Viper Networks CEO Outlines Growth Strategy in Special Letter to Shareholders; Company Projects Sales of $10 million and Profitability in 2006.

SAN DIEGO -- Viper Networks, Inc. (OTC:VPER), a major provider of wholesale and retail Voice-over-Internet Protocol (VoIP) services, today released a Special Letter to Shareholders from its new President and Chief Executive Officer, Farid Shouekani. The letter offered a progress report on the Company, outlined the firm's growth strategy and projected significant revenue growth and achievement of profitability in 2006.

The text of the letter follows:

Dear Shareholder,

I am writing this, my first letter to you as President and Chief Executive Officer of Viper Networks, Inc., to update you on the progress of the Company and tell you about its prospects for significant growth in coming months. But first, I would like to thank you for your continued interest in, and support for, Viper. If you have invested in us for a significant amount of time -- as I know many of you have -- Viper owes you its gratitude, and we hope to reward you in the near future with substantial per-share price appreciation as we build a strong organization. It is good to have people like you on board. To newer shareholders, I say thank you and welcome. You are buying Viper at a very opportune time.

So how does Viper Networks intend to build a strong organization and boost share value? The answer can be found in recent actions that the Company has taken to spur growth and raise share value. Taken together, these steps mark the completion of Viper's rebirth, a challenging process of filing financial statements, creating a more stockholder-friendly capital structure, changing top management, increasing sales while reducing expenses and finding new sources of funding. Now, as this process comes to completion, Viper can point to a number of accomplishments since the beginning of the year.

First, since early this year the Company has sharply reduced its share number of shares outstanding, in large part by the return of personal shares held by management. Out of 175 million shares outstanding on March 31, 2005, Viper has retired 53 million, for a reduction of more than 30%. Among the retired shares were 16.5 million given back by Viper senior executives in return for warrants to buy the shares back at $0.25 -- more than two-and-a-half times the recent market price. The high exercise price of the warrants provides a robust incentive for me and other top managers to take the actions necessary to raise the share price for everyone.

Capital Plan to Raise $20 Million or More

Second, the Company has sharply accelerated its raising of capital, with an eye toward stepping up its pace of acquisitions. The new financing effort, which I initiated when I became Chief Executive Officer, draws on my own contacts with sources of overseas capital, specifically in Saudi Arabia, and it is already bearing fruit. As of September 9, 2005, we have raised $500,000 with commitments for an additional $1 million. We will be using these funds to acquire several Voice-over-Internet Protocol (VoIP) retail providers, increase sales and marketing efforts and expand our global VoIP network. In the next round, between now and the first Quarter of 2006, I expect to raise an additional $5 million. My target for a third round in 2006 is even higher: $10 million to $15 million. So the total raised through the end of next year could be $20 million or more. This would not only be Viper Networks' largest capital infusion ever, but also will require no borrowing. One of our achievements over the past year has been to eliminate long-term debt. We intend to stay debt-free going forward.

Together, these actions have put Viper in position to increase sales sharply and to achieve profitability by the second half of 2006. And with our stock retirement program, the per-share impact of that profit will be amplified.

Specifically, we project revenue of over $10 million in 2006, up from expected sales of $4.3 million in 2005 and well above the revenue of $4.25 million reported in the latest 12-month period, ending June 30, 2005. We also expect our net loss per diluted share to narrow from ($0.08) in 2004 to ($0.04) in 2005, with the break-even point being reached in the second half of 2006.

In the latest reporting quarter, ending June 30, 2005, we reported revenues of $858,338, down from $1.24 million in the second quarter of 2004. Our operating losses were slightly less, however, down to $828,680 from $888,944, as was our net loss -- down to $347,250 from $2,020,074. This improvement in operating results and at the bottom line was due mainly to reductions in our sales, general and administrative expenses. We plan to continue that cost-cutting trend, and we expect gross margins to improve as we orient our revenue mix toward more-profitable retail business.

