---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2008

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to
______________

Commission file number 000-50346

COUNTERPATH
CORPORATION(Name of small business issuer as in its
charter)

|Nevada                                           | 20-0004161                       
|------------------------------------------------ | ---------------------------------
|(State or other jurisdiction of incorporation or | (IRS Employer Identification No.)
|organization)                                    |                                  

Suite 300, One Bentall Centre, 505 Burrard Street,
Vancouver, British Columbia, Canada V7X 1M3(Address of principal
executive offices)

(604) 320-3344(Issuers telephone number)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X]   No [   ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). (Check one): Yes [ 
 ]   No [X]

As of March 10, 2008, there were 129,608,887 shares of the
issuers common stock issued and outstanding, par value $0.001.

Transitional Small Business Disclosure Format (Check one): Yes
[   ]   No [X]

---

COUNTERPATH CORPORATION (Formerly CounterPath
Solutions, Inc.)JANUARY 31, 2008 QUARTERLY REPORT ON FORM 10-QSB

INDEX

|                  |                                                                                        | Page
|----------------- | -------------------------------------------------------------------------------------- | ----
|                  |                                                                                        |     
|                  | Part
      I                                                                           |     
|Item
      1.     | Financial
      Statements                                                             | 3   
|Item
      2.     | Managements
      Discussion and Analysis or Plan of Operation                        | 23  
|Item
      3(A)T. | Controls
      and Procedures                                                          | 34  
|                  | Part
      II                                                                          |     
|Item
      1.     | Legal
      Proceedings                                                                | 34  
|Item
      2.     | Unregistered
      Sales of Equity Securities and Use of Proceeds                      | 35  
|Item
      3.     | Defaults
      Upon Senior Securities                                                  | 35  
|Item
      4.     | Submission
      of Matters to a Vote of Security Holders                              | 35  
|Item
      5.     | Other
      Information                                                                | 35  
|Item
      6.     | Exhibits                                                                               | 36  
|                  | Exhibits                                                                               |     
|31                | Section 302
      Certification of Chief Executive Officer and Chief Financial Officer |     
|32                | Certification Pursuant to U.S.C.
      18 Section 1350                                 |     

2

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

COUNTERPATH CORPORATION(Formerly CounterPath
Solutions, Inc.)INDEX TO INTERIM CONSOLIDATED FINANCIAL
STATEMENTS January 31, 2008 (Unaudited)(Stated in U.S.
Dollars)

|                                                                                                 | Page        
|------------------------------------------------------------------------------------------------ | ------------
|                                                                                                 |             
|Interim
      Consolidated Balance Sheets                                                        | 4           
|                                                                                                 |             
|Interim
      Consolidated Statements of Operations and Comprehensive Loss                       | 5           
|                                                                                                 |             
|Interim
      Consolidated Statements of Cash Flows                                              | 6           
|                                                                                                 |             
|Interim
      Consolidated Statements of Changes in Stockholders Equity (Capital
      Deficit) | 7           
|                                                                                                 |             
|Notes
      to the Interim Consolidated Financial Statements                                     | 8
       22

3

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COUNTERPATH CORPORATION(Formerly CounterPath
Solutions, Inc.)INTERIM CONSOLIDATED BALANCE SHEETS(Stated in
U.S. Dollars)

|                                                                           |   | January 31, |   |   | April 30,  |  
|-------------------------------------------------------------------------- | - | ----------- | - | - | ---------- | -
|                                                                           |   | 2008        |   |   | 2007       |  
|                                                                           |   | (Unaudited) |   |   |            |  
|Assets                                                                     |   |             |   |   |            |  
|Current assets:                                                            |   |             |   |   |            |  
|Cash                                                                       | $ | 3,079,584   |   | $ | 1,680,220  |  
|Accounts receivable (net of allowance
      for doubtful accounts of       |   |             |   |   |            |  
|$197,922 and $56,817
      respectively)                                   |   | 3,932,699   |   |   | 1,924,899  |  
|Prepaid expenses and deposits                                              |   | 546,613     |   |   | 129,534    |  
|Total
      current assets                                                 |   | 7,558,896   |   |   | 3,734,653  |  
|                                                                           |   |             |   |   |            |  
|Deposits - Note 9 and Note 12                                              |   | 403,615     |   |   | 74,613     |  
|Equipment                                                                  |   | 388,437     |   |   | 276,599    |  
|Intangible assets (net of accumulated
      amortization of $599,162       |   |             |   |   |            |  
|and $nil  Note 2(d) and 3)                                                |   | 5,533,770   |   |   |           |  
|Investment tax credits recoverable                                         |   | 233,582     |   |   |           |  
|Goodwill  Note 3                                                          |   | 6,727,744   |   |   |           |  
|Other assets                                                               |   | 129,494     |   |   | 25,716     |  
|Total Assets                                                               | $ | 20,975,538  |   | $ | 4,111,581  |  
|                                                                           |   |             |   |   |            |  
|Liabilities and Stockholders Equity (Capital
      Deficit)               |   |             |   |   |            |  
|Current liabilities:                                                       |   |             |   |   |            |  
|Accounts payable and accrued
      liabilities                             | $ | 2,496,182   |   | $ | 1,314,083  |  
|Due to related parties                                                     |   | 20,853      |   |   | 25,417     |  
|Unearned revenue                                                           |   | 658,189     |   |   | 408,188    |  
|Customer deposits                                                          |   | 23,351      |   |   | 5,615      |  
|Warranty payable                                                           |   | 105,404     |   |   | 83,769     |  
|Total
      current liabilities                                            |   | 3,303,979   |   |   | 1,837,072  |  
|                                                                           |   |             |   |   |            |  
|Convertible debentures  Note 5                                            |   |            |   |   | 3,369,230  |  
|Unrecognized tax benefit  Note 2(c)                                       |   | 332,157     |   |   |           |  
|Total
      liabilities                                                    |   | 3,636,136   |   |   | 5,206,302  |  
|                                                                           |   |             |   |   |            |  
|Stockholders equity (capital
      deficit):                              |   |             |   |   |            |  
|Preferred stock, $0.001 par value  Note 6                                 |   |             |   |   |            |  
|Authorized: 100,000,000                                                    |   |             |   |   |            |  
|Issued and outstanding: January 31,
      2008  1; April 30, 2007  Nil   |   |            |   |   |           |  
|Common stock, $0.001 par value
       Note 7                              |   |             |   |   |            |  
|Authorized: 415,384,500                                                    |   |             |   |   |            |  
|Issued and
      outstanding:                                              |   |             |   |   |            |  
|January 31, 2008  95,108,887;
      April 30, 2007  37,940,983           |   | 95,109      |   |   | 37,941     |  
|Additional paid-in capital                                                 |   | 28,982,590  |   |   | 4,820,069  |  
|Accumulated deficit                                                        |   | (12,823,439 | ) |   | (5,872,151 | )
|Accumulated other
      comprehensive income (loss)  currency translation |   |             |   |   |            |  
|adjustment                                                                 |   | 1,085,142   |   |   | (80,580    | )
|Total
      stockholders equity (capital deficit)                         |   | 17,339,402  |   |   | (1,094,721 | )
|Liabilities and Stockholders Equity                                       | $ | 20,975,538  |   | $ | 4,111,581  |  
|                                                                           |   |             |   |   |            |  
|Going concern (Note 2)                                                     |   |             |   |   |            |  
|New accounting pronouncements (Note 2(c))                                  |   |             |   |   |            |  
|Commitments and contingent liability (Notes 9 and 10)                      |   |             |   |   |            |  
|Subsequent events (Note 13)                                                |   |             |   |   |            |  

See accompanying notes to the consolidated financial
statements

4

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COUNTERPATH CORPORATION (Formerly CounterPath
Solutions, Inc.) INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS(Stated in U.S. Dollars) (Unaudited)

|                                                 |   | Three Months Ended |   |   | Nine Months Ended |  
|------------------------------------------------ | - | ------------------ | - | - | ----------------- | -
|                                                 |   | January
      31,  |   |   | January
      31, |  
|                                                 |   | 2008               |   |   | 2007              |  
|Revenue  Note 8:                                |   |                    |   |   |                   |  
|Software                                         | $ | 1,698,829          |   | $ | 653,332           |  
|Service                                          |   | 935,934            |   |   | 354,250           |  
|Total revenue                                    |   | 2,634,763          |   |   | 1,007,582         |  
|Operating expenses:                              |   |                    |   |   |                   |  
|Cost of sales (includes amortization of          |   |                    |   |   |                   |  
|intangibles of $303,931 and $599,162-
      Note |   | 771,178            |   |   | 337,009           |  
|2(d))                                            |   |                    |   |   |                   |  
|Sales and marketing                              |   | 1,016,758          |   |   | 409,856           |  
|Research and development                         |   | 1,545,630          |   |   | 647,664           |  
|General and administrative                       |   | 1,589,055          |   |   | 581,446           |  
|Restructuring cost - Note 11                     |   |                   |   |   |                  |  
|Total
      operating expenses                   |   | 4,922,621          |   |   | 1,975,975         |  
|Loss from operations                             |   | (2,287,858         | ) |   | (968,393          | )
|Interest and other income (expense), net         |   |                    |   |   |                   |  
|Interest income                                  |   | 87,707             |   |   | 17,485            |  
|Interest expense - Notes 4 and 5                 |   | (1,258             | ) |   | (394,969          | )
|Loss on sale of assets                           |   |                   |   |   | (1,169            | )
|Foreign exchange gain                            |   | 4,709              |   |   |                  |  
|Net loss for the period                          | $ | (2,196,700         | ) | $ | (1,347,046        | )
|Other comprehensive income:                      |   |                    |   |   |                   |  
|Foreign currency translation adjustments         |   | (522,573           | ) |   | (31,462           | )
|Comprehensive loss                               | $ | (2,719,273         | ) | $ | (1,378,508        | )
|Net loss per share:                              |   |                    |   |   |                   |  
|Basic and diluted                                | $ | (0.02              | ) | $ | (0.04             | )
|Weighted average common                          |   |                    |   |   |                   |  
|shares outstanding:                              |   | 94,939,745         |   |   | 37,940,983        |  

See accompanying notes to the consolidated financial
statements

5

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COUNTERPATH CORPORATION(Formerly CounterPath
Solutions, Inc.)INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS(Stated in U.S. Dollars) (Unaudited)

|                                                                           |   | Nine Months Ended |  
|-------------------------------------------------------------------------- | - | ----------------- | -
|                                                                           |   | January
      31, |  
|                                                                           |   | 2008              |  
|Cash flows from operating activities:                                      |   |                   |  
|Net loss for the period                                                    | $ | (6,878,875        | )
|Adjustments to reconcile
      net loss to net cash used in                |   |                   |  
|operating activities:                                                      |   |                   |  
|Depreciation
      and amortization                                        |   | 240,821           |  
|Amortization of intangible
      assets                                    |   | 599,162           |  
|Stock-based
      compensation -note 7                                     |   | 1,235,514         |  
|Accretion of convertible
      debenture discount - Note 5                 |   | 90,570            |  
|Loss on conversion
      of convertible debentures                         |   | 540,200           |  
|Changes in assets and liabilities:                                         |   |                   |  
|Accounts
      receivable                                                  |   | (456,424          | )
|Prepaid expenses and deposits                                              |   | (403,000          | )
|Accounts
      payable and accrued liabilities                             |   | 268,463           |  
|Unearned revenue                                                           |   | 250,001           |  
|Customer
      deposits                                                    |   | 18,358            |  
|Warranty payable                                                           |   | 21,635            |  
|Net cash used in operating activities                                      |   | (4,473,575        | )
|                                                                           |   |                   |  
|Cash flows from investing activities:                                      |   |                   |  
|Cash acquired on acquisition of NewHeights, net of transaction
      costs |   | 2,517,365         |  
|Purchase of equipment                                                      |   | (51,954           | )
|Deposits                                                                   |   | (329,002          | )
|Increase in other assets                                                   |   | (101,503          | )
|Net cash provided by (used in) investing activities                        |   | 2,034,906         |  
|                                                                           |   |                   |  
|Cash flows from financing activities:                                      |   |                   |  
|Common stock issued                                                        |   | 3,506,832         |  
|Convertible debenture issued                                               |   |                  |  
|Decrease in due to related parties                                         |   | (4,564            | )
|Net cash provided by (used in) financing activities                        |   | 3,502,268         |  
|                                                                           |   |                   |  
|Foreign currency translation effect on cash                                |   | 335,765           |  
|                                                                           |   |                   |  
|Increase (decrease) in cash                                                |   | 1,399,364         |  
|                                                                           |   |                   |  
|Cash, beginning of the period                                              |   | 1,680,220         |  
|Cash, end of the period                                                    | $ | 3,079,584         |  
|                                                                           |   |                   |  
|Supplemental disclosure of cash flow information                           |   |                   |  
|Cash paid for:                                                             |   |                   |  
|Interest                                                                   | $ | 2,222             |  
|Common stock and stock options issued in connection
      with the         |   |                   |  
|acquisition of NewHeights Software
      Corporation                       | $ | 15,477,343        |  
|Convertible debentures converted into common stock                         | $ | 4,000,000         |  

See accompanying notes to the consolidated financial
statements

6

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COUNTERPATHCORPORATION(Formerly CounterPath Solutions, Inc.)CONSOLIDATEDSTATEMENTSOFCHANGESINSTOCKHOLDERSEQUITY(CAPITALDEFICIT)for the Nine
Months Ended January 31, 2008 (Stated in U.S. Dollars)

Common
        shares
      
      Preferred
        Shares
      
      
      
      
      
      
      
      
      AccumulatedNumber
      
      
      
      
      Number
      
      
      
      
      
      Additional
      
      
      
      
      
      Otherof
      
      
      
      
      of
      
      
      
      
      
      Paid-in
      
      
      Accumulated
      
      
      ComprehensiveShares
      
      
      Par
        Value
      
      Shares
      
      
      Par
        Value
      
      
      Capital
      
      
      Deficit
      
      
      Loss
      
      
      TotalBalance, May 1, 2007
      37,940,983
      
      $
      37,941
      
      
      
      $
      
      
      $
      4,820,069
      
      $
      (5,872,151
      )
      $
      (80,580
      )
      $
      (1,094,721
      )Shares issued: CommonAcquisition of NewHeights 
        Note 3
      38,400,820
      
      
      38,401
      
      
      
      
      
      
      
      15,138,460
      
      
      
      
      
