Press Release

Ottawa, Ontario – May 13, 2008 - Espial® Group Inc. ("Espial" or the "Company"), (TSX:ESP), a leader in the delivery of IPTV middleware and applications, today announced its first quarter financial results for the three-month period ended March 31, 2008.

Q1 HIGHLIGHTS:

•  Signed a regional European reseller agreement with a major Network Equipment Vendor (NEV);

•  Delivered Evo® Server Release 3.1.0 supporting a reference ecosystem including set-top boxes, VOD servers and DRM technology;

•  Demonstrated Evo IPTV Service Platform to customers and thought leaders at IPTV World Forum in London, England.

For the three-month period ended March 31, 2008 the Company reported revenues of $1.3 million compared to revenues of $2.2 million for the three months ended March 30, 2007. For the three-month period, net loss was to $1.8 million, or $0.19 per share, compared to a net loss of $1.9 million last year, or $0.13 per share.

“We are pleased with the progress we have made on reducing our costs, while maintaining our commitment to our customers and leading edge products” noted Jaison Dolvane, President and CEO of Espial. “Our total sales and operating sales costs in Q3 of fiscal 2007 was $3.9 million when we announced the intention to reduce our costs to reflect the emerging nature of the IPTV industry. In Q1 2008, our total costs were $3.4 million, which includes $0.1 million of non-cash depreciation and stock compensation. Our cash position remains strong at $14.5 million.”

“Revenue and consistency of revenue is still a difficult measure for the near-term success of our business. The IPTV industry continues to be very strategic for telecom and cable companies globally, who have displayed strong commitment towards IPTV. However, the integration, deployment and subscriber ramp for IPTV has proven more difficult than initially expected, and as such is taking longer than previous forecasts” commented Mr. Dolvane. “Our key objectives for 2008 are to deploy our lead customers for the Evo IPTV Service Platform, turn up a new or current channel partner and to secure 2 new major customers for the Evo IPTV Service Platform. During the quarter we made strong progress on new channel prospects and major opportunities, as significant steps towards accomplishing our objectives in 2008. Through these, we will continue to strengthen the foundation of our business to leverage future industry growth.

During the first part of Q2, Mr. Dolvane assumed responsibility for sales and services. Dave Williamson, the former VP of Sales and Services, left the company to pursue other interests.

Q1 Financial Results

First quarter revenues were $1,274,286 compared with revenues of $2,179,462 in the same period a year ago. First quarter software license and royalty revenues were $519,649 compared to software license and royalty revenues of $1,338,916 in the first quarter of fiscal 2007. Professional services for the first quarters of 2008 and 2007 were $404,366 and 434,983 respectively. Maintenance and support revenues for the first quarter were $350,271 compared to $405,563 last year.

Gross margins for the first quarter of fiscal 2008 were 48% compared with 76% in the first quarter of fiscal 2007.

Operating expenses in the first quarter of fiscal 2008 were $2,707,957, compared to $2,765,414, in the first quarter of fiscal 2007.

Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) for the first quarter of fiscal 2008 was a loss of $1,986,742 compared to a loss of $1,046,733 in fiscal 2007.

Net loss in the first quarter was $1,802,803 compared to a loss of $1,909,079 last year.

Cash and cash equivalents at March 31, 2008 was $14,531,094.

The Company will be hosting a conference call to discuss the second quarter financial results on May 13, 2008 at 5:00 PM Eastern Standard Time (EST). The phone number to join the results discussion is:

•  Toll line - 416-646-3095

•  Toll free line - 800-814-4859

About Espial (www.espial.com)

Espial provides IPTV middleware and applications that enable superior quality of experience, fast application performance, carrier-grade scalability, and open extensibility, all at a lower total cost of ownership. Espial's Evo® IPTV Service Platform includes Evo Client, Evo Server, Evo Browser, Evo BML Browser, Evo Future-Proof Framework™ (FPF), Evo SkinTones™ and applications such as Electronic Program Guide, Video on Demand, Digital Video Recorder, Content Portal, Games, and Triple Play.

Forward Looking Statement

This press release contains statements that are forward-looking in nature. Statements preceded by the words believe, expect, anticipate, plan, intend, continue, estimate, may, will, and similar expressions are forward-looking statements. Forward-looking statements are based on Espial's beliefs and assumptions based on information available at the time the assumption was made. Forward-looking statements relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, new services, market forces, commitments and technological developments, relating to the Espial. By its nature, such forward-looking information is subject to various risks and uncertainties which could cause Espial's actual results and experience to differ materially from the anticipated results or other expectations expressed. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this document, and Espial undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

In addition to our GAAP results, Espial discloses a “ Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) ”, which is referred to as a “Non-GAAP Measure”. Because the Non-GAAP Measure is not calculated in accordance with GAAP, it is used by management as a supplement to, and not an alternative to, or superior to, financial measures calculated in accordance with GAAP.  

Inquiries from financial press or analysts:

ESPIAL GROUP INC.

Consolidated Balance Sheet

(in Canadian dollars)

ESPIAL GROUP INC.

Consolidated Statement of Operations and Comprehensive Loss

(in Canadian dollars except share data)