QuStream Corporation Reports 2008 Second Quarter Results

TORONTO, ONTARIO, Aug 27 (MARKET WIRE) --
QuStream Corporation ("QuStream" or the "Company") (TSX VENTURE: QVC), an
innovative global provider of high-definition (HD) broadcast solutions
that facilitated NBC's comprehensive coverage of the 2008 Beijing
Olympics, today announced its second quarter fiscal 2008 results.

QuStream Corporation's Chairman, President and CEO, Fred Godard,
commented, "The second quarter was very active as we prepared the launch
of the Integrity(TM) signal processing series. We are on track to launch
both the Integrity(TM) 600 series - a new signal processing platform with
multiple signal processing cards and the new C/S series - a system
specific series of signal processing products. Customer demonstrations
are currently being conducted and these products will figure prominently
in September at the upcoming International Broadcasters Conference show
in Amsterdam. These products are expected to significantly add to revenue
over the next several quarters.

Business activity slowed considerably in the US during the second
quarter, with many projects being delayed due to both economic and
liquidity concerns. We are now in the midst of our third quarter,
typically punctuated by strong US Government purchasing. We typically
experience much stronger revenue in the second half of the year. That
trend is not expected to change for 2008. With the expected surge due to
government spending cycles plus incremental revenue as the Integrity(TM)
line gains momentum, we are looking for a strong second half to the year.

Our earnings suffered in the quarter from the combination of weaker than
expected quarterly revenue, seasonal costs associated with the National
Association of Broadcasters conference plus a non-recurring spike in R&D
spending on technical consultants and other costs associated with the
launch of the Integrity(TM) series. These engineering investments in
product development are expected to payback handsomely over the very near
term."

Second quarter highlights for the three months ended June 30, 2008, as
compared to the three months ended June 30, 2007:

----------------------------------------------------------------------------

C$ expressed in thousands, except per share
amounts
------------------------------------------- Q2 2008 Q2 2007
----------------------------------------------------------------------------
Revenues $ 4,996 $ 6,417
Cost of Sales $ 2,268 $ 2,869
Gross Profit $ 2,728 $ 3,548
Gross Margin 55% 55%
Operational Expenses $ 3,930 $ 3,566
Incl: Selling and Marketing $ 1,724 $ 1,627
Incl: Research and Development $ 1,344 $ 1,081
Other: Foreign Exchange Gain (Loss), Recovery
of Income Taxes $ (443) $ (12)
Net Earnings (Loss) $ (886) $ (25)
EPS (loss) - Basic & Diluted $ (0.04) $ (0.00)
----------------------------------------------------------------------------

Fiscal 2008's first half highlights for the six months ended June 30,
2008, as compared to the six months ended June 30, 2007:

----------------------------------------------------------------------------

C$ expressed in thousands, except per share
amounts Six Months Six Months
------------------------------------------- 2008 2007
----------------------------------------------------------------------------
Revenues $ 9,525 $ 11,331
Cost of Sales $ 4,299 $ 5,019
Gross Profit $ 5,226 $ 6,312
Gross Margin 55% 56%
Operational Expenses: $ 7,144 $ 6,676
Incl: Selling and Marketing $ 3,023 $ 2,870
Incl: Research and Development $ 2,366 $ 2,098
Other: Foreign Exchange Gain (Loss), Recovery
of Income Taxes $ (730) $ (72)
Net Earnings (Loss) $ (1,375) $ (322)
EPS (loss) - Basic & Diluted $ (0.06) $ (0.01)
----------------------------------------------------------------------------

The 2008 Second 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 www.qustream.com.

Revenues for the second quarter of fiscal 2008 were $5.0 million
compared with $6.4 million in the same period last year, a decrease of
22%. Revenues for the six-month period were down less so, at 16% to $9.5
million compared to $11.3 million in the same period last year.
Government revenue, QuStream's largest customer segment, actually
increased 31% in the second quarter of 2008 compared to 2007 but this was
offset by a decrease in commercial revenue of 34%. When comparing the
revenues for the six-month periods, government and commercial revenues
decreased 21% and 14% respectively over the previous year. It is
important to note that excluding the exchange rate effect from converting
sales posted in US dollars into Canadian dollars for reporting purposes,
revenues for the second quarter of fiscal 2008 were down 17% over last
year and revenues for six months decreased by 7% over 2007's first half.

QuStream's gross margins continue to be maintained presently at 55%,
within the Company's desired range of 55%-60%.

As described above, the slower sales and weak US dollar, combined with
accelerated investment in R&D, adding to our sales teams, as well as
one-time charges associated with legal and credit financing costs, caused
the Company to post a net loss for the second quarter of $0.9 million or
$(0.04) per share. This compares to $(0.03) million or $0.00 per share
for the second quarter of fiscal 2007. For the six months ended June 30,
2008, the net loss was $1.4 million or $(0.06) per share compared to
$(0.3) million or $(0.01) per share over 2007.

Bookings (see Note 1 below) for the second quarter were US$3.6 million
compared with US$5.8 million in the same period last year, an overall
decrease of 38% reflecting decreased bookings at June 30, 2008, in both
government and commercial segments.

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.

The 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

Copyright 2008, Market Wire, All rights reserved.

-0-