      
      
      
      15,176,861Conversion of debentures  Note 5
      10,000,000
      
      
      10,000
      
      
      
      
      
      
      
      3,990,000
      
      
      
      
      
      
      
      
      4,000,000Private placement  Note
        3
      8,750,000
      
      
      8,750
      
      
      
      
      
      
      
      3,491,250
      
      
      
      
      
      
      
      
      3,500,000Exercise of stock options
      17,084
      
      
      17
      
      
      
      
      
      
      
      6,815
      
      
      
      
      
      
      
      
      6,832Fair value of vested stock
        options
      
      
      
      
      
      
      
      
      
      
      
      300,482
      
      
      
      
      
      
      
      
      300,482exchanged  Note 3Shares issued: Preferred
      
      
      
      
      
      1
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      Stock-based compensation - Note 7
      
      
      
      
      
      
      
      
      
      
      
      1,235,514
      
      
      
      
      
      
      
      
      1,235,514Net loss for the period
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      (6,878,875
      )
      
      
      
      
      (6,878,875
      )Foreign currency translation adjustment
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      1,165,722
      
      
      1,165,722Cumulative-effect adjustment  Note
        2(c)
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      (72,413
      )
      
      
      
      
      (72,413
      )Balance, January 31, 2008 (Unaudited)
      95,108,887
      
      $
      95,109
      
      1
      
      $
      
      
      $
      28,982,590
      
      $
      (12,823,439
      )
      $
      1,085,142
      
      $
      17,339,402


Seeaccompanyingnotes to theconsolidatedfinancialstatement

7

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COUNTERPATH CORPORATION(Formerly CounterPath
Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS(Stated in U.S. Dollars) (Unaudited)

|Note 1 | Nature of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | CounterPath Corporation (formerly CounterPath Solutions,
      Inc.) (the Company) was incorporated in the State of Nevada on April 18,
      2003. The Company changed its name from CounterPath Solutions, Inc. to
      CounterPath Corporation on October 17, 2007. The Companys common shares
      are quoted for trading on the Over-The-Counter Bulletin Board in the
      United States of America. On August 2, 2007, the Company completed the
      acquisition of all of the shares of NewHeights Software Corporation
      (NewHeights) through the issuance of 38,400,820 shares of the Companys
      common stock and 1,849,180 preferred shares issued from a subsidiary of
      the Company that are exchangeable into 1,849,180 shares of common stock of
      the Company. For accounting purposes, the Company was deemed to be the
      acquirer of NewHeights based on certain factors including the number of
      common shares issued in the transaction as a proportion of the total
      common shares outstanding, and the composition of the board after the
      transaction (Note 3). On February 5, 2008 NewHeights Software Corporation
      and CounterPath Solutions R&D Inc. were amalgamated under the name
      CounterPath Technologies Inc.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | The Company provides Voice over Internet Protocol
      software and related services to customers in North America, Central and
      South America, Europe and Asia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Note 2 | Significant Accounting Policies and Going
      Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | These interim consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles in
      the United States of America and are stated in U.S. dollars except where
      otherwise disclosed. Because a precise determination of many assets and
      liabilities is dependent upon future events, the preparation of financial
      statements for the period necessarily involves the use of estimates, which
      have been made using careful judgment. Actual results may vary from these
      estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | These interim consolidated financial statements have been
      prepared on a going concern basis, which implies the Company will continue
      to realize its assets and discharge its liabilities and commitments in the
      normal course of business. The continuation of the Company as a going
      concern is dependent upon the continued financial support from its
      stockholders, the ability of the Company to obtain necessary equity
      financing to continue operations and to generate sustainable significant
      revenue. There is no guarantee that the Company will be able to raise any
      equity financing or generate profitable operations. As at January 31,
      2008, the Company has not yet achieved profitable operations and had an
      accumulated deficit of $12,823,439 since incorporation. These factors
      raise substantial doubt regarding the Companys ability to continue as a
      going concern. Management is implementing a plan to address these
      uncertainties to enable the Company to continue as a going concern through
      the end of fiscal 2009 and beyond. This plan includes new equity financing
      in amounts sufficient to sustain operations, and to increase revenues from
      operations.          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | Realizable values may be substantially different from
      carrying values as shown in these financial statements should the Company
      be unable to continue as a going concern. These financial statements do
      not include any adjustments to the recoverability and classification of
      recorded asset amounts and classification of liabilities that might be
      necessary should the Company be unable to continue as a going concern. The
      interim consolidated financial statements have, in managements opinion,
      been properly prepared within the framework of the significant accounting
      policies as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

8

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COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 2 | Significant Accounting
      Policies and Going Concern (contd)
|------ | -----------------------------------------------------------------

| | a) | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | These interim consolidated financial statements include
      the accounts of the Company and its wholly- owned subsidiaries,
      CounterPath Solutions R&D Inc., incorporated under the laws of the
      province of British Columbia, Canada, NewHeights Software Corporation,
      continued under the Canada Business Corporation Act and 6789722 Canada
      Inc., incorporated under the Canada Business Corporations Act. The results
      of NewHeights Software Corporation are included from August 2, 2007, the
      date of acquisition. All inter-company transactions and balances have been
      eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | b) | Interim Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | The information presented in the accompanying interim
      consolidated financial statements is without audit pursuant to the rules
      and regulations of the Securities and Exchange Commission. Certain
      information and footnote disclosures normally included in the financial
      statements prepared in accordance with generally accepted accounting
      principles have been condensed or omitted pursuant to such rules and
      regulations, although the Company believes that the disclosures are
      adequate to make the information presented not misleading.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | These statements reflect all adjustments, which are, in
      the opinion of management, necessary to present fairly the financial
      position, results of operations and cash flows for the interim periods
      presented in accordance with accounting principles generally accepted in
      the United States of America. Except where noted, these interim financial
      statements follow the same accounting policies and methods of their
      application as the Companys April 30, 2007 annual consolidated financial
      statements. All adjustments are of a normal recurring nature. It is
      suggested that these interim financial statements be read in conjunction
      with the Companys April 30, 2007 annual consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | Operating results for the three and nine months ended
      January 31, 2008 are not necessarily indicative of the results that can be
      expected for the year ending April 30, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | c) | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | In October 2006, the Financial Accounting Standards Board
      (FASB) issued interpretation No. 48, Accounting for Uncertainty in
      Income Taxes-an Interpretation of FASB Statement No. 109 (FAS No.
      109) (FIN 48). This interpretation prescribes a recognition
      threshold and measurement attribute for tax positions taken or expected to
      be taken in a tax return. This interpretation also provides guidance on
      de-recognition, classification, interest and penalties, accounting in
      interim periods, disclosure and transition. The evaluation of a tax
      position in accordance with this interpretation is a two-step process. In
      the first step, recognition, the Company determines whether it is
      more-likely-than-not that a tax position will be sustained upon
      examination, including resolution of any related appeals or litigation
      processes, based on the technical merits of the position. The second step
      addresses measurement of a tax position that meets the
      more-likely-than-not criteria. The tax position is measured at the largest
      amount of benefit that is greater than 50 percent likely of being realized
      upon ultimate settlement.

9

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 2 | Significant Accounting
      Policies and Going Concern (contd)
|------ | -----------------------------------------------------------------

| | c) | New Accounting Pronouncements  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | Differences between tax positions taken in a tax return
      and amounts recognized in the financial statements will generally result
      in a) an increase in a liability for income taxes payable or a reduction
      of an income tax refund receivable, b) a reduction in a deferred tax asset
      or an increase in a deferred tax liability or c) both a and b. Tax
      positions that previously failed to meet the more- likely-than-not
      recognition threshold should be recognized in the first subsequent
      financial reporting period in which that threshold is met. Previously
      recognized tax positions that no longer meet the more-likely-than-not
      recognition threshold should be de-recognized in the first subsequent
      financial reporting period in which that threshold is no longer met. Use
      of a valuation allowance as described in FAS No. 109 is not an appropriate
      substitute for the de-recognition of a tax position. The requirement to
      assess the need for a valuation allowance for deferred tax assets based on
      sufficiency of future taxable income is unchanged by this interpretation.
      This interpretation is effective for fiscal years beginning after December
      15, 2006. The Company adopted the provisions of FIN 48 on May 1, 2007. The
      cumulative effect of adopting FIN 48 of $72,413 was recorded as a
      reduction to retained earnings. The total amount of unrecognized tax
      benefits as of the date of adoption was $245,362. Of this amount, $245,362
      represents the amount that would reduce the Companys effective income tax
      rate, if recognized in future periods.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | The Company recognizes interest and penalties accrued on
      unrecognized tax benefits within income tax expense. As of January 31,
      2008, we had $117,750 of interest and penalties accrued associated with
      unrecognized tax benefits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | The Company is subject to taxation in the U.S. and
      Canada. It is subject to tax examinations by tax authorities for all
      taxation years commencing in or after 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | As of January 31, 2008, the amount of unrecognized tax
      benefits had increased by $86,795.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | In September 2006, FASB issued Statement of Financial
      Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157).
      This standard clarifies the principle that fair value should be based on
      the assumptions that market participants would use when pricing an asset
      or liability. Additionally, it establishes a fair value hierarchy that
      prioritizes the information used to develop those assumptions. This
      standard is effective for financial statements issued for fiscal years
      beginning after November 15, 2007. The Company is currently evaluating the
      impact of this statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    | In February 2007, the FASB issued FASB Statement No. 159,
      The Fair Value Option for Financial Assets and Financial Liabilities 
      Including an Amendment of FASB Statement No. 115. (SFAS No. 159). This
      standard permits an entity to choose to measure many financial instruments
      and certain other items at fair value. This standard is effective for
      financial statements issued for fiscal years beginning after November 15,
      2007. The Company is currently evaluating the impact of this
    statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

10

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 2 | Significant Accounting
      Policies and Going Concern (contd)
|------ | -----------------------------------------------------------------

| | d) | Goodwill and Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Goodwill represents the excess purchase price over the
      estimated fair value of net assets acquired as of the acquisition date. We
      have adopted the requirements of Statement of Financial Accounting
      Standards No. 142, Goodwill and Other Intangible Assets (SFAS No.
      142). SFAS No. 142 requires goodwill to be tested for impairment annually
      or more frequently if an event occurs or circumstances change that would
      more likely than not reduce the fair value of the Company's business
      enterprise below its carrying value. The impairment test requires
      management to estimate the fair value of the Company's overall business
      enterprise down to the reporting unit level. Goodwill of $6,339,717
      (CDN$6,704,947) was initially recorded in connection with the acquisition
      of NewHeights Software Corporation on August 2, 2007 (Note 3). Management
      will perform its annual impairment test in its fiscal fourth quarter. No
      impairment charges were recorded to the period ended January 31,
    2008.                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Intangible assets include the intangibles purchased in
      connection with the acquisition of NewHeights Software Corporation on
      August 2, 2007 (Note 3). The intangible assets are being carried and
      reported at acquisition cost and include amounts initially allocated to
      acquired technologies of $3,454,839 (CDN$3,678,100) and customer asset of
      $2,283,908 (CDN$2,431,500). Subsequent to acquisition, the acquired
      technologies will be amortized based on their estimated useful life of
      four years and the customer asset will be amortized on the basis of
      Managements estimate of the future cash flows from this asset over
      approximately five years, which is Managements estimate of the useful
      life of the customer asset. These assets have accumulated amortization at
      January 31, 2008 of $599,162. The expected aggregate amortization for the
      acquired technologies for years ended April 30, 2008 to 2012 is $686,389,
      $915,185, $915,185, $915,185 and $228,796, respectively. The expected
      aggregate amortization for the customer asset for the years ended April
      30, 2008 to 2013 is $212,629, $467,345, $522,838, $538,223 ,$465,698 and
      $213,290, respectively.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | We have adopted the requirements of Statement of
      Financial Accounting Standard No. 144, The Impairment or Disposal of
      Long-Lived Assets (SFAS No. 144), SFAS No. 144 requires us to review
      the carrying value of intangibles and other long-lived assets for
      impairment at least annually or whenever events or changes in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Recoverability of long-lived assets is measured by
      comparison of its carrying amount to the undiscounted cash flows that the
      asset or asset group is expected to generate. If such assets are
      considered to be impaired, the impairment to be recognized is measured by
      the amount by which the carrying amount of the property, if any, exceeds
      its fair market value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | e) | Comparative Figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Certain comparative figures have been reclassified to
      conform to the current periods presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

11

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 3 | Business Combination                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | On August 2, 2007, the Company acquired all of the shares
      of NewHeights Software Corporation (NewHeights) through the issuance of
      38,400,820 shares of the Companys common stock and 1,849,180 preferred
      shares issued from 6789722 Canada Inc., a subsidiary of the Company, that
      are exchangeable into 1,849,180 shares of common stock of the Company.
      Upon closing, the Companys convertible debenture holders converted their
      existing debentures in the amount of $4 million into 10 million shares of
      common stock pursuant to the terms of the convertible debenture agreement
      (Note 5). In addition, the Company completed a private placement of $1.3
      million, $0.5 million and $1.7 million on August 2, 2007, September 30,
      2007 and November 2, 2007, respectively, issuing a total of 8.75 million
      shares of common stock at $0.40. The Company also entered into
      subscription agreements with investors to raise an additional $2.0 million
      through the issuance of 5 million shares of common stock at $0.40 per
      share, which were completed on February 2, 2008 and March 2, 2008
      respectively.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Concurrent with the transaction, the Company issued
      4,288,504 replacement employee options to former optionees of NewHeights.
      Included in the nine months ending January 31, 2008 statement of
      operations is a $388,786 compensation charge (being the incremental fair
      value of the vested options) recorded in association with the issuance of
      these options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | The Company acquired NewHeights to gain access to
      NewHeights technology and customer base. NewHeights has a portfolio of
      standards based software applications aimed at simplifying and enhancing
      real-time communications over the internet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | The Company accounted for the acquisition using the
      purchase method of accounting in accordance with Statement of Financial
      Accounting Standards No. 141, Business Combinations. Accordingly, the
      purchase price has been allocated to the tangible and intangible assets
      acquired and the liabilities assumed on the basis of their respective fair
      values on the acquisition date. Purchase price in excess of fair value of
      the net tangible and identifiable intangible assets acquired has been
      allocated to goodwill. Any goodwill allocated on the acquisition will not
      be deductible for tax purposes. The Companys consolidated statements of
      operations and comprehensive loss include the operating results of
      NewHeights from August 2, 2007, the date of acquisition. The functional
      currency of NewHeights is the Canadian dollar hence the values of the
      assets and liabilities of NewHeights including goodwill will fluctuate
      with changes in exchange rates.                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | The following table summarizes the allocation of the
      purchase price and related transaction costs to the fair value of the
      assets acquired and liabilities assumed at the date of acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Cash
    $
    2,634,910Working capital (other than cash)
    
