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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

(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, 2009

[   ] TRANSITION REPORT PURSUANT TO 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(Exact name of registrant as specified 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(Registrants telephone
number)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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 large
accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [   ] |                                               | Accelerated
      filer                   
      [   ]
|----------------------------- | --------------------------------------------- | ------------------------------------------------------
|Non-accelerated filer   [   ] | (Do not check if a smaller reporting company) | Smaller reporting company [X]                         

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

---

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date:
28,832,050 shares of common stock issued and outstanding as of March 12, 2009.

2

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COUNTERPATH CORPORATION

JANUARY 31, 2009 QUARTERLY REPORT ON FORM 10-Q

INDEX

|               |                                                                                              | Page
|-------------- | -------------------------------------------------------------------------------------------- | ----
|               |                                                                                              |     
|               | Part
      I                                                                                 |     
|               |                                                                                              |     
|Item
      1.  | Financial
      Statements.                                                                  | 4   
|               |                                                                                              |     
|Item
      2.  | Managements
      Discussion and Analysis of Financial Condition and Results of Operations. | 21  
|               |                                                                                              |     
|Item
      4T. | Controls
      and Procedures.                                                               | 32  
|               |                                                                                              |     
|               | Part
      II                                                                                |     
|               |                                                                                              |     
|Item
      1.  | Legal
      Proceedings.                                                                     | 33  
|               |                                                                                              |     
|Item
      1A. | Risk
      Factors.                                                                          | 33  
|               |                                                                                              |     
|Item
      2.  | Unregistered
      Sales of Equity Securities and Use of Proceeds.                           | 37  
|               |                                                                                              |     
|Item
      3.  | Defaults
      Upon Senior Securities.                                                       | 38  
|               |                                                                                              |     
|Item
      4.  | Submission
      of Matters to a Vote of Security Holders.                                   | 38  
|               |                                                                                              |     
|Item
      5.  | Other
      Information.                                                                     | 38  
|               |                                                                                              |     
|Item
      6.  | Exhibits.                                                                                    | 38  

3

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PART I



Item 1. Financial Statements.

It is the opinion of management that the interim consolidated
financial statements for the quarter ended January 31, 2009 include all
adjustments necessary in order to ensure that the interim consolidated financial
statements are not misleading.

The interim consolidated financial statements are stated in
United States dollars and are prepared in accordance with generally accepted
accounting principles in the United States of America.







COUNTERPATH CORPORATIONINDEX TO INTERIM
CONSOLIDATED FINANCIAL STATEMENTS January 31, 2009
(Unaudited)(Stated in U.S. Dollars)

|                                                                           | Page        
|-------------------------------------------------------------------------- | ------------
|                                                                           |             
|Interim
      Consolidated Balance Sheets                                  | 5           
|                                                                           |             
|Interim
      Consolidated Statements of Operations and Comprehensive Loss | 6           
|                                                                           |             
|Interim
      Consolidated Statements of Cash Flows                        | 7           
|                                                                           |             
|Interim
      Consolidated Statements of Changes in Stockholders Equity   | 8           
|                                                                           |             
|Notes
      to the Interim Consolidated Financial Statements               | 9
      - 20

4

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COUNTERPATH CORPORATION INTERIM CONSOLIDATED BALANCE
SHEETS(Stated in U.S. Dollars)

|                                                                           |   | January 31, |   |   | April 30,   |  
|-------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                           |   | 2009        |   |   | 2008        |  
|Assets                                                                     |   | (Unaudited) |   |   |             |  
|Current assets:                                                            |   |             |   |   |             |  
|Cash                                                                       | $ | 3,384,110   |   | $ | 6,223,613   |  
|Accounts receivable
      (net of allowance for doubtful accounts of       |   |             |   |   |             |  
|$851,494 and $407,050, respectively)                                       |   | 3,293,720   |   |   | 5,409,658   |  
|Investment tax credits
      recoverable                                   |   |            |   |   | 1,061,133   |  
|Prepaid expenses and deposits                                              |   | 339,259     |   |   | 646,679     |  
|Total
      current assets                                                 |   | 7,017,089   |   |   | 13,341,083  |  
|                                                                           |   |             |   |   |             |  
|Deposits                                                                   |   | 112,797     |   |   | 103,017     |  
|Equipment                                                                  |   | 272,764     |   |   | 736,854     |  
|Intangible assets (net of accumulated
      amortization of $2,878,879     |   |             |   |   |             |  
|and $1,364,365)  Note 2(d)                                                |   | 5,387,794   |   |   | 8,534,666   |  
|Goodwill  Note 2(d)                                                       |   | 7,201,885   |   |   | 8,674,990   |  
|Other assets                                                               |   | 98,124      |   |   | 177,749     |  
|Total Assets                                                               | $ | 20,090,453  |   | $ | 31,568,359  |  
|                                                                           |   |             |   |   |             |  
|Liabilities and Stockholders Equity                                       |   |             |   |   |             |  
|Current liabilities:                                                       |   |             |   |   |             |  
|Accounts payable and
      accrued liabilities                             | $ | 3,341,396   |   | $ | 4,529,201   |  
|Unearned revenue                                                           |   | 873,319     |   |   | 936,343     |  
|Customer deposits                                                          |   | 10,675      |   |   | 85,283      |  
|Warranty accrual                                                           |   | 143,890     |   |   | 144,347     |  
|Total
      current liabilities                                            |   | 4,369,280   |   |   | 5,695,174   |  
|                                                                           |   |             |   |   |             |  
|Deferred lease inducements                                                 |   | 47,471      |   |   | 97,734      |  
|Unrecognized tax benefit                                                   |   | 98,575      |   |   | 98,575      |  
|Total
      liabilities                                                    |   | 4,515,326   |   |   | 5,891,483   |  
|                                                                           |   |             |   |   |             |  
|Stockholders equity:                                                      |   |             |   |   |             |  
|Preferred stock, $0.001 par value  Note 4                                 |   |             |   |   |             |  
|Authorized: 100,000,000                                                    |   |             |   |   |             |  
|Issued and outstanding: January 31,
      2009  1; April 30, 2008  1     |   |             |   |   |             |  
|Common stock, $0.001 par value  Note
      5                              |   |             |   |   |             |  
|Authorized: 83,076,900                                                     |   |             |   |   |             |  
|Issued and
      outstanding:                                              |   |             |   |   |             |  
|January 31, 2009  28,552,638 ;
      April 30, 2008  25,921,797          |   | 28,552      |   |   | 25,921      |  
|Additional paid-in capital                                                 |   | 48,226,138  |   |   | 43,398,849  |  
|Accumulated deficit                                                        |   | (30,096,884 | ) |   | (18,479,483 | )
|Accumulated other
      comprehensive income (loss)  currency translation |   |             |   |   |             |  
|adjustment                                                                 |   | (2,582,679  | ) |   | 731,589     |  
|Total
      stockholders equity                                           |   | 15,575,127  |   |   | 25,676,876  |  
|Liabilities and Stockholders Equity                                       | $ | 20,090,453  |   | $ | 31,568,359  |  

Going concern  Note 2

Commitments and contingent liability  Notes 7 and 8

See accompanying notes to the consolidated financial
statements

5

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COUNTERPATH CORPORATIONINTERIM CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(Stated in U.S. Dollars)
(Unaudited)

|                                                          |   | Three Months Ended |   |   | Nine Months Ended |  
|--------------------------------------------------------- | - | ------------------ | - | - | ----------------- | -
|                                                          |   | January
      31,  |   |   | January
      31, |  
|                                                          |   | 2009               |   |   | 2008              |  
|Revenue  Note 6:                                         |   |                    |   |   |                   |  
|Software                                                  | $ | 1,305,303          |   | $ | 1,698,829         |  
|Service                                                   |   | 724,758            |   |   | 935,934           |  
|Total
      revenue                                       |   | 2,030,061          |   |   | 2,634,763         |  
|Operating expenses:                                       |   |                    |   |   |                   |  
|Cost of sales (includes depreciation
      of $48,490 and |   |                    |   |   |                   |  
|$107,381 and amortization of intangible assets
      of   |   |                    |   |   |                   |  
|$1,514,515 and $599,162 
      Note 2(d))                |   | 863,573            |   |   | 771,178           |  
|Sales and marketing                                       |   | 762,398            |   |   | 1,016,758         |  
|Research and development                                  |   | 1,142,497          |   |   | 1,545,630         |  
|General and administrative                                |   | 1,524,559          |   |   | 1,589,055         |  
|Restructuring costs  Note 9                              |   | 26,268             |   |   |                  |  
|Total operating
      expenses                            |   | 4,319,295          |   |   | 4,922,621         |  
|Loss
      from operations                                |   | (2,289,234         | ) |   | (2,287,858        | )
|Interest and other income (expense), net                  |   |                    |   |   |                   |  
|Interest income                                           |   | 33,627             |   |   | 87,707            |  
|Interest expense  Note 3                                 |   | (1,278             | ) |   | (1,258            | )
|Foreign exchange gain (loss)                              |   | 19,360             |   |   | 4,709             |  
|Net loss for the period                                   | $ | (2,237,525         | ) | $ | (2,196,700        | )
|Other comprehensive loss:                                 |   |                    |   |   |                   |  
|Foreign currency translation adjustments                  |   | (282,407           | ) |   | (522,573          | )
|Comprehensive loss                                        | $ | (2,519,932         | ) | $ | (2,719,273        | )
|Net loss per share:                                       |   |                    |   |   |                   |  
|Basic and diluted                                         | $ | (0.08              | ) | $ | (0.12             | )
|                                                          |   |                    |   |   |                   |  
|Weighted average common shares outstanding:               |   | 28,542,855         |   |   | 18,987,949        |  

