Castelle to Enter Fax-over-IP Market, Fastest Growing Segment of the Fax Server Market.

MORGAN HILL, Calif. -- Castelle(R) (Nasdaq:CSTL), a leader in 'all-in-one' network fax solutions for the business and enterprise markets, today announced that it will enter into the fax-over-IP (FoIP) market with a new generation of network fax servers that support internet protocol (IP) faxing. The Company expects to release its new generation of IP fax servers by early 2007.

The fastest growing segment of the fax server market from 2004 to 2009 is IP faxing, according to a report by independent research firm, Davidson Consulting. As companies implement full IP telephony solutions or voice over IP (VoIP), the demand for IP fax solutions is also expected to increase. By utilizing the IP faxing T.38 protocol, users are able to send faxes in real time, receiving status and confirmation as the fax is sent over the VoIP network. The advantages of IP faxing include significant savings on long distance charges, accelerated document processing, and centralized management for the network administrator.

"More and more companies are turning to the internet to send and receive documents, including fax," said Scott McDonald, President and CEO of Castelle. "For many of our customers and potential customers, fax is business critical. A fax over IP solution will enable them to employ faxing in a VoIP environment and dramatically reduce the cost of large scale fax applications, while maintaining the benefits that come with implementing an all-in-one fax server."

Castelle is building on twenty years experience in the fax server industry in order to develop an advanced internet fax solution that will integrate with its customers evolving network infrastructures. Castelle's new generation of IP fax servers will offer reliability through redundant hardware, significant cost savings on phone service, and flexibility as customers expand both technologically and geographically.

About Castelle

Castelle (Nasdaq:CSTL), a market leader in 'all-in-one' network fax solutions for business and enterprise, offers organizations every possible network fax option: desktop faxing, production faxing, fax and email integration, workflow application integration, and tools for developing custom fax applications. FaxPress(TM), FaxPress Premier(TM) and FaxPress Enterprise(TM) network fax servers include the FaxPress or FaxPress Plus(TM) software suite that enables administrators and users to perform functions such as managing fax queues, creating reports, and viewing fax archives.

Castelle products are designed to be easy to use and maintain, and provide an economical way for companies to share resources over the network. Castelle was founded in 1987 and is headquartered in Morgan Hill, California. Its products are available through a worldwide network of distributors, resellers, and online retailers. Visit Castelle online at www.castelle.com.

FaxPress(TM), FaxPress Premier(TM), FaxPress Enterprise(TM) and FaxPress Plus(TM) are trademarks of Castelle.

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Forward-Looking Statements

This press release may contain forward-looking statements. These statements are subject to risks and uncertainties. Such risks and uncertainties include possible delay in new product or feature offerings, the ability of the Castelle and other parties to develop and incorporate new features and functions into its products, market acceptance of and demand for new products and features, increasing competition, new products and features from competitors which may compare favorably to the Castelle's products, and possible increased demand for the products of our competitors. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements as contained in our reports to the Securities and Exchange Commission, including our Forms 10-Q and 10-K. The Company assumes no obligation to update the forward-looking information.