    618,146Equipment
    
    261,092Acquired technologies
    
    3,454,839Customer asset
    
    2,283,908Goodwill
    
    6,339,717Other assets
    
    2,276Total net assets acquired
    $
    15,594,888Consideration:Purchase price - fair value of shares issued
    $
    15,176,861Fair value of the surrendered options of
      NewHeights
    
    300,482Transaction costs
    
    117,545Total
    $
    15,594,888


12

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 3 | Business Combination 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The fair value of common shares issued is based on the
      weighted average closing common share price for the five trading days
      prior to, and the five trading days after the announcement of acquisition.
      The Black- Scholes option pricing model has been used to determine the
      fair value of the surrendered options of NewHeights granted to former
      optionees of NewHeights as of the transaction date of August 2, 2007.                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The equipment acquired in the acquisition of NewHeights
      primarily consists of computer equipment, furniture and fixtures and have
      been recorded at fair value, which approximates net book value. These
      assets will be amortized on the basis of declining balances. The acquired
      technologies and customer asset represent finite life intangible assets.
      The customer asset represents a relationship with an existing customer of
      NewHeights. The acquired technologies will be amortized based on their
      estimated useful life of four years and the customer asset will be
      amortized on the basis of Managements estimate of the future cash flows
      from this asset over approximately five years, which is Managements
      estimate of the useful life of the customer asset.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The following table presents unaudited pro forma results
      of operations for the three and nine months ended January 31, 2008, as if
      the acquisition had occurred on May 1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| |                         |   | Three Months Ended |   |   | Nine Months Ended |  
| | ----------------------- | - | ------------------ | - | - | ----------------- | -
| |                         |   | January
      31   |   |   | January 31        |  
| |                         |   | 2008               |   |   | 2007              |  
| |                         |   |                    |   |   |                   |  
| | Revenue                 | $ | 2,634,763          |   | $ | 1,668,039         |  
| |                         |   |                    |   |   |                   |  
| | Net loss for the period | $ | (2,196,700         | ) | $ | (3,494,241        | )
| |                         |   |                    |   |   |                   |  
| | Net loss per share:     |   |                    |   |   |                   |  
| | Basic and diluted       | $ | (0.02              | ) | $ | (0.04             | )

13

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 4 | Related Party
      Transactions                                                                                                                                                                                                                                                                           
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                            
|       | During the three and nine months ended January 31, 2008
      and 2007, the Company incurred the following lease expense to a company
      with a director in common with the Company and interest expenses to a
      company controlled by the spouse of a significant shareholder of the
      Company:

| |                                   |   | Three Months Ended |  |   | Nine Months Ended | 
| | --------------------------------- | - | ------------------ |  | - | ----------------- | 
| |                                   |   | January
      31,  |  |   | January
      31, | 
| |                                   |   | 2008               |  |   | 2007              | 
| |                                   |   |                    |  |   |                   | 
| | Interest on convertible debenture | $ | Nil                |  | $ | 34,167            | 
| | Lease payment                     | $ | 20,853             |  | $ | Nil               | 

The above transactions are in the
normal course of operations and are recorded at amounts established and agreed
to between the related parties. The amounts due to these related parties at
January 31, 2008 are unsecured, non-interest bearing and have no stated terms of
repayment.

The Companys Chairman is the Chairman
and founding shareholder of Mitel Networks Corporation (Mitel). The Companys
wholly-owned subsidiary, NewHeights has entered into a distribution agreement
with Mitel on June 15, 2004 and has amended such agreement on August 7, 2007.
The agreement renews automatically for one-year periods and contains termination
rights of both parties. Under the terms of this distribution agreement, the
Company earns a specified fee from Mitel based on the number of product licenses
sold to Mitel.

The Company, through its wholly-owned
subsidiary, NewHeights receives royalties of $0.52 (CDN$0.50) for each phone
product sold by Mitel with session initiation protocol technology that was
transferred to Mitel in April 2006 by NewHeights up to a maximum of
approximately US$1,362,100 (CDN$1,300,000).

The Companys software license revenue
for the three and nine months ended January 31, 2008, pursuant to the terms of
this distribution agreement, was $500,000 and $1,480,500.

As at January 31, 2008, the Company
has an accounts receivable balance from Mitel of $905,933 (April 30, 2007 -
$nil).

In addition, during the three and nine
months ended January 31, 2008, the Company reimbursed Mitel for certain expenses
on behalf of the Company and another related corporation to Mitel totaling
$49,786 (April 30, 2007 - $nil) and the Company was paid $12,199 by the related
corporation to Mitel. As at January 31, 2008, the Company had an accounts
payable balance to Mitel of $20,853 (April 30, 2007 - $nil).

14

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 5 | Convertible
      Debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | On November 30, 2006, the Company completed the issuance
      of convertible debentures in the principal amount of $4,000,000 to a group
      of investors including a company controlled by the spouse of a significant
      shareholder of the Company. The debentures are unsecured, bear interest at
      5% per annum with interest payable quarterly and mature on November 30,
      2008. The investors may convert the debentures at any time, and from time
      to time, in whole or in part into common shares of the Company at a
      conversion price of $0.40 per share. Consideration for $2,000,000 of the
      $4,000,000 convertible debentures was the cancellation of the $2,000,000
      debenture originally issued on December 13, 2005. In addition, the
      outstanding share purchase warrants for the purchase of up to 2,500,000
      shares of common stock at a price of $0.80 per share, which were issued in
      connection with the December 2005 debenture were cancelled on closing. The
      new debentures rank senior to the Companys other existing and future
      indebtedness as long as they remain outstanding. Under the terms of the
      private placement, the investors also received share purchase warrants for
      the purchase of up to 5,000,000 shares of the Companys common stock,
      exercisable for three years at a price of $0.80 per share
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | The $4,000,000 convertible debenture was recorded on the
      date of issuance at its fair value which is estimated to approximate its
      face value with the proceeds raised allocated between the convertible
      debenture, and share purchase warrants based on their relative fair values
      and the beneficial conversion feature based on its intrinsic value in
      accordance with EITF 00-27, Application of Issue No. 98-5 to Certain
      Convertible Instruments (EITF 00-27). The Company used the
      Black-Scholes option pricing model to determine the fair value of the
      share purchase warrants using the Companys historical prices and the
      following assumptions (i) risk-free interest rate of 4.52%, (ii) expected
      volatility of 82.02%, (iii) expected life of 3 years, and (iv) a dividend
      yield of nil. At the date of issuance of the $4,000,000 debenture, the
      Company allocated $3,227,590 to the convertible debenture $336,205 to the
      share purchase warrants issued in connection with the convertible
      debenture and $436,206 to the beneficial conversion feature. The amounts
      allocated to the share purchase warrants and beneficial conversion feature
      represents a discount on the debt financing which is accreted to income
      over the term of the debt.                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | On August 2, 2007, in conjunction with the acquisition of
      NewHeights Software Corporation (Note 3) the Companys convertible
      debenture holders converted their existing debentures in the amount of
      $4,000,000 into 10,000,000 shares of common stock at a conversion price of
      $0.40 per share. As a result, the remaining balance of the unaccreted debt
      discount on the date of conversion of $540,200 was recorded in the
      consolidated statement of operations as additional interest expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | The convertible debenture and
      debt discount are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                                                  |   | Face       |   |   |          |   |   | Carrying   |  
| | ------------------------------------------------ | - | ---------- | - | - | -------- | - | - | ---------- | -
| |                                                  |   | Amount     |   |   | Discount |   |   | Value      |  
| |                                                  |   |            |   |   |          |   |   |            |  
| | Convertible debenture at April 30, 2007          | $ | 4,000,000  |   | $ | 630,770  |   | $ | 3,369,230  |  
| | Accretion of debt discount to date of conversion |   |           |   |   | (90,570  | ) |   | 90,570     |  
| | Conversion of debenture on August 2, 2007        |   | (4,000,000 | ) |   | (540,200 | ) |   | (3,459,800 | )
| |                                                  | $ |           |   | $ |         |   |   |           |  

During the three and nine months ended
January 31, 2008, the Company recorded an accretion expense of $nil (2006 -
$17,491) and $90,570 (2006 - $34,593) respectively on this discount.

15

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 6 | Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | On August 2, 2007, the Company entered into a voting and
      exchange trust agreement among its subsidiary, 6789722 Canada Inc., and
      Valiant Trust Company whereby the Company issued and deposited with
      Valiant Trust a special preferred voting share of the Company in order to
      enable Valiant Trust to execute certain voting and exchange rights as
      trustee for and on behalf of the registered holders from time to time of
      the preferred shares of 6789722 Canada Inc. Each preferred share of
      6789722 Canada Inc. is exchangeable into one share of common stock of the
      Company at the election of the shareholder, or, in certain circumstances,
      of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Note 7 | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | The Company has a stock option plan under which options
      to purchase common shares of the Company may be granted to employees,
      directors and consultants. Stock options entitle the holder to purchase
      common stock at a subscription price determined by the Board of Directors
      of the Company at the time of the grant. The options generally vest in the
      amount of 12.5% on the date which is six months from the date of grant and
      then beginning in the seventh month at 1/42 per month for 42 months, at
      which time the options are fully vested. On August 2, 2007, the Company
      issued 4,288,504 stock options to former optionees of NewHeights Software
      Corporation (New Heights) to replace their existing options. The
      replacement options were granted at $0.40 per share and generally vest in
      the amount of 33.3% after each of three years from the original date of
      grant at which time the options are fully vested. The fair value of the
      surrendered NewHeights options of $300,482 was included in the purchase
      price of NewHeights and a compensation charge of $388,786 (being the
      incremental fair value of the options which have vested) was recorded in
      the statement of operations in association with the issuance of these
      options. The maximum number of shares of common stock authorized by the
      stockholders and reserved for issuance by the Board of Directors of the
      Company under the stock option plans are 4,000,000 under the 2004 Stock
      option plan and 21,300,000 under the 2005 Stock option plan.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | Effective May 1, 2006, with the adoption of SFAS No.
      123R, the Company has elected to use the Black- Scholes option pricing
      model to determine the fair value of stock options granted. In accordance
      with SFAS No. 123R for employees, the compensation expense is amortized on
      a straight-line basis over the requisite service period which approximates
      the vesting period. Compensation expense for stock options granted to
      non-employees is amortized over the vesting period or, if none exists,
      over the service period. Compensation associated with unvested options
      granted to non-employees is remeasured on each balance sheet date using
      the Black-Scholes option pricing model.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | The expected volatility of options granted has been
      determined using the method described under SFAS No. 123R using the
      historical stock price. The expected term of options granted to employees
      in the current fiscal year has been determined utilizing the simplified
      method as prescribed by SAB No. 107, Share- Based Payment. For
      non-employees, the expected term of the options approximates the full term
      of the options. The risk-free interest rate is based on a treasury
      instrument whose term is consistent with the expected term of the stock
      options. The Company has not paid and does not anticipate paying dividends
      on its common stock; therefore, the expected dividend yield is assumed to
      be zero. In addition, SFAS No. 123R requires companies to utilize an
      estimated forfeiture rate when calculating the expense for the period,
      whereas prior to the adoption of SFAS No. 123R the Company recorded
      forfeitures based on actual forfeitures and recorded a compensation
      expense recovery in the period when the awards were forfeited. As a
      result, based on the Companys experience, the Company applied an
      estimated forfeiture rate of 15% in fiscal 2007 in determining the expense
      recorded in the accompanying consolidated statement of operations.                                                                                                                                                                                                                                                                  

16

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 7 | Common Stock
      (contd)                                                                                                                                                                                                                                           
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                        
|       | Stock Options (contd)                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                        
|       | The weighted-average fair value of options granted during
      the nine months ended January 31, 2008 and 2007 were $0.22 and $0.35
      respectively. The weighted-average assumptions utilized to determine such
      values are presented in the following table:

| |                             | Nine Months      |  | Nine Months     
| | --------------------------- | ---------------- |  | ----------------
| |                             | Ended            |  | Ended           
| |                             | January 31, 2008 |  | January 31, 2007
| | Risk-free interest rate     | 4.75%            |  | 4.85%           
| | Expected volatility         | 69.6%            |  | 83.2%           
| | Expected term               | 4.7 yrs          |  | 5.8 yrs         
| | Dividend yield              | 0 %              |  | 0 %             
| | Weighted average fair value | $ 0.22           |  | $ 0.35          

The following is a summary of the
status of the Companys stock options as of January 31, 2008 and the stock
option activity during the nine months ended January 31, 2008:

Weighted-averageNumber of
    
    
      Exercise PriceOptions
    
    
      per ShareOutstanding at April 30, 2007
    
    13,468,100
    
    
      $0.46Granted
    
    1,000,000
    
    
      $0.38Issued to NewHeights former
      optionees
    
    4,288,504
    
    
      $0.40Exercised
    
    (17,084
    )
    
      $0.40Forfeited
    
    (923,406
    )
    
      $0.39Cancelled
    
    (363,793
    )
    
      $0.38Outstanding at January 31,
      2008
    
    17,452,321
    
    
      $0.45Exercisable at January 31,
      2008
    
    9,779,513
    
    
      $0.47Exercisable at April 30, 2007
    
    4,664,437
    
    
      $0.54


17

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 7 | Common Stock (contd)                                                                                               
|------ | ---------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                      
|       | Stock Options (contd)                                                                                              
|       |                                                                                                                      
|       | The following table summarizes information regarding
      stock purchase options outstanding as of January 31, 2008.

