CC Filed by Filing Services Canada Inc. 403-717-3898

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bm4ypMfl9Omqo6ZlVHI0TBnRqpPBREfm3XODabBgA0qprsR9kEqED8CePlFOLduI WB1Q/LWY3MPt9ubAomhZdA== 0001137171-09-000597.txt : 20090731 0001137171-09-000597.hdr.sgml : 20090731 20090731151001 ACCESSION NUMBER: 0001137171-09-000597 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20090730 FILED AS OF DATE: 20090731 DATE AS OF CHANGE: 20090731 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Norsat International Inc. CENTRAL INDEX KEY: 0000748213 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 000000000 STATE OF INCORPORATION: A1 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-12600 FILM NUMBER: 09977042 BUSINESS ADDRESS: STREET 1: 100-4020 VIKING WAY CITY: RICHMOND STATE: A1 ZIP: V6V2L4 BUSINESS PHONE: 6048212800 MAIL ADDRESS: STREET 1: 100-4020 VIKING WAY CITY: RICHMOND STATE: A1 ZIP: V6V2L4 FORMER COMPANY: FORMER CONFORMED NAME: NORSAT INTERNATIONAL INC / DATE OF NAME CHANGE: 20000426 FORMER COMPANY: FORMER CONFORMED NAME: NII NORSAT INTERNATIONAL INC DATE OF NAME CHANGE: 19970210 FORMER COMPANY: FORMER CONFORMED NAME: NORSAT INTERNATIONAL INC DATE OF NAME CHANGE: 19900515 6-K 1 norsat6k073109.htm NORSAT INTERNATIONAL FORM 6-K CC Filed by Filing Services Canada Inc. 403-717-3898

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For July 30, 2009

NORSAT INTERNATIONAL INC.

(Registrant's Name)

Suite 110 - 4020 Viking Way
Richmond, British Columbia
Canada V6V 2N2

(Address of principal executive offices)

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F

Form 20-F

Form 40-F

Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes

If 'Yes' is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b).

Not applicable

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Norsat International Inc.

(Registrant)

Date: July 30, 2009

By: Signed "Eugene Syho"

Eugene Syho

Chief Financial Officer

Exhibit List

32.1 CEO Certification

32.2 CFO Certification

99.1 Financial Statements for the period ended June 30, 2009

99.2 Management's Discussion & Analysis

EX-32.1 2 ceocert.htm CERTIFICATION CC Filed by Filing Services Canada Inc. 403-717-3898

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Amiee Chan, President and Chief Executive Officer of Norsat International Inc., certify the following:

Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of Norsat International Inc. (the “issuer”) for the interim period ended June 30, 2009.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings..

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings..

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is by the Committee of Sponsoring Organizations (COSO).

i.2

N/A

i.3

N/A

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2009 and ended on June 30, 2009 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: July 29, 2009

“Amiee Chan”

_______________________

Dr. Amiee Chan, Ph.D, MBA

President and CEO

EX-32.2 3 cfocert.htm CERTIFICATION CC Filed by Filing Services Canada Inc. 403-717-3898

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Eugene Syho, Chief Financial Officer of Norsat International Inc., certify the following:

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii)

(b)

5.1

Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is by the Committee of Sponsoring Organizations (COSO).

i.2

N/A

i.3

N/A

Date: July 29, 2009

“Eugene Syho”

_______________________

Eugene G. Syho, MBA, CMA

Chief Financial Officer

EX-99.1 4 financials.htm FINANCIALS CC Filed by Filing Services Canada Inc. 403-717-3898

[financials002.gif]

NORSAT INTERNATIONAL INC.

Interim Consolidated Financial Statements

For the Six Months Ended June 30, 2009

(Unaudited and expressed in US dollars)

Norsat International Inc.

Consolidated Balance Sheets

(Unaudited – Expressed in US Dollars)

	June 30,	December 31,
	2009	2008

ASSETS
Current assets (note 8):
Cash and cash equivalents (note 3)	$ 4,980,980	$ 983,062
Short term investments	33,372	31,391
Accounts receivable, net (notes 7 & 17)	3,553,174	6,807,386
Inventories	5,037,526	4,497,415
Prepaid expenses and other	319,789	271,735
Total current assets	13,924,841	12,590,989

Long-term prepaid expenses and other (note 8)	8,598	8,210
Property and equipment, net (note 8)	673,146	727,786
Intangible (note 4 & 19)	2,258,610	-
Total assets	$ 16,865,195	$ 13,326,985

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$ 666,512	$ 1,843,878
Accrued liabilities	1,908,584	1,799,113
Deferred revenue	953,273	457,007
Total current liabilities	3,528,369	4,099,998

Long-term deferred revenue	773,962	622,552
Future income taxes (note 19)	271,398	-
Total liabilities	4,573,729	4,722,550
Shareholders' equity:
Share capital (note 10)	39,793,699	37,825,476
Contributed surplus (note 10)	3,545,726	3,522,738
Accumulated other comprehensive	399,537	(229,210)
income (loss) (note 9)
Deficit	(31,447,496)	(32,514,569)
Total shareholders' equity	12,291,466	8,604,435
Total liabilities and shareholders' equity	$ 16,865,195	$ 13,326,985

Commitments (note 16 &17)
See accompanying notes to unaudited interim consolidated financial statements.

Norsat International Inc.

Consolidated Statements of Earnings, Deficit and Comprehensive Income (Loss)

(Unaudited – Expressed in US Dollars)

		Three months ended June 30,			Six months ended June 30,
		2009	2008		2009	2008

Sales (note 13)	$ 4,896,300		$ 3,960,003	$ 9,891,071		$ 6,888,550
Cost of sales		2,439,540	1,992,549		4,981,293	3,431,476
		2,456,760	1,967,454		4,909,778	3,457,074
Expenses:
Selling, general and administrative		1,399,886	1,527,274		2,806,594	2,830,369
Product development, net (note 17)		162,554	225,549		468,134	410,605
Amortization		181,622	91,629		307,379	181,331
		1,744,062	1,844,452		3,582,107	3,422,305
Income for the period before
other income		712,698	123,002		1,327,671	34,769
Other (income) expense (note 11)		474,361	(11,841)		260,598	(105,168)
Income before income taxes		238,337	134,843		1,067,073	139,937
Income taxexpense		-	8		-	8

Net earnings for the period		238,337	134,835		1,067,073	139,929

Deficit, beginning of period		(31,685,833)	(34,709,236)		(32,514,569)	(34,999,726)
Transitional adjustment on
adoption of accounting policy (note 4)		-	-		-	285,396

Deficit, end of period	$ (31,447,496)		$ (34,574,401) $		(31,447,496)	$ (34,574,401)

Net earnings for the period	$ 238,337		$ 134,835	$ 1,067,073		$ 139,929

Other comprehensive income (loss):
Currency translation adjustment		886,081	46,509		628,747	(201,152)

Comprehensive income (loss) for the	$ 1,124,418		$ 181,344	$ 1,695,820		$ (61,223)
period

Net earnings per common share - basic	$ 0.00		$ 0.00 $		0.02	$ 0.00
and diluted (note 12)
Weighted number of shares outstanding
Basic		59,384,184	53,667,697		57,470,487	52,789,434
Diluted		59,962,874	57,334,898		58,048,128	56,450,948

See accompanying notes to unaudited interim consolidated financial statements.

Norsat International Inc.

Consolidated Statements of Cash Flows

(Unaudited – Expressed in US Dollars)

Three months endedJune 30,			Six months ended June 30,
	2009	2008	2009	2008

Cash and cash equivalents provided by (used in)
OPERATING ACTIVITIES:
Net earnings for the period	$ 238,337	$ 134,835	$ 1,067,073	$ 139,929
Items not involving cash:
Amortization	181,622	91,629	307,379	181,331
Foreign exchange (gain) loss	(2,754)	3,261	(2,754)	(28,202)
Stock-based compensation (note 10c)	37,371	45,044	60,556	66,798
Government contribution (note 17)	326,724	(89,023)	507,579	(188,573)
Changes in inventory estimate	-	(88,589)	-	(88,589)
Changes in non-cash working capital (note 14)	1,047,062	(678,691)	1,543,459	(923,215)
Cash provided by (used in) operations	1,828,362	(581,534)	3,483,292	(840,521)

INVESTING ACTIVITIES:

Purchase of property and equipment	(62,151)	(154,945)	(91,280)	(223,968)
Redemption of short term investments	-	-	-	61,052
Cash used in investment activities	(62,151)	(154,945)	(91,280)	(162,916)

FINANCING ACTIVITIES:
Payment on the operating line of credit	-	-	-	(500,000)
Proceeds from exercise of warrants	50,261	64,533	50,261	1,449,270
and options (note 10b)
Proceeds from government contributions (note 17)	220,918	94,812	626,973	133,900
Cash provided by financing activities	271,179	159,345	677,234	1,083,170

Effect of foreign currency translation on	34,925	(9,367)	(71,328)	2,432
cash and cash equivalents

Increase (decrease) in cash and cash equivalents	2,072,315	(586,501)	3,997,918	82,165
Cash and cash equivalents, beginning of period	2,908,665	1,355,174	983,062	686,508
Cash and cash equivalents, end of period	$ 4,980,980	$ 768,673	$ 4,980,980	$ 768,673

Supplemental cash flow and other disclosures (note 14)
See accompanying notes to unaudited interim consolidated financial statements.

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)

Norsat International Inc.

1. Nature of Business

The Company is incorporated under the laws of British Columbia and its principal business activities include the marketing, design and sales of microwave products and portable satellite products that provide rapidly deployable broadband satellite data and video continuity in areas where traditional communication infrastructure is insufficient, damaged or non-existent. The Company’s business operates primarily through two business segments – Microwave Products and Satellite Systems. The Company has entered into two new business segments – Maritime Products and Wireless Networks, but the Company is still in the early stages in both these segments.

