QuStream Corporation

QuStream Corporation

December 01, 2008 06:00 ET

CORRECTION FROM SOURCE: QuStream Corporation Reports 2008 Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Dec. 1, 2008) - QuStream Corporation ("QuStream" or the "Company") (TSX VENTURE:QVC) issues a correction from source in respect of the press release that was disseminated by the Company at 4:43 p.m. on November 28, 2008. The comparative EPS for the three months ended September 30, 2007 disclosed in the third quarter highlights chart should have read $0.02 rather than $(0.02). The full text of the corrected press release follows:

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™ 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
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

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

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™ 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.

The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information