See accompanying notes to the consolidated financial
statements

6

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COUNTERPATH CORPORATIONINTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS(Stated in U.S. Dollars) (Unaudited)

|                                                                   |   | Nine Months Ended |  
|------------------------------------------------------------------ | - | ----------------- | -
|                                                                   |   | January
      31, |  
|                                                                   |   | 2009              |  
|Cash flows from operating activities:                              |   |                   |  
|Net loss for the period                                            | $ | (11,617,401       | )
|Adjustments to reconcile net loss to net
      cash used in        |   |                   |  
|operating activities:                                              |   |                   |  
|Depreciation and amortization                                      |   | 510,907           |  
|Amortization
      of intangible assets                            |   | 1,514,515         |  
|Stock-based compensation
       Note 5                            |   | 1,077,085         |  
|Accretion
      of convertible debenture discount                  |   |                  |  
|Loss on conversion of convertible
      debentures                 |   |                  |  
|Foreign exchange
      loss                                        |   | 55,335            |  
|Changes in assets and liabilities:                                 |   |                   |  
|Accounts
      receivable                                          |   | 2,827,038         |  
|Prepaid expenses and deposits                                      |   | 272,773           |  
|Accounts
      payable and accrued liabilities                     |   | (765,453          | )
|Unearned revenue                                                   |   | (63,024           | )
|Customer
      deposits                                            |   | (74,608           | )
|Warranty payable                                                   |   | (457              | )
|Net cash used in operating activities                              |   | (6,263,290        | )
|                                                                   |   |                   |  
|Cash flows from investing activities:                              |   |                   |  
|Cash acquired on acquisition of NewHeights                         |   |                  |  
|Purchase of equipment                                              |   | (82,083           | )
|Deposits                                                           |   | (28,396           | )
|Decrease (increase) in other assets                                |   | 79,625            |  
|Net cash provided by (used in) investing activities                |   | (30,854           | )
|                                                                   |   |                   |  
|Cash flows from financing activities:                              |   |                   |  
|Common stock issued, net of transaction
      costs                |   | 3,752,835         |  
|Decrease in due to related parties                                 |   |                  |  
|Net cash provided by financing activities                          |   | 3,752,835         |  
|                                                                   |   |                   |  
|Foreign exchange effect on cash                                    |   | (298,194          | )
|                                                                   |   |                   |  
|Increase (decrease) in cash                                        |   | (2,839,503        | )
|                                                                   |   |                   |  
|Cash, beginning of the period                                      |   | 6,223,613         |  
|Cash, end of the period                                            | $ | 3,384,110         |  
|                                                                   |   |                   |  
|Supplemental disclosure of cash flow information                   |   |                   |  
|Cash paid for:                                                     |   |                   |  
|Interest                                                           | $ | 11,713            |  
|Common stock and stock options issued
      in connection with the | $ |                  |  
|acquisition of NewHeights Software Corporation                     |   |                   |  
|Convertible debentures converted into
      common stock           | $ |                  |  

See accompanying notes to the consolidated financial
statements

7

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COUNTERPATHCORPORATIONINTERIMCONSOLIDATEDSTATEMENTSOFCHANGESINSTOCKHOLDERSEQUITYfor the NineMonthsEndedJanuary31,
2009 (Stated in U.S. Dollars)

|                                        |  | Common
      shares |  |   | Preferred
      Shares |  |  |        |  |   |           |  |   |            |   |   |             |  
|--------------------------------------- |  | ------------------- |  | - | ---------------------- |  |  | ------ |  | - | --------- |  | - | ---------- | - | - | ----------- | -
|                                        |  |                     |  |   |                        |  |  |        |  |   |           |  |   |            |   |   |             |  
|                                        |  | Number              |  |   |                        |  |  | Number |  |   |           |  |   | Additional |   |   |             |  
|                                        |  | of                  |  |   |                        |  |  | of     |  |   |           |  |   | Paid-in    |   |   | Accumulated |  
|                                        |  | Shares              |  |   | Par Value              |  |  | Shares |  |   | Par Value |  |   | Capital    |   |   | Deficit     |  
|Balance, April 30, 2008                 |  | 25,921,797          |  | $ | 25,921                 |  |  | 1      |  | $ |          |  | $ | 43,398,849 |   | $ | (18,479,483 | )
|                                        |  |                     |  |   |                        |  |  |        |  |   |           |  |   |            |   |   |             |  
|Shares issued:                          |  |                     |  |   |                        |  |  |        |  |   |           |  |   |            |   |   |             |  
|Private placement  Note 5              |  | 2,530,841           |  |   | 2,531                  |  |  |       |  |   |          |  |   | 3,750,304  |   |   |            |  
|Exchange of subsidiary preferred        |  |                     |  |   |                        |  |  |        |  |   |           |  |   |            |   |   |             |  
|shares- Note 4                          |  | 100,000             |  |   | 100                    |  |  |       |  |   |          |  |   | (100       | ) |   |            |  
|Stock-based compensation - Note 5       |  |                    |  |   |                       |  |  |       |  |   |          |  |   | 1,077,085  |   |   |            |  
|Net loss for the period                 |  |                    |  |   |                       |  |  |       |  |   |          |  |   |           |   |   | (11,617,401 | )
|Foreign currency translation adjustment |  |                    |  |   |                       |  |  |       |  |   |          |  |   |           |   |   |            |  
|Balance, January 31, 2009 (unaudited)   |  | 28,552,638          |  | $ | 28,552                 |  |  | 1      |  | $ |          |  | $ | 48,226,138 |   | $ | (30,096,884 | )

Seeaccompanyingnotes to theconsolidatedfinancialstatements

8

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COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

|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 and the TSX Venture Exchange in Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | On August 2, 2007, the Company acquired of all of the
      shares of NewHeights Software Corporation (NewHeights) through the
      issuance of 7,680,168 shares of the Companys common stock and 369,836
      preferred shares issued from a subsidiary of the Company that are
      exchangeable into 369,836 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.                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | On February 1, 2008, the Company acquired FirstHand
      Technologies Inc. (FirstHand), a private Ontario, Canada corporation,
      through the issuance of 5,900,014 shares of the Companys common stock.
      For accounting purposes, the Company was deemed to be the acquirer of
      FirstHand 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.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | On February 1, 2008, the Company acquired BridgePort
      Networks, Inc. (BridgePort), a private Delaware corporation, by way of
      merger in consideration for the assumption of all of the assets and
      liabilities of BridgePort. For accounting purposes, the Company was deemed
      to be the acquirer of BridgePort based on certain factors primarily being
      the composition of the board after the transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | On February 5, 2008, the Company's wholly-owned
      subsidiaries, NewHeights and CounterPath Solutions R&D Inc. were
      merged as a wholly-owned subsidiary of the Company under the name
      CounterPath Technologies Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | On March 19, 2008, the Companys Board of Directors
      approved a five for one common stock consolidation. As a result, the
      Company's authorized capital decreased from 415,384,500 shares of common
      stock to 83,076,900 shares of common stock. The par value of the common
      stock was unaffected by the stock consolidation and remains at $0.001 per
      share. All per share amounts and outstanding shares, including all common
      stock equivalents (stock options and warrants) have been retroactively
      adjusted in the Consolidated Financial Statements and in the Notes to the
      Consolidated Financial Statements for all periods presented to reflect the
      stock consolidation.                                                                                                                                                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | The Company focuses on the design, development, marketing
      and sales of desktop and mobile communications application software,
      conferencing software, gateway (server) software and related professional
      services, such as pre and post sales technical support and customization
      services. The Companys products are sold into the Voice over Internet
      Protocol (VoIP) market primarily to carriers, infrastructure manufacturers
      and businesses 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,
      2009, the Company has not yet achieved profitable operations and had an
      accumulated deficit of $30,096,884 since incorporation. These factors
      raise substantial doubt regarding the Companys ability to continue as a
      going concern.

9

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COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

|Note 2 | Significant Accounting
      Policies and Going Concern - (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | Management is implementing a plan to address these
      uncertainties to enable the Company to continue as a going concern through
      the end of fiscal 2010 and beyond. This plan includes new equity financing
      in amounts sufficient to sustain operations, such as the private placement
      discussed in Note 5, and to increase revenues and decrease costs 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:

| | a) | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | These consolidated financial statements include the
      accounts of the Company and its wholly-owned subsidiaries, CounterPath
      Technologies Inc., a company existing under the laws of the province of
      British Columbia, Canada, FirstHand Technologies Inc., continued under
      laws of the province of British Columbia, BridgePort Networks, Inc.
      incorporated under the laws of the state of Delaware and 6789722 Canada
      Inc., incorporated under the Canada Business Corporations Act. The results
      of NewHeights Software Corporation (which subsequently merged with another
      subsidiary to become CounterPath Technologies Inc.) are included from
      August 2, 2007, the date of acquisition. The results of FirstHand
      Technologies Inc. and BridgePort Networks, Inc. are included from February
      1, 2008, 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, 2008 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, 2008 annual consolidated financial
      statements.                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Operating results for the nine months ended January 31,
      2009 are not necessarily indicative of the results that can be expected
      for the year ending April 30, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | c) | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | In December 2007, the FASB issued Statement of Financial
      Accounting Standards No. 141 (revised 2007), Business Combinations(SFAS No. 141R). This standard replaces SFAS141 and establishes
      principles and requirements for how an acquirer recognizes and measures in
      its financial statement the identifiable assets acquired and liabilities
      assumed, any non-controlling interest in the acquiree, and the goodwill
      acquired.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

10

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

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

| | c) | New Accounting Pronouncements  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | This standard also establishes disclosure requirements
      which will enable users to evaluate the nature and financial effects of
      the business combination. This standard is effective for financial
      statements issued for fiscal years beginning after December 15, 2008. The
      Company is currently evaluating the impact of this statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | In December 2007, the FASB issued Statement of Financial
      Accounting Standards No. 160, Non controlling Interests In Consolidated
      Financial Statements  an amendment to ARB No.51(SFAS No. 160).
      This standard Amends ARB 51 to establish accounting and reporting
      standards for a non-controlling interest in a subsidiary and for
      deconsolidation of a subsidiary. This standard applies prospectively to
      business combinations for which the acquisition date is on or after the
      beginning of the first annual reporting period beginning on or after
      December 15, 2008. This standard may not be applied before that date. The
      Company is currently evaluating the impact of this statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | In March 2008, the Financial Accounting Standards Board
      (FASB) issued Statement of Financial Accounting Standards No. 161,
      Disclosures about Derivative Instruments and Hedging Activities  an
      amendment of FASB Statement No. 133 (FAS 161). FAS 161 modifies
      existing requirements to include qualitative disclosures regarding the
      objectives and strategies for using derivatives, fair value amounts of
      gains and losses on derivative instruments and disclosures about
      credit-risk-related contingent features in derivative agreements. The
      pronouncement also requires the cross-referencing of derivative
      disclosures within the financial statements and notes thereto. The Company
      is currently evaluating the impact of this statement.                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | In May 2008, the FASB issued Statement of Financial
      Accounting Standards No. 162, The Hierarchy of Generally Accepted
      Accounting Principles (FAS 162). FAS 162 is effective 60 days following
      the SECs approval of the Public Company Accounting Oversight Board
      Auditing amendments to AU Section, 411 The Meaning of Present Fairly
      in Conformity with Generally Accepted Accounting Principles. The
      statement is intended to improve financial reporting by identifying a
      consistent hierarchy for selecting accounting principles to be used in
      preparing financial statements that are presented in conformity with U.S.
      generally accepted accounting principles (GAAP). The Company is currently
      evaluating the impact of this statement.                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 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.
      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
      which is CounterPath Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Goodwill of $6,339,717 (CDN$6,704,947), and $2,083,960
      (CDN$2,083,752) was initially recorded in connection with the acquisition
      of NewHeights Software Corporation on August 2, 2007 and FirstHand
      Technologies Inc. on February 1, 2008. Translated to U.S. dollars using
      the period end rate, the goodwill balance at January 31, 2009 (April 30,
      2008) was $5,494,569 (CDN$6,704,947) and $1,707,316 (CDN$2,083,752),
      respectively. Management will perform its annual impairment test in its
      fiscal fourth quarter. No impairment charges were recorded in the nine
      months ended January 31, 2009 (2008 - $nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The Company also evaluates goodwill for impairment
      whenever events or changes in circumstances indicate that the carrying
      amount may not be recoverable. These events or circumstances could include
      a significant change in the business climate, legal factors, operating
      performance indicators, competition, or sale or disposition of a
      significant portion of a reporting unit. Recoverability of goodwill is
      measured at the reporting unit level by comparing the reporting units
      carrying amount, including goodwill, to the fair value of the reporting
      unit, which is measured based upon, among other factors, market multiples
      for comparable companies as well as a discounted cash flow analysis.
      Reporting units represent components of the Company for which discrete
      financial information is available that is regularly reviewed by
      management. Management has determined that the Company currently has one
      reporting unit. If the recorded value of the assets, including goodwill,
      and liabilities (net book value) of the reporting unit exceeds its fair
      value, an impairment loss may be required.