2. Basis of Presentation

These financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles ("GAAP") for interim financial reporting and the accounting polices used are consistent with the most recent audited annual financial statements except for those included in note 4. These financial statements do not contain all disclosures required by Canadian GAAP for annual financial statements, and accordingly, should be read together with the audited 2008 annual consolidated financial statements included in the Company's 2008 Annual Report.

The results for the three and six months ended June 30, 2009 may not be indicative of the results that may be expected for the full year or any other period.

3. Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and short term, highly liquid interest bearing term deposits that are readily convertible to known amounts of cash. The cash and cash equivalents act as the Company’s primary source of cash and fluctuate directly as a result of its cash flows from operating, investing and financing activities.

4. Changes in Accounting Policies

CICA 3064 – “Goodwill and Intangible Assets”

On January 1, 2009, the Company adopted CICA Section 3064 – “Goodwill and Intangible Assets”, which replaces Section 3062 – “Goodwill and Other Intangible Assets” and Section 3450 – “Research and Development Costs”. The new section provides guidance on the recognition of assets based on asset recognition criteria rather than matching of revenues and expenses. As a result of adopting this section, there is no material impact on the Company’s consolidated financial statements. The Company has recognized an intangible asset during the first quarter ended March 31, 2009 that is subject to amortization. The intangible asset will be tested for impairment in accordance with the provisions of Impairment of Long Lived Assets, section 3064.

Intangible Asset

The Company follows the recommendations of CICA section 3064 “Goodwill and Intangible Assets” for recognition, measurement, presentation and disclosure of intangible assets. An intangible asset meets the identification criterion when it is separable or arises from contractual or other legal rights, regardless of whether those rights are transferable or separable. The Company recognizes an intangible if and only if (a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the Company; and (b) the cost of the asset can be measured reliably. Intangible assets are initially measured at cost which comprises of its purchase price, including duties, taxes, legal costs, professional fees and any directly attributable cost of preparing the asset for its intended use. A recognized intangible asset is amortized over its estimated useful life on a straight line basis unless the life is determined to be indefinite. The

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)

estimate of the useful life of an intangible asset is based on an analysis of all facts, in particular, the expected use of the asset by the Company and any legal or contractual provisions that may limit the useful life.

The amortization method and estimate of useful life of an intangible asset is reviewed annually. An intangible asset that is subject to amortization is tested for impairment according to section 3063 “Impairment of Long-Lived Assets” which states that an impairment loss is recognized when the carrying amount of the long lived asset is not recoverable and exceeds its fair value. The test for recoverability is performed whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Intangible assets which have indefinite lives are not amortized, but are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The impairment loss is the amount by which the carrying amount exceeds the fair value. If the fair value subsequently increases, the impairment loss for an intangible asset is not reversed.

CICA 3031 – “Inventories”

On January 1, 2008, the Company adopted CICA Handbook Section 3031 - “Inventories”, which replaces Section 3030, of the same name. The new section provides guidance on the basis and method of measurement of inventories and allows for reversal of previous write-downs. The section also establishes new standards on disclosure of accounting policies used, carrying amounts, amounts recognized as an expense, write-downs and the amount of any reversal of any write-downs.

Due to circumstances that previously caused the inventories to be written down below cost no longer existed, and the net realizable value of the inventories had increased as a result of the Company’s change in economic conditions, the amount of the write down of inventories had been reversed. As a result of adopting CICA Section 3031, a reversal of previous write-downs of $285,396 was recorded as an increase to inventory and a decrease in opening deficit as at January 1, 2008.

Prior to the adoption of CICA 3031, parts and supplies inventory were stated at the lower of weighted average cost and replacement cost. Subsequent to the adoption of CICA 3031, parts and supplies inventory are stated at the lower of weighted average cost and net realizable value.

5. Recent Accounting Pronouncements

International Financial Reporting Standards (“IFRS”)

The Canadian Accounting Standards Board has confirmed that publicly accountable, profit oriented enterprises will be required to adopt IFRS for fiscal years beginning on or after January 1, 2011. Early conversion to IFRS for fiscal years beginning on or after January 1, 2009 is permitted. The Company will be required to begin reporting under IFRS for its first quarter ending March 31, 2011 with restatement of comparative information presented. The conversion to IFRS will impact the Company’s accounting policies, information technology systems, taxes, contractual commitments involving GAAP based clauses, long-term employee compensation plans and performance metrics.

Accordingly when the Company develops its IFRS plan, it will have to include measures to provide extensive training to key finance personnel to review contracts and agreements and to increase the level of awareness and knowledge amongst management, the Board of Directors and the Audit Committee. Additional resources will be engaged to ensure the timely conversion to IFRS. As at June 30, 2009, the Company has completed an IFRS diagnostic and is working to develop an IFRS implementation plan that will address the accounting policies and procedures, IT and data systems, internal control environment over financial reporting and training of its employees impacted in the IFRS conversion. The Company has identified the internal resources responsible for spearheading the IFRS conversion process and has charged the team with preparing a detailed project plan and budget for approval by the end of September 30, 2009.

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)

6. Capital Disclosures

The Company's objectives and policies for managing capital are to maintain a strong capital base so as to maintain investor, creditor and market confidence, sustain future development of the business and to safeguard the entity’s ability to support the Company’s normal operating requirements on an ongoing basis.

The capital of the Company consists of the items included in the consolidated balance sheet in the shareholders’ equity section. The Company manages its capital structure and makes changes based on economic conditions and the risk characteristics of the Company’s assets. As at June 30, 2009 shareholder’s equity was $12,291,466.

To manage the Company’s capital requirements the Company has in place a planning and budgeting process which help determine funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. The Company plans to continue to fund its short-term cash requirements through operations, and if required the Company has an operating line of credit in place that can be drawn upon.

While there is a possibility of increased risk due to the current global credit crisis and recessionary trends, the exposure to the Company was minimal at the end of June 30, 2009. The Company’s accounts receivable are made up of 43% government receivables and the balance of the outstanding accounts receivable are spread over a large number of customers. During September 2008, the Company was awarded a US Department of Defense Contract to deliver satellite systems and services of approximately $5.5 million and the Company also entered into an agreement with the Canadian Federal Minister of Industry (the Minister) through the Strategic Aerospace & Defense Initiative (SADI) whereby the Minister will provide funding of 35% of eligible spending related to the research and development of Aerospace & Defense (A&D) technology development projects to a maximum funding amount of Cdn$5,975,200 for eligible costs starting from September 21, 2007 up to and including December 31, 2011.

For the six months ended June 30, 2009, there were no changes in the Company's approach to capital management.

The Company has externally imposed capital requirements. Under its operating line of credit agreements, the Company’s working capital ratio (current assets divided by current liabilities) cannot be less than 1.15:1 and debt to tangible net worth ratio (total liabilities divided by the sum of total assets minus total liabilities) cannot exceed 2.5:1. As at June 30, 2009, the Company’s working capital ratio was 3.95:1 and the debt to tangible net worth ratio was 0.37:1. For the six months ended June 30, 2009, the Company has met all of its externally imposed capital requirements. As at June 30, 2009, the Company did not access its operating line of credit.

7. Financial Instruments

(a)

Financial assets and liabilities

Financial assets are cash and cash equivalents, short-term investments, and accounts receivable. Financial liabilities include operating line of credit, accounts payable and accrued liabilities.

The Company has classified its cash and cash equivalents and short term investments as held-for-trading financial assets, measured at fair value. Accounts receivable are classified as loans and receivables, measured at amortized cost. Accounts payable, accrued liabilities, and operating line of credit are classified as other liabilities held for trading, measured at amortized cost. The carrying value of the Company’s financial assets and liabilities is considered to be reasonable approximation of fair value due to the short-term nature of these instruments.

The carrying values and fair values of financial assets and liabilities as at June 30, 2009 and December 31, 2008 are summarized as follows:

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)


(in thousands of dollars)	June 30, 2009		December 31, 2008
	Carrying Value	Fair Value	Carrying Value	Fair Value
Held-for-trading	$ 5,014	$ 5,014	$ 1,014	$ 1,014
Loans and receivables	$ 3,553	$ 3,553	$ 6,807	$ 6,807
Held-to-maturity investments
Other liabilities	$ 2,575	$ 2,575	$ 3,643	$ 3,643

Credit Risk

Credit risk is the risk of a financial loss if a customer or counterparty to a financial instrument fails to meet its obligations under a contract. This risk primarily arises from the Company’s receivables from customers.

The Company’s exposure to credit risk is dependent upon the characteristics of each customer. Each customer is assessed for credit worthiness. The credit worthiness of customers is assessed using third party credit scores and through direct monitoring of their financial well being on a continual basis. In some cases, where customers fail to meet the Company's credit worthiness benchmark, the Company may choose to transact with the customer on a prepayment basis.

The Company does not have credit insurance or other financial instruments to mitigate its credit risk as the exposure is minimal due to the make up of its customer base.

The Company regularly reviews the collectability of its accounts receivable and establishes an allowance for doubtful accounts based on its best estimates of any potentially uncollectible accounts. As at June 30, 2009, the balance of the allowance for doubtful accounts was $57,414 (2008 – $36,311). Pursuant to their respective terms, accounts receivable was aged as follows as at June 30, 2009 and December 31, 2008:


(in thousands of dollars)	June 30, 2009	December 31, 2008
Current	2,092	3,359
0-30 days overdue	940	1,641
31-60 days overdue	49	238
61-90 days overdue	0	1,271
Over 90 days overdue	472	298
Total accounts receivable	3,553	6,807

While there is a possibility of increased customer credit risk due to the current global credit crisis, the exposure is minimal due to the make up of the Company’s customer base. As at June 30, 2009, 43% of the outstanding accounts receivable consists of government departments and the balance of the outstanding accounts receivable are spread over a very large number of customers.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.