Number of
      **Aggregate**
      
      Number of
      **Aggregate**Exercise
      Options
      Intrinsic
      
      Options
      IntrinsicPrice
      Outstanding
      Value
      Expiry Date
      Exercisable
      Value$0.30
      200,000
      $16,000
      August 1, 2016
      70,833
      $5,667$0.34
      575,000
      23,000
      May 1, 2012
      95,833
      3,833$0.38
      165,000
      
      October 1, 2011
      51,563
      $0.39
      8,390,000
      
      Sept. 7, 2010 to January
        10, 2016
      4,698,098
      $0.40
      4,199,221
      
      March 2, 2008 to June 15,2015
      3,029,602
      $0.43
      1,200,000
      
      September 7, 2016
      400,000
      $0.45
      190,000
      
      December 13, 2012$0.56
      250,000
      
      February 20, 2016
      119,792
      $0.59
      300,000
      
      July 26, 2016
      112,500
      $0.61
      983,100
      
      May 23, 2016
      409,625
      $0.67
      275,000
      
      June 13, 2010 to July 11, 2016
      150,000
      $0.68
      100,000
      
      April 10, 2016
      43,750
      $0.75
      50,000
      
      March 3, 2016
      22,917
      $1.07
      150,000
      
      March 29, 2010
      150,000
      $1.17
      175,000
      
      February 22, 2010
      175,000
      $1.58
      150,000
      
      October 24, 2009
      150,000
      $1.87
      100,000
      
      July 21, 2009
      100,000
      January 31, 2008
      17,452,321
      $39,000
      
      9,779,513
      $9,500April 30, 2007
      13,468,100
      $10,200
      
      4,664,437
      $1,700


The aggregate intrinsic value in the
preceding table represents the total intrinsic value, based on the Companys
closing stock price of $0.38 per share as of January 31, 2008 (April, 2007 
$0.34), which would have been received by the option holders had all option
holders exercised their options as of that date. The total number of
in-the-money options vested and exercisable as of January 31, 2008 was 166,666
(April 30, 2007  42,500). As of January 31, 2008 approximately 9.8 million
outstanding options (April 30, 2007  4.7 million) were vested and exercisable,
and the weighted average exercise price was $0.47 (April 30, 2007  $0.54) . The
total intrinsic value of options exercised during the nine months ended January
31, 2008 was $341 (2007  $nil). The grant date fair value of options vested
during the nine months ended January 31, 2008 was $ 1,373,988 (April 30, 2007 
$1,323,055).

18

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 7 | Common Stock
      (contd)                                                                                                        
|------ | ------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                     
|       | Stock Options (contd)                                                                                                             
|       |                                                                                                                                     
|       | The following table summarizes information regarding the
      non-vested stock purchase options outstanding as of January 31, 2008.

| |                                              |  |                   |   | Weighted Average      | 
| | -------------------------------------------- |  | ----------------- | - | --------------------- | 
| |                                              |  | Number of Options |   | Grant-Date Fair Value | 
| | Non-vested options at April
      30, 2007   |  | 8,803,663         |   | $0.32                 | 
| | Granted                                      |  | 5,288,504         |   | $0.22                 | 
| | Vested                                       |  | (5,495,953        | ) | $0.25                 | 
| | Forfeited                                    |  | (923,406          | ) | $0.25                 | 
| | Non-vested options at January
      31, 2008 |  | 7,672,808         |   | $0.31                 | 

As of January 31, 2008 there was
$1,975,545 of total unrecognized compensation cost related to unvested
share-based compensation awards. This unrecognized compensation cost is expected
to be recognized over a weighted average period of 1.3 years.

Employee and non-employee stock-based
compensation amounts classified in the Companys consolidated statements of
operations for the three and nine months ended January 31, 2008 and 2007 are as
follows:

| |                                |   | Three Months Ended |  |   | Nine Months Ended | 
| | ------------------------------ | - | ------------------ |  | - | ----------------- | 
| |                                |   | January
      31,  |  |   | January
      31, | 
| |                                |   | 2008               |  |   | 2007              | 
| |                                |   |                    |  |   |                   | 
| |                                |   |                    |  |   |                   | 
| | Cost of sales                  | $ | 14,247             |  | $ | 10,660            | 
| | Sales and marketing            |   | 26,821             |  |   | 18,358            | 
| | Research and development       |   | 97,517             |  |   | 42,697            | 
| | General and administrative     |   | 160,119            |  |   | 86,782            | 
| | Total stock-based compensation | $ | 298,704            |  | $ | 158,497           | 

19

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 8 | Segmented Information                                                                                                                                                                                                                                                                                                                                                
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                      
|       | Our chief operating decision maker reviews financial
      information presented on a consolidated basis, accompanied by desegregated
      information about revenues by geographic region for purposes of making
      operating decisions and assessing financial performance. Accordingly, we
      have concluded that we have one reportable operating segment.
|       |                                                                                                                                                                                                                                                                                                                                                                      
|       | Foreign revenues are based on the country in which the
      customer is located. The following is a summary of total revenues by
      geographic area for the three and nine months ended January 31, 2008 and
      2007:                                                                                                                                         

| |                           |   | Three Months Ended |  |   | Nine Months Ended | 
| | ------------------------- | - | ------------------ |  | - | ----------------- | 
| |                           |   | January
      31,  |  |   | January
      31, | 
| |                           |   | 2008               |  |   | 2007              | 
| | North America             | $ | 1,067,401          |  | $ | 396,299           | 
| | Europe                    |   | 529,538            |  |   | 464,372           | 
| | Asia                      |   | 110,266            |  |   | 21,680            | 
| | Central and South America |   | 915,857            |  |   | 35,504            | 
| | Other                     |   | 11,701             |  |   | 89,727            | 
| |                           | $ | 2,634,763          |  | $ | 1,007,582         | 

Contained within the results for North
America are revenues from the United States of $467,229 and $563,120 for the
three months ended January 31, 2008 and 2007, respectively. Contained within the
results of Europe are revenues from the United Kingdom of $155,407 and $278,644
for the three months ended January 31, 2008 and 2007, respectively.

All of the Companys long-lived assets
are located in Canada.

Revenue from significant customers for
the three and nine months ended January 31, 2008 and 2007 is summarized as
follows:

| |            |  | **Three Months Ended** |  |  | Nine Months Ended | 
| | ---------- |  | ---------------------- |  |  | ----------------- | 
| |            |  | **January 31,**        |  |  | January
      31, | 
| |            |  | 2008                   |  |  | **2007**          | 
| |            |  |                        |  |  |                   | 
| | Customer A |  | 31%                    |  |  |                  | 
| | Customer B |  | 20%                    |  |  |                  | 
| | Customer C |  | 6%                     |  |  | 27%               | 
| | Customer D |  |                       |  |  | 24%               | 
| | Customer E |  |                       |  |  | 14%               | 
| | Customer F |  |                       |  |  |                   | 
| |            |  | 57%                    |  |  | 65%               | 

Accounts receivable balances for Customer
  A were $930,500 as at January 31, 2008 and $nil as at April 30, 2007. Accounts
  receivable balances for Customer B were $905,933 as at January 31, 2008 and
  $nil as at April 30, 2007. Accounts receivable balances for Customer C were
  $254,671 as at January 31, 2008 and $371,485 as at April 30, 2007. Accounts
  receivable balances for Customer D were $327,217 as at January 31, 2008 and
  $341,927 as at April 30, 2007 Accounts receivable balances for Customer E were
  $nil as at January 31, 2008 and $nil as at April 30, 2007 Accounts receivable
  balances for Customer F were $312,505 as at January 31, 2008 and $347,222 as
  at April 30, 2007.

20

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 9 | Commitments
|------ | -----------

| | a) | On July 10, 2006, the Company entered into a lease for
      office premises, which commenced on December 1, 2006 and expires on
      September 29, 2011 for which a deposit of $86,785 was made.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                   
| | b) | On April 29, 2005, the Company entered into a lease for
      office premises, which commenced on October 1, 2005 and expires on
      September 30, 2012 for which a deposit of $10,403 was made.
| |    |                                                                                                                                                                                                   
| |    | Total rent payable over the term of the agreements for
      the years ended April 30 are as follows:                                                                                             

Office Lease2008
    $
    182,3182009
    
    729,2712010
    
    747,4852011
    
    760,4952012
    
    442,2982013
    
    89,590$
    2,951,457


|Note 10 | Contingent Liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | On February 17, 2006, a competitor filed a statement of
      claim in the Supreme Court of British Columbia claiming among other
      things, general, punitive and aggravated damages of unspecified amounts
      with respect to alleged business ethics matters. Management of the Company
      believes that the claim is without foundation or merit. Any loss as a
      result of this claim will be recorded in the period that the loss is
      probable and measurable.                                                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Note 11 | Restructuring                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | The Company accounts for our restructuring activities in
      accordance with Statement of Financial Accounting Standards No. 146,
      Accounting for Costs Associated with Exit or Disposal Activities.As a result of the Companys post acquisition activities, we incurred
      restructuring costs of $nil and $182,107 during the three months and nine
      months ended January 31, 2008. Restructuring costs of $182,107 were
      related to employee severance arrangements as a result of the
      consolidation of administrative, sales, marketing, and research and
      development departments after the close of the NewHeights Software
      Corporation acquisition. At January 31, 2008, we had a restructuring
      accrual for severance in the amount of $nil.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Note 12 | Deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | The Company paid $300,000 to Bridgeport Networks as a
      deposit towards the purchase of the company, as set out in the Agreement
      of Merger and plan of Reorganization (Note 13(b)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

21

---

COUNTERPATH CORPORATION(Formerly CounterPath Solutions, Inc.)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Stated in U.S. Dollars) 
  (Unaudited)

|Note 13 | Subsequent Events
|------- | -----------------

| | a) | On February 1, 2008, the Company announced that it had
      acquired FirstHand Technologies Inc. (FirstHand) through the issuance of
      29,500,000 shares of the Companys common stock. Concurrent with the
      transaction, the Company issued 1,395,632 replacement employee options to
      former optionees of FirstHand. These options entitle the holders thereof
      the right to purchase one common share for each option held at $0.38 per
      share. These options expire over various periods ending on June 26, 2017
      and generally vest over three years from original issuance. Concurrent
      with the issuance of the options, the Board of Directors of the Company
      amended the Companys 2005 Stock option plan to increase the amount of
      stock options available for grant under the plan from 15,000,000 to
      21,300,000.              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | b) | On February 1, 2008, the Company entered into and closed
      an Agreement of Merger and Plan of Reorganization with CounterPath
      Acquisition Corp., (a wholly-owned Delaware subsidiary,) Bridgeport
      Networks, Inc., (a private Delaware corporation), and certain shareholders
      of Bridgeport Networks as set out in the merger agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | Prior to the entry into the merger agreement, the Company
      incorporated CounterPath Acquisition for the sole purpose of acquiring
      Bridgeport Networks by way of merger. On February 1, 2008, following the
      filing of a Certificate of Merger, CounterPath Acquisition was merged with
      and into Bridgeport Networks, with Bridgeport Networks carrying on as the
      surviving corporation. Following the effective time of the merger, and by
      operation of law, all of the issued and outstanding shares of Bridgeport
      Networks were cancelled and the surviving corporation became a
      wholly-owned subsidiary of the Company. The Company acquired all of the
      issued and outstanding shares of Bridgeport Networks by way of merger in
      consideration for the assumption of all of the assets and liabilities of
      Bridgeport Networks.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | c) | On February 2, 2008, the Company completed a private
      placement of $1.0 million through the issuance of 2.5 million shares of
      common stock at $0.40 to a related party. The private placement was
      previously committed to, and conditional on, the acquisition of NewHeights
      Software Corporation which closed on August 2, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | d) | On March 3, 2008, the Company completed a private
      placement of $1.0 million through the issuance of 2.5 million shares of
      common stock at $0.40 to a related party. The private placement was
      previously committed to, and conditional on, the acquisition of NewHeights
      Software Corporation which closed on August 2, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    | On March 12, 2008, the Company granted stock options to
        twenty-three employees to purchase an aggregate of 1,053,227 shares of
        common stock at an exercise price of $0.37 per share, exercisable for
        a period of five years pursuant to the Companys 2005 Amended and
        Restated Stock Option Plan. 833,227 options vest in the amount of 50%
        on the date of grant and then beginning in the second month at 1/48 per
        month for 48 months, at which time the options are fully vested. 220,000
        options vest in the amount of 12.5% on the date which is six months from
        the date of grant and then beginning in the seventh month at 1/42 per
        month for 42 months, at which time the options are fully vested.                                                                                                            

22

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Item 2. Managements Discussion and Analysis or Plan of
Operation.

The
following discussion and analysis should be read in conjunction with the
financial statements and related notes and the other financial information
appearing elsewhere in this quarterly report. This discussion and analysis
contains forward-looking statements that involve risk, uncertainties and
assumptions.

In
some cases, you can identify forward-looking statements by terminology such as
may, will, should, expects, plans, anticipates, believes,
estimates, predicts, potential or continue or the negative of these
terms or other comparable terminology. Our actual results could differ
materially from those anticipated in the forward-looking statements as a result
of many factors, including those identified below, in Risk Factors and
elsewhere in this quarterly report. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.

Our
financial statements are stated in United States dollars and are prepared in
accordance with United States generally accepted accounting principles. All
references to common shares refer to our shares of common stock. As used in
this quarterly report, the terms we, us and our means CounterPath
Corporation, unless otherwise indicated.

Overview

Background

We
were incorporated under the laws of the State of Nevada on April 18, 2003.
Following incorporation, we commenced the business of operating an entertainment
advertising website.

On
April 30, 2004, we changed our business following the merger of our company with
Xten Networks, Inc., a private Nevada company. Xten Networks was incorporated
under the laws of the State of Nevada on October 28, 2002. As a result of the
merger, we acquired all of the 9,000,000 issued and outstanding shares in Xten
Networks in exchange for agreeing to issue 18,000,000 shares of our common stock
to the stockholders of Xten Networks. The stockholders of Xten Networks were
entitled to receive two shares of our common stock for each one share of Xten
Networks.

On
August 26, 2005, we entered into an agreement and plan of merger with Ineen,
Inc., our wholly-owned subsidiary, whereby Ineen merged with and into our
company, with our company carrying on as the surviving corporation under the
name CounterPath Solutions, Inc.

On
August 2, 2007, we acquired all of the shares of NewHeights Software Corporation
through the issuance of 38,400,820 shares of our common stock and 1,849,180
preferred shares issued from a subsidiary of our company, which preferred shares
are exchangeable into 1,849,180 shares of common stock. On October 17, 2007, we
changed our name from CounterPath Solutions, Inc. to CounterPath Corporation.

On
February 1, 2008, we acquired all of the shares of FirstHand Technologies Inc.
through the issuance of 29,500,000 shares of our common stock. On February 1,
2008, we acquired all of the issued and outstanding shares of Bridgeport
Networks, Inc. by way of merger in consideration for the assumption of all of
the assets and liabilities of Bridgeport Networks.