11

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

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

| | d) | Goodwill and Intangible Assets 
(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Although there was a decline in the market capitalization
      of the Company, as well as comparable companies, during the quarter ended
      January 31, 2009, the Company concluded that there were no triggering
      events as of January 31, 2009 which would require a formal impairment
      analysis of the carrying value of goodwill. Management believes that the
      recent decline in the Companys market capitalization is not due to any
      fundamental change or adverse events in the Companys operations.
      Accordingly, the Company has not recognized any impairment of its goodwill
      in the accompanying condensed consolidated financial statements. The
      Company is continuing to monitor its economic situation and the need to
      perform an impairment analysis in light of recent macro-economic
      indications in the equity markets as well as recent volatility and
      downward pressure on its market capitalization. To the extent the Company
      concludes that there are any indicators of impairment prior to the date of
      the next annual goodwill impairment test on April 30, 2009, management
      will perform an impairment analysis under SFAS No. 142, Goodwill and
      Other Intangible Assets, and could record an impairment charge to write
      down goodwill to its fair value. If the results of that impairment testing
      confirm that a write down of goodwill is necessary, then the Company will
      record an associated charge. Any such charge could be significant and
      accordingly, would have a material impact on the Companys financial
      position and results of operations, but would not be expected to have a
      material adverse effect on the Companys cash flows from
  operations.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Intangible assets include the intangibles purchased in
      connection with the acquisition of NewHeights Software Corporation on
      August 2, 2007 and FirstHand Technologies Inc. and BridgePort Networks,
      Inc. on February 1, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | The intangible assets of NewHeights 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). The acquired technologies are amortized based
      on their estimated useful life of four years and the customer asset is
      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 intangible assets of FirstHand are being carried and
      reported at acquisition cost and include amounts initially allocated to
      acquired technologies of $2,804,700 (CDN$2,804,700) and customer asset of
      $587,000 (CDN$587,000). The acquired technologies are amortized based on
      their estimated useful life of four years and the customer asset is
      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 intangible assets of BridgePort are being carried and
      reported at acquisition cost and include amounts initially allocated to
      acquired technologies of $476,703 and customer asset of $43,594. The
      acquired technologies are amortized based on their estimated useful life
      of four years and the customer asset is 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | Statement of Financial Accounting Standard No. 144, The
      Impairment or Disposal of Long-Lived Assets (SFAS No. 144), SFAS No.
      144 requires the Company 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. No impairment charges were recorded for the
      nine months ended January 31, 2009 (2008 - $nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

12

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

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

| | d) | Goodwill and Intangible Assets 
(contd)                                                  
| | -- | -------------------------------------------------------------------------------------------
| |    |                                                                                            
| |    | A summary of the Companys intangible assets, net, at
      January 31, 2009 is as follows:

| |                                     |   |           |  |   | Accumulated  |  |   | Net Carrying | 
| | ----------------------------------- | - | --------- |  | - | ------------ |  | - | ------------ | 
| |                                     |   | Cost      |  |   | Amortization |  |   | Amount       | 
| | Acquired technologies               | $ | 5,751,633 |  | $ | 2,349,403    |  | $ | 3,402,230    | 
| | Customer assets                     |   | 2,515,040 |  |   | 529,476      |  |   | 1,985,564    | 
| | Intangible assets, January 31, 2009 | $ | 8,266,673 |  | $ | 2,878,879    |  | $ | 5,387,794    | 

| | e) | Comparative Figures                                                                                      
| | -- | ---------------------------------------------------------------------------------------------------------
| |    |                                                                                                          
| |    | Certain comparative figures have been reclassified to
      conform to the current periods presentation.

|Note 3 | Related Party
      Transactions                                                                                                                                                                                                                                                            
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                             
|       | During the three months ended January 31, 2009 and 2008,
      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, | 
| |                                   |   | 2009               |  |   | 2008              | 
| | Interest on convertible debenture | $ | Nil                |  | $ | Nil               | 
| | Lease payment                     | $ | Nil                |  | $ | 20,853            | 

The above transactions are in the
normal course of operations and are recorded at amounts established and agreed
to between the related parties.

The Companys Chairman is the Chairman
and founding shareholder of Mitel Networks Corporation (Mitel). NewHeights
Software Corporation entered into a distribution agreement with Mitel on June
15, 2004 and amended such agreement on August 7, 2007. NewHeights was acquired
by the Company on August 2, 2007 and was amalgamated on February 5, 2008 with
the Companys wholly-owned subsidiary, CounterPath Solutions R&D Inc. under
the name CounterPath Technologies Inc. The distribution agreement with Mitel
renews automatically for one-year periods and contains termination rights of
both parties. Under the terms of the distribution agreement, the Company earns a
specified fee from Mitel based on the number of product licenses sold to Mitel.

On July 31, 2008 the Company entered
into a source code license agreement whereby the Company licensed to Mitel the
source code for the Your Assistant product in consideration of a payment of
$650,000. Associated with the agreement are ongoing license fees to be paid by
Mitel of $12.00 per copy deployed, declining to $7.50 per copy deployed after
two years and declining from $7.50 to nil after four years. In addition, the
agreement provides Mitel with a first right to match any third party offer to
purchase the source code software and related intellectual property.

13

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

|Note 3 | Related Party Transactions  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | The Companys software license revenue for the three and
      nine months ended January 31, 2009, pursuant to the terms of these
      agreements, was $221,748 and $909,256 (2008 - $536,496 and $1,518,331)
      respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | As at January 31, 2009, the Company has an accounts
      receivable balance from Mitel of $483,837 (April 30, 2008 - $1,177,000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | During the three and nine months ended January 31, 2009,
      the Company through its wholly owned subsidiary, FirstHand Technologies
      Inc., paid $67,970 (2008 - $nil) and $200,910 (2008 - $nil), respectively,
      to Kanata Research Park Corporation (KRP) for leased office space. KRP
      is controlled by the Companys Chairman. As at January 31, 2009, the
      Company had an accounts payable balance to KRP of $6,849 (April 30, 2008 -
      $2,656).                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Note 4 | Exchangeable Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | 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.                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | On October 9, 2008 and November 19, 2008, the Company
      issued 50,000 shares each totaling to 100,000 shares of common stock
      pursuant to a holder of 100,000 shares of exchangeable preferred shares of
      its subsidiary 6789722 Canada Inc. exercising their exchange rights. As
      the exchangeable shares have already been recognized in connection with
      the acquisition of NewHeights, the value ascribed to these shares on
      exchange is $nil.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Note 5 | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | On March 19, 2008, the Companys Board of Directors
      approved a five for one common stock consolidation. As a result, the
      Company's authorized capital decreased from 415,384,500 shares of common
      stock to 83,076,900 shares of common stock. All per share amounts and
      outstanding shares, including all common stock equivalents (stock options
      and warrants) have been retroactively adjusted in the Consolidated
      Financial Statements and in the Notes to the Consolidated Financial
      Statements for all periods presented to reflect the stock consolidation.                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | On April 11, 2008, certain officers, directors and
      affiliates of the Company entered into an escrow agreement with the TSX- V
      whereby a total of 11,489,635 shares of common stock in the Company were
      deposited into escrow with Valiant Trust acting as escrow agent as a
      condition to listing of the Companys shares of common stock on the TSX-V.
      The shares are released as to 25% upon entering in to the agreement and
      25% on each date that is 6, 12 and 18 months from the date of the escrow
      agreement. As of January 31, 2009, 5,740,819 shares of common stock had
      been released from escrow.                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | On July 30, 2008, the Company announced a private
      placement of up to approximately 3.3 million units at a price of $1.50
      (CDN$1.54) per unit for gross proceeds of up to approximately $5 million
      (CDN$5.1 million). On July 31, 2008 and October 24, 2008, the Company
      issued 2,433,439 units and 97,402 units, respectively, at a price of $1.50
      (CDN$1.54) per unit for gross proceeds of $3,784,439 (CDN$3,897,497). The
      Company incurred $31,604 of transaction costs. Each unit consists of one
      share of common stock in the capital of the Company and one-half of one
      non-transferable common share purchase warrant. Each warrant shall entitle
      the holder thereof to purchase one share of common stock in the capital of
      the Company for a period of two years commencing from the date of issue at
      an exercise price of $2.25 per warrant share.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Certain officers and directors of the Company subscribed
      for 759,559 units at a price of $1.50 (CDN$1.54) per unit, including
      warrants entitling the holders thereof to purchase one share of common
      stock in the capital of the Company for a period of two years commencing
      from the date of issue at an exercise price of $2.25 per warrant share for
      gross proceeds of $1,142,306 (CDN$1,169,721). As the unit price of $1.50
      (CDN$1.54) per unit was below the closing market price of $1.60 (CDN$1.64)
      per share of the Companys common stock on the date of the transaction and
      included one-half of one common share purchase warrant, the Company
      recorded a compensatory charge to general and administrative expenses for
      the nine months ending January 31, 2009 of $195,293.                                                                        

14

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

|Note 5 | Common Stock  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | 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 800,000 under the 2004 Stock
      option plan and 4,260,000 under the 2005 Stock option plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | 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 period has been determined utilizing the
      simplified method as prescribed by SAB No. 107, Share-Based Payment, as
      amended by SAB No. 110 on January 1, 2008. 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 2009 and 2008 in determining the expense recorded in the
      accompanying consolidated statement of operations.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | The weighted-average fair value of options granted during
      the nine months ended January 31, 2009 was $0.50. The weighted-average
      assumptions utilized to determine such values are presented in the
      following table:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| |                             |   | Nine Months Ended |  |   | Nine Months Ended | 
| | --------------------------- | - | ----------------- |  | - | ----------------- | 
| |                             |   | January 31, 2009  |  |   | January 31, 2008  | 
| | Risk-free interest rate     |   | 2.26%             |  |   | 4.75%             | 
| | Expected volatility         |   | 68.8%             |  |   | 69.6%             | 
| | Expected term               |   | 3.7 yrs           |  |   | 4.7 yrs           | 
| | Dividend yield              |   | 0%                |  |   | 0%                | 
| | Weighted average fair value | $ | 0.50              |  | $ | 0.22              | 