The Company has in place a planning and budgeting process which helps determine funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives.

To manage this risk the Company maintains an operating line of credit which provides access to borrow in Canadian and /or US dollars to meet short-term financing obligations.

As at June 30, 2009, the Company had cash and cash equivalents of $4,980,980, short term investments of $33,372 and accounts receivable of $3,553,174 for a total of $8,567,526 which will cover its short-term financial obligations from its accounts payable of $666,512 and accrued liabilities of $1,908,584 for a total of $2,575,096.

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)

Currency risk

Currency risk is defined as the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

The Company is exposed primarily to foreign exchange fluctuations in the U.S. dollar as components of cost and receivables being denominated in currencies other than the United States dollar. To a lesser extent, the Company is also exposed to foreign exchange fluctuations in the British pound (GBP) in the magnitude of approximately GBP 200,000 in expenses per year.

Based on the Company’s currency exposure at June 30, 2009, a 1% depreciation or appreciation of its other currencies against the US dollar would result in an approximate $60,000 increase or decrease in the Company’s net earnings.

To manage the exposure to foreign exchange risk the company enters into short term forward contracts as part of its cash management strategy. The Company does not designate the forward contracts as a hedge for accounting purposes. As at June 30, 2009, the Company did not have any forward contracts outstanding.

8. Operating Line of Credit

As at June 30, 2009, the Company has a secured operating line of credit from HSBC for Cdn$500,000 or US$400,000 under Export Development Canada’s (EDC) Master Receivable Guarantee (MARG) program.

Subsequent to June 30, 2009, the Company increased the operating line of credit with the same financial institution to Cdn$1,000,000 or US$800,000. All terms and conditions of the operating line remain the same as outlined under note 6 - Capital Disclosures, except for:

The requirement for securitization under Export Development Canada’s (EDC) Master Receivable Guarantee (MARG) program was lifted.

Interest at the rate of the Bank’s Prime Rate plus 1.35% per annum.

Total assets, not including intangible assets, pledged as collateral for the line of credit is $14,606,585 as at June 30, 2009

As at June 30, 2009, the Company had no borrowings outstanding with respect to the line of credit.

9. Accumulated Other Comprehensive Income (Loss)

	June 30, 2009	December 31, 2008

Balance, beginning of period	$ (229,210)	$ 1,306,800
Unrealized (gains) losses on translating financial
statements from functional currency to
reporting currency	628,747	(1,536,010)
Balance, end of period	$ 399,537	$ (229,210)

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)

10. Share Capital

(a)

Authorized

75,000,000 common shares without par value

(b) Issued


Shares issued and outstanding
	Number #	Amount $
Balance, December 31, 2008	54,313,305	37,825,476
Stock options exercised	75,000	50,261
Reclassification of contributed surplus upon exercise of stock options		37,568
Shares issued relating to Bluemoon acquisition	5,000,000	1,886,864
Share issuance costs relating to Bluemoon (note 19)		(6,470)
Balance, June 30,2009	59,388,305	39,793,699

The Company has reserved 6,306,505 common shares under its 1999 (amended) incentive share option plan. The plan provides for the granting of stock options at the fair market value of the Company at the grant date, with terms to a maximum of ten years and vesting provisions to be determined by the Board of Directors.


	Number of options	Weighted average exercise price Cdn$
Balance, December 31, 2008	1,518,000	$ 1.34
Granted	363,800	0.80
Exercised	(75,000)	0.83
Expired	(20,000)	0.75
Forfeited	(58,500)	0.88
Balance, June 30, 2009	1,728,300	1.27

Share purchase options outstanding at June 30, 2009 include:


	Options outstanding			Options exercisable
Range of exercise prices Cdn$	Number of options outstanding	Weighted average remaining contractual life(years)	Weighted average exercise price Cdn$	Number of options exercisable	Weighted average exercise price Cdn$
$0.45 to $0.99	922,800	3.25	0.74	392,000	0.67
$1.00 to $1.99	626,000	2.31	1.24	376,600	1.22
$2.00 to $6.19	179,500	2.26	4.14	179,500	4.14
$0.45 to $6.19	1,728,300	2.80	1.27	948,100	1.54

The exercise price of all share purchase options granted during the period are equal to the closing market price at the grant date. Using an option pricing model with assumptions noted below, the estimate fair value of all options granted during 2009 and 2008 have been reflected in the statements of operations as follows:

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)


	Three months ended June 30,		Six months ended June 30,
	2009	2008	2009	2008
Total compensation credited to contributed surplus and debited stock based compensation	$ 37,371	$45,044	$60,556	$66,798

The weighted average assumptions used to estimate the fair value of options during the period were:


	Three months ended June 30,		Six months ended June 30,
	2009	2008	2009	2008
Risk free interest rate	1.83%	2.9%	1.83%	3.26%
Expected life	3.50	3.50	3.50	3.50
Vesting period	2 to 10 years	2 to 10 years	2 to 10 years	2 to 10 years
Expected volatility	84.0%	74.5%	83.9%	74.2%
Expected dividends	Nil	nil	nil	nil

363,800 stock purchase options were granted with a weighted average fair market value of $0.80 for the six months ended June 30, 2009.

Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models may not necessarily provide a reliable measure of the fair value of the Company’s share purchase options.

(d) Warrants

The continuity of share purchase warrants is as follows:


Expiry date Exercise price	April 28, 2009 Cdn$1.09	January 12, 2011 US$0.48	Total number of warrants outstanding
Balance, December 31, 2008	1,206,811	366,690	1,573,501
Warrants exercised	-	-	-
Warrants expired	(1,206,811)	-	(1,206,811)
Balance, June 30, 2009	-	366,690	366,690

During the three months ended June 30, 2009, 1,206,811 warrants with an exercise price of Cdn$1.09 expired. Warrants set to expire on January 12, 2009, were extended to January 12, 2011. The warrants were issued as part of the employee stock ownership plan on January 12, 2007.

(e) Contributed surplus


Balance, December 31, 2008	$ 3,522,738
Changes during 2009
Stock-based compensation expense	60,556
Reclassification to Share Capital for options exercised	(37,568)
Balance, June 30, 2009	$ 3,545,726


Balance, December 31, 2007	$ 4,147,433
Changes during 2008
Stock-based compensation expense	66,768
Reclassification to Share Capital for warrants exercised	(624,039)
Reclassification to Share Capital for ESPP warrants exercised	(20,401)
Reclassification to Share Capital for options exercised	(290)
Balance, June 30, 2008	$ 3,569,501

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)

11. Other (Income) Expense


	Three months ended June 30,		Six months ended June 30,
	2009	2008	2009	2008
Net interest expense	$ 8,273	$ 11,382	$ 18,458	$ 28,940
Foreign currency (gain) loss	466,088	(23,223)	242,140	(134,108)
	$ 474,361	$ (11,841)	$ 260,598	$ (105,168)

12. Earnings per Share

Basic earnings per share for the three months ended June 30, 2009 is $0.00 (2008 - $0.00) and the weighted average number of shares used in calculating basic net earnings per share is 59,384,184 (2008 – 53,667,697). Basic earnings per share for the six months ended June 30, 2009 is $0.02 (2008 - $0.00) and the weighted average number of shares used in calculating basic net earnings per share is 57,470,487 (2008 – 52,789,434).

As the exercise of in-the-money warrants or options are dilutive, the diluted earnings per share for the three months ended June 30, 2009 is $0.00 (2008 - $0.00) and the weighted average number shares used in calculating diluted net earnings per share is 59,962,874 (2008 – 57,334,898). The diluted earnings per share for the six months ended June 30, 2009 is $0.02 (2008 - $0.00) and the weighted average number shares used in calculating diluted net earnings per share is 58,048,128 (2008 – 56,450,948).

13. Segmented Information

The Company’s business operates primarily through two business segments – Microwave Products and Satellite Systems. The Company has entered into two new business segments – Maritime Products and Wireless Networks, but the Company is still in the early stages in both these segments.

The Microwave Products segment designs, develops and markets receivers, transmitters and power amplifiers. The Satellite Systems segment designs, develops and markets portable satellite systems, related accessories and services. These Microwave Products and Satellite Systems are designed to interoperate with geostationary satellites orbiting the earth. The products permit users to establish a broadband communications link (up to 10 Mbps) between any two points on earth. This broadband communications link is capable of transporting a broad range of content including voice, data and moving video.

The Maritime Products segment develops and markets satellite systems, related accessories and services for the marine environment. Similar to Microwave Products and Satellite Systems, these products establish broadband communications links interoperating with geostationary satellites, but have the additional challenge of needing to accommodate a vessel’s motion and movement,.

The Wireless Networks segment develops markets and deploys wireless communications systems that would address a customer’s need to solve connectivity challenges covering an area larger than Wi-Fi solutions. These solutions are specific technology agnostic and can be based on different protocols such as WiMAX, LTE and/or 4G.

The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business is in a different stage in its life cycle and they require different marketing strategies.

The following tables set forth information by operating segments from continuing operations for the three and six months ended June 30, 2009 and 2008 respectively. For the three and six months ended June 30, 2009, the Wireless Networks segment did not generate any revenues.