Business of CounterPath

Our
business focuses on the design, development and sale of software and related
services and hardware for voice over internet protocol or VoIP applications.
VoIP is a general term for technologies that use internet protocol for
transmission of packets of data which include voice, video, text, fax, and other
forms of information that have traditionally been carried over the dedicated
circuit-switched connections of the public switched telephone network (PSTN).
Our software applications are based on session initiation protocol which is the
recognized standard for interactive end points that involve multimedia elements
such as voice, video, instant messaging, and presence (the ability to monitor a
person's availability). Users of our software in combination with voice over
internet protocol service are able to communicate and make voice and video calls
from a device running our software. Our software has been designed to run in
multiple operating environments such as Windows 2000, Windows XP, Mac OS X,
Linux and Windows Mobile 5 (used for personal digital assistants or PDA's).

Our
strategy is to sell our software to our customers to allow such customers to
deliver session initiation protocol and voice over internet protocol (VoIP)
services. Customers that we are targeting include large incumbent telecom
providers, telecom original equipment manufacturers, large equipment providers
and internet telephony service providers. Our software enables voice
communication from the end user through the network to another end user and
enables the service provider to deliver other streaming content to end users
such as video, radio or the weather. Our

23

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recent acquisitions of FirstHand Technologies Inc. and
BridgePort Networks, Inc. expand the product portfolio of our company to include
fixed-mobile-convergence applications for the enterprise and telecom service
provider markets.

Revenue

We
derive revenue from the sale of software licenses and software customization,
USB sticks on which our software operates and services associated with software
such as technical support services, implementation and training. We recognize
software and services revenue at the time of delivery, provided all other
revenue recognition criteria have been met.

Post
contract customer support services include e-mail and telephone support,
unspecified rights to bug fixes and product updates and upgrades and
enhancements available on a when-and-if available basis, and are recognized
ratably over the term of the service period, which is generally twelve months.

We
offer our products and services directly through our sales force and indirectly
through distribution partners. Our distribution partners include networking and
telecommunications equipment vendors throughout the world.

The
amount of product configuration and customization, which reflects the requested
features, determines the price for each sale. The number of software licenses
purchased will have a direct impact on the average selling price. Services may
vary depending upon a customers requirements for technical support,
implementation and training.

We
believe that our revenue and results of operations may vary significantly from
quarter to quarter as a result of long sales and deployment cycles, new product
introductions and variations in customer ordering patterns.

Operating Expenses

Operating
expenses consist of cost of sales, sales and marketing, research and
development, and general and administrative expenses, and restructuring costs.
Personnel-related costs are the most significant component of each of these
expense categories. We expect to continue to hire a number of new employees to
support our growth.

Cost
of sales primarily consists of (a) payments to third party vendors for
compression/decompression software known as codecs, (b) salaries and benefits
related to personnel, (c) related overhead, (d) costs of USB sticks on which our
software resides, (e) billable and non-billable travel, lodging, and other
out-of-pocket expenses, (f) amortization of capitalized software that is
implemented into our products, (g) amortization of intangible assets, and (h)
warranty expense. Amortization of intangible assets consists of the amortization
expense related to the intangible assets acquired from NewHeights Software
Corporation comprising acquired technologies and a customer asset. The acquired
technologies are amortized over four years on a straight-line basis and the
customer assets are amortized based on the Companys estimate of cash flows from
those technologies, which is approximately five years.

Sales
and marketing expense consists primarily of (a) salaries and related personnel
costs including stock-based compensation, (b) commissions, (c) travel, lodging
and other out-of-pocket expenses, (d) marketing programs such as trade shows,
and (e) other related overhead. Commissions are recorded as expense when earned
by the employee. We expect increases in sales and marketing expense for the
foreseeable future as we further increase the number of sales professionals and
increase our marketing activities with the intent to grow our revenue. We expect
sales and marketing expense to decrease as a percentage of total revenue,
however, as we leverage our current sales and marketing personnel as well as our
distribution partnerships.

Research
and development expense consists primarily of (a) salaries and related personnel
costs including stock-based compensation, (b) payments to suppliers for design
and consulting services, (c) costs relating to the design and development of new
products and enhancement of existing products, (d) quality assurance and
testing, and (e) other related overhead. To date, all of our research and
development costs have been expensed as incurred. We expect research and
development expense to increase for the foreseeable future and to decrease as a
percentage of total revenue in the future.

General
and administrative expense consists primarily of (a) salaries and personnel
costs including stock-based compensation related to our executive, finance,
human resource and information technology functions, (b) accounting, legal and
regulatory fees, and (c) other related overhead.

Restructuring
costs are post acquisition activities related to the acquisition of NewHeights
Software Corporation. We incurred restructuring costs related to employee
severance agreements as a result of post acquisition consolidation of
administration, sales and marketing and research and development departments. At
January 31, 2008 we have a restructuring accrual for severance of $nil.

24

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Application of Critical Accounting Policies and Use of
Estimates

Our
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires that we make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. We evaluate our estimates and
assumptions on an ongoing basis. Our actual results may differ significantly
from these estimates under different assumptions or conditions. There have been
no material changes to these estimates for the periods presented in this
quarterly report.

We
believe that of our significant accounting policies, which are described in Note
2 to our annual financial statements, the following accounting policies involve
a greater degree of judgment and complexity. Accordingly, the following policies
are the most critical to aid in fully understanding and evaluating our financial
condition and results of operations.

Revenue Recognition

We
recognize revenue in accordance with the American Institute of Certified Public
Accountants (AICPA) Statement of Position (SOP) 97-2 Software Revenue
Recognition, as amended by SOP 98-9 Modification of SOP 97-2, Software Revenue
Recognition with Respect to Certain Transactions.

In
all of our arrangements, we do not recognize any revenue until we can determine
that persuasive evidence of an arrangement exists, delivery has occurred, the
fee is fixed or determinable, and we deem collection to be probable. For
distribution and reseller arrangements, fees are fixed or determinable and
collection probable when there are no rights to exchange or return and fees are
not dependable upon payment from the end-user. If any of these criteria are not
met, revenue is deferred until such time that all criteria have been met.

A
substantial percentage of our revenue is generated by multiple-element
arrangements, such as products, maintenance and support, professional services
and training. When arrangements include multiple elements, we allocate the total
fee among the various elements using the residual method. Under the residual
method, revenue is recognized when vendor-specific objective evidence, or VSOE,
of fair value exists for all of the undelivered elements of the arrangement, but
does not exist for one or more of the delivered elements of the arrangement.
Each arrangement requires us to analyze the individual elements in the
transaction and to estimate the fair value of each undelivered element, which
typically includes maintenance and services. Revenue is allocated to each of the
undelivered elements based on its respective fair value, with the fair value
determined by the price charged when that element is sold separately.

For
contracts with elements related to customized network solutions and certain
network build-outs, we apply FASB Emerging Issues Task Force Issue No. 00-21,
Revenue Arrangements with Multiple Deliverables and revenues are recognized
under SOP 81-1, Accounting for Performance of Construction-Type and Certain
Production-Type Contracts, generally using the percentage-of-completion
method.

In
using the percentage-of-completion method, revenues are generally recorded based
on a completion of milestones as described in the agreement. Profit estimates on
long-term contracts are revised periodically based on changes in circumstances
and any losses on contracts are recognized in the period that such losses become
known.

Post
contract customer support (PCS) services include e-mail and telephone support,
unspecified rights to bug fixes and product updates and upgrades and
enhancements available on a when-and-if available basis, and are recognized
ratably over the term of the service period, which is generally twelve
months.

PCS
service revenue generally is deferred until the related product has been
accepted and all other revenue recognition criteria have been met. Professional
services and training revenue is recognized as the related service is performed.

We
provide a one year warranty on software products. We have set up a warranty
provision in the amount of 2% of software sales, which is amortized over a
twelve-month term. We recognize this deferred revenue evenly over a twelve-month
period from the date of the sale.

Stock-Based Compensation

Stock
options granted are accounted for under SFAS No. 123R Share-Based Payment and
are recognized at the fair value of the options as determined by an option
pricing model as the related services are provided and the options

25

---

earned. SFAS No.123R replaces existing requirements under FAS
123 and APB 25, and requires public companies to recognize the cost of employee
services received in exchange for equity instruments, based on the fair value of
those instruments on the measurement date which generally is the grant date,
with limited exceptions.

Stock-based
compensation represents the cost related to stock-based awards granted to
employees and non-employee consultants. We measure stock-based compensation cost
at measurement date, based on the estimated fair value of the award, and
generally recognize the cost as expense on a straight-line basis (net of
estimated forfeitures) over the employee requisite service period or the period
during which the related services are provided by the non-employee consultants
and the options are earned. We estimate the fair value of stock options using a
Black-Scholes option valuation model.

The
expected volatility of options granted has been determined using the volatility
of our companys stock. The expected volatility for options granted during the
nine months ended January 31, 2008 was 69.6 %. The expected life of options
granted after April 30, 2006 has been determined utilizing the simplified
method as prescribed by the SEC's Staff Accounting Bulletin No. 107,
Share-Based Payment. The expected term of options granted during the nine
months ended January 31, 2008 was 4.7 years. For the nine months ended January
31, 2008, the weighted-average risk free interest rate used was 4.75% . The
risk-free interest rate is based on a treasury instrument whose term is
consistent with the expected term of the stock options. We have not paid and do
not anticipate paying cash dividends on our shares of common stock; therefore,
the expected dividend yield is assumed to be zero. In addition, SFAS No. 123R
requires companies to utilize an estimated forfeiture rate when calculating the
expense for the period. We applied an estimated forfeiture rate of 15.0% in the
nine months ended January 31, 2008 in determining the expense recorded in our
consolidated statement of operations.

Cost
of sales and operating expenses include stock-based compensation expense. For
the three months ended January 31, 2008, we recorded an expense of $298,704 in
connection with share-based payment awards. A future expense of non-vested
options of $1,975,545 is expected to be recognized over a weighted-average
period of 1.3 years.

Research and Development Expense for Software
Products

Research
and development expense includes costs incurred to develop intellectual
property. The costs for the development of new software and substantial
enhancements to existing software are expensed as incurred until technological
feasibility has been established, at which time any additional costs would be
capitalized. We have determined that technological feasibility is established at
the time a working model of software is completed. Because we believe our
current process for developing software will be essentially completed
concurrently with the establishment of technological feasibility, no costs have
been capitalized to date.

Accounts Receivable and Allowance for Doubtful Accounts

We
extend credit to our customers based on evaluation of an individual customers
financial condition and collateral is generally not required. Accounts
outstanding beyond the contractual payment terms are considered past due. We
determine our allowance for doubtful accounts by considering a number of
factors, including the length of time accounts receivable are beyond the
contractual payment terms, our previous loss history, and a customers current
ability to pay its obligation to us. We write-off accounts receivable when they
are identified as uncollectible. All outstanding accounts receivable accounts
are periodically reviewed for collectibility on an individual basis.

Goodwill and Intangible Assets

We
have a significant amount of goodwill and intangible assets on our balance sheet
related to the acquisition of NewHeights Software Corporation (see Note 3 in the
accompanying financial statements). Intangible assets are carried and reported
at acquisition cost, net of accumulated amortization subsequent to acquisition.
The intangible assets acquired are comprised of acquired technologies and a
customer asset relating to a customer relationship. The acquired technologies
are being amortized over their estimated useful life of four years and the
customer asset is being amortized over approximately five years based on our
estimate of cash flows from the asset. The intangible assets are reviewed for
impairment whenever events or circumstances indicate impairment might exist in
accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.Projected undiscounted net cash flows expected to be
derived from the use of those assets are compared to the respective net carrying
amounts to determine whether any impairment exists. Impairment, if any, is based
on the excess of the carrying amount over the fair value of those assets.

The
determination of the net carrying value of goodwill and intangible assets and
the extent to which, if any, there is impairment are dependent on material
estimates and judgments on our part, including the useful life over which the
intangible assets are to be amortized, and the estimates of the value of future
net cash flows, which are based upon further estimates of future revenues,
expenses and operating margins. In applying SFAS No. 142, Goodwill and Other

26

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Intangible Assets,we review our goodwill annually for
impairment or more frequently when indicators of impairment are present.

Results of Operations

Our
operating activities during the three months ended January 31, 2008 consisted
primarily of selling our IP telephony software to telecom companies and IP
telephony service providers, which provide IP telephony services to end users,
and the continued development of our IP telephony software products.

Revenue

Three
        Months Ended January 31,2008
      
      
      2007
      
      
      Period-to-Period
        ChangePercent of
      
      
      
      
      
      Percent
      
      
      
      
      
      PercentTotal
      
      
      
      
      
      of Total
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Revenue by TypeSoftware
      $
      1,698,829
      
      
      64%
      
      $
      653,332
      
      
      65%
      
      $
      1,045,497
      
      
      160%Service
      
      935,934
      
      
      36%
      
      
      354,250
      
      
      35%
      
      
      581,684
      
      
      164%Total revenue
      $
      2,634,763
      
      
      100%
      
      $
      1,007,582
      
      
      100%
      
      $
      1,627,181
      
      
      161%Revenue by RegionInternational
      $
      1,567,362
      
      
      59%
      
      $
      611,283
      
      
      61%
      
      $
      956,079
      
      
      156%North America
      
      1,067,401
      
      
      41%
      
      
      396,299
      
      
      39%
      
      
      671,102
      
      
      169%Total revenue
      $
      2,634,763
      
      
      100%
      
      $
      1,007,582
      
      
      100%
      
      $
      1,627,181
      
      
      161%


For
the three months ended January 31, 2008, we recognized $2,634,763 in revenue
compared to $1,007,582 for the three months ended January 31, 2007. This
represents an increase of $1,627,181 or 161% from the same period last year, of
which $500,000 is attributable to the addition of software revenue from the
acquisition of NewHeights. We recognized $1,698,829 in software revenue for the
three months ended January 31, 2008 compared to $653,332 for the three months
ended January 31, 2007, representing an increase of $1,045,497 or 160%, of which
$500,000 is attributable to the addition of software revenue from the
acquisition of NewHeights. For the three months ended January 31, 2008, service
revenue was $935,934 compared to $354,250 for the three months ended January 31,
2007, representing an increase of $581,684 or 164%, primarily attributable to a
general increase in service revenue to other customers. International revenue
outside of North America increased by 156% during the three months ended January
31, 2008 compared to the three months ended January 31, 2007, primarily due to
increased sales in Central America and Europe. North American revenue increased
by 169% for the three months ended January 31, 2008, compared to the three
months ended January 31, 2007, as a result of the addition of software revenue
from the acquisition of NewHeights whose sales are focused on a North American
customer.