15

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

|Note 5 | Common Stock 
      (contd)                                                                                                                                                          
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                        
|       | Stock Options  (contd)                                                                                                                                                               
|       |                                                                                                                                                                                        
|       | The following is a summary of the status of the Companys
      stock options as of January 31, 2009 and the stock option activity during
      the nine months ended January 31, 2009:

| |                                 |  |           |   |  | Weighted-average | 
| | ------------------------------- |  | --------- | - |  | ---------------- | 
| |                                 |  | Number of |   |  | Exercise Price   | 
| |                                 |  | Options   |   |  | per Share        | 
| | Outstanding at April 30, 2008   |  | 3,794,263 |   |  | $2.20            | 
| | Granted                         |  | 1,296,000 |   |  | $0.99            | 
| | Exercised                       |  |          |   |  |                 | 
| | Forfeited / Cancelled           |  | (932,483  | ) |  | $2.00            | 
| | Expired                         |  | (173,055  | ) |  | $2.00            | 
| | Outstanding at January 31, 2009 |  | 3,984,725 |   |  | $1.88            | 
| |                                 |  |           |   |  |                  | 
| | Exercisable at January 31, 2009 |  | 2,264,900 |   |  | $2.30            | 
| | Exercisable at April 30, 2008   |  | 2,360,979 |   |  | $2.30            | 

The following table summarizes
information regarding stock purchase options outstanding as of January 31, 2009:

Number of
    Aggregate
      
    Number of
    AggregateExercise
      
      Options
    Intrinsic
      
    Options
    IntrinsicPrice
      
    Outstanding
    Value
      Expiry Date
    Exercisable
    Value$0.44
      
    732,000
    
      December 15, 2013
    
    $1.50
      
    40,000
    
      August 1, 2016
    24,166
    $1.55
      
    50,000
    
      July 30, 2013
    6,250
    $1.64
      
    40,000
    
      June 3, 2013
    5,833
    $1.70
      
    35,000
    
      May 1, 2012
    14,584
    $1.75
      
    320,000
    
      May 14, 2013
    53,333
    $1.80
      
    40,000
    
      August 20, 2013
    40,000
    $1.85
      
    102,907
    
      February 2, 2013
    75,715
    October 1, 2011 to$1.90
      
    170,776
    
      June 26, 2017
    141,777
    September 7, 2010 to January
        10,$1.95
      
    1,267,600
    
      2016
    1,019,912
    August 20,2009 to March 18,$2.00
      
    499,162
    
      2015
    405,124
    $2.15
      
    240,000
    
      September 7, 2016
    140,000
    $2.25
      
    11,000
    
      December 13, 2012
    2,980
    $2.80
      
    50,000
    
      February 20, 2016
    36,458
    $2.95
      
    60,000
    
      July 26, 2016
    37,500
    $3.05
      
    176,280
    
      May 23, 2016
    117,518
    June 13, 2010 to July 11,$3.35
      
    15,000
    
      2016
    15,000
    $3.40
      
    20,000
    
      April 10, 2016
    13,750
    $5.35
      
    30,000
    
      March 29, 2010
    30,000
    $5.85
      
    35,000
    
      February 22, 2010
    35,000
    $7.90
      
    30,000
    
      October 24, 2009
    30,000
    $9.35
      
    20,000
    
      July 21, 2009
    20,000
    January 31, 2009
      
    3,984,725
    $ 
      
    2,264,900
    $ April 30, 2008
      
    3,794,263
    $17,333
      
    2,360,979
    $7,635


16

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

|Note 5 | Common Stock 
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | Stock Options  (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | The aggregate intrinsic value in the preceding table
      represents the total intrinsic value, based on the Companys closing stock
      price of $0.33 per share as of January 31, 2009 (April 30, 2008  $1.80),
      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, 2009 was nil
      (April 30, 2008  43,021). The total intrinsic value of options exercised
      during the nine months ended January 31, 2009 was $nil (2007  $341). The
      grant date fair value of options vested during the nine months ended
      January 31, 2009 was $938,301 (April 30, 2008  $1,817,972).
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | The following table summarizes information regarding the
      non-vested stock purchase options outstanding as of January 31, 2009:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                                        |  |                   |   |  | Weighted Average      | 
| | -------------------------------------- |  | ----------------- | - |  | --------------------- | 
| |                                        |  | Number of Options |   |  | Grant-Date Fair Value | 
| | Non-vested options at April 30, 2008   |  | 1,433,284         |   |  | $1.48                 | 
| | Granted                                |  | 1,296,000         |   |  | $0.50                 | 
| | Vested                                 |  | (662,210          | ) |  | $1.42                 | 
| | Forfeited                              |  | (347,249          | ) |  | $1.41                 | 
| | Non-vested options at January 31, 2009 |  | 1,719,825         |   |  | $0.83                 | 

As of January 31, 2009 there was
$1,278,035 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 0.96 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, 2009 and 2008 are as
follows:

| |                                |   | Three Months Ended |  |   | Nine Months Ended | 
| | ------------------------------ | - | ------------------ |  | - | ----------------- | 
| |                                |   | January
      31,  |  |   | January
      31, | 
| |                                |   | 2009               |  |   | 2008              | 
| |                                |   |                    |  |   |                   | 
| | Cost of sales                  | $ | 18,305             |  | $ | 14,247            | 
| | Sales and marketing            |   | 27,465             |  |   | 26,821            | 
| | Research and development       |   | 41,448             |  |   | 97,517            | 
| | General and administrative     |   | 169,914            |  |   | 160,119           | 
| | Total stock-based compensation | $ | 257,132            |  | $ | 298,704           | 

Warrants

During the nine months ended January
31, 2009, the Company issued 1,216,720 warrants on July 31, 2008 and 48,701
warrants on October 24, 2008 as part of a unit offering. The fair value of the
stock purchase warrants granted was $394,372. The warrants enable the holders
the right to purchase up to 1,265,421 shares of the Companys common stock,
exercisable for two years from the date of issue. The assumptions utilized to
determine such values are presented in the following table:

| |                                         | Nine Months Ended
| | --------------------------------------- | -----------------
| |                                         | January 31, 2009 
| |                                         |                  
| | Risk-free interest rate                 | 1.58% - 2.52%    
| | Expected volatility                     | 48.54% - 66.34%  
| | Expected term                           | 2 yrs            
| | Dividend yield                          | 0%               
| | Weighted average fair value per warrant | $0.31 - $0.44    

17

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

|Note 5 | Common Stock  (contd)                                                                                    
|------ | -----------------------------------------------------------------------------------------------------------
|       |                                                                                                            
|       | Warrants  (contd)                                                                                        
|       |                                                                                                            
|       | The following table summarizes information
      regarding the warrants outstanding as of January 31, 2009.

| |                              |  | Number of |  |  | Weighted Average |  |  |                          | 
| | ---------------------------- |  | --------- |  |  | ---------------- |  |  | ------------------------ | 
| |                              |  | Options   |  |  | Exercise Price   |  |  | Expiry Dates             | 
| | Warrants at April 30, 2008   |  | 1,000,000 |  |  | $4.00            |  |  | November 30, 2009        | 
| |                              |  |           |  |  |                  |  |  |                          | 
| | Granted                      |  | 1,265,421 |  |  | $2.25            |  |  | July 31, 2010 to October | 
| |                              |  |           |  |  |                  |  |  | 28, 2010                 | 
| | Exercised                    |  |          |  |  |                 |  |  |                          | 
| | Expired                      |  |          |  |  |                 |  |  |                          | 
| | Warrants at January 31, 2009 |  | 2,265,421 |  |  | $3.04            |  |  |                          | 

|Note 6 | 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, 2009 and
      2008:                                                                                                                                         

| |                           |   | Three Months Ended |  |   | Nine Months Ended | 
| | ------------------------- | - | ------------------ |  | - | ----------------- | 
| |                           |   | January
      31,  |  |   | January
      31, | 
| |                           |   | 2009               |  |   | 2008              | 
| | North America             | $ | 1,106,684          |  | $ | 1,067,401         | 
| | Europe                    |   | 556,985            |  |   | 529,538           | 
| | Asia                      |   | 214,739            |  |   | 110,266           | 
| | Central and South America |   | 151,653            |  |   | 915,857           | 
| | Other                     |   |                   |  |   | 11,701            | 
| |                           | $ | 2,030,061          |  | $ | 2,634,763         | 

Contained within the results of North
America for the three and nine months ended January 31, 2009 are revenues from
the United States of $709,371 and $3,201,514 (2008 - $467,229 and $1,339,847)
respectively and from Canada of $397,313 and $1,110,987 (2008 - $600,172 and
$1,731,836) respectively.

Contained within the results of Europe
for the three and nine months ended January 31, 2009 are revenues from the
United Kingdom of $131,991 and $514,706 (2008 - $155,407 and $727,253)
respectively, from Germany of $210,753 and $512,055 (2008 - $113,073 and
$268,065) respectively, from Denmark of $31,396 and $309,888 (2008 - $63,930 and
$64,055) respectively, and from Portugal of $5,876 and $156,078 (2008 - $)
respectively.

Contained within the results of South
America for the three and nine months ended January 31, 2009 are revenues from
Brazil of $14,521 and $117,983 (2008 - $6,387 and $39,511) respectively, from
Mexico of $22,381 and $225,584 (2008 - $803,695 and $988,958) respectively, and
from the Dominican Republic of $3,847 and $64,584 (2008 - $78,053 and $133,750)
respectively.

All of the Companys long-lived
assets, which include equipment, intangible assets and other assets, are located
in Canada and the United States as follows:

| |               |   | **As
      at** | 
| | ------------- | - | --------------- | 
| |               |   | January 31,     | 
| |               |   | 2009            | 
| |               |   |                 | 
| | Canada        | $ | 5,681,830       | 
| | United States |   | 76,852          | 
| | Total         | $ | 5,758,682       | 