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)


	Three months ended June 30,		Six months ended June 30,
	2009	2008	2009	2008
Sales
Microwave products	$ 1,599,993	$ 2,103,235	$ 3,111,913	$ 4,076,946
Satellite systems	3,172,989	1,856,768	6,595,146	2,811,604
Maritime systems	123,318	-	184,012	-
	$ 4,896,300	$ 3,960,003	$ 9,891,071	$ 6,888,550

Gross Profit
Microwave products	$ 678,800	$ 810,635	$ 1,292,346	$ 1,662,952
Satellite systems	1,751,294	1,156,819	3,611,505	1,794,122
Maritime systems	26,666	-	5,927	-
	$ 2,456,760	$ 1,967,454	$ 4,909,778	$ 3,457,074


As at June 30, 2009	Microwave Products	Satellite Systems	Maritime Systems	Wireless Network	Consolidated
Total assets related to operations	$ 4,595,501	$ 9,739,346	$ 271,738	$2,258,610	$ 16,865,195
Property and equipment, net	$ 211,784	$ 448,839	$ 12,523	$ -	$ 673,146

As at December 31, 2008
Total assets related to operations	$ 6,299,750	$ 7,027,235	$ -	$ -	$ 13,326,985
Property and equipment, net	$ 344,029	$ 383,757	$ -	$ -	$ 727,786

Substantially all property and equipment are located in Canada.

14. Supplemental cash flow and other disclosures


	Three months ended June 30,		Six months ended June 30,
	2009	2008	2009	2008
Changes in non-cash operating working capital:
Accounts receivable	$ 1,541,535	$(1,106,700)	$ 2,561,273	$ 381,640
Inventories	(994,696)	(557,169)	(690,425)	(898,252)
Prepaid expenses and other	295,660	(30,652)	(62,965)	(42,633)
Accounts payable	(674,178)	707,261	(1,120,135)	134,995
Accrued liabilities	617,403	166,845	165,078	(612,856)
Deferred revenue	237,217	62,568	515,776	28,297
Long term deferred revenue	24,121	79,156	174,857	85,594
	$ 1,047,062	$ (687,691)	$ 1,543,459	$ (923,215)

Supplementary information:
Interest paid (received)	$ (2,786)	$ 6,390	$ (885)	$ 12,383
Income taxes paid	nil	8	nil	8

15. Comparative Figures

Certain comparative figures have been reclassified to conform to the financial statement presentation adopted in 2009.

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)

16. Commitments

Future minimum payments at June 30, 2009 under various purchasing commitments, loan commitments and operating lease agreements for each of the next five years are approximately as follows:


	2009	2010	2011	2012	2013
Inventory purchase obligation	$2,397,974	-	-	-	-
Operating lease obligations	$ 271,306	$ 449,823	$ 411,006	$ 46,623	$ 46,623
Total	$2,669,280	$ 449,823	$ 411,006	$ 46,623	$ 46,623

In the normal course of operations the Company enters into purchase commitments. Included in 2009 commitments are inventory and material purchase obligations of $2,397,974.

17. Government Contributions

Strategic Aerospace & Defense Initiative (SADI)

In September 2008, the Company entered into an agreement with the Canadian Federal Minister of Industry (the Minister) through the Strategic Aerospace & Defense Initiative (SADI) whereby the Minister will provide funding of 35% of eligible spending related to the research and development of Aerospace & Defense (A&D) technology development projects to a maximum funding amount of Cdn$5,975,200 for eligible costs starting from September 21, 2007 up to and including December 31, 2011.

Repayment is contingent on performance benchmarks established at the end of Norsat’s fiscal 2011 year end and is capped at 1.5 times the contribution (actual amounts disbursed by the Minister) over a period of 15 years starting in 2012. Annual repayment amounts shall be calculated based on 1.851% of gross business revenue (GBR) multiplied by the adjustment rate (based on the growth of GBR over the previous year). For the six months ended June 30, 2009, the Company did not accrue any liability for repayment as the amount can not be determined.

For the three and six months ended June 30, 2009, the Company accrued SADI funding receivable of $326,724 (Cdn$380,000) and $507,579 (Cdn$605,000) respectively and charged the amount as a reduction to product development expense in the consolidated statement of operations.

For the three and six months ended June 30, 2009, $220,918 (Cdn$256,941) and $ 626,973 (Cdn$762,110) cash was received. $359,368 (Cdn$442,621) remains in accounts receivable at June 30, 2009

18. Related Party Transactions

On December 23, 2008, $94,185 (Cdn$114,720) was transferred to a member of the board’s bank account as share capital for Norsat SA. The board member held this cash for Norsat SA until January 27, 2009 when Norsat SA opened a bank account and the funds were deposited into this bank account.

19. Acquisition of Bluemoon 4G Ltd.

On March 9, 2009, the Company acquired 100% ownership of Bluemoon 4G Ltd., a WiMAX products and services provider to accelerate the Company’s entry into the WiMAX market, from unrelated third parties for 5,000,000 shares of the Company’s common stock. Bluemoon 4G Ltd. is a pre-revenue company that has a customer relationship that will allow it to supply and deliver equipment for WiMAX installations. In acquiring Bluemoon, the Company has acquired the relationship and is in the process of negotiating a contract to formalize the customer relationship. This transaction closed on April 20, 2009.

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)

Bluemoon 4G Ltd. is a pre-revenue company without any employees and did not have any commercial activities. Accordingly, the acquisition was recorded as an asset acquisition and not a business combination.

Given the timing to perform a proper valuation exercise, management has recorded the transaction at an initial estimated value of $1,946,324 (Cdn$2,455,000) to intangible asset which represents the customer relationship acquired. The Company has received the final valuation report on June 30, 2009, which is in line with management’s initial estimate. The Company has adjusted the purchase price to $2,120,770 (Cdn$2,466,586) to adjust initial estimates for the Ireland stamp duties and legal fees. The purchase value was based on the market value of the shares given up less liquidity and escrow discounts calculated using the Black-Scholes model. The liquidity discount has been determined on the basis that the Company’s shares are not widely traded. The escrow discount has been determined on the basis that the counterparty will not be able to access the shares until certain performance milestones have been met. As per terms of the contract, shares are held in escrow u ntil December 31, 2009 and the counterparty has to meet certain performance milestones. In the event that the milestones are not met, the counterparty has to pay a minimum order fee equal to the value of 5,000,000 Norsat common shares at the effective date of March 9, 2009 less twenty percent of any equipment supply orders up to $12,000,000 received by Norsat prior to December 31, 2009. The escrow agreement has been put in place to protect the Company’s financial interest in securing the minimum order fee.

Management has allocated the entire purchase price of $2,120,770 (Cdn$2,466,586) to intangible assets, $1,880,394 (Cdn$2,371,840) as common shares which includes share issuance costs of $6,470 (Cdn$ 8,160). The intangible asset of $2,258,610 (Cdn$2,626,902) as reported consists of $2,046,324 (Cdn$2,380,000) purchase value, $27,808 (Cdn$32,342) of Ireland stamp duties, $25,143 (Cdn$29,243) of legal costs, $21,495 (Cdn$25,000) of valuation costs, accumulated amortization of $136,318 (Cdn$158,546) and a temporary tax difference effect of $274,158 (Cdn$315,652).

Based on the information available at the present time, the intangible asset is estimated to have a useful life until December 31, 2013. Amortization of the intangible was calculated on a straight line based on the estimated useful life. For the six months ended June 30, 2009, amortization expense was $132,582 (Cdn$158,546).

A total future income tax liability of $274,158 (Cdn$315,652) was recognized on the transaction to reflect the income tax effect of temporary differences arising from the Company’s asset acquisition of Bluemoon 4G Ltd. The income tax liability was calculated based on Ireland’s effective tax rate of 12.5% and is the difference between the tax adjusted final book value and actual purchase price of the transaction.

20. Subsequent Events

(a) The Company obtained regulatory approval to commence a normal course issuer bid to purchase up to a

maximum of 5,183,949 of its common shares, representing approximately 10% of the public float as of June 30, 2009, through the facilities of the Toronto Stock Exchange ("TSX"). Norsat’s total issued and outstanding common shares were 59,388,305 as of June 30, 2009.

The normal course issuer bid will commence on July 6, 2009 and will terminate on the earlier of the date on which Norsat completes its purchases pursuant to the normal course issuer bid and July 5, 2010. Pursuant to the rules of the TSX, Norsat may purchase up to 4,069 common shares during any trading day. In addition, Norsat may also make one block purchase per calendar week which exceeds the daily repurchase restriction pursuant to block purchase exemptions. The purchases will be made in accordance with the policies and rules of the TSX. The price paid for any common shares acquired will be the market price at the time of purchase and all common shares purchased under the normal course issuer bid will be cancelled.

Norsat intends to enter into a pre-defined automatic share purchase plan with its designated broker to allow for the repurchase of common shares at times when Norsat ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. Norsat believes that the market

Norsat International Inc.

Notes to the Consolidated Financial Statements

Six months ended June 30, 2009
(Unaudited - Expressed in US dollars)

price of its common shares are such that their purchase may be an attractive and appropriate use of corporate funds in light of potential benefits to remaining shareholders.

As at July 24, 2009, the Company redeemed 41,500 shares at a weighted average price of Cdn$0.70 per share pursuant to the normal issuer bid in effect since July 6, 2009.

(b) Subsequent to June 30, 2009, the Company increased its operating line of credit from HSBC to Cdn$1,000,000 or US$800,000. All terms and conditions of the operating line remain the same as outlined under note 6 – Capital Disclosures, except for:

The requirement for securitization under Export Development Canada’s (EDC) Master Receivable Guarantee (MARG) program was lifted.

Interest at the rate of the Bank’s Prime Rate plus 1.35% per annum.