Plenty of Room to Grow

If our projections sound over-optimistic, given the challenges we have faced in the recent past and the large number of VoIP competitors, I ask you to consider some facts about the VoIP market -- and some of our unique strengths. That market, first of all, is easily growing fast enough to make room for a herd of companies, without pinching their growth. In the long run, of course, only the best-run companies survive, but VoIP growth is still in the early boom stages, where competitive pressure and competitive pricing are not serious inhibiting factors. To give you some idea of the growth ahead, here are several recent research-firm estimates of the future size of the American VoIP market, now at about 1 million households: 17.5 million households by the end of 2008 (Yankee Group), and (Jupiter Research) 27 million in 2009 (IDC). And that's just in the U.S.

One of Viper Networks' strengths is its global marketing focus. If anything, we are leaning more toward overseas than domestic U.S. sales, and a worldwide strategy creates certain competitive advantages. Overseas markets tend to be under-served and fragmented. We have found that we can get first-mover advantage in many foreign countries where Internet usage is high and traditional phone service can be problematic. Put those two factors together and you get high demand for Internet-based phone service, the potential for rapid sales growth from an already large group of Internet-connected customers. This is why Viper has signed more than 30 overseas marketing and distribution deals so far, with more in the works.

Viper is also unusual, if not unique, among VoIP providers in selling pre-paid rather than post-paid service. We are aiming at consumers in the U.S. and abroad who want to avoid a monthly commitment and pay only for the calls they make, when they make them. And the prices they pay are competitive with those of other VoIP services -- less than 3 cents per minute from the U.S. to land-line numbers in the U.K., for instance, and 2.2 cents per minute to land lines in Paris.

Integrated for Quality and Access

Finally, Viper is an integrated VoIP provider, up to the "last mile" connections to homes and businesses. We not only provide the VoIP hardware and retail service, but we also own the network that carries our calls, as well as those of third parties. This network business, which was our main revenue producer in recent years, is expected to contribute a smaller share of sales as our retail VoIP business expands. But it will remain as a revenue stream and, importantly, a means of ensuring first-rate retail service. When we own our own network, of course, we control its availability and ensure its quality.

In recent months we have started building on these strengths with several initiatives, including a major overseas distribution deal in the Philippines. In the latter arrangement, announced in June 2005, we have signed a master distribution agreement with Asian High Technology Corporation (AHTC), making AHTC the sole distributor of our VoIP service in the Philippines. This gives us direct distribution and marketing access for the first time to this nation of 80 million. The potential of this VoIP service market is further enhanced by the presence of 8 million Filipino expatriates in the U.S. and elsewhere. We have also signed recent distribution agreements in Chile and the Bahamas.

To sum up, I am glad you are on board with us at this exciting time. I see plenty of reason to believe that your participation in the VoIP market through your investment in Viper Networks will be highly rewarding. Again, I thank you for your interest and commitment, and I expect to report some gratifying results the next time I write.

Yours truly,

    Farid Shouekani
    President and Chief Executive Officer
    Viper Networks, Incorporated

If you would like to be added to Viper Networks' Investor list, please send a request to [e-mail].

About Viper Networks Inc.

Viper Networks, Inc. has built "Your Internet Phone Company" by refining technology and expanding its state-of-the-art global VoIP (Voice-over-Internet Protocol) network. Viper customers can place calls to any phone in the world at substantial savings using an existing dial-up or broadband Internet connection, and they receive calls through a unique IP-PSTN switching network. Viper Networks is a publicly traded corporation with headquarters in San Diego, Calif. For more information about Viper Networks, Inc., please visit its Web site at www.vipernetworks.com.

Safe Harbor Statement: Except for the historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from the results predicted and reported results should not be considered an indication of future performance. In addition to the factors discussed in the filings with the Securities and Exchange Commission, among the other factors that could cause actual results to differ materially are the following: adverse changes in the business conditions and the general economy; competitive factors, such as rival companies' pricing and marketing efforts; availability of third-party material products at reasonable prices; the financial condition of the customer; risks of obsolescence due to shifts in market demand; and litigation involving product liabilities and consumer issues. Viper Networks, Inc. cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Viper Networks Inc. expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the company's expectations or any change in events, conditions or circumstances on which any such statement is based.