18

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

|Note 6 | Segmented Information 
      (contd)                                                                                          
|------ | --------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                 
|       | Revenue from significant customers for the three and nine
      months ended January 31, 2009 and 2008 is summarized as follows:

| |            |  | Three Months Ended |  |  | Nine Months Ended | 
| | ---------- |  | ------------------ |  |  | ----------------- | 
| |            |  | January
      31,  |  |  | January
      31, | 
| |            |  | 2009               |  |  | 2008              | 
| |            |  |                    |  |  |                   | 
| | Customer A |  | 19%                |  |  | 20%               | 
| | Customer B |  | 10%                |  |  | 3%                | 
| | Customer C |  | 3%                 |  |  |                  | 
| | Customer D |  | 1%                 |  |  | 31%               | 
| | Customer E |  | 4%                 |  |  | 6%                | 
| |            |  | 37%                |  |  | 60%               | 

|       | Accounts receivable balances for Customer A were $404,289
      as at January 31, 2009 (April 30, 2008 - $1,177,000). Accounts receivable
      balances for Customer B were $426,001 as at January 31, 2009 (April 30,
      2008 - $432,019). Accounts receivable balances for Customer C were
      $134,025 as at January 31, 2009 (April 30, 2008 - $46,796). Accounts
      receivable balances for Customer D were $nil as at January 31, 2009 (April
      30, 2008 - $930,500). Accounts receivable balances for Customer E were
      $270,000 as at January 31, 2009 (April 30, 2008 - $400,000).
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Note 7 | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | a) | On June 28, 2005, the Company entered into a software
      development consulting agreement extension, which commenced on June 30,
      2006 and expires June 30, 2009. The payment schedule is tied to specific
      milestones as they are completed and requires total payments of $109,000
      in fiscal year 2009 and $109,000 in fiscal year 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | b) | The Company is subject to a license agreement (the
      "Amended Omnibus Agreement") and a sponsored research agreement (the
      "Amended Research Agreement") with Columbia University pertaining to
      certain technologies acquired in the acquisition of FirstHand Technologies
      Inc. on February 1, 2008. Pursuant to the Amended Omnibus Agreement and
      the Amended Research Agreement, the Company is required to provide
      financial support for SIP (Session Initiation Protocol) research in the
      field of Internet/Ethernet Telephony conducted at Columbias Department of
      Computer Science. Subject to certain limitations, the Company is entitled
      to an exclusive license from Columbia University for all inventions and
      research information directly relating to the field of Internet/Ethernet
      Telephony. In exchange for the continuing rights granted under the Amended
      Research Agreement, the Company is required to make a future payment for
      research of $109,000 payable on January 1, 2009. Commencing on the one
      year anniversary date of the of the termination or expiration of the
      Amended Research Agreement, the Company shall be required to pay a minimum
      annual royalty of $100,000 to Columbia University net of any royalties
      paid to Columbia University under the Amended Omnibus Agreement.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | c) | On February 5, 2009, the Company entered into an
      extension agreement of existing lease for office premises, which commences
      on April 1, 2009 and expires on September 30, 2009. The monthly lease
      payment under this extension agreement is $2,576.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |    | Total payable over the term of the agreements for the
      years ended April 30, are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

Office Leases 
    
    
    Office Leases
    
    
    
    
    
    
    
    
    SoftwareRelated
    
    
     Unrelated
    
    
    Sub Lease
    
    
    Total Office
    
    
    Development
    
    
    ResearchParty
    
    
    Party
    
    
    Income
    
    
    Leases
    
    
    Contracts
    
    
    Agreement2009
    $
    69,008
    
    $
    184,994
    
    $
    (19,402
    )
    $
    234,600
    
    $
    
    
    $
    109,0002010
    
    260,645
    
    
    728,252
    
    
    (77,608
    )
    
    911,289
    
    
    109,000
    
    
    2011
    
    
    
    
    643,712
    
    
    (77,608
    )
    
    566,104
    
    
    
    
    
    2012
    
    
    
    
    358,326
    
    
    (77,608
    )
    
    280,718
    
    
    
    
    
    2013
    
    
    
    
    72,581
    
    
    (32,337
    )
    
    40,244
    
    
    
    
    
    $
    329,653
    
    $
    1,987,865
    
    $
    (284,563
    )
    $
    2,032,955
    
    $
    109,000
    
    $
    109,000


19

---

COUNTERPATH CORPORATIONNOTES TO THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS

|Note 8  | 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 9  | Restructuring                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | As a result of the Companys post acquisition activities,
      the Company incurred restructuring costs of $26,268 (2008  $nil) and
      $959,264 (2008  $182,107) during the three and nine months ended January
      31, 2009, respectively. Restructuring costs 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 acquisitions of NewHeights Software Corporation, FirstHand Technologies
      Inc. and BridgePort Networks, Inc. These charges are shown as a separate
      line item in the consolidated statement of operations.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Note 10 | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| | (a) | On March 12, 2009, the Company reduced the exercise price
      of 1,282,111 employee incentive stock options to $0.47 (CDN $0.60) per common
      share for all of its employees and contractors holding stock options,
      other than for its officers and directors. The affected stock options had
      a weighted average exercise price of $2.17. No other terms of the stock
      options were changed.                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (c) | On March 12, 2009, the Company and its wholly-owned
      subsidiary, CounterPath Technologies Inc., entered into a settlement
      agreement with a founder and former officer of the Company. Under the
      settlement agreement, the Company will pay at total of $385,951
      (CDN$495,000) over 45 months at a rate of CDN$11,000 per month and pay for
      health benefits for 21 one months.                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (d) | Pursuant to a settlement agreement dated October 31,
      2008, entered into between the Company, CounterPath Technologies Inc., and
      an officer of the Company, the Company exercised its right to pay the
      officer CDN$142,500 of severance by way of the issuance of 279,412 common
      shares of the Company at a price of CDN$0.51 per share on March 12, 2009,
      in full satisfaction of all amounts owing pursuant to the Settlement
      Agreement.

20

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Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations.

Forward-Looking Statements

This
quarterly report contains forward-looking statements as that term is defined in
Section 27A of the United States Securities Act of 1933 and Section 21E of the
United States Securities Exchange Act of 1934. These statements relate to future
events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as may, should, intends,
expects, plans, anticipates, believes, estimates, predicts,
potential, or continue or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled Risk Factors, which may cause our or our industrys actual results,
levels of activity or performance to be materially different from any future
results, levels of activity or performance expressed or implied by these
forward-looking statements.

Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity or
performance. 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.

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.

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 issued and outstanding shares in Xten Networks in
exchange for issuing 3,600,000 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 7,680,168 shares of our common stock and 369,836
preferred shares issued from a subsidiary of our company, which preferred shares
are exchangeable into 369,836 shares of our 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 5.9 million 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.

21

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On
February 5, 2008, NewHeights and our subsidiary CounterPath Solutions R&D
Inc. were merged as a wholly-owned subsidiary under the name CounterPath
Technologies Inc.

On
March 19, 2008, our board of directors approved a five for one common stock
consolidation. As a result, our authorized capital decreased from 415,384,500
shares of common stock to 83,076,900 shares of common stock.

Business of CounterPath

Our
business focuses on the design, development, marketing and sales of desktop and
mobile application software, conferencing server software, gateway server
software and related professional services, such as pre and post sales technical
support and customization services. Our software products are sold into the
telecommunications sector, specifically the voice over Internet protocol (VoIP),
unified communications and fixed-mobile convergence markets. VoIP, unified
communications and fixed-mobile convergence are general terms for technologies
that use Internet or mobile protocols for the transmission of packets of data
which may 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.

Our
strategy is to sell our software to our customers to allow such customers to
deliver session initiation protocol and 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
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 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.

Cost
of sales primarily consists of (a) salaries and benefits related to personnel,
(b) related overhead, (c)

22

---

amortization of intangible assets, (d) billable and
non-billable travel, lodging, and other out-of-pocket expenses, (e) payments to
third party vendors for compression/decompression software known as codecs, (f)
amortization of capitalized software that is implemented into our products, and
(g) warranty expense. Amortization of intangible assets consists of the
amortization expense related to the intangible assets acquired from NewHeights
Software Corporation, FirstHand Technologies Inc. and BridgePort Networks, Inc.
comprising acquired technologies and customer assets. The acquired technologies
are amortized based on their estimated useful life of four years and the
customer assets are amortized on the basis of management's estimate of the
future cash flows from these assets over approximately five years, which is
management's estimate of the useful life of the customer assets.

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.

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, FirstHand Technologies Inc. and BridgePort Networks, Inc.
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, 2009 we have a
restructuring accrual for severance of $nil.

Critical Accounting Policies

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.

Basis of Presentation

The
consolidated financial statements include the accounts of our company and our
wholly-owned subsidiaries, CounterPath Technologies Inc., a company existing
under the laws of the province of British Columbia, Canada, FirstHand
Technologies Inc., continued under laws of the province of British Columbia,
BridgePort Networks, Inc. incorporated under the laws of the state of Delaware
and 6789722 Canada Inc., incorporated under the Canada Business Corporations
Act. The results of NewHeights Software Corporation (which subsequently

23

---

merged with another subsidiary to become CounterPath
Technologies Inc.) are included from August 2, 2007, the date of acquisition.
The results of FirstHand Technologies Inc. and BridgePort Networks, Inc. are
included from February 1, 2008, the date of acquisition. All inter-company
transactions and balances have been eliminated.

Interim Reporting

The
information presented in the accompanying interim consolidated financial
statements is without audit pursuant to the rules and regulations of the SEC.
Certain information and footnote disclosures normally included in the interim
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although we believe 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, the interim consolidated financial statements follow the same accounting
policies and methods of their application as our April 30, 2008 annual
consolidated financial statements. All adjustments are of a normal recurring
nature. It is suggested that these interim consolidated financial statements be
read in conjunction with our April 30, 2008 annual consolidated financial
statements.

Operating
results for the three and nine months ended January 31, 2009 are not necessarily
indicative of the results that can be expected for the year ending April 30,
2009.

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.

24

---

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
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 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
three months ended January 31, 2009 was 67.0% . 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 as amended by SAB No. 110 on January 1, 2008.
The expected term of options granted during the nine months ended January 31,
2009 was 4.4 years. For the nine months ended January 31, 2009, the
weighted-average risk free interest rate used was 3.23% . 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 three
months ended January 31, 2009 in determining the expense recorded in our
consolidated statement of operations.

Cost of sales and operating expenses include stock-based
compensation expense. For the nine months ended January 31, 2008, we recorded an
expense of $1,077,085 in connection with share-based payment awards. A future
expense of non-vested options of $1,278,035 is expected to be recognized over a
weighted-average period of 0.96 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.

25

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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. Management
has reviewed the outstanding receivables, and factored in the potential
collectibility issues arising out of the present economic turmoil. Adequate
provision has been made for accounts that, in managements view, might be
affected by the economic uncertainties.

Goodwill and Intangible Assets

We
have a significant amount of goodwill and intangible assets on our balance sheet
related to the acquisitions of NewHeights Software Corporation, FirstHand
Technologies Inc. and BridgePort Networks, Inc. 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 customer assets relating to customer relationships. The
acquired technologies are amortized based on their estimated useful life of four
years and the customer asset is 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 assets. 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
Intangible Assets,"we review our goodwill annually for impairment or more
frequently when indicators of impairment are present. These events or
circumstances could include a significant change in the business climate, legal
factors, operating performance indicators, competition, or sale or disposition
of a significant portion of a reporting unit. Recoverability of goodwill is
measured at the reporting unit level by comparing the reporting units carrying
amount, including goodwill, to the fair value of the reporting unit, which is
measured based upon, among other factors, market multiples for comparable
companies as well as a discounted cash flow analysis. Reporting units represent
components of our company for which discrete financial information is available
that is regularly reviewed by management. Management has determined that our
company currently has one reporting unit. If the recorded value of the assets,
including goodwill, and liabilities (net book value) of the reporting unit
exceeds its fair value, an impairment loss may be required.

