QuStream Corporation Reports 2008 Third Quarter Results

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 third quarter fiscal 2008 results.


QuStream Corporation's Chairman, President and CEO, Fred Godard, commented, "The
impact of the liquidity crisis was felt in our third quarter as the turmoil in
the financial markets caused a number of pending projects to be delayed. The
fundamental market forces which drive the demand for our products remain intact.
Accordingly, we remain optimistic about our long term prospects but at the same
time, we are taking a more cautious view in the short term and are conducting
our business in a manner so as to conserve resources. 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
were featured prominently at the International Broadcasters Conference show in
Amsterdam and the customer response was enthusiastic."


The Company experienced a significant decrease in business activity in the third
quarter as the economic slow down and liquidity concerns adversely impacted our
revenue expectations. The third quarter is traditionally the strongest quarter
due to increased US government purchasing. Although government revenue was
relatively flat in the third quarter of 2008 compared to the same period last
year, the sharp decrease in commercial business in the quarter was the main
reason for the overall decrease in revenue in the third quarter.


In light of the significant general economic uncertainty and the potential
adverse impact on the Company's near term outlook, we have initiated cost
reduction programs commencing at the start of our fourth quarter plus have taken
valuation allowances with respect to inventory and future tax assets. Our
inventory reserves were increased by $1.6 million in the third quarter, which
reduced our gross margins from 55% to 24% in the third quarter and from 55% to
44% for the nine months ending September 30, 2008. In addition, the Company took
a valuation allowance in the amount of $1.8 million related to future tax assets
no longer meeting the more likely than not criteria.


Third quarter highlights for the three months ended September 30, 2008, as
compared to the three months ended September 30, 2007:




----------------------------------------------------------------------------
C$ expressed in thousands, except per share amounts       Q3 2008   Q3 2007
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Revenues                                                  $ 5,057   $ 7,766
Cost of Sales                                             $ 3,855   $ 3,476
Gross Profit                                              $ 1,202   $ 4,290
Gross Margin                                                   24%       55%
Operational Expenses                                      $ 3,322   $ 3,539
 Incl: Selling and Marketing                              $ 1,401   $ 1,459
 Incl: Research and Development                           $ 1,091   $ 1,086
Other: Foreign Exchange Gain (Loss), 
 Provision for Income Taxes                               $(1,077)  $  (295)
Net Earnings (Loss)                                       $(3,344)  $   448
EPS (loss) - Basic & Diluted                              $ (0.14)  $ (0.02)
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Highlights for the nine months ended September 30, 2008, as compared to 
the nine months ended September 30, 2007:

----------------------------------------------------------------------------
                                                             Nine      Nine
C$ expressed in thousands,                                 Months    Months
except per share amounts                                     2008      2007
----------------------------------------------------------------------------
Revenues                                                 $ 14,582  $ 19,097
Cost of Sales                                            $  8,154  $  8,495
Gross Profit                                             $  6,428  $ 10,602
Gross Margin                                                   44%       56%
Operational Expenses:                                    $ 10,466  $ 10,215
 Incl: Selling and Marketing                             $  4,424  $  4,329
 Incl: Research and Development                          $  3,457  $  3,184
Other: Foreign Exchange Gain (Loss), 
 Provision for Income Taxes                              $   (347) $   (223)
Net Earnings (Loss)                                      $ (4,719) $    126
EPS (loss) - Basic & Diluted                             $  (0.20) $   0.01
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The 2008 Third 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.


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.



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.