EX-99.2 5 mda.htm MD&A CC Filed by Filing Services Canada Inc. 403-717-3898

[mda002.gif]

MANAGEMENT DISCUSSION AND ANALYSIS

For the six months ended June 30, 2009

Norsat International Inc. | SYMBOL: NII (TSX)

110- 4020 Viking Way | Richmond | British Columbia | Canada | V6V 2L4.

tel: 604-821-2800 | fax: 604-821-2801 | www.norsat.com

Page 1

Norsat International Inc. Management Discussion & Analysis

1.1

Date

The following management discussion and analysis of Norsat International Inc. (the “Company”) as of July 24, 2009 should be read in conjunction with the unaudited interim consolidated financial statements for the three and six month period ended June 30, 2009, and the 2008 annual financial statements and management discussion and analysis and related notes included therein, which have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP).

All amounts following are expressed in US Dollars unless otherwise indicated. Additional information relating to the Company, including the Company’s annual report and 20F for the year ended December 31, 2008, may be found on the Company’s web page at www.norsat.co m and at www.sedar.com.

Forward Looking Statements

The following discussion and analysis of the financial conditions and results of operations contains forward-looking statements concerning anticipated developments in the Company’s operations in future periods, the adequacy of the Company’s financial resources and other events or conditions that may occur in the future. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,”, “predicts,” “potential,” “targeted,” “plans,” “possible” and similar expressions, or statements that events, conditions or results “will,” “may,” “could” or “should” occur or be achieved. These forward-looking statements include, without limitation, statements about the Company’s market opportu nities, strategies, competition, expected activities and expenditures as the Company pursues its business plan, the adequacy of the Company’s available cash resources and other statements about future events or results. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, such as business and economic risks and uncertainties. The Company’s forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made. Consequently, all forward-looking statements made in this discussion and analysis of the financial conditions and results of operations or the documents incorporated by reference are qualified by this cautionary statement and there can be no assurance that actual results or developments anti cipated by the Company will be realized. Some of these risks, uncertainties and other factors are described herein under the heading “Risks and Uncertainties” and in the most recent Annual Information Form under the heading “Risk Factors”. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

1.2

Overview

Norsat International Inc. (“the Company”) designs, develops and markets satellite ground equipment which enables high speed transmission of data, audio and video over commercial and military satellites. The Company’s equipment is located on earth and thus falls under the broad category of “satellite ground equipment”. The Company concentrates on ground equipment that is central to the transmission and reception of content for commercial and military applications, as opposed to consumer applications such as direct-to-home broadcasting.

Page 2

Norsat International Inc. Management Discussion & Analysis

communications links interoperating with geostationary satellites, but have the additional challenge of needing to accommodate a vessel’s motion and movement. This segment is not yet a material aspect of the business.

The Wireless Networks segment develops, markets and deploys wireless communications systems that would address a customer’s need to solve connectivity challenges covering an area larger than Wi-Fi solutions. These solutions are specific technology agnostic and can be based on different protocols such as WiMAX, LTE and/or 4G.

This segment has intangible assets that account for 12.6% of the Company’s total assets and represents the value of the acquisition of Bluemoon 4G Ltd. on March 9, 2009.

1.3

Selected Annual Financial Information


*Annual Financial Data* *(Expressed in thousands of dollars, except per share amounts)* *Amounts are in US Dollars*
	Year Ended December 31
	2008	2007	2006
	$	$	$
Sales	18,057	16,451	13,448
Operating Expenses	7,069	7,157	9,363
Net earnings (loss) from operations before income taxes	2,200	1,385	(3,876)
Net earnings (loss)	2,200	1,385	(3,833)
Earnings (loss) per share	0.04	0.03	(0.08)
Earnings (loss) per share, basic and diluted	0.04	0.02	(0.08)
Total assets	13,327	9,528	8,427
Long-term financial liabilities	nil	nil	nil

1.4

Results of Operations

QUARTER REVIEW


	Three months ended June 30,		Six months ended June 30,
	2009	2008	2009	2008
Revenue	$ 4,896,300	$ 3,960,003	$ 9,891,071	$ 6,888,550
Gross Profit	$ 2,456,760	$ 1,967,454	$ 4,909,778	3,457,074
Gross Profit %	50.2%	49.7%	49.6%	50.2%
Selling, General and Administrative	1,399,886	1,527,274	2,806,594	2,830,369
Product Development	162,554	225,549	468,134	410,605
Amortization	181,622	91,629	307,379	181,331
Other Expense (Income)	474,361	(11,841)	260,598	(105,168)
Total Operating Expenses	2,218,423	1,832,611	3,842,705	3,317,137
Net Earnings	238,337	134,843	1,067,073	139,937
Earnings Per Share – Basic and Diluted	0.00	0.00	0.02	0.00

Page 3

Norsat International Inc. Management Discussion & Analysis

SECOND QUARTER HIGHLIGHTS

Key items that affected the results for the second quarter of 2009, compared to the second quarter of 2008, are as follows:

Revenues improved significantly year on year for Satellite systems to $3.2MM in the quarter ended June 30, 2009 from $1.9MM for the same period in 2008. Microwave product sales were down 23.8% to $1.6MM this quarter from $2.1MM for the same period in 2008. The gross margins of 50.2% for the quarter is up marginally from the 49.7% experienced in the same period in 2008. Despite the pressures of the global recessionary trends, the Company has been able to maintain overall margins within the range that management expects.

On a YTD basis, revenues from Satellite systems improved from $2.8 million in the first half on 2008 to $6.6 million for the same period in the current year. Microwave product sales were down 23.7% to $3.1 million as compared to $4.1 million last year. Gross margins continues to hover around the 50% level with the first half of this year at 49.6% compared to 50.2% for the first half of 2008.

Selling, General and Administrative expenses of $1.4MM in the quarter ended June 30, 2009 is consistent with the $1.5MM range in the previous fiscal quarters. Expenses are down slightly from the same period last year due as management is sensitive to the uncertainties of the current economic climate and continues to be committed to maintaining a prudent operating structure.

The biggest challenge during quarter resulted from foreign exchange losses attributable to the rapid appreciation of the Canadian Dollar relative the US Dollar during the quarter, resulting in a $0.5 million expense.

As a result of the SADI program contribution awarded to the Company in September 2008, $326,724 (Cdn$380,000) was accrued and reported as a reduction to product development costs in the second quarter of 2009

Subsequent to the quarter end, the Company announced a Normal Course Issuer Bid to acquire up to 5.2 million common shares through the facilities of the Toronto Stock Exchange. As at July 24, 2009, the Company redeemed 41,500 shares at a weighted average price of Cdn$0.70 per share pursuant to the normal issuer bid in effect since July 6, 2009.

Subsequent to the quarter end, the Company successfully negotiated an increase to the operating line of credit from Cdn$500,000 (or US$400,000) to Cdn$1,000,000 (or US$800,000).

As at June 30, 2009, working capital* improved to $10.4MM as compared to $8.5MM at the end of 2008. The current ratio** for the second of 2009 was 3.9x as compared to 3.1x at the end of 2008. These improvements reflect the continuing commitment to a more effective structure for existing operations and future activities.

The Company continues to believe that the long term prospects in the satellite industry remain strong, driven by the net-centric transformation of militaries, growth in homeland security spending and the emergence of non-traditional applications such as business continuity and content production by various entities.

Key factors that will be expected to affect the Company’s revenue growth in the near term remain the timing of the award of major military and certain other commercial projects. It is expected that competition will continue to intensify as more companies focus on opportunities in this market, which will continue to put pressure on gross margins.

Management is committed to implementing a business model which will serve to (i) add a recurring revenue stream through a range of services, (ii) broaden the company’s portfolio to include the sale of comprehensive turn-key solutions, and (iii) diversify the base of customers to include non-defense customers.

*- Working Capital is a non-GAAP measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable GAAP measure. Working capital is defined as current assets less current liabilities.

**- Current Ratio is a non-GAAP measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. Current Ratio is defined as current assets divided by current liabilities.

Page 4

Norsat International Inc. Management Discussion & Analysis

REVENUES and GROSS MARGINS


	Three months ended June 30,		Six months ended June 30,
	2009	2008	2009	2008
Sales	$		$
Microwave Products	$ 1,599,993	$ 2,103,235	$ 3,111,913	$ 4,076,942
Satellite Systems	3,172,989	1,856,768	6,595,146	2,811,604
Maritime Systems	123,318	-	184,012	-
Total	$ 4,896,300	$ 3,960,003	$ 9,891,071	$ 6,888,546
*Gross Profit Margin*	%	%	%	%
Microwave Products	42.4	38.5	41.5	40.8
Satellite Systems	55.2	62.3	54.3	63.8
Maritime Systems	21.6	-	17.5	-
*Average Gross Margin*	50.2	49.7	49.6	50.2

Sales in the second quarter of the current year is up 23.6% from the same period last year, primarily due to the traction gained in satellite systems. Overall sales for the quarter were $4.9 million up $0.9 million from the $4.0 million reported for the same period last year. The second quarter revenue performance improved resulting from sales to a number of new European militaries as well as from the backlog of satellite systems orders carried over from the end of 2008. Sales on a year to date basis is up 43.6% from $6.9 million in the first half of 2008 to $9.9 million for the same period in the current year. The sales performance for the current year is the result of significantly improved satellite systems sales over the previous year.

Sales of Microwave Products for the quarter were $1.6 million, down from the $2.1 million sales for the same period in 2008. Similar to the first quarter of 2009, this segment continues to be negatively impacted by the global recession. On a year to date basis, Microwave product sales the first half of 2009 was down 23.7% to $3.1 million from the $4.1 million for the same period last year. Microwave product revenues continue to be weak as projects continue to be deferred or postponed until the economic situation improves. While there has been a decrease in sales volume, the Company has maintained gross margin levels at the 41% level.