Although
there was a decline in the market capitalization of our company, as well as
comparable companies, during the quarter ended January 31, 2009, management
concluded that there were no triggering events as of January 31, 2009 which
would require a formal impairment analysis of the carrying value of goodwill.
Management believes that the recent decline in our companys market
capitalization is not due to any fundamental change or adverse events in our
companys operations. Accordingly, our company has not recognized any impairment
of its goodwill in the accompanying condensed consolidated financial statements.
Our company is continuing to monitor its economic situation and the need to
perform an impairment analysis in light of recent macro-economic indications in
the equity markets as well as recent volatility and downward pressure on its
market capitalization. To the extent our company concludes that there are any
indicators of impairment prior to the date of the next annual goodwill
impairment test on April 30, 2009, management will perform an impairment
analysis under SFAS No. 142, Goodwill and Other Intangible Assets, and could
record an impairment charge to write down goodwill to its fair value. If the
results of that impairment testing confirm that a write down of goodwill is
necessary, then our company will record an associated charge. Any such charge
could be significant and accordingly, would have a material impact on our
companys financial position and results of operations, but would not be
expected to

26

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have a material adverse effect on our companys cash flows from
operations.

Use of Estimates

The
preparation of our financial statements in conformity with generally accepted
accounting principles in the United States requires our management to make
estimates and assumptions which affect the amounts reported in these
consolidated financial statements, the notes thereto, and the disclosure of
contingent assets and liabilities at the date of the financial statements.
Actual results could differ from those estimates.

Results of Operations

Our
operating activities during the three and nine months ended January 31, 2009
consisted primarily of selling our IP telephony software to service providers
and original equipment manufacturers serving the telecom industry, and the
continued development of our IP telephony software products.

Revenue

**Three Months Ended January 31,**2009
      
      
      2008
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof Total
      
      
      
      
      
      of Total
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Revenue by TypeSoftware
      $
      1,305,303
      
      
      64%
      
      $
      1,698,829
      
      
      64%
      
      
      ($393,526
      )
      
      -23%Service
      
      724,758
      
      
      36%
      
      
      935,934
      
      
      36%
      
      
      (211,176
      )
      
      -23%Total revenue
      $
      2,030,061
      
      
      100%
      
      $
      2,634,763
      
      
      100%
      
      
      ($604,702
      )
      
      -23%Revenue by RegionInternational
      $
      923,377
      
      
      45%
      
      $
      1,567,362
      
      
      59%
      
      
      ($643,985
      )
      
      -41%North America
      
      1,106,684
      
      
      55%
      
      
      1,067,401
      
      
      41%
      
      
      39,283
      
      
      4%Total revenue
      $
      2,030,061
      
      
      100%
      
      $
      2,634,763
      
      
      100%
      
      
      ($604,702
      )
      
      -23%


For
the three months ended January 31, 2009, we generated $2,030,061 in revenue
compared to $2,634,763 for the three months ended January 31, 2008. This
represents a decrease of $604,702 from the same period last year. We generated
$1,305,303 in software revenue for the three months ended January 31, 2009
compared to $1,698,829 for the three months ended January 31, 2008, representing
a decrease of $393,526 or 23%. The decrease in software revenue was primarily
due to lower sales through our original equipment manufacturers channel. For the
three months ended January 31, 2009, service revenue was $724,758 compared to
$935,934 for the three months ended January 31, 2008. The decrease of $211,176
or 23% in service revenue was primarily due to lower software sales as service
sales are generally required to implement our software. International revenue
outside of North America decreased by 41% during the three months ended January
31, 2009 compared to the three months ended January 31, 2008, largely due to
decreased sales in Latin America and Europe. North American revenue increased by
4% for the three months ended January 31, 2009 compared to the three months
ended January 31, 2008, primarily due to increased revenue from our original
equipment manufacturers channel.

|                |   | **Nine Months Ended January 31,** |  |  |          | 
|--------------- | - | --------------------------------- |  |  | -------- | 
|                |   | 2009                              |  |  | 2008     | 
|                |   |                                   |  |  | Percent  | 
|                |   |                                   |  |  | of Total | 
|                |   | Amount                            |  |  | Revenue  | 
|Revenue by Type |   |                                   |  |  |          | 
|Software        | $ | 5,267,225                         |  |  | 69%      | 
|Service         |   | 2,392,426                         |  |  | 31%      | 
|Total revenue   | $ | 7,659,651                         |  |  | 100%     | 

27

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**Nine
        Months Ended January 31,**2009
      
      
      2008
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof Total
      
      
      
      
      
      of Total
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Revenue by RegionInternational
      $
      3,347,151
      
      
      44%
      
      $
      3,234,581
      
      
      51%
      
      $
      112,570
      
      
      3%North America
      
      4,312,500
      
      
      56%
      
      
      3,071,683
      
      
      49%
      
      
      1,240,817
      
      
      40%Total revenue
      $
      7,659,651
      
      
      100%
      
      $
      6,306,264
      
      
      100%
      
      $
      1,353,387
      
      
      21%


For
the nine months ended January 31, 2009, we generated $7,659,651 in revenue
compared to $6,306,264 for the nine months ended January 31, 2008. This
represents an increase of $1,353,387 or 21% from the same period last year. We
generated $5,267,225 in software revenue for the nine months ended January 31,
2009 compared to $4,509,969 for the nine months ended January 31, 2008,
representing an increase of $757,256 or 17%. The increase in software revenue
was driven by sales to customers of BridgePort and FirstHand that were acquired
in February 2008. For the nine months ended January 31, 2009, service revenue
was $2,392,426 compared to $1,796,295 for the nine months ended January 31,
2008. The increase of $596,131 in service revenue was primarily due to increase
in service revenue from customers of BridgePort and FirstHand acquired in
February 2008, and professional services related to implementation of our
solutions. International revenue outside of North America grew by 3% during the
nine months ended January 31, 2009 compared to the nine months ended January 31,
2008, driven by Latin American and European software sales. North American
revenue increased 40% for the nine months ended January 31, 2009, compared to
the nine months ended January 31, 2008, driven primarily by sales of software
and services to customers of BridgePort and FirstHand acquired in February 2008.

Operating Expenses

Cost of Sales

Cost
of sales for the three and nine months ended January 31, 2009 and 2008 were as
follows:

January
        31, 2009
      
      
      January
        31, 2008
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof
      
      
      
      
      
      of
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Three months ended
      $
      863,573
      
      
      43%
      
      $
      771,178
      
      
      29%
      
      $
      92,395
      
      
      12%Nine months ended
      $
      3,327,619
      
      
      43%
      
      $
      1,833,707
      
      
      29%
      
      $
      1,493,912
      
      
      81%


Cost
of sales was $863,573 for the three months ended January 31, 2009 compared to
$771,178 recorded for the three months ended January 31, 2008. The increase of
$92,395 was primarily attributable to the amortization of intangible assets
amounting to $458,870 (January 31, 2008 - $303,931), relating to the
acquisitions of BridgePort and FirstHand, partially offset by a reduction in
warranty expense of $60,678.

Cost
of sales was $3,327,619 for the nine months ended January 31, 2009 compared to
$1,833,707 for the nine months ended January 31, 2008. The increase of
$1,493,912 was primarily attributable to the amortization of intangible assets
of $1,514,515 (January 31, 2008  $599,162). The increase in cost of sales was
also attributable to increases in personnel and associated wages on account of
acquisition of BridgePort and FirstHand, third-party software royalties used
with our products, and third-party hardware used with our products, partially
offset by employee reductions across our company during the nine months ended
January 31, 2009.

28

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Sales and Marketing

Sales
and marketing expenses for the three and nine months ended January 31, 2009 and
2008 were as follows:

January
        31, 2009
      
      
      January
        31, 2008
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof
      
      
      
      
      
      of
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Three months ended
      $
      762,398
      
      
      38%
      
      $
      1,016,758
      
      
      39%
      
      
      ($254,360
      )
      
      (25%
      )Nine months ended
      $
      3,431,062
      
      
      45%
      
      $
      2,583,761
      
      
      41%
      
      $
      847,301
      
      
      33%


Sales
and marketing expenses were $762,398 for the three months ended January 31, 2009
compared to $1,016,758 for the three months ended January 31, 2008. The decrease
of $254,360 was primarily attributable to the decrease in sales and marketing
personnel and associated wages and commissions due to the employee
rationalization during August and October 2008.

Sales
and marketing expenses were $3,431,062 for the nine months ended January 31,
2009 compared to $2,583,761 for the nine months ended January 31, 2008. The
increase of $847,301 was primarily attributable to increases in sales and
marketing personnel and associated wages and commissions due to the acquisitions
of FirstHand and BridgePort on February 1, 2008. The increase in costs from
employee compensation amounted to approximately $1.18 million, which was
partially offset by a reduction of approximately $380,000 in professional
services.

Research and Development

Research
and development expenses for the three and nine months ended January 31, 2009
and 2008 were as follows:

January
        31, 2009
      
      
      January
        31, 2008
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof
      
      
      
      
      
      of
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Three months ended
      $
      1,142,497
      
      
      56%
      
      $
      1,545,630
      
      
      59%
      
      
      ($403,133
      )
      
      (26%
      )Nine months ended
      $
      6,263,594
      
      
      82%
      
      $
      3,945,543
      
      
      63%
      
      $
      2,318,051
      
      
      59%


Research
and development expenses were $1,142,497 for the three months ended January 31,
2009 compared to $1,545,630 for the three months ended January 31, 2008. The
decrease of $403,133 was primarily attributable to the decrease in research and
development personnel and associated wages due to the restructuring and
subsequent downsizing in the company during August and October 2008.

Research
and development expenses were $6,263,594 for the nine months ended January 31,
2009 compared to $3,945,543 for the nine months ended January 31, 2008. The
increase of $2,318,051 was primarily attributable to increases in research and
development personnel and associated wages and non-cash stock based
compensation. Research and development personnel were acquired through the
acquisitions of FirstHand and BridgePort on February 1, 2008, resulting in an
increase of approximately $2.32 million for the nine months ending January 31,
2009. There was also a significant increase in the professional services and
consulting expenses of about $300,000.

29

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General and Administrative

General
and administrative expenses for the three and nine months ended January 31, 2009
and 2008 were as follows:

January
        31, 2009
      
      
      January
        31, 2008
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof
      
      
      
      
      
      of
      
      
      
      
      
      Increase /Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Three months ended
      $
      1,524,559
      
      
      75%
      
      $
      1,589,055
      
      
      60%
      
      
      ($64,496
      )
      
      (4%
      )Nine months ended
      $
      5,312,358
      
      
      69%
      
      $
      4,145,223
      
      
      66%
      
      $
      1,167,135
      
      
      28%


General
and administrative expenses were $1,524,559 for the three months ended January
31, 2009 compared to $1,589,055 for the three months ended January 31, 2008. The
decrease of $64,496 was primarily attributable to a decrease in personnel
related costs as a result of restructuring and subsequent downsizing in our
company during August and October 2008.