Nine
        Months Ended January 31,2008
      
      
      2007
      
      
      Period-to-Period
        ChangePercent of
      
      
      
      
      
      
      
      
      Percent
      
      
      
      
      
      PercentTotal
      
      
      
      
      
      
      
      
      of Total
      
      
      
      
      
      Increase /Amount
      
      
      **Revenue**
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Revenue by TypeSoftware
      $
      4,509,969
      
      
      72%
      
      $
      3,339,116
      
      
      75%
      
      $
      1,170,853
      
      
      35%Service
      
      1,796,295
      
      
      28%
      
      
      1,102,140
      
      
      25%
      
      
      694,155
      
      
      63%Total revenue
      $
      6,306,264
      
      
      100%
      
      $
      4,441,256
      
      
      100%
      
      $
      1,865,008
      
      
      42%Revenue by RegionInternational
      $
      3,234,581
      
      
      51%
      
      $
      2,603,690
      
      
      59%
      
      $
      630,891
      
      
      24%North America
      
      3,071,683
      
      
      49%
      
      
      1,837,566
      
      
      41%
      
      
      1,234,117
      
      
      67%Total revenue
      $
      6,306,264
      
      
      100%
      
      $
      4,441,256
      
      
      100%
      
      $
      1,865,008
      
      
      42%


For
the nine months ended January 31, 2008, we recognized $6,306,264 in revenue
compared to $4,441,256 for the nine months ended January 31, 2007. This
represents an increase of $1,865,008 or 42% from the same period last year. We
recognized $4,509,969 in software revenue for the nine months ended January 31,
2008 compared to $3,339,116 for the nine months ended January 31, 2007,
representing an increase of $1,170,853 or 35%. The increase in software revenue
was primarily due to the addition of software revenue from the acquisition of
NewHeights. For the nine months ended January 31, 2008, service revenue was
$1,796,295 compared to $1,102,140 for the nine months ended January 31, 2007.
The increase of $694,155 or 63% in service revenue reflects the increase in
services we provide primarily to our larger customers to support their deployed
software. International revenue outside of North

27

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America increased by 24% during the nine months ended January
31, 2008 compared to the nine months ended January 31, 2007, primarily due to
European and Central American software sales. North American revenue during the
nine months ended January 31, 2008 increased by 67% compared to the nine months
ended January 31, 2007, primarily as a result of the NewHeights acquisition and
the associated software sales in this region.

Operating Expenses

Cost of Sales

Cost
of sales for the three and nine months ended January 31, 2008 and 2007 were as
follows:

January
        31, 2008
      
      
      January
        31, 2007
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof
      
      
      
      
      
      of
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Three months ended
      $
      771,178
      
      
      30%
      
      $
      337,009
      
      
      33%
      
      $
      434,169
      
      
      129%Nine months ended
      $
      1,833,707
      
      
      29%
      
      $
      1,135,221
      
      
      26%
      
      $
      698,486
      
      
      62%


Cost
of sales was $771,178 for the three months ended January 31, 2008 compared to
$337,009 for the three months ended January 31, 2007. The increase in cost of
sales of $434,169 was primarily due to the amortization of intangible assets of
$303,931 included in the cost of sales, additional stock based compensation, and
also due to a strengthening Canadian dollar which results in higher recorded
U.S. dollar costs for costs incurred in Canadian dollars.

Cost
  of sales was $1,833,707 for the nine months ended January 31, 2008 compared
  to $1,135,221 for the nine months ended January 31, 2007. The increase in cost
  of sales of $698,486 was primarily due to the amortization of intangible assets
  of $599,162, additional stock based compensation, and also due to a strengthening
  Canadian dollar which results in higher recorded U.S. dollar costs for costs
  incurred in Canadian dollars, offset by lower use of third party licensed technology.

Sales and Marketing

Sales
  and marketing expenses for the three and nine months ended January 31, 2008
  and 2007 were as follows:

January
        31, 2008
      
      
      January
        31, 2007
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof
      
      
      
      
      
      of
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Three months ended
      $
      1,016,758
      
      
      40%
      
      $
      409,856
      
      
      41%
      
      $
      606,902
      
      
      148%Nine months ended
      $
      2,583,761
      
      
      42%
      
      $
      1,164,793
      
      
      26%
      
      $
      1,418,968
      
      
      122%


Sales
and marketing expenses were $1,016,758 for the three months ended January 31,
2008 compared to $409,856 for the three months ended January 31, 2007. The
increase of $606,902 was primarily attributable to increases in consulting fees,
wages, stock based compensation and travel related expenses primarily due to the
acquisition of NewHeights, as well as the strengthening of the Canadian dollar
vis-à-vis the US dollar.

Sales
and marketing expenses were $2,583,761 for the nine months ended January 31,
2008 compared to $1,164,793 for the nine months ended January 31, 2007. The
increase of $1,418,968 was primarily attributable to increases in consulting
fees, wages, stock based compensation and travel related expenses primarily due
to the acquisition of NewHeights, as well as the strengthening of the Canadian
dollar vis-à-vis the US dollar.

Research and Development

Research
  and development expenses for the three and nine months ended January 31, 2008
  and 2007 were as follows:

January
        31, 2008
      
      
      January
        31, 2007
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof
      
      
      
      
      
      of
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Three months ended
      $
      1,545,630
      
      
      61%
      
      $
      647,664
      
      
      64%
      
      $
      897,966
      
      
      139%Nine months ended
      $
      3,945,543
      
      
      63%
      
      $
      1,942,508
      
      
      44%
      
      $
      2,003,035
      
      
      103%


28

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Research
and development expenses were $1,545,630 for the three months ended January 31,
2008 compared to $647,664 for the three months ended January 31, 2007. Research
and development expenses including wages and benefits, consulting, and
stock-based compensation increased significantly compared to the prior period
primarily with the addition of research and development personnel as a result of
the acquisition of NewHeights.

Research
and development expenses were $3,945,543 for the nine months ended January 31,
2008 compared to $1,942,508 for the nine months ended January 31, 2007. Research
and development expenses including wages and benefits, consulting, and
stock-based compensation increased significantly compared to the prior period
primarily as a result of the acquisition of NewHeights and the additional
research and development personnel.

General and Administrative

General
and administrative expenses for the three and nine months ended January 31, 2008
and 2007 were as follows:

January
        31, 2008
      
      
      January
        31, 2007
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof
      
      
      
      
      
      of
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Three months ended
      $
      1,589,055
      
      
      62%
      
      $
      581,446
      
      
      58%
      
      $
      1,007,609
      
      
      173%Nine months ended
      $
      4,145,223
      
      
      67%
      
      $
      1,806,663
      
      
      41%
      
      $
      2,338,560
      
      
      129%


General
and administrative expenses for the three months ended January 31, 2008 were
$1,589,055 compared to $581,446 for the three months ended January 31, 2007. The
increase of $1,007,609 in general and administrative expenses was primarily
attributable to increases in personnel and the associated compensation of
personnel, and stock based compensation due to the acquisition of NewHeights.

General
and administrative expenses for the nine months ended January 31, 2008 were
$4,145,223 compared to $1,806,663 for the nine months ended January 31, 2007.
The increase of $2,338,560 in general and administrative expenses was primarily
attributable to increases in personnel and the associated compensation of
personnel, and stock based compensation due to the acquisition of NewHeights.

Restructuring Costs

During
the nine months ended January 31, 2008, we recorded restructuring costs of
$182,107. Restructuring costs of $182,107 were related to employee severance
arrangements as a result of the consolidation of administrative, sales,
marketing, and research and development departments after the close of the
NewHeights acquisition. There were no restructuring costs for the three months
ended January 31, 2008 or nine months ending January 31, 2007.

Interest and Other Income

Interest
income for the three months ended January 31, 2008 was $87,707 compared to
$17,485 for the three months ended January 31, 2007 relating to higher average
cash balances. Interest expense for the three months ended January 31, 2008 was
$1,258 compared to $105,717 for the three months ended January 31, 2007 as a
result of the convertible debentures being converted into equity in the prior
quarter.

Interest
income for the nine months ended January 31, 2008 was $136,786 compared to
$38,087 for the nine months ended January 31, 2007. The increase relates to
higher average cash balances. Interest expense for the nine months ended January
31, 2008 was $689,810 compared to $191,506 for the nine months ended January 31,
2007. Interest expense during fiscal 2008 includes both a cash interest
component of $52,228 and a non-cash component of $90,570 relating to the
accretion of the discount on the convertible debenture and $540,200 relating to
the unaccreted debt discount on the date of conversion recorded as an additional
interest expense.

Liquidity and Capital Resources

As
at January 31, 2008, we had $3,079,584 in cash compared to $1,680,220 at April
30, 2007, representing an increase of $1,399,364. Our working capital was
$4,254,917 at January 31, 2008 compared to $1,897,581 at April 30, 2007,
representing an increase of $2,357,336. Current assets increased by $3,824,243,
during the nine months ended January 31, 2008, while current liabilities
increased by $1,466,907.

29

---

Operating Activities

Our
operating activities resulted in a net cash outflow of $4,473,575 for the nine
months ended January 31, 2008. This compares with a net cash outflow of
$1,943,503 for the same period last year and represents a $2,530,072 increase in
cash outflows from operations compared to the same period last year. The net
cash outflow from operating activities for the nine months ended January 31,
2008 was primarily a result of a net loss of $6,878,875, receivables of
$454,624, and prepaid expenses and deposits of $403,000, offset by a decrease in
accounts payable of $268,463 and other non-cash items such as depreciation and
amortization of $240,821, amortization of intangible assets of $599,162, stock
based compensation of $1,235,514, accretion of convertible debenture discount of
$90,570 and a loss on the extinguishment of convertible debentures of $540,200.
The convertible debentures were converted into shares of common stock on the
close of the acquisition of NewHeights, requiring a write-off of the remaining
discount at which the convertible debentures were recorded. Cash flows from
operations include the cash flows from NewHeights from August 2, 2007, the date
of acquisition.

Investing Activities

Investing
activities resulted in a net cash inflow of $2,034,906 for the nine months ended
January 31, 2008 primarily from cash acquired on acquisition of NewHeights,
offset by purchases of equipment and an increase in other assets consisting of
costs related to the NewHeights transaction. This compares with a net cash
outflow from investing activities of $262,472 for the nine months ended January
31, 2007 which was primarily for purchases of equipment and deposits. The
Company paid $300,000 to Bridgeport Networks as a deposit towards the purchase
of the company, as set out in the Agreement of Merger and plan of
Reorganization. At January 31, 2008, we did not have any material commitments
for future capital expenditures.

Financing Activities

Financing
activities resulted in a net cash inflow of $3,502,268 for the nine months ended
January 31, 2008 compared to a net cash inflow of $2,000,858 for the same period
last year.

On
August 2, 2007, we announced the closing of the acquisition of NewHeights. As
part of the transaction, our investors completed an investment of $1.3 million,
for 3.25 million shares of common stock at $0.40 per share, and entered into
subscription agreements to raise an additional $4.2 million through the issuance
of 10.5 million shares of common stock at $0.40 per share over five months. On
September 30, 2007, November 2, 2007, February 2, 2008 and March 2, 2008, $0.5
million, $1.7 million, $1.0 million and $1.0 million, respectively, was invested
at $0.40 per share.

On
February 1, 2008, we announced the closing of the acquisition of FirstHand
Technologies Inc. through the issuance of 29.5 million shares of our common
stock. On closing, FirstHand had cash of approximately $5.9 million and net
working capital of approximately $6.4 million.

We
believe that our current working capital and anticipated proceeds from the
investments as part of the NewHeights and First Hand transactions and our cash
flows will be sufficient to fund our combined operations for the next eighteen
months.However, our forecast of the period of time through which our
financial resources will be adequate to support our operations is a
forward-looking statement that involves risks and uncertainties, and actual
results could vary materially. If we are unable to raise additional capital when
required or on acceptable terms, or achieve cash flow positive operations, we
may have to significantly delay product development and scale back operations
both of which may affect our ability to continue as a going concern.

We
intend to seek additional funding through public or private financings, but our
business and shareholders investment are at risk if we are unable to obtain
additional financing on acceptable terms or at all which raise substantial doubt
on our ability to continue as a going concern.

Long Term Obligations

On
July 10, 2006, we entered into a lease for office premises, which commenced on
December 1, 2006 and expires on September 29, 2011 for which a deposit of
$86,785 was made. On April 29, 2005, we entered into a lease for office
premises, which commenced on October 1, 2005 and expires on September 30, 2012
forwhich adeposit of $10,403 was made.

30

---

Total rent payable over the term of the agreements for the
years ended April 30 is as follows:

OfficeLease2008
    $
    182,3182009
    
    729,2712010
    
    747,4852011
    
    760,4952012
    
    442,2982013
    
    89,590$
    2,951,457


Off-Balance Sheet Arrangements

We
do not have, and do not have any present plans to implement, any off-balance
sheet arrangements.

New Accounting Pronouncements

In
October 2006, the Financial Accounting Standards Board (FASB) issued
interpretation No. 48, Accounting for Uncertainty in Income Taxes-an
Interpretation of FASB Statement No. 109 (FAS No. 109) (FIN 48). This
interpretation prescribes a recognition threshold and measurement attribute for
tax positions taken or expected to be taken in a tax return. This interpretation
also provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. The
evaluation of a tax position in accordance with this interpretation is a
two-step process. In the first step, recognition, our company determines whether
it is more-likely-than-not that a tax position will be sustained upon
examination, including resolution of any related appeals or litigation
processes, based on the technical merits of the position. The second step
addresses measurement of a tax position that meets the more-likely-than-not
criteria. The tax position is measured at the largest amount of benefit that is
greater than 50 percent likely of being realized upon ultimate settlement.
Differences between tax positions taken in a tax return and amounts recognized
in the financial statements will generally result in a) an increase in a
liability for income taxes payable or a reduction of an income tax refund
receivable, b) a reduction in a deferred tax asset or an increase in a deferred
tax liability or c) both a and b. Tax positions that previously failed to meet
the more-likely-than-not recognition threshold should be recognized in the first
subsequent financial reporting period in which that threshold is met. Previously
recognized tax positions that no longer meet the more-likely-than-not
recognition threshold should be de-recognized in the first subsequent financial
reporting period in which that threshold is no longer met. Use of a valuation
allowance as described in FAS No. 109 is not an appropriate substitute for the
de-recognition of a tax position. The requirement to assess the need for a
valuation allowance for deferred tax assets based on sufficiency of future
taxable income is unchanged by this interpretation. This interpretation is
effective for fiscal years beginning after December 15, 2006. The cumulative
effect of adopting FIN 48 of $72,413 was recorded as a reduction to retained
earnings. The total amount of unrecognized tax benefits as of the date of
adoption was $245,362. Of this amount, $245,362 represents the amount that would
reduce our effective income tax rate, if recognized in future periods. We
recognize interest and penalties accrued on unrecognized tax benefits within
income tax expense. As of January 31, 2008, we had $117,750 of interest and
penalties accrued associated with unrecognized tax benefits. We are subject to
taxation in the U.S. and Canada. We are subject to tax examinations by tax
authorities for all taxation years commencing in or after 2002. As of January
31, 2008, the amount of unrecognized tax benefits had increased by $86,794.

