QuStream Corporation Announces 2008 First Quarter Results

TORONTO, ONTARIO, May 20 (MARKET WIRE) --
QuStream Corporation ("QuStream" or the "Company") (TSX VENTURE: QVC),
an innovative global provider of high-definition (HD) broadcast solutions
selected by NBC to outfit their facilities for coverage of the 2008
Beijing Olympics, today announced its first quarter fiscal 2008 results.

QuStream Corporation's Chairman, President and CEO, Fred Godard,
commented, "The first quarter, which is traditionally our softest
quarter, posted satisfactory financial results. Whereas we did experience
a slow down in business activity beyond seasonal norms heading into the
first quarter, activity resumed mid-way through the quarter. We continue
to monitor the economic situation and its impact upon our business
environment closely. Notwithstanding, what we find most encouraging are
all of the factors signaling that strong growth is ahead of us, which we
project to accelerate in the second half of 2008."

QuStream exhibited its growing product line and innovative integration
methods for both mobile and fixed broadcast facilities last month at the
National Association of Broadcasters Convention in Las Vegas. Introducing
new lines of products each year has propelled the Company forward and is
a critical component contributing to future bookings and revenue growth.
QuStream's gross margins continue to be on target as the Company gears up
to expand sales into more fixed facilities in North America and
aggressively pursue opening up new international markets for all its
products and equipment. QuStream continues to invest in the future growth
of broadcast technology solutions taking advantage of the industry's
accelerating conversion to HD and the corresponding explosive demand for
HD content.

First quarter highlights for the three months ended March 31, 2008, as
compared to the three months ended March 31, 2007:

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C$ expressed in thousands, except per share amounts Q1 2008 Q1 2007
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Revenues $ 4,529 $ 4,914
Cost of Sales $ 2,031 $ 2,150
GGross Profit $ 2,498 $ 2,764
Gross Margin 55% 56%
Operational Expenses $ 3,214 $ 3,110
Incl: Selling and Marketing $ 1,299 $ 1,243
Incl: Research and Development $ 1,022 $ 1,017
Other: Foreign Exchange Gain (Loss) $ 1 $ 25
Net Earnings (Loss) $ (489) $ (297)
EPS (loss) - Basic & Diluted $ (0.02) $ (0.01)
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The 2008 First Quarter Financial Statements and Management's
Discussion & Analysis have been filed with www.sedar.com and can be
viewed on the Company's website at
http://www.qustream.com/IC_financial.htm.

Revenue for the first quarter of fiscal 2008 was down 8% in Canadian
dollar terms from the same quarter in 2007. This decrease was a result of
the effect of translation from US dollars, the currency in which the
revenue was generated, into Canadian dollars for reporting purposes. The
sharp appreciation of the Canadian dollar over the ensuing period created
a net reduction in reported revenue even though in constant US dollars
terms, revenue increased 8% in the first quarter of 2008 over the same
period in 2007.

Gross margins were 55%, within our expected range of 55% to 60%.
Operating expenses for research and development and sales and marketing
were higher than last year as we continue to invest in new product
development and market channel access, in anticipation of the official
launch of the Integrity platform early in the third quarter of 2008.

As a result of these investments, first quarter net earnings for 2008
decreased, from a loss of $297, 000 for the same period in the previous
year, to a loss of $489,000.

Bookings which are valued in US dollars (see Note 1 below) were US$5.1
million for the first quarter of 2008 compared with US$5.6 million in the
same period last year, a decrease of 10%. As discussed in the recent Q4
conference call, a short term fall off in business activity was
experienced beginning in late fiscal 2007 and continuing into early
fiscal 2008. Whereas business activity normalized later in the quarter,
it was too late to make up to 2007 levels.

The backlog, also valued in US dollars, that was carried forward from Q4
2007 into Q1 2008 was US$2.1 million as compared to US$1.5 million
carried into Q1 2007.

Looking ahead to the next generation of QuStream products, the
Integrity(TM) 600 series -- a new signal processing platform with
multiple signal processing cards, was shown at the National Association
of Broadcasters in April 2008. Customer interest was strong and several
early units have been ordered for later shipment. Full production volumes
are expected to commence during the third quarter.

