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[whyme2005]

CSTL $3.0 MOVING UP..EARNINGS THIS WEEK...SOLID LOW FLOATER CSTL COULD BE A BIG GAINER THIS WEEK AFTER EARNINGS.

CSTL, with only 1.8m shares in the float and $1.6/share cash and ZERO debt, will report 2Q 2006 earnings this week.

CSTL's CEO Mr. MacDonald issued the following bullish update a few weeks ago:

http://biz.yahoo.com/bw/060505/200605050...

Recent insider buying is also encouraging:

http://www.secform4.com/insider/showhist...

On April 26, 2006, VSTL reported its 12th consecutive profitable quarter. CSTL's 1Q 2006 was the best quarter since 2000. Following sequential revenue increases the prior three quarters.


1 Q 2006 EARNINGS SUMMARY:

-- 1Q 2006 Revenues $2.99M vs. $2.59M...up 15%

-- 1Q 2006 Net income 5c/share vs. 3c/share in 1Q 2005.

-- $7.14M cash or $1.6/share...Up $640K From 1Q 2005.

-- ZERO DEBT


*** CSTL HIGHLIGHTS:

- Float: 1.8M shares

- Outstanding shares: 4M

- Market cap $13M

- P/S of 1.15

- P/E less than 15

REGARDING 1Q 2006, Mr. MACDONALD SAID"

"Our first quarter of 2006 was a clear reflection of Castelle's successful expansion into the enterprise market with FaxPress Premier(TM)," ...... "FaxPress Premier has been a significant contributor in helping Castelle capture additional market share, and has been one of the key drivers behind our revenue and earnings growth. Also in the first quarter, Castelle introduced a more robust digital fax server, FaxPress Enterprise(TM), to support the increasing demand for installations in digital environments. FaxPress(TM), FaxPress Premier and FaxPress Enterprise have been well received by new and existing customers worldwide, and we look forward to expanding our share of the fax server market."

Castelle Continues to Strengthen its Balance Sheet

Castelle's balance sheet as of March 31, 2006 reported cash and cash equivalents of $7.14 million, up 5.6% from December 31, 2005. This translates to nearly $1.59 per fully diluted share. Cash has not been at this level since the second quarter of 1997. Castelle remains free of long-term debt.

Strategic Partnerships to Support New Growth Initiatives

Castelle has recently taken several significant steps to expand its product offerings and establish new solution partnerships. In addition to the introduction of FaxPress Enterprise in March, Castelle announced that FaxPress Premier has been approved by Fujitsu Limited as an "Interstage® Enabled" product in Japan. In April, Castelle announced the integration of its fax servers with Ricoh's new GlobalScan 2.0 software to provide a complete fax solution for all electronic and paper-based documents.



ABOUT CSTL:

Castelle (Nasdaq:CSTL - News), a market leader in "all-in-one" network fax solutions for business and enterprise, develops office automation systems that allow organizations to easily implement faxing over local area networks and the Internet. Castelle's network fax servers, FaxPress(TM), FaxPress Premier(TM), and FaxPress Enterprise(TM) provide a simple way to integrate fax with email, desktop and back-end applications. 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.