Norsat International Inc.
OTC Bulletin Board : NSATF

Norsat International Inc.

August 12, 2005 15:30 ET

Norsat Posts Strong Revenue Gain, Positions Itself for Growth in Second Half of 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 12, 2005) - Norsat International Inc. (TSX:NII)(OTCBB:NSATF) has announced it generated CAD$6.2 million in total revenue for the three months ending June 30, 2005, an 83 percent increase over the same period in the previous year.

Norsat's transition under a new management team led by Board of Directors Chair George King and President and CEO William Coyne III also saw Satellite Systems revenue up 270 percent over the comparable period in 2004, to CAD$4.2 million. The Company's year-to-date sales totaled CAD$8.7 million, a 12 percent increase over the six months ended June 30, 2004.

With investments in sales and marketing, non-recurring non-cash expenses, upgrades to its website and other selling, general and administrative costs, the Company incurred a net loss from continuing operations of CAD$0.8 million, compared to a net loss of CAD$0.4 million over the same period in 2004.

"The strong revenue growth is encouraging, but most important, we're making the investments necessary to build on our strengths and take advantage of emerging opportunities," Coyne said. "We're positioning this Company for growth over the long term while also recognizing the need to realize positive cash flow quickly."

George King was appointed on to the Norsat Board on April 8 and was appointed Chairman May 2, and Bill Coyne joined as President and CEO May 16. King sits on a number of executive boards, has served as a Section 16 officer of a U.S. public company and is a director or trustee of five private companies and two universities. Coyne has extensive operational experience with operating large enterprises such as Sprint and Cable & Wireless and possesses a distinguished history of fostering growth in small technology businesses. James Sharpe, who has a strong financial management and organizational development history, was appointed to the Board of Directors and named Chairman of the Audit Committee on May 20.

"We created our Global Development Council and Board of Advisors with senior professionals from a broad array of compatible industries as a strategic decision designed to take advantage of multiple opportunities for growth," King said. "This expertise, combined with hard work, our sector leading technology and reliability, superior service and strong relationships, should serve us well."

The Company created the Advisory Board and Global Development Council during the second quarter while expanding its sales and marketing initiatives in the Health Care market and into the Homeland Security market in the United States and certain European Union countries. The Company believes these and other steps will result in increased revenue in the near and mid term.

The external Board of Advisors, comprised of consultants with industry expertise and experienced executives with strong industry ties, is responsible for evaluating strategic initiatives such as joint ventures and opportunities for inorganic growth. The Global Development Council includes external senior industry executives, primarily ex-Chairmen, Presidents and CEOs within the telecommunications, satellite, equipment and services industries. Its members are responsible for introducing new sales opportunities and channels through the use of their extensive network of contacts.

During the second quarter, Microwave revenue decreased to CAD$1.9 million, down 13 percent over the three months ended June 30, 2004, as margins eroded slightly and demand fluctuated. The Company has initiated a win-back program to renew relationships with previous Microwave Customers. Satellite Systems represented 55 percent of total sales for the three months ended June 30, 2005, compared to 37 percent for the same period in the prior year.

On June 30, 2005, the Company announced it had been awarded a USD$3.3 million order by the U.S. Army Forces Central Command. The Company is providing its Newslink™ portable satellite terminals, training and maintenance to support the expansion of the U.S. Army's Digital Video and Imagery Distribution System.

In other developments:

- On June 21, 2005, the audit firm KPMG informed the Company of its determination to not accept the appointment as auditors of the Company for the fiscal year ending December 31, 2005. The Company's Board of Directors and Audit Committee of the Board are currently considering a global accounting firm to serve as its successor auditor. There has been no reservation on the Company's financial statements on which KPMG issued a report. KPMG's decision does not result from any disagreement with Company management.

- Norsat has engaged an outside consulting firm specializing in Customer Relationship Management to increase overall productivity and access to important customer and prospect information.

- The Company also expanded its focus beyond the microwave and mobile satellite communication market for the military and media to increase sources of revenue streams, reduce dependency on military business and complement existing revenue streams.

"This first 100 days of transition has been invigorating, and we expect the second half of the year to see us on a continued growth curve," Coyne said.

Forward statements

Statements in this report relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third party manufacturing, managing rapid growth, global sales risks, limited intellectual property protection and other risks and uncertainties described in Norsat's public filings with securities regulatory authorities.

The information should be read in conjunction with the Company's unaudited interim consolidated financial statements and related notes includes therein for the three months ended June 30, 2005, and the audited consolidated financial statements, related notes included therein and Management Discussion and Analysis for the year ended December 31, 2004 included in the Company's 2004 Annual Report. All the Company's financial statements are prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP). Additional information from the year ended December 31, 2004, and other information related to the Company, may be found on the Company's website at

About Norsat International Inc.

Norsat International Inc. designs, engineers and markets intelligent satellite solutions for high-speed data transmission. For more than 25 years, Norsat has built a strong reputation in the field of satellite technology by providing its customers with innovative products and has now sold over 2.5 million products in 87 countries around the world. Norsat's latest innovation is the Norsat OmniLink™ line of portable satellite terminal products that provide rapidly deployable broadband satellite data and video connectivity in areas where traditional communications infrastructure is insufficient, damaged, or non-existent. Norsat's sectors of concentration include Health Care, Military, Emergency Services and Media.

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