Sales of Satellite Systems for the quarter were $3.2 million up significantly from the $1.9 million in sales for the same period in 2008. In addition to the benefits of the backlog of satellite systems orders carried over from the end of 2008, the Company was able to continue to make inroads with reseller channels and received a number of new satellite systems orders. In addition, the Company supplemented sales through the delivery of a number of custom satellite systems solutions to existing European military customers Year to date, sales of Satellite systems have improved 135% from $2.8 million for the first half of 2008 to $6.6 million for the first half of 2009.

The overall gross margin for the quarter ended June 30, 2009 was 50.2% compared to 49.7% for the same period in 2008. On a year to date basis, overall gross margins have dipped slightly to 49.6% for the first half of 2009 as compared to the 50.2% in the first half of 2008. Management anticipates that overall margins will continue to hold around these levels despite the downward pressures resulting from the recessionary trends in the global economy.

Margins realized from Microwave products during the quarter were at 42.4% up from the 38.5% in the same period in 2008. Margins improvement resulted from the product sales mix, which consisted of higher end products as well as new products introductions, which command healthy margins. However, the overall market continues to experience margin erosion due to global recessionary pressures. Declining sales volumes in the industry is forcing more aggressive pricing from companies in order to protect market share.

Margins from Satellite systems were at 55.2% during the quarter compared to the 62.3% experienced for the same period in 2008. This decline in margins is partially due to lower system prices for products fulfilled through reseller channels, when compared to direct sales to the customer. The lower prices translate to a decline in gross margins. The current gross margin levels for Satellite systems are consistent with management expectations moving forward, as products gain increased market penetration through reseller channel networks.

Page 5

Norsat International Inc. Management Discussion & Analysis

EXPENSES


	Three months ended June 30,		Six months ended June 30,
	2009	2008	2009	2008
Expenses	$	$	$
Selling, general and administrative	1,399,886	1,527,274	$ 2,806,594	2,830,369
Product development	162,554	225,549	468,134	410,605
Amortization	181,622	91,629	307,379	181,331
Other (income)expense	474,361	(11,841)	260,598	(105,168)
Total	2,218,423	1,832,611	3,842,705	3,317,137

The Company’s commitment to cost control has not wavered and this philosophy continues to be reflected in the cost structure. However, when necessary, staff levels have gradually been increased to ensure that commitments to research and development projects are met and product innovation and product leadership are not compromised.

Administrative costs remained relatively constant at $1.4 million in the quarter compared to $1.5 million for the same period in 2008. The Company incurred additional costs related to the initiation of a more active corporate communications program, but these costs were offset by curtailments in other administrative areas.

Product development costs continue to be a core focus for the Company and are reflected through development programs in both the Microwave business segment and the Satellite systems segment. These increases are offset by contributions from the SADI program. Without the SADI program contribution, the Company’s product development costs this year are currently in the range of $0.5 million per quarter as compared to the $0.2 million quarterly spending for 2008. This significant increase is consistent with the renewed commitment towards product leadership and also consistent with spending levels from the previous two fiscal quarters.

Amortization expenses increased by $0.1 million compared to the same period in the previous year reflecting the full quarterly amortization of intangible assets related to the Bluemoon acquisition.

The other expense line item increased by $0.5 million in the quarter as compared to the same period in 2008. This is all attributable to the exchange losses resulting from the strength of the Canadian dollar relative to the United States dollar. The unrealized losses from foreign exchange result primarily from revaluing US dollar denominated instruments to a Canadian dollar equivalent as at the period end. The revaluation of the US dollar denominated instruments result in an unrealized loss with an appreciation of the Canadian dollar vis-à-vis the US dollar and conversely a currency depreciation results in an unrealized gain.

Page 6

Norsat International Inc. Management Discussion & Analysis

1.5

SUMMARY OF QUARTERLY RESULTS

The following tables set forth certain operations data for each of the eight most recent quarters that, in management’s opinion, have been prepared on a basis consistent with the audited consolidated financial statements contained in our fiscal 2008 Annual Report. The unaudited consolidated statements of operations data presented below reflects all adjustments, consisting primarily of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of results for the interim periods. These operating results are not necessarily indicative of results for any future period. You should not rely on them to predict our future performance.

(Amounts are expressed in thousands of United States dollars except per share amounts and number of shares.)


*Quarterly Financial Data (Unaudited)* *(Expressed in thousands of dollars, except earnings per share amounts)* *Amounts are in US$*
	Three Months Ended
	Mar 31	Jun 30	Sep 30	Dec 31
*2009*	$	$	$	$
Sales	4,995	4,896	-	-
Net earnings	829	238	-	-
Earnings per share – basic	0.02	0.00
Earnings per share – diluted	0.02	0.00	-	-
Weighted average common shares outstanding	#	#	#	#
Basic	54,313	59,384	-	-
Diluted	56,112	59,963	-	-

*2008*	$	$	$	$
Sales	2,929	3,960	4,889	6,280
Net earnings	5	135	742	1,318
Earnings per share – basic	0.00	0.00	0.01	0.02
Earnings per share – diluted	0.00	0.00	0.01	0.02
Weighted average common shares outstanding	#	#	#	#
Basic	51,911	53,668	53,698	54,117
Diluted	55,659	57,335	57,140	54,117

2007	$	$	$	$
Sales	-	-	3,787	4,780
Net (loss) earnings	-	-	167	230
Earnings per share – basic			0.00	0.00
Earnings per share – diluted	-	-	0.00	0.00
Weighted average common shares outstanding	#	#	#	#
Basic	-	-	50,584	50,646
Diluted	-	-	55,769	55,871

Quarterly results may fluctuate from quarter to quarter because sales volumes are seasonal with the first quarter of the year being the weakest quarter and the fourth quarter being a strong quarter. Sales volumes are also dependent on military sales, which tend to be uneven over the course of a year.

– Revenue for the first half of 2009 was stronger than the historical patterns of soft quarters to start the year. This is due primarily to the backlog of orders carried forward from the end of 2008.

Page 7

Norsat International Inc. Management Discussion & Analysis

1.6

Liquidity and Financial Condition

The Company’s principal cash requirements are for working capital and capital expenditures.

The Company's cash and term deposit balance as at June 30, 2009 was $5.0 million, an increase of $4.0 million from $1.0 million as at December 31, 2008. The cash and term deposit balances are broken down as follows; $3.0 million in operating accounts and $2.0 million in a short term interest bearing deposit instrument with the Company’s banking institution. During the three months ended June 30, 2009, cash generated by operations was $1.8 million. Financing activities generated net proceeds of $0.3 million during the three months ended June 30, 2009, while investing activities consumed $0.1 million during the period.

The Company’s working capital requirements are mainly for production materials, productions and selling, operations and general administrative expenses. The Company’s working capital may be improved by increasing sales, shortening collection cycles and enhancing of inventory controls.

As at June 30, 2009, working capital^* increased to $10.4MM as compared to $8.5MM at the end of 2008. The current ratio** for the second quarter of 2009 was at 3.9x as compared to 3.1x as at the end of 2008. The Company’s commitment to achieving a more effective structure that began in October, 2006 is starting to pay off in today’s results.

Accounts receivable, was at $3.6 million as at June 30, 2009, down from the balance of $6.8 million as at December 31, 2008. Bad debt provisions are set aside as a percentage of sales that reflect historical experience of defaults. The total provisions are reviewed more thoroughly on an individual customer basis at the end of the fiscal year. In light of the increased credit risks, the percentage rate used to provide for bad debt provisions was reviewed to ensure consistency with historical collection data. Review of the Company’s accounts receivable determined that the bad debt provision was reasonably assessed as at June 30, 2009.

Accounts payable and accrued liabilities were $2.6 million, compared to $3.6 million as at December 31, 2008, reflecting a decreased level of purchasing, consistent with a tightened inventory philosophy.

Inventory as at June 30 2009 was $5.0 million compared to $4.5 million as at December 31, 2008. The increase in inventory resulted from two major factors. Finished goods increased due to satellite systems that were in transit on June 30, 2009 and were subsequently delivered to the US Department of Defense in early July. Microwave products inventory was built up due to the decline in market demand. Replenishment orders of materials for future delivery have since been decreased, but the Company decided to honor its commitment to previously booked orders and absorb the temporary inventory increase to maintain good supplier relationships. The increase in the Company’s inventory level is a temporary spike and inventory will continue to be replaced on a just-in-time basis and monitored closely to manage the risk of obsolescence.

At June 30, 2009, the Company has accumulated a deficit of $31,447,496. The Company has successfully generated net earnings from continued operations from the fourth quarter of 2006 through to the second quarter of 2009. However, these past successes cannot be used as an indication of the Company’s future performance.

Management believes that the Company’s strategy remains sound and can deliver steady performance despite current uncertainty in the global economic environment.

^*- Working Capital is a non-GAAP measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable GAAP measure. Working capital is defined as current assets less current liabilities.

Page 8

Norsat International Inc. Management Discussion & Analysis

1.7

Capital Resources

The Company’s capital resources as at June 30, 2009 were in cash and cash equivalents. In the current environment of global uncertainty, the Company plans to continue to fund cash requirements through operations. And if required, the Company has operating lines of credit in place than can be drawn upon.

During the three months ended June 30, 2009, the Company did not complete any financing transactions. As of June 30, 2009, the Company maintained a secured operating line of credit from a financial institution for Cdn$500,000 or US$400,000 under Export Development Canada’s (EDC) Master Receivable Guarantee (MARG) program.