General
and administrative expenses were $5,312,358 for the nine months ended January
31, 2009 compared to $4,145,223 for the nine months ended January 31, 2008. The
increase of $1,167,135 was primarily attributable to increase in general and
administrative personnel related costs due to acquisition of FirstHand and
BridgePort, partly offset by a reduction in costs due to restructuring. Other
increases in expenses occurred in professional services, non-cash amortization
expenses, as well as office rent, non-cash stock-based compensation and an
increase of about $640,000 in allowance for doubtful accounts.

Restructuring Charges

Restructuring
  charges for the three months ended January 31, 2009 and 2008 were as follows:

January
        31, 2009
      
      
      January
        31, 2008
      
      
      Period-to-Period
        ChangePercent
      
      
      
      
      
      Percent
      
      
      
      
      
      Percentof
      
      
      
      
      
      of
      
      
      
      
      
      Increase/Amount
      
      
      Revenue
      
      
      Amount
      
      
      Revenue
      
      
      Amount
      
      
      (Decrease)Three months ended
      $
      26,268
      
      
      1%
      
      $
      Nil
      
      
      0%
      
      $
      26,268
      
      
      n/aNine months ended
      $
      959,264
      
      
      13%
      
      $
      182,107
      
      
      3%
      
      $
      777,157
      
      
      n/a


Restructuring
charges for the three months ended January 31, 2009 were $26,268 compared to
$nil for the three months ended January 31, 2008. These costs were related to
employee severance arrangements as a result of the consolidation of
administrative, sales, marketing, and research and development departments after
the integration of the acquisitions of NewHeights, FirstHand and BridgePort.

Restructuring
charges for the nine months ended January 31, 2009 were $959,264 compared to
$182,107 for the nine months ended January 31, 2008. These costs 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 acquisitions of NewHeights, FirstHand and BridgePort.

Interest and Other Income

Interest
income for the three months ended January 31, 2009 was $33,627 compared to
$87,707 for the same period in 2008. Interest expense for the three months ended
January 31, 2009 was $1,278 compared to $1,258 for the three months ended
January 31, 2008.

Interest
income for the nine months ended January 31, 2009 was $83,893 compared to
$136,786 for the same period in 2008. Interest expense for the nine months ended
January 31, 2009 was $11,713 compared to $689,810 for the nine months ended
January 31, 2008. Interest expense for the nine months ended January 31, 2008
included both a cash interest component of $52,228 and a non-cash component of
$90,570 relating to the accretion

30

---

of the discount on our convertible debenture, and $540,200
relating to the expensing of unaccreted debt discount on the date of conversion.
On August 2, 2007, in conjunction with the acquisition of NewHeights, our
convertible debenture holders converted their existing debentures in the amount
of $4,000,000 into 2,000,000 shares of common stock at a conversion price of
$2.00 per share.

Liquidity and Capital Resources

As
of January 31, 2009 we had $3,384,110 in cash compared to $6,223,613 at April
30, 2008, representing a decrease of $2,839,503. Our working capital was
$2,647,809 at January 31, 2009 compared to $7,645,909 at April 30, 2008,
representing a decrease of $4,998,100.

Presently,
our cash flow generated from operations is not sufficient to meet operating and
capital expenses. We have incurred operating losses since inception, and we
project this to continue for the next nine to twelve months. At January 31,
2009, we had cash of approximately $3.4 million and working capital of $2.6
million; however, our management projects that under our current operating plan,
we will require approximately $12-14 million to fund our ongoing operating
expenses and working capital requirements for the next twelve months. We
anticipate that this will be funded through cash flow generated from operations,
working capital, potential employee rationalization beyond the completed
employee rationalization and external financing. On July 31, 2008 and October
28, 2008, our company issued 2,433,439 units and 97,402 units, respectively, at
a price of $1.50 (CDN$1.54) per unit for gross proceeds of $3,784,439
(CDN$3,897,497). Each unit consists of one share of common stock in the capital
of our company and one-half of one non-transferable common share purchase
warrant. Each warrant entitles the holder thereof to purchase one share of
common stock in the capital of our company for a period of two years commencing
from the date of grant at an exercise price of US$2.25 per warrant share.

Operating Activities

Our
operating activities resulted in a net cash outflow of $6,263,290 for the nine
months ended January 31, 2009. This compares with a net cash outflow of
$4,473,575 for the same period last year and represents a $1,789,715 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,
2009 was primarily a result of a net loss of $11,617,401 compared to a net loss
of $6,878,875 for the same period last year. Net cash used in operating
activities was primarily due to our net loss partially offset by non-cash
charges including stock-based compensation under SFAS 123R of $1,077,085,
depreciation of $510,907, and amortization of intangible assets of $1,514,515. A
decrease in accounts payable of $765,453 due to the payout of accrued legal and
professional fees consumed cash. This use of cash was partially offset by cash
provided by a decrease in accounts receivable of $2,827,038 that includes
receipt of investment tax credits of $1,061,133.

Investing Activities

Investing
activities resulted in a net cash outflow of $30,854 for the nine months ended
January 31, 2009 resulting primarily from a decrease in deposits and other
assets. This compares with a net cash inflow of $2,034,906 for the same period
last year which resulted primarily from cash acquired on the acquisition of
NewHeights, offset by purchases of equipment and increase in other assets
consisting of costs related to the NewHeights transaction. At January 31, 2009,
we did not have any material commitments for future capital expenditures.

Financing Activities

Financing
activities resulted in a net cash inflow of $3,752,835 for the nine months ended
January 31, 2009 compared to a net cash inflow of $3,502,268 for the same period
last year. On July 31, 2008 and October 28, 2008, our company issued 2,433,439
units and 97,402 units, respectively, at a price of $1.50 (CDN$1.54) per unit
for gross proceeds of $3,784,439 (CDN$3,897,497). Each unit consists of one
share of common stock in the capital of our company and one-half of one
non-transferable common share purchase warrant. Each warrant entitles the holder
thereof to purchase one share of common stock in the capital of our company for
a period of two years commencing from the date of grant at an exercise price of
US$2.25 per warrant share.

31

---

We
intend to seek additional funding through public or private financings to fund
our operations through fiscal 2010 and beyond. However, 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.

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
December 2007, the FASB issued Statement of Financial Accounting Standards No.
141 (revised 2007), Business Combinations("SFAS No. 141R"). This
standard replaces SFAS141 and establishes principles and requirements for an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired and liabilities assumed, any non-controlling interest in the
acquiree, and the goodwill acquired. This standard also establishes disclosure
requirements which will enable users to evaluate the nature and financial
effects of the business combination. This standard is effective for financial
statements issued for fiscal years beginning after December 15, 2008. We are
currently evaluating the impact of this statement on our companys consolidated
financial statements.

In
December 2007, the FASB issued Statement of Financial Accounting Standards No.
160, Non controlling Interests In Consolidated Financial Statements  an
amendment to ARB No.51 ("SFAS No. 160"). This standard Amends ARB 51 to
establish accounting and reporting standards for a non-controlling interest in a
subsidiary and for deconsolidation of a subsidiary. This standard applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. This standard may not be applied before that date. We are
currently evaluating the impact of this statement.

In
March 2008, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 161, Disclosures about Derivative
Instruments and Hedging Activities  an amendment of FASB Statement No. 133
(FAS 161). FAS 161 modifies existing requirements to include qualitative
disclosures regarding the objectives and strategies for using derivatives, fair
value amounts of gains and losses on derivative instruments and disclosures
about credit-risk-related contingent features in derivative agreements. The
pronouncement also requires the cross-referencing of derivative disclosures
within the financial statements and notes thereto. We are currently evaluating
the impact of this statement.

In
May 2008, the FASB issued Statement of Financial Accounting Standards No. 162,
The Hierarchy of Generally Accepted Accounting Principles (FAS 162). FAS 162
is effective 60 days following the SECs approval of the Public Company
Accounting Oversight Board Auditing amendments to AU Section, 411 The Meaning
of Present Fairly in Conformity with Generally Accepted Accounting
Principles. The statement is intended to improve financial reporting by
identifying a consistent hierarchy for selecting accounting principles to be
used in preparing financial statements that are presented in conformity with
U.S. generally accepted accounting principles (GAAP). We are currently
evaluating the impact of this statement.

Item 4T. Controls and Procedures.

Disclosure Controls and Procedures

Disclosure
controls and procedures and other procedures that are designed to ensure that
information required to be disclosed in our reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported, within the time
period 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 reports filed under the
Exchange Act is accumulated and communicated to management including our Chief
Executive Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding required disclosure.

32

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In
connection with this quarterly report, as required by Rule 13a-15 under the
Securities Exchange Act of 1934, we have carried out an evaluation of the
effectiveness of the design and operation of our company's disclosure controls
and procedures. 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
disclosure controls and procedures are effective as at the end of the period
covered by this report.

Changes in Internal Control Over Financial Reporting

During
the quarter ended January 31, 2009, there were no changes in internal control
over financial reporting that have materially affected, or are reasonably likely
to affect, our companys internal control over financial reporting.

PART II  OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. 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 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

33

---

development costs or, if the capital is available, that it will
be on terms acceptable to us. Disruptions in financial markets and challenging
economic conditions have and may continue to affect our ability to raise
capital. 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, as indicated in the audit report included in our Form 10-KSB/A
filed with the SEC on September 3, 2008, raise substantial doubt on our ability
to continue as a going concern. Our financial statements included in this Form
10-Q do not include any adjustments to the recoverability and classification of
recorded asset amounts and classification of liabilities that might be necessary
should we be unable to continue as a going concern.

The current economic environment has adversely affected
business spending patterns, which may have an adverse effect on our
business.

The disruptions in the financial markets and challenging
economic conditions have adversely affected the United States and world economy,
and in particular, reduced consumer spending and reduced spending by businesses.
Turmoil in global credit markets, and recent turmoil in the geopolitical
environment in many parts of the world and other disruptions, such as changes in
energy costs are and may continue to put pressure on global economic conditions.
Our operating results in one or more segments may also be affected by uncertain
or changing economic conditions particularly germane to that segment or to
particular customer markets within that segment. The challenges we have seen in
the United States have expanded overseas. If our customers delay or cancel
spending on their IT infrastructure, that decision could result in reductions in
sales of our products, longer sales cycles and increased price competition.
There can be no assurances that government responses to the disruptions in the
financial markets will restore spending to previous levels. If global economic
and market conditions, or economic conditions in the United States or other key
markets, remain uncertain or persist, spread, or deteriorate further, we may
experience material impacts on our business, operating results, and financial
condition.

We are subject to the credit risk of our customers, which
could have a material adverse effect on our financial condition, results of
operations and liquidity.

We are subject to the credit risk of our customers. Businesses
that are good credit risks at the time of sale may become bad credit risks over
time. In times of economic recession, the number of our customers who default on
payments owed to us tends to increase. If we fail to adequately assess and
monitor our credit risks, we could experience longer payment cycles, increased
collection costs and higher bad debt expense. Additionally, to the degree that
the ongoing turmoil in the credit markets makes it more difficult for some
customers to obtain financing, those customers ability to pay could be
adversely impacted, which in turn could have a material adverse impact on our
business, operating results, and financial condition.

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.