QuStream's mission is to become a global leader in video infrastructure.
The Company's goals for 2008 will build upon the substantial progress
made in 2007 by advancing the areas of:

(i) Sales to US Government -- currently QuStream's largest North American
customer category;

(ii) Further penetration of the new customer segment - fixed facility
broadcasters;

(iii) Sales internationally for all product lines geared to both mobile
units and fixed facilities

(iv) New products:

(v) Maintain gross margins between 55% to 60%;

(vi) Maintain investment in research and development to ensure future
innovations and technology solutions into new product lines;

(vii) As always, Management will evaluate potential acquisition targets
and pursue any opportunistic situation(s) that may arise.

Factoring together all that QuStream has in place, the outlook for 2008
continues to be to grow revenue profitably.

QuStream will hold a conference call on Wednesday, May 21, 2008, at 10:00
am (ET) to discuss these results. Please call local 416-695-6623 or toll
free 1-888-818-4097 to join our conference call. To listen to this call
at a later date please call local 416-695-5800 / or toll free 1
800-408-3053 and use the pass code 3261458. The recording will be
available here until Jun 04, 2008 11:59 PM.

Important to Note 1:

The Company uses terms such as bookings, shipments and backlog. These
terms are not defined by generally accepted accounting principles (GAAP).
Usage of these terms may vary from the usage adopted by other companies.
QuStream combines bookings (purchase orders received by the company),
shipments (orders shipped by the company and invoiced) and closing
backlog (opening backlog, plus bookings less shipments) to provide a
useful indictor for determining how the products are being received by
the market and the economic health of the market as it relates to demand
for QuStream's products. Closing backlog is not a guarantee of future
revenues and provides no information about the timing on which future
revenue may be recorded. Bookings, shipments and backlog are reported in
US dollars to reflect the underlying currency of the majority of such
contracts and, therefore, reduce the volatility that would result from
converting the measure to Canadian dollars.

About QuStream Corporation:

QuStream, embracing the PESA brand and FortelDTV(TM) technology, is a
global provider of integrated solutions to the creators and distributors
of professional video content including the high-definition television
and professional audio/video market segments. QuStream is headquartered
in Toronto, Canada, with offices in the U.S., Europe and Asia. For more
information, visit QuStream at www.qustream.com.

To receive Company news by email, please send a message to
sasha@chfir.com indicating "QuStream news" on the subject line.

Forward-Looking Statements

The statements made in this press release that are not historical facts
contain forward-looking information that involves risk and uncertainties.
All statements, other than statements of historical facts, which address
QuStream's expectations, should be considered forward-looking statements.
Such statements are based on management's exercise of business judgment
as well as assumptions made by and information currently available to
management. When used in this document, the words "may", "will",
"anticipate", "believe", "estimate", "expect", "intend" and words of
similar import, are intended to identify any forward-looking statements.
You should not place undue reliance on these forward-looking statements.
These statements reflect our current view of future events and are
subject to certain risks and uncertainties as contained in the Company's
filings with Canadian securities regulatory authorities, which in
relation to this press release include, but are not limited to, our
expected fiscal 2008 organic revenue growth, our expected future design
wins, and our expected market share across various customers and product
segments. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, our actual results
could differ materially from those anticipated in these forward-looking
statements. We undertake no obligation, and do not intend, to update,
revise or otherwise publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the
date hereof, or to reflect the occurrence of any unanticipated events.
Although we believe that our expectations are based on reasonable
assumptions, we can give no assurance that our expectations will
materialize.
TSX Venture Exchange Inc. has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.

Contacts:
QuStream Corporation
Frederick L. Godard
Chairman, President and CEO
(416) 385-2323 x 200
Email: fgodard@qustream.com
Website: www.qustream.com

CHF Investor Relations
Christopher Haldane
Account Manager
(416) 868-1079 x 237
Email: chris@chfir.com

CHF Investor Relations
Sasha Abrams
Associate Account Manager
(416) 868-1079 x 246
Email: sasha@chfir.com

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