In September 2006, FASB issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements. This standard clarifies
the principle that fair value should be based on the assumptions that market
participants would use when pricing an asset or liability. Additionally, it
establishes a fair value hierarchy that prioritizes the information used to
develop those assumptions. This standard is effective for financial statements
issued for fiscal years beginning after November 15, 2007. We are currently
evaluating the impact of this statement.

In February 2007, the FASB issued FASB Statement No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities  Including an
Amendment of FASB Statement No. 115. This standard permits an entity to choose
to measure many financial instruments and certain other items at fair value.
This standard is effective for financial statements issued for fiscal years
beginning after November 15, 2007. We are currently evaluating the impact of
this statement.

RISK FACTORS

Much
of the information included in this quarterly report includes or is based upon
estimates, projections or other forward looking statements. Such forward
looking statements include any projections or estimates made by us and our
management in connection with our business operations. While these
forward-looking statements, and any

31

---

assumptions upon which they are based, are made in good faith
and reflect our current judgment regarding the direction of our business, actual
results will almost always vary, sometimes materially, from any estimates,
predictions, projections, assumption or other future performance suggested
herein.

Such
estimates, projections or other forward looking statements involve various
risks and uncertainties as outlined below. We caution the reader that important
factors in some cases have affected and, in the future, could materially affect
actual results and cause actual results to differ materially from the results
expressed in any such estimates, projections or other forward looking
statements.

Risks Associated with our Business and Industry

Lack of cash flow which may affect our ability to continue
as a going concern.

Since
inception, our company has had negative cash flows from operations. Our business
plan calls for continued research and development of our products and expansion
of our market share. We may require additional financing to finance working
capital and pay for operating expenses and capital requirements until we achieve
a positive cash flow. However, there is no assurance that actual cash
requirements will not exceed our estimates. In particular, additional capital
may be required in the event that:

-
we incur delays and additional expenses as a result of technology failure;

-
we are unable to create a substantial market for our products; or

-
we incur any significant unanticipated expenses.

The
occurrence of any of the aforementioned events could adversely affect our
ability to meet our proposed business plans.

We
depend on a mix of revenues and outside capital to pay for the continued
development of our technology and the marketing of our products. Such outside
capital may include the sale of additional stock and/or commercial borrowing.
There can be no assurance that capital will continue to be available if
necessary to meet these continuing development costs or, if the capital is
available, that it will be on terms acceptable to us. The issuance of additional
equity securities by us would result in a dilution, possibly a significant
dilution, in the equity interests of our current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments.

If
we are unable to obtain financing in the amounts and on terms deemed acceptable
to us, our business and future success may be adversely affected and raise
substantial doubt on our ability to continue as a going concern.

A
decline in the price of our common stock could affect our ability to raise
further working capital and adversely impact our operations.

A
prolonged decline in the price of our common stock could result in a reduction
in the liquidity of our common stock and a reduction in our ability to raise
capital. Because our operations have been primarily financed through the sale of
equity securities, a decline in the price of our common stock could be
especially detrimental to our liquidity and our continued operations. Any
reduction in our ability to raise equity capital in the future would force us to
reallocate funds from other planned uses and would have a significant negative
effect on our business plans and operations, including our ability to develop
new products and continue our current operations. If our stock price declines,
there can be no assurance that we can raise additional capital or generate funds
from operations sufficient to meet our obligations.

The
majority of our directors and officers are located outside the United States,
with the result that it may be difficult for investors to enforce within the
United States any judgments obtained against us or some of our directors or
officers.

The
majority of our directors and officers are nationals and/or residents of
countries other than the United States, and all or a substantial portion of such
persons' assets are located outside the United States. As a result, it may be
difficult for investors to enforce within the United States any judgments
obtained against us or our officers or directors, including judgments predicated
upon the civil liability provisions of the securities laws of the United States
or any state thereof. Consequently, investors may be effectively prevented from
pursuing remedies under United States federal securities laws against some of
our directors or officers.

We
could lose our competitive advantages if we are not able to protect any
proprietary technology and intellectual property rights against infringement,
and any related litigation could be time-consuming and costly.

32

---

Our
success and ability to compete depends to a significant degree on our
proprietary technology incorporated in our software. Other than registering the
domain names: www.counterpath.com and www.xten.com, among others, applying to
register the trademarks eyeBeamTM and BriaTM, among
others, and filing one patent on a process for configuring audio and video
devices with a softphone, we have not taken any action to protect our
proprietary technology. If any of our competitors copies or otherwise gains
access to our proprietary technology or develops similar technologies
independently, we would not be able to compete as effectively. We also consider
our family of registered and unregistered trademarks including CounterPath,
Bria, eyeBeam, X-Pro, X-Lite, X-Web, X-Tunnels, X-Look, X-Cipher and X.Net,
invaluable to our ability to continue to develop and maintain the goodwill and
recognition associated with our brand. The measures we take to protect the
proprietary technology software, and other intellectual property rights, which
presently are based upon a combination of copyright, trade secret and trademark
laws, may not be adequate to prevent their unauthorized use. Further, the laws
of foreign countries may provide inadequate protection of such intellectual
property rights.

We
may need to bring legal claims to enforce or protect such intellectual property
rights. Any litigation, whether successful or unsuccessful, could result in
substantial costs and diversions of resources. In addition, notwithstanding any
rights we have secured in our intellectual property, other persons may bring
claims against us that we have infringed on their intellectual property rights,
including claims based upon the content we license from third parties or claims
that our intellectual property right interests are not valid. Any claims against
us, with or without merit, could be time consuming and costly to defend or
litigate, divert our attention and resources, result in the loss of goodwill
associated with our service marks or require us to make changes to our website
or other of our technologies.

Our
products may become obsolete and unmarketable if we are unable to respond
adequately to rapidly changing technology and customer demands.

Our
industry is characterized by rapid changes in technology and customer demands.
As a result, our products may quickly become obsolete and unmarketable. Our
future success will depend on our ability to adapt to technological advances,
anticipate customer demands, develop new products and enhance our current
products on a timely and cost-effective basis. Further, our products must remain
competitive with those of other companies with substantially greater resources.

We
may experience technical or other difficulties that could delay or prevent the
development, introduction or marketing of new products or enhanced versions of
existing products. Also, we may not be able to adapt new or enhanced services to
emerging industry standards, and our new products may not be favorably received.

Unless
we can establish market acceptance of our current products, our potential
revenues may be significantly reduced.

We
expect that a substantial portion of our future revenue will be derived from the
sale of our software products. We expect that these product offerings and their
extensions and derivatives will account for a majority our revenue for the
foreseeable future. Broad market acceptance of our software products is,
therefore, critical to our future success and our ability to continue to
generate revenues. Failure to achieve broad market acceptance of our software
products as a result of competition, technological change, or otherwise, would
significantly harm our business. Our future financial performance will depend
primarily on the continued market acceptance of our current software product
offerings and on the development, introduction and market acceptance of any
future enhancements. There can be no assurance that we will be successful in
marketing our current product offerings or any new product offerings,
applications or enhancements, and any failure to do so would significantly harm
our business.

We
face larger and better-financed competitors, which may affect our ability to
operate our business and achieve profitability.

Management
is aware of similar products which compete directly with our products and some
of the companies developing these similar products are larger and
better-financed than us and may develop products superior to those of our
company. Such competition will potentially affect our chances of achieving
profitability and ultimately adversely affect our ability to continue as a going
concern.

Risks Associated with our Common Stock

*If
we issue additional shares of common stock in the future this may result in
dilution to our existing stockholders.*

We
are authorized to issue 415,384,500 shares of common stock and 100,000,000
shares of preferred stock. Our board of directors has the authority to issue
additional shares of common stock up to the authorized capital stated in the
certificate of incorporation. Our board of directors may choose to issue some or
all of such shares to acquire one or

33

---

more businesses or to provide additional financing in the
future. The issuance of any such shares may result in a reduction of the book
value or market price of the outstanding shares of our common stock. If we do
issue any such additional shares, such issuance will cause a reduction in the
proportionate ownership and voting power of all other stockholders. Further, any
such issuance may result in a change of control of our corporation.

*Penny
stock rules will limit the ability of our stockholders to sell their shares of
common stock.*

The
SEC has adopted regulations which generally define penny stock to be any
equity security that has a market price (as defined) less than $5.00 per share
or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's
confirmation.

In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from these rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for the stock that is subject to these
penny stock rules. Consequently, these penny stock rules may affect the ability
of broker-dealers to trade our securities. We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common stock.

The
Sales Practice Requirements of the Financial Industry Regulatory Authority, or
FINRA may also limit a stockholder's ability to buy and sell our stock.

In
addition to the "penny stock" rules described above, the FINRA has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer's financial status, tax status, investment
objectives and other information. Under interpretations of these rules, the
FINRA believes that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. The FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for its shares.

Item 3(A)T. Controls and Procedures

As
required by Rule 13a-15 under the Exchange Act, we have carried out an
evaluation of the effectiveness of the design and operation of our companys
disclosure controls and procedures as of the end of the period covered by this
quarterly report, being January 31, 2008. This evaluation was carried out under
the supervision and with the participation of our companys management,
including our companys chief executive officer and chief financial officer.
Based upon that evaluation, our companys chief executive officer and chief
financial officer concluded that our companys disclosure controls and
procedures are effective as at the end of the period covered by this quarterly
report. There have been no significant changes in our internal controls over
financial reporting that occurred during our most recent fiscal quarter that
have materially affected, or are reasonably likely to materially affect our
internal controls over financial reporting.

Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our companys reports filed
or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SECs rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
companys reports filed under the Exchange Act is accumulated and communicated
to management, including our companys president as appropriate, to allow timely
decisions regarding required disclosure.

34

---

PART II  OTHER INFORMATION

Item 1. Legal Proceedings.

Except
as set out below, we know of no material, active, or pending legal proceeding
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation where such claims or action involves damages
for a value of more than 10% of our assets as of January 31, 2008 or any
proceeding in which any of our company's directors, officers, or affiliates, or
any registered or beneficial shareholders, is an adverse party or has a material
interest advance to our company's interest.

On
February 17, 2006, Eyeball Networks Inc., filed a statement of claim in the
Supreme Court of British Columbia (Action No. S-061080, Vancouver Registry)
against our company, Mr. Mark Bruk, and two employees, alleging breach of (i)
confidentiality, and (ii) previous employment agreements between the two
employees (Dr. Joseph Vass and Mark Klagenberg) and Eyeball. Eyeball is seeking
an injunction requiring our company, Mr. Bruk, and the two employees, to deliver
to Eyeball any confidential information they have in their possession, power or
control relating to Eyeball and its business, restraining our company from
developing, manufacturing or marketing power meters, although we do not
currently develop, manufacture or market power meters. Among other things,
Eyeball is claiming general, punitive and aggravated damages of unspecified
amounts. Management of our company has filed a Statement of Defence denying all
allegations, and strongly believes that any allegations made by Eyeball in
connection with our company's current business operations are without foundation
or merit. We intend to continue to vigorously defend these proceedings.

Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds

On
February 2, 2008 we issued 2,500,000 shares of our common stock to Wesley Clover
Corporation at a price of $0.40 per share for proceeds of $1,000,000 in
accordance with the terms of a subscription agreement dated June 15, 2007. The
3,750,000 shares of common stock of our Company were issued in reliance upon
Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933.

On
March 3, 2008 we issued 2,500,000 shares of our common stock to Wesley Clover
Corporation at a price of $0.40 per share for proceeds of $1,000,000 in
accordance with the terms of a subscription agreement dated June 15, 2007. The
3,750,000 shares of common stock of our Company were issued in reliance upon
Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933.

On
March 12, 2008, we granted stock options to twenty three employees to purchase
an aggregate of 1,053,227 shares of our common stock at an exercise price of
$0.37 per share, exercisable for a period of five years pursuant to our 2005
Amended and Restated Stock Option Plan. The options are subject to vesting
provisions as set forth in the stock option agreements dated March 12, 2008. We
issued the stock options three non-U.S. persons (as that term is defined in
Regulation S of the Securities Act of 1933), in an offshore transaction relying
on Regulation S and/or Section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

35

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Item 6. Exhibits.