Terms and conditions are as follows:

interest at the rate of the Bank’s Prime Rate plus 0.85% per annum

all amounts under the loans shall be repaid on demand by the Bank

general security agreement given by the Company creating a first fixed and floating charge and security interest over all present and after acquired assets of the Company

general assignment of book debts creating a first priority assignment of the debts and accounts receivable of the Company

assignment /endorsement by the Company to the Bank of all risk insurance (including extended coverage endorsement) in amounts and from an issuer acceptable to the Bank, on all of the Company’s real and personal property including, without limitation, equipment and inventory owned by the Company, showing the bank as first loss payee by way of standard mortgage endorsement, such policy to include business interruption and public liability insurance.

MARG of Cdn$450,000 from EDC

the working capital ratio (current assets divided by current liabilities) shall not at any time to be less than 1.15:1

the Debt to Tangible Net Worth ratio (total liabilities divided by the sum of total assets minus total liabilities) shall not at any time exceed 2.5:1

The requirement for securitization under Export Development Canada’s (EDC) Master Receivable Guarantee (MARG) program was lifted.

Interest at the rate of the Bank’s Prime Rate plus 1.35% per annum.

CONTRACTUAL OBLIGATIONS

The following table presents the aggregate amount of future cash outflows for contractual obligations as of June 30, 2009 under various purchasing commitments, loan commitments and operating lease agreements for each of the next five years:


	2009	2010	2011	2012	2013
Inventory purchase obligation	2,397,974				
Operating lease obligations	271,306	449,823	411,006	46,623	46,623
Total	2,669,280	449,823	411,006	46,623	46,623

In the normal course of operations the Company enters into purchase commitments. The Company has accrued for estimated losses, if any, when determinable, including losses on disputed purchase commitments with suppliers.

The Company believes most of its working capital can be funded through its operations. The Company may also pursue other financing facilities to fund its working capital and meet its contractual obligations from time to time.

Due to consistently changing economic conditions which may not be under the control of the Company, there can be no assurance that additional financing will be available when needed or, if available, that it can be obtained on commercially reasonable terms.

Page 9

Norsat International Inc. Management Discussion & Analysis

1.8

Off Balance Sheet Arrangements

Not applicable.

1.9

Transactions with Related Parties

1.10

Proposed Transactions

Not applicable.

1.11

Critical Accounting Estimates

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in Canada, and makes estimates and assumptions that affect its reported amounts of assets, liabilities, revenue and expenses, and the related disclosures of contingent liabilities. The Company bases its estimates on historical experience and other assumptions that it believes are reasonable in the circumstances. Actual results may differ from these estimates.

Management has discussed the development and selection of the Company’s critical accounting estimates with the Audit Committee of the Company’s Board of Directors, and the Audit Committee has reviewed the following disclosures.

The following critical accounting policies reflect the Company’s more significant estimates and assumptions used in preparing its consolidated financial statements:

The Company maintains an allowance for doubtful accounts for estimated losses that may arise if any of its customers are unable to make required payments. Management provides for bad debts by setting aside a percentage of sales towards the allowance account. The percentage is based on the Company’s historical default experience and is reviewed periodically to ensure consistency with default experience. In addition, at the end of each fiscal year, management specifically analyzes the age of outstanding customer balances, historical bad debt experience, customer credit-worthiness and changes in customer payment terms to evaluate estimates of collectability of the Company’s accounts receivable balance. The allowance set aside is then adjusted to align with the specific analysis performed. Throughout the year, if the Company determines that the financial condition of any of its custome rs has deteriorated, increases in the allowance may be made.

The Company values its finished goods and work-in-process inventories at the lower of weighted average cost and net realizable value. Net realizable value reflects the current estimated net selling price or value in use of the item in inventory in a non-forced sale. The Company assesses the need for inventory write-downs based on its assessment of estimated net realizable value using assumptions about future demand and market conditions. When the results of these assumptions differ from the Company’s projections, an additional inventory write-down may be required. In addition, changes in the underlying factors used in the Company’s projections may necessitate additional write-downs in the future. Market factors are generally outside of the Company’s control.

The Company generates a portion of its revenue from multiple elements sales arrangements. Revenue is recognized for each element when there is no remaining performance obligations required and is based on their relative fair value at the inception of the sales arrangement. If fair value cannot be determined, either due to changes in contract elements or other factors, it will be necessary to defer revenue until objective evidence of fair value exists or when the final elements are delivered.

Page 10

Norsat International Inc. Management Discussion & Analysis

The Company entered into a $5.97 million repayable investment with the Canadian Federal Ministry of Industry through the Strategic Aerospace and Defense Initiative (SADI). This funding represents a portion of the company’s eligible R&D expenses from September 21, 2007 up to and including December 31, 2011. The Company determines eligible expenditures and will submit quarterly to the Ministry for reimbursement. The final determination for eligibility rests with the Ministry and could go through the process of substantiating the expenditure claims. Based on these discussions, it will be necessary to alter or defer the amounts claimed for reimbursement.

On March 9, 2009, the Company acquired 100% ownership of Bluemoon 4G Ltd., a WiMAX products and services provider to accelerate the Company’s entry into the WiMAX market, from unrelated third parties for 5,000,000 shares of the Company’s common stock. Bluemoon 4G Ltd. is a pre-revenue company that has a customer relationship that will allow it to supply and deliver equipment for WiMAX installations. In acquiring Bluemoon 4G Ltd, the Company has acquired the relationship and is in the process of negotiating a contract to formalize the customer relationship.

The value was based on the market value of the shares given up less liquidity and escrow discounts calculated using the Black-Scholes model. The liquidity discount has been determined on the basis that the Company’s shares are not widely traded. The escrow discount has been determined on the basis that the counterparty will not be able to access the shares until certain performance milestones have been met. As per terms of the contract, shares are held in escrow until December 31, 2009 and the counterparty has to meet certain performance milestones. In the event that the milestones are not met, the counterparty has to pay a minimum order fee. The escrow agreement has been put in place to protect the Company’s financial interest in securing the minimum order fee.

Management has allocated the entire purchase price of $2,120,770 (Cdn$2,466,586) to intangible assets and $1,880,394 (Cdn$2,371,840) as common shares, which includes share issuance costs of $6,470 (Cdn$ 8,160). The net intangible asset of $2,258,610 (Cdn$2,626,902) as reported was broken down as follows:

Purchase Value

$2,046,324 (Cdn$2,380,000)

Ireland Stamp Duties

$27,808 (Cdn$32,342)

Legal Costs

$25,143 (Cdn$29,243)

Valuation Costs

$21,495 (Cdn$25,000)

Temporary tax difference effect

$274,158 (Cdn$ 318,863)

Less: Accumulated amortization

$136,318 (Cdn$158,546)

Based on the information available at the present time, the intangible asset is estimated to have a useful life until December 31, 2013. Amortization of the intangible was calculated on a straight line based on the estimated useful life. The amortization recorded for the six months ended June 30, 2009 was $132,582 (Cdn$158,546).

A total future income tax liability of $271,398 (Cdn$ 315,612) was recognized on the transaction to reflect the income tax effect of temporary differences arising from the Company’s asset acquisition of Bluemoon 4G Ltd. The income tax liability was calculated based on Ireland’s effective tax rate of 12.5% and is the difference between the tax adjusted final book value and actual purchase price of the transaction.

1.12

Changes in Accounting Policies including Initial Adoption

CICA 3064 – “Goodwill and Intangibles”

On January 1, 2009, the Company adopted CICA Section 3064 – “Goodwill and Intangibles”, which replaces Section 3062 – “Goodwill and Other Intangible Assets” and Section 3450 – “Research and Development Costs”. The new section provides guidance on the recognition of assets based on asset recognition criteria rather than matching of revenues and expenses. As a result of adopting this section, there is no material impact on the Company’s consolidated financial statements. As a result of adopting this section, there is no material impact on the Company’s consolidated financial statements. The Company has recognized an intangible asset during the first quarter that is subject to amortization. The intangible asset will be tested for impairment in accordance with the provisions of Impairment of Long Lived Assets, CICA section 3064.

Page 11

Norsat International Inc. Management Discussion & Analysis

IFRS

The accounting Standards Board of the CICA announced that Canadian GAAP for publicly accountable enterprises will be replaced with International Financial Reporting Standards (IFRS) for fiscal years beginning on or after January 1, 2011.

Implementing IFRS will have an impact on accounting financial reporting and supporting IT systems and processes.

It may also have an impact on taxes, contractual commitments involving GAAP based clauses, long-term employee compensation plans and performance metrics. Accordingly when the Company develops its IFRS plan, it will have to include measures to provide extensive training to key finance personnel to review contracts and agreements and to increase the level of awareness and knowledge amongst management, the Board of Directors and the Audit Committee. Additional resources may be engaged to ensure the timely conversion to IFRS. As at June 30, 2009, the Company has completed an IFRS diagnostic and is still in the process of developing an IFRS implementation plan.

The Company has identified the internal resources responsible for spearheading the IFRS conversion process and has charged the team with preparing a detailed project plan and budget for approval by the end of September 30, 2009.

1.13

Financial Instruments and Other instruments

The Company’s financial instruments include cash and cash equivalents, short-term investments, accounts receivables, accounts payable and accrued liabilities. The carrying value of cash and cash equivalents, short-term investments, accounts receivables, accounts payable and accrued liabilities is approximate to their fair values due to the short-term nature of these financial assets and liabilities.

The Company is exposed to foreign currency exchange risk as a result of components of cost being denominated in currencies other than the United States dollar. The Company has not entered into any derivative agreements to mitigate this risk.

