QVC Qustream Corporation

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:

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C$ expressed in thousands, except per share
 amounts
-------------------------------------------           Q2 2008       Q2 2007
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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)
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Fiscal 2008's first half highlights for the six months ended June 30, 2008, as compared to the six months ended June 30, 2007:

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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)
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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