Exhibits Required by Item 601 of Regulation S-B

|(3)  | Articles of Incorporation and By-laws                                                                                                                                                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                             
|3.1  | Articles of Incorporation (incorporated by reference from
      our Registration Statement on Form SB-2 filed on July 16, 2003).                                                                                            
|     |                                                                                                                                                                                                                             
|3.2  | Bylaws (incorporated by reference from our Registration
      Statement on Form SB-2 filed on July 16, 2003).                                                                                                               
|     |                                                                                                                                                                                                                             
|3.3  | Amended Bylaws (incorporated by reference from our
      Registration Statement on Form SB-2/A filed on September 3, 2003).                                                                                                 
|     |                                                                                                                                                                                                                             
|3.4  | Articles of Merger (incorporated by reference from our
      Current Report on Form 8-K filed on September 15, 2005).                                                                                                       
|     |                                                                                                                                                                                                                             
|3.5  | Amended Bylaws (incorporated by reference from our
      Current Report on Form 8-K filed on April 28, 2006).                                                                                                               
|     |                                                                                                                                                                                                                             
|3.6  | Certificate of Amendment to the Articles of
      Incorporation, dated August 9, 2007.                                                                                                                                      
|     |                                                                                                                                                                                                                             
|3.7  | Certificate of Designation, dated August 9, 2007.                                                                                                                                                                           
|     |                                                                                                                                                                                                                             
|(4)  | Instruments defining the rights of security holders,
      including indentures                                                                                                                                             
|     |                                                                                                                                                                                                                             
|4.1  | 2004 Stock Option Plan effective May 18, 2004
      (incorporated by reference from our Registration Statement on Form S-8
      filed on June 14, 2005).                                                                   
|     |                                                                                                                                                                                                                             
|4.2  | Form of Stock Option Agreement for 2004 Stock Option Plan
      (incorporated by reference from our Registration Statement on Form S-8
      filed on June 14, 2005).                                                       
|     |                                                                                                                                                                                                                             
|4.3  | 2005 Stock Option Plan effective March 4, 2005
      (incorporated by reference from our Registration Statement on Form S-8
      filed on June 14, 2005).                                                                  
|     |                                                                                                                                                                                                                             
|4.4  | Form of Stock Option Agreement for 2005 Stock Option Plan
      (incorporated by reference from our Registration Statement on Form S-8
      filed on June 14, 2005).                                                       
|     |                                                                                                                                                                                                                             
|4.5  | Form of Amended & Restated Stock Option and
      Subscription Agreement (Canadian) (incorporated by reference from our
      Current Report on Form 8-K filed On October 14, 2005).                                        
|     |                                                                                                                                                                                                                             
|4.6  | Form of Amended & Restated Stock Option and
      Subscription Agreement (US) (incorporated by reference from our Current
      Report on Form 8-K filed On October 14, 2005).                                              
|     |                                                                                                                                                                                                                             
|(10) | Material Contracts                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                             
|10.1 | Domain Name Assignment Agreement, dated May 2, 2003,
      between Broad Scope Enterprises, Inc. and Hon Kit Ng (incorporated by
      reference from our Registration Statement on Form SB-2 filed on July 16,
      2003).
|     |                                                                                                                                                                                                                             
|10.2 | Subscription Agreement, dated April 20, 2003, between
      Broad Scope Enterprises Inc. and Hon Kit Ng (incorporated by reference
      from our Registration Statement on Form SB-2 filed on July 16, 2003).              
|     |                                                                                                                                                                                                                             
|10.3 | Subscription Agreement, dated May 1, 2003, between Broad
      Scope Enterprises Inc. and Hon Kit Ng (incorporated by reference from our
      Registration Statement on Form SB-2 filed on July 16, 2003).                 
|     |                                                                                                                                                                                                                             
|10.4 | Subscription Agreement, dated May 2, 2003, between Broad
      Scope Enterprises Inc. and Simon Au (incorporated by reference from our
      Registration Statement on Form SB-2 filed on July 16, 2003).                   
|     |                                                                                                                                                                                                                             
|10.5 | Form of Subscription Agreement between Broad Scope
      Enterprises Inc. and various private placement placees (incorporated by
      reference from our Registration Statement on Form SB-2 filed on July 16,
      2003).

36

---

|10.6  | Agreement and Plan of Merger among Broad Scope
      Enterprises Inc., Xten Networks, Inc., Broad Scope Acquisition Corp. and
      Mark Bruk (incorporated by reference from our Current Report on Form 8-K
      filed on May 10, 2004).                                                                        
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                   
|10.7  | Agreement and Plan of Merger between Broad Scope
      Enterprises Inc. and Xten Networks, Inc. (incorporated by reference from
      our Current Report on Form 8-K filed on May 10, 2004).                                                                                                                      
|      |                                                                                                                                                                                                                                                                                                                   
|10.8  | Software Development Agreement between Xten Networks,
      Inc. (formerly Evove, Inc.) and Xten Networks (Canada) Inc. (formerly Xten
      Networks Inc.) (incorporated by reference from our Current Report on Form
      8-K filed on May 10, 2004).                                                          
|      |                                                                                                                                                                                                                                                                                                                   
|10.9  | Debt Settlement and Subscription Agreement dated April
      19, 2005 between Xten Networks, Inc. and Steven Bruk (incorporated by
      reference from our Annual Report on Form 10-KSB filed on July 29,
      2005).                                                                                           
|      |                                                                                                                                                                                                                                                                                                                   
|10.10 | Employment Agreement dated June 16, 2005 between Xten
      Networks R&D Inc. and Larry Timlick (incorporated by reference from
      our Annual Report on Form 10-KSB filed on July 29, 2005).                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                   
|10.11 | Settlement Agreement and Release dated June 29, 2005
      between Xtend Communications Corp. and Xten Networks, Inc. (incorporated
      by reference from our Annual Report on Form 10-KSB filed on July 29,
      2005).                                                                                       
|      |                                                                                                                                                                                                                                                                                                                   
|10.12 | Form of Amendment to Stock Option and Subscription
      Agreement (incorporated by reference from our Current Report on Form 8-K
      filed on July 17, 2006).                                                                                                                                                  
|      |                                                                                                                                                                                                                                                                                                                   
|10.13 | Form of Stock Option and Subscription Agreement for U.S.
      Persons (incorporated by reference from our Current Report on Form 8-K
      filed on July 17, 2006).                                                                                                                                              
|      |                                                                                                                                                                                                                                                                                                                   
|10.14 | Form of Stock Option and Subscription Agreement for
      Non-U.S. Persons (incorporated by reference from our Current Report on
      Form 8-K filed on July 17, 2006).                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                   
|10.15 | Employment Agreement between CounterPath Solutions, Inc.
      and Jason Fischl dated August 29, 2005 (incorporated by reference from our
      Annual Report on Form 10-KSB filed on July 31, 2006).                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                   
|10.16 | Employment Agreement between CounterPath Solutions, Inc.
      and Donovan Jones dated June 1, 2005 (incorporated by reference from our
      Annual Report on Form 10-KSB filed on July 31, 2006).                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                   
|10.17 | Employment Agreement between CounterPath Solutions, Inc.
      and David Karp dated September 11, 2006 (incorporated by reference from
      our Quarterly Report on Form 10-QSB filed on September 14,
2006).                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                   
|10.18 | Form of Subscription Agreement dated November 30, 2006,
      between our company and various investors (incorporated by reference from
      our Current Report on Form 8-K filed on December 7, 2006).                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                   
|10.19 | Form of Subscription Agreement dated November 30, 2006,
      between our company and KMB Trac Two Holdings Ltd (incorporated by
      reference from our Current Report on Form 8-K filed on December 7,
      2006).                                                                                            
|      |                                                                                                                                                                                                                                                                                                                   
|10.20 | Form of Convertible Note dated November 30, 2006
      (incorporated by reference from our Current Report on Form 8-K filed on
      December 7, 2006).                                                                                                                                                           
|      |                                                                                                                                                                                                                                                                                                                   
|10.21 | Form of Warrant Certificate dated November 30, 2006
      (incorporated by reference from our Current Report on Form 8-K filed on
      December 7, 2006).                                                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                   
|10.22 | Amended Employment Agreement between Donovan Jones and
      CounterPath Solutions R&D Inc., a wholly owned subsidiary of
      CounterPath Solutions, Inc. dated January 1, 2007 (incorporated by
      reference from our Quarterly Report on Form 10-QSB filed on March 9,
      2007).                        
|      |                                                                                                                                                                                                                                                                                                                   
|10.23 | Employment Agreement between Mark Bruk and CounterPath
      Solutions R&D Inc., a wholly owned subsidiary of CounterPath
      Solutions, Inc. dated March 8, 2007 (incorporated by reference from our
      Quarterly Report on Form 10-QSB filed on March 9, 2007).                                            
|      |                                                                                                                                                                                                                                                                                                                   
|10.24 | Arrangement Agreement among CounterPath Solutions, Inc.,
      6789722 Canada Inc., a wholly owned subsidiary of CounterPath Solutions,
      Inc. and NewHeights Software Corporation dated as of June 15, 2007
      (incorporated by reference from our Current Report on Form 8K filed on
      June 18, 2007)

37

---

|10.25 | Support and Lock Up Agreements between CounterPath
      Solutions, Inc and each of Owen Matthews and Wesley Clover dated as of
      June 15, 2007 (incorporated by reference from our Current Report on Form
      8K filed on June 18, 2007)                                                                           
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                           
|10.26 | Subscription Agreement between CounterPath Solutions, Inc
      and Wesley Clover dated as of June 15, 2007 (incorporated by reference
      from our Current Report on Form 8K filed on June 18, 2007)                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                           
|10.27 | Amended Employment Agreement between Mark Bruk and
      CounterPath Solutions R&D Inc., a wholly owned subsidiary of
      CounterPath Solutions, Inc. dated July 24, 2007.                                                                                                                                              
|      |                                                                                                                                                                                                                                                                                                                           
|10.28 | Exchangeable Share Support Agreement between CounterPath
      Solutions, Inc. and 6789722 Canada Inc., a wholly owned subsidiary of
      CounterPath Solutions, Inc. dated as of August 2, 2007 (incorporated by
      reference from our Current Report on Form 8-K filed on August 8,
    2007).                      
|      |                                                                                                                                                                                                                                                                                                                           
|10.29 | Voting and Exchange Trust Agreement among CounterPath
      Solutions, Inc., 6789722 Canada Inc., a wholly owned subsidiary of
      CounterPath Solutions, Inc. and Valiant Trust Company dated as of August
      2, 2007 (incorporated by reference from our Current Report on Form 8-K
      filed on August 8, 2007).
|      |                                                                                                                                                                                                                                                                                                                           
|10.30 | Piggyback Registrations Rights Agreement among our
      company and various shareholders, dated as of August 2, 2007 (incorporated
      by reference from our Current Report on Form 8-K filed on August 8,
      2007).                                                                                                
|      |                                                                                                                                                                                                                                                                                                                           
|10.31 | Form of Subscription Agreement dated August 2, 2007,
      between our company and various investors (incorporated by reference from
      our Current Report on Form 8-K filed on August 8, 2007).                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                           
|10.32 | Installment Subscription Agreement dated August 2, 2007,
      between our company and various investors (incorporated by reference from
      our Current Report on Form 8-K filed on August 8, 2007).                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                           
|10.33 | Loan Conversion Agreement dated August 2, 2007, between
      our company and various investors (incorporated by reference from our
      Current Report on Form 8-K filed on August 8, 2007).                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                           
|10.34 | Form of Stock Option and Subscription Agreement dated
      August 2, 2007, between our company and each of the former optionees of
      NewHeights Software Corporation (incorporated by reference from our
      Current Report on Form 8-K filed on August 8, 2007).                                                  
|      |                                                                                                                                                                                                                                                                                                                           
|10.35 | Escrow Agreement among our company, Owen Matthews, Wesley
      Clover and Clark Wilson LLP dated as of August 2, 2007 (incorporated by
      reference from our Current Report on Form 8-K filed on August 8,
    2007).                                                                                                 
|      |                                                                                                                                                                                                                                                                                                                           
|10.36 | Employment Agreement between Greg Pelling and CounterPath
      Solutions R&D Inc., a wholly owned subsidiary of CounterPath
      Solutions, Inc. dated September 13, 2007 our Quarterly Report on Form
      10-QSB filed on September 14, 2007).                                                                       
|      |                                                                                                                                                                                                                                                                                                                           
|10.37 | Amended Employment Agreement between Donovan Jones and
      CounterPath Solutions R&D Inc., a wholly owned subsidiary of
      CounterPath Solutions, Inc. dated September 13, 2007 (incorporated by
      reference from our Quarterly Report on Form 10-QSB filed on September 14,
      2007).                        
|      |                                                                                                                                                                                                                                                                                                                           
|10.38 | Employment Agreement between Mark Bruk and CounterPath
      Corporation dated December 13, 2007 (incorporated by reference from our
      Quarterly Report on Form 10-QSB filed on December 17, 2007).                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                           
|10.39 | Share Exchange Agreement dated January 28, 2008 among
      CounterPath Corporation, Firsthand Technologies Inc. and certain
      shareholders of Firsthand Technologies Inc. (incorporated by reference
      from our Current Report on Form 8-K filed on January 29, 2008)                                            
|      |                                                                                                                                                                                                                                                                                                                           
|10.40 | Escrow Agreement dated February 1, 2008 among CounterPath
      Corporation, FirstHand Technologies Inc. and certain shareholders of
      FirstHand Technologies Inc. (incorporated by reference from our Current
      Report on Form 8-K filed on February 5, 2008)                                                    
|      |                                                                                                                                                                                                                                                                                                                           
|10.41 | Agreement of Merger and Plan of Reorganization dated
      February 1, 2008 among our company, CounterPath Acquisition Corp.,
      Bridgeport Networks, Inc. and certain shareholders of Bridgeport Networks,
      Inc. (incorporated by reference from our Current Report on Form 8-K filed
      on February 5, 2008) 

38

---

|(21)  | Subsidiaries of CounterPath
      Corporation.                                                        
|----- | ------------------------------------------------------------------------------------------------------
|      |                                                                                                       
|      | CounterPath Technologies Inc.
      (amalgamated under the British Columbia Business Corporations Act)
|      |                                                                                                       
|      | FirstHand Technologies Inc. (incorporated
      under the Ontario Business Corporations Act)          
|      |                                                                                                       
|      | Bridgeport Networks, Inc. (a Delaware
      corporation)                                              
|      |                                                                                                       
|      | 6789722 Canada Inc. (incorporated
      under the Canadian Business Corporations Act)                 
|      |                                                                                                       
|(31)  | Section 302 Certification                                                                             
|      |                                                                                                       
|31.1* | Section 302 Certification
      of Chief Executive Officer.                                           
|      |                                                                                                       
|31.2* | Section 302 Certification
      of Chief Financial Officer.                                           
|      |                                                                                                       
|(32)  | Section 906 Certification                                                                             
|      |                                                                                                       
|32.1* | Section 906 Certification
      of Chief Executive Officer.                                           
|      |                                                                                                       
|32.2* | Section 906 Certification
      of Chief Financial Officer.                                           
|      |                                                                                                       
|*     | filed herewith                                                                                        



39

---

SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



COUNTERPATH CORPORATION



By: /s/Greg
Pelling       Greg
Pelling       Chief Executive Officer &
Director        (Principal Executive
Officer)        Date: March 14, 2008



By: /s/David
Karp       David
Karp       Chief Financial Officer, Secretary
& Treasurer       (Principal Financial
Officer and Principal Accounting
Officer)        Date: March 14, 2008

40

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