34

---

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 may in the future be subject to damaging and disruptive
intellectual property litigation that could materially and adversely affect our
business, results of operations and financial condition, as well as the
continued viability of our company.

We may be unaware of filed patent applications and issued
patents that could relate to our products and services. Intellectual property
litigation, if determined against us, could:

- result in the loss of a substantial number of existing customers or
  prohibit the acquisition of new customers;
- cause us to lose access to key distribution channels;
- result in substantial employee layoffs or risk the permanent loss of
  highly-valued employees;
- materially and adversely affect our brand in the market place and cause a
  substantial loss of goodwill;
- cause our stock price to decline significantly; and
- lead to the bankruptcy or liquidation of our company.

Parties making claims of infringement may be able to obtain
injunctive or other equitable relief that could effectively block our ability to
provide our services and could cause us to pay substantial royalties, licensing
fees or damages. The defense of any lawsuit could result in time-consuming and
expensive litigation, regardless of the merits of such claims.

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.

Our success and ability to compete depends to a significant
degree on our proprietary technology incorporated in our software. 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 and X-Lite, 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 patents, patents pending, 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.

35

---

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 of
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.

Any prolonged activity in respect of the integration of the
recently acquired businesses with our business could be time consuming and
costly and adversely affect our financial results and stock price.

We completed the acquisition of NewHeights Software
Corporation, a private Canada corporation, FirstHand Technologies Inc., a
private Ontario corporation, and BridgePort Networks, Inc., a private Delaware
corporation. The integration of the business of each respective company with our
business has been, and will continue to be, a time consuming and expensive
process. Any prolonged activity in respect of the integration of the acquired
businesses with our business could divert financial and other resources from our
planned operations, which could negatively affect our results of operations,
lower employee morale, and result in customers cancelling existing orders or
choosing not to place new ones. In addition, the combined operations of our
company and the acquired businesses may not achieve anticipated synergies or
other benefits. If the anticipated benefits of the combined operations are not
realized or do not meet the expectations of financial or industry analysts, the
market price of our common stock may decline.

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 83,076,900 shares of common 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 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.

36

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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 Financial Industry Regulatory Authority, or FINRA, has
adopted sales practice requirements, which may limit a stockholder's ability to
buy and/or sell shares of our common 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 2. Unregistered Sales of Equity Securities and Use of
Proceeds.

On
November 19, 2008, we issued 50,000 shares of our common stock to a holder of
50,000 exchangeable preferred shares of our subsidiary, 6789722 Canada Inc.,
exercising the exchange right. The exchangeable preferred shares of 6789722
Canada Inc. were issued in connection with the closing of the Arrangement
Agreement among our company, 6789722 Canada Inc. and NewHeights Software
Corporation on August 2, 2007. Each exchangeable preferred share of 6789722
Canada Inc. is exchangeable into one share of our common stock at the election
of the holder, or, in certain circumstances, our company. The 50,000 shares of
common stock were issued to one non-U.S. person (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.

On
December 15, 2008, we granted stock options to two officers and a number of
employees to purchase an aggregate of 732,000 shares of our common stock at an
exercise price of $0.44 (CDN$0.55) per common 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 December 15, 2008. We issued the stock options to two 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.

37

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On
March 12, 2009, we issued 279,412 shares of our common stock pursuant to a
Settlement Agreement dated October 31, 2008 between our company, CounterPath
Technologies Inc. and a former officer of our company. We exercised our right to
pay the CDN$142,500 of severance under the Settlement Agreement by way of
issuance of 279,412 shares of our common stock at a deemed price of CDN$0.51 per
share. The 279,412 shares of our common stock were issued to one non-U.S. person
(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.

On
March 12, 2009, we unilaterally reduced the exercise price of 1,282,111 stock
options held by employees and contractors, but not officers and directors, of
our company to $0.47 (CDN $0.60) per common share. No other terms of the stock options
were changed.

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 | Amended Bylaws (incorporated by reference from our
      Current Report on Form 8-K filed on April 22, 2008).                                                        
|    |                                                                                                                                                                      
|(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).           

38

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|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  | 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).                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                     
|10.2  | 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).                                                                                                                 
|      |                                                                                                                                                                                                                                                                                                                     
|10.3  | 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).                                                                                                      
|      |                                                                                                                                                                                                                                                                                                                     
|10.4  | 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).                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                     
|10.5  | 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).                                                                                                    
|      |                                                                                                                                                                                                                                                                                                                     
|10.6  | Form of Convertible Note dated November 30, 2006
      (incorporated by reference from our Current Report on Form 8-K filed on
      December 7, 2006).                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                                     
|10.7  | Form of Warrant Certificate dated November 30, 2006
      (incorporated by reference from our Current Report on Form 8-K filed on
      December 7, 2006).                                                                                                                                                          
|      |                                                                                                                                                                                                                                                                                                                     
|10.8  | Amended Employment Agreement between Donovan Jones and
      CounterPath Solutions R&D Inc., a wholly owned subsidiary of
      CounterPath Solutions, Inc. dated February 1, 2007 (incorporated by
      reference from our Quarterly Report on Form 10QSB filed on March 9, 2007).                                
|      |                                                                                                                                                                                                                                                                                                                     
|10.9  | 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 10QSB filed on March 9, 2007).                                               
|      |                                                                                                                                                                                                                                                                                                                     
|10.10 | 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 8-K filed on
      June 18, 2007).
|      |                                                                                                                                                                                                                                                                                                                     
|10.11 | 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
      8-K filed on June 18, 2007).                                                                   
|      |                                                                                                                                                                                                                                                                                                                     
|10.12 | Subscription Agreement between CounterPath Solutions, Inc
      and Wesley Clover dated as of June 15, 2007 (incorporated by reference
      from our Current Report on Form 8-K filed on June 18, 2007).                                                                                                           
|      |                                                                                                                                                                                                                                                                                                                     
|10.13 | Amended Employment Agreement between Mark Bruk and
      CounterPath Solutions R&D Inc., a wholly owned subsidiary of
      CounterPath Solutions, Inc. dated July 24, 2007 (incorporated by reference
      from our Annual Report on Form 10-KSB/A filed on July 30, 2007).                                       

39

---

|10.14 | 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).                      
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                           
|10.15 | 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).
|      |                                                                                                                                                                                                                                                                                                                           
|10.16 | 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).                                                                                                
|      |                                                                                                                                                                                                                                                                                                                           
|10.17 | 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).                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                           
|10.18 | 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).                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                           
|10.19 | 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).                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                           
|10.20 | 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).                                                  
|      |                                                                                                                                                                                                                                                                                                                           
|10.21 | 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).                                                                                                 
|      |                                                                                                                                                                                                                                                                                                                           
|10.22 | Employment Agreement between Greg Pelling 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).                                       
|      |                                                                                                                                                                                                                                                                                                                           
|10.23 | 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).                        
|      |                                                                                                                                                                                                                                                                                                                           
|10.24 | 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).                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                           
|10.25 | 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).                                           
|      |                                                                                                                                                                                                                                                                                                                           
|10.26 | 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).                                                   
|      |                                                                                                                                                                                                                                                                                                                           
|10.27 | 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).
|      |                                                                                                                                                                                                                                                                                                                           
|10.28 | Form of Subscription Agreement dated July 31, 2008
      between our company and various investors (incorporated by reference from
      our Quarterly Report on Form 10-Q filed on September 15,
  2008).                                                                                                                

40

---

|10.29 | Form of Subscription
        Agreement dated October 28, 2008 between our company and an investor (filed
        herewith).                                                                                                                       
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                   
|10.30 | Settlement Agreement
        amongst Greg Pelling, CounterPath Corporation and CounterPath Technologies
        Inc. dated October 31, 2008 (incorporated by reference from our Quarterly
        Report on Form 10-Q filed on December 15, 2008).
|      |                                                                                                                                                                                                                                                   
|10.31 | Settlement
        Agreement amongst Mark Bruk, CounterPath Corporation, and CounterPath
        Technologies Inc. dated March 12, 2009 (filed herewith).                                                                                         
|      |                                                                                                                                                                                                                                                   
|(14)  | Code of Ethics                                                                                                                                                                                                                                    
|      |                                                                                                                                                                                                                                                   
|14.1  | Code of Business
        Conduct and Ethics (incorporated by reference from our Annual Report on
        Form 10-KSB filed on July 29, 2004).                                                                                                     
|      |                                                                                                                                                                                                                                                   
|14.2  | Code of Business
        Conduct and Ethics and Compliance Program (incorporated by reference from
        our Quarterly Report on Form 10-QSB filed on September 15, 2008).                                                                      
|      |                                                                                                                                                                                                                                                   
|(21)  | **Subsidiaries
        of CounterPath Corporation**                                                                                                                                                                                               
|      |                                                                                                                                                                                                                                                   
|      | CounterPath
        Technologies Inc. (incorporated in the Province of British Columbia, Canada)                                                                                                                                                  
|      |                                                                                                                                                                                                                                                   
|      | 6789722 Canada
        Inc. (incorporated in Canada)                                                                                                                                                                                              
|      |                                                                                                                                                                                                                                                   
|      | FirstHand Technologies
        Inc. (continued into the Province of British Columbia, Canada)                                                                                                                                                     
|      |                                                                                                                                                                                                                                                   
|      | BridgePort Networks,
        Inc. (incorporated in the state of Delaware)                                                                                                                                                                         
|      |                                                                                                                                                                                                                                                   
|      | BridgePort Networks
        (Europe) Ltd. (incorporated in the United Kingdom)                                                                                                                                                                    
|      |                                                                                                                                                                                                                                                   
|      | BridgePort Networks
        K.K. (incorporated in Japan)                                                                                                                                                                                          
|      |                                                                                                                                                                                                                                                   
|(31)  | Section 302
        Certification                                                                                                                                                                                                                 
|      |                                                                                                                                                                                                                                                   
|31.1  | Section
        302 Certification of Donovan Jones (filed herewith).                                                                                                                                                                              
|      |                                                                                                                                                                                                                                                   
|31.2  | Section
        302 Certification of David Karp (filed herewith).                                                                                                                                                                                 
|      |                                                                                                                                                                                                                                                   
|(32)  | Section 906
        Certification                                                                                                                                                                                                                 
|      |                                                                                                                                                                                                                                                   
|32.1  | Section
        906 Certification of Donovan Jones (filed herewith).                                                                                                                                                                              
|      |                                                                                                                                                                                                                                                   
|32.2  | Section
        906 Certification of David Karp (filed herewith).                                                                                                                                                                                 

41

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SIGNATURES

In
accordance with Section 13 or 15(d) 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/ Donovan Jones                                      | 
|--- | ------------------------------------------------------ | 
|    | Donovan Jones                                          | 
|    | President, Chief Executive
      Officer & Director    | 
|    | Date: March 12, 2009                                   | 
|    |                                                        | 
|    |                                                        | 
|    | /s/ David Karp                                         | 
|    | David Karp                                             | 
|    | Chief Financial Officer,
      Treasurer and Secretary | 
|    | Date: March 12, 2009                                   | 

42

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