1.14

Outstanding Share Data

The following details the share capital structure as at June 30, 2009:


	Remaining life / Expiry date	Exercise price	Number of securities	Total
Common shares				59,388,305

Share purchase options
	3.25 years	CDN$0.45 to CDN$0.99	922,800
	2.31 years	CDN$1.00 to CDN$1.99	626,000
	2.26 years	CDN$2.00 to CDN$6.19	179,500	1,728,300

Warrants	January 12, 2011	US$0.48	366,690	366,690

1.15

Risks and Uncertainties

RISKS ASSOCIATED WITH FINANCIAL RESULTS

The Company’s inability to generate sufficient cash flows from its operations. Should the Company fail to generate sufficient cash flows from operations, it will require additional financing. As at June 30, 2009, the Company has accumulated a deficit of $31,447,496. Although the Company has generated net earnings from its continued operations through the fourth quarter of 2006 to the second quarter of 2009, it cannot be used as an indication of the Company’s future performance.

Page 12

Norsat International Inc. Management Discussion & Analysis

The Company’s inability to accurately forecast its results from quarter to quarter may affect its cash resources and result in wide fluctuations in the market price of the Company's stock. The operating results have varied on a quarterly basis in the past and may fluctuate significantly in the future as a result of a variety of factors, many of which are described below. Due to these and other factors, most of which are outside of the Company’s control, the quarterly revenues and operating results are difficult to forecast. As a result, the Company may not be able to accurately predict its necessary cash expenditures during each quarter or obtain financing in a timely manner to cover any shortfalls. The Company also believes that period-to-period comparisons of its operating results may not be meaningful and one should not rely on any such comparisons as an indication of its future performance.

RISKS ASSOCIATED WITH BUSINESS AND OPERATIONS

The Company’s exposure to business and operation risks includes but is not limited to the following:

The Company cannot be sure it will be able to identify emerging technology and market trends, enhance the existing technologies or develop new technologies in order to effectively compete in the satellite communications industry.

The Company has customer concentration. A significant portion of the Company’s revenues have been recognized from a limited number of customers. While the Company has been diversifying its customer base, the efforts to date may be insufficient to offset the effects of the quarterly variance of sales and delays associated with selling to the Government sector.

The Company cannot be sure that it will be able to compete effectively with the current competitors.

The Company has limited intellectual property protection.

The Company depends on its key employees and it cannot be sure that it will be able to keep these employees or hire and train replacements.

The Company sells products which may, in certain instances, be subject to export and/or re-export restrictions. The Company may also be subjected to penalties and fines should there be a breach in its processes. The Company has formed a committee to actively oversee compliance with all such export regulations.

The Company buys components and products which may, in certain instances, be subject to contractual obligations to purchase minimum quantities during a given period, maintain resale records and abide by certain resale restrictions. Failure to fulfill any or all of these may negatively impact liquidity should the Company be forced to take ownership of any un-purchased units. It may also affect the Company’s ability to continue supplying products as originally specified and thus affect obligations to fulfill customers.

The Company may be subject to product liability claims, which are not fully covered by insurance.

The Company intends to expand its international operations. It thus faces a number of risks including tariffs and other trade barriers, political and economic instability in foreign markets and fluctuations in foreign currencies. Those external risks may not be under the Company’s control. While the additional resources are required for the expansion, the Company cannot be sure its success and a failure of such expansion would have reversed impact on the Company’s business.

On January 28, 2009 the Obama administration announced a Buy American provision in its economic stimulus package. The Company is still in the process of determining the impact of this initiative on future contracts from the United States and will seek to develop an appropriate course of action, if so warranted.

Readers are advised to assess to Form 20F filed under www.sec.gov/edgar.shtml for the full contents of “Risks Associated with Business and Operations”.

RISKS ASSOCIATED WITH THE VALUE OF NORSAT SHARES

The exercise of the existing outstanding options and warrants to be issued may substantially dilute the value of the Company’s common shares. The Company has 75,000,000 shares of Common Stock authorized, of which 59,388,305 were outstanding at June 30, 2009 and an additional 2,094,990 common shares have been reserved for issuance upon the exercise of outstanding options and warrants to be issued as of such date. Although the Board of Directors has no present intention to do so, it has the authority, within parameters set by the Toronto Stock Exchange (the “TSX”), without action by the shareholders, to issue authorized and unissued shares of Common Stock. Any series of Preferred Stock, if and when established and issued, could also have rights superior to shares of the Company’s Common Stock, particularly in regard to voting, the payment of dividends and upon liquidation of Norsat.

Page 13

Norsat International Inc. Management Discussion & Analysis

Convertible debt, if issued to raise additional working capital for the Company could also have dilutive effect on the shareholders.

The current financial market volatility can result in wide fluctuations in the market price of the Company's stock. The Company has reported eleven consecutive quarters of profitability starting from the fourth quarter of 2006. Despite the previously mentioned profitable results, the uncertainty and volatility in current financial markets can result in wide fluctuations in the market price of the Company’s stock. Bear in mind though that the Company’s operating results have varied on a quarterly basis in the past and may fluctuate significantly in the future.

RISKS ASSOCIATED WITH FOREIGN EXCHANGE

The Company is exposed primarily to foreign exchange fluctuations in the U.S. dollar. The Company is exposed to foreign currency exchange risk as a result of components of cost being denominated in currencies other than the United States dollar. To a lesser extent, the Company is also exposed to foreign exchange fluctuations in both the British pound (GBP) and Euros. The total exposure in GBP is approximately GBP 200,000 in expenses per year. The total exposure in Euros is approximately €350,000 in expenses per year. As of June 30, 2009, the Company had no outstanding forward contracts.

1.16

Disclosure Controls and Internal Controls over Financial Reporting

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) on a timely basis so that appropriate decisions can be made regarding public disclosure.

An evaluation of the effectiveness of the design and operation of disclosure controls and procedures was conducted as of June 30, 2009, by and under the supervision of the CEO and CFO. Based on this evaluation, the CEO and CFO have concluded that the disclosure controls and procedures, as defined in Canada by Multilateral Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings, and in the United States by Rule 13a-15(e) under the Securities Exchange Act of 1934 (“the Exchange Act”) are effective to ensure that (i) information required to be disclosed in reports that are filed or submitted under Canadian securities legislation and the Exchange Act is recorded, processed, summarized and reported within the time periods specified in those rules and forms; and (ii) material information relating to the Company is accumulated and communicated to the Company’s management, i ncluding the CEO and CFO, or persons performing similar functions.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with Canadian GAAP and the requirements of the Securities and Exchange Commission in the United States, as applicable. Management is responsible for establishing and maintaining adequate internal controls over financial reporting for the Company.

The Company’s management, including the CEO and CFO, has evaluated the effectiveness of the internal controls over financial reporting. Based on this revaluation, management has concluded that internal controls over financial reporting were designed effectively as of June 30, 2009.

As a result of this review it was determined that there were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting.

While the Company’s CEO and CFO believe that the Company’s internal controls over financial reporting provide a reasonable level of assurance that they are effective, they do not expect that the Company’s disclosure controls and procedures or internal control over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met.

Page 14

GRAPHIC 6 mda002.gif begin 644 mda002.gif M1TE&.#EAQ`&5`/<``!)8FUW7>JV/O[^RUDEC!.=!MAKJVVQ8V-C8J7J[7$U-?D\/7U]1EJLR!YO9:6 MEMG9V5>3R,7%Q4*)R$EZI&.\WZ"@H'!P<&-C9,#,V6NBU,_/SP92 MF>SL["=IHAQEL)J;FQ<[:A=;EVB)J2I^P;3.YRAA=LM8.#@T%8 M=P90E!4S7>+BXGN7M3)ZN)*@LZFIJ;S3Z55:71%'@6)UD@A5GQ8V81M5A7V- MI`A.C]#0T)W!XHBDP#YTH^#CZ_Q]#EMFL[,S75V=HF*BEZ7RZ6FI2%@ MF1U!7CU+7%Z!HW)S200PXYY)!##CGD<(,6$SS1P!]_ M_/'''W_\\</"B1(4*%2I4J%"A0H4*%2I4J%"A0H4*%2I4J%"A`H(=`M10(9*C3(0& M?_[\^?/G3X,&%OJD.,&!`P/'S]^1J3X\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OCQ MX\>/'S\'_OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY M\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY M\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY M\^?/GS]__OSY\^?/GS]__OSY__/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\ M^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^9/"`0<<<,`!'/SQQQ]__/'' M'W_\\</'S]^_/CQX\?/DS]__OSY\^?/GS]__OSY\^?/GS]_ M_OSY\\>/'S]^_/@Y\.?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]_ M_OSY\^?/GS]__OSY\^?/'W_\\<)'CU)DB1)DB1)DB1)DB1)DB1)DB1)DB1)DB1)DB1)DB1)DB1) MDB1)DB1)DD1/$CTAE!@!,B*##Q\^?/CPX<.'#Q\^?/CPX<,'#1)R&OSY\^?/ MGS]__/'''W_\\<?+DR9,G3YX\>?+DR9,G3YX\>VCX\='@SY\_?_[\ M^?/_Y\^?/W_^_/GSY\^?/W_^_/GSY\^?`P<.'#B@X<^?/W_^_/GSY\^?/W_^ M_/GSY\^?/W_^_/GSY\^?/W_\^/'CQX\?/W[\^/'CQT^&/W_^_/GSY\^?/W_^ M_/GSY\^?/W_^^/'CQX\?/P?^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^ M_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^ M_/GSY\^?/W_^_/GSY\^?/W_^_/GSQQ]__/'''W_\\<>."!!QYX2``'#7Z(T,`? M?_SQQQ]__/'''W_\\<#'CQ\_?B3\^?/GSY\_ M?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_ M?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\27,C!Q4U M!!@P8,"``0,&#!@P8,"``0,&#!@P8,"``0,&#!@P8,"``0,&_PP8,&#`@`$# M!@P8,&#`@`$#!@P8,&`PYH4`,V]LP)&`!P\>/'CPX,&#!P\>/'@D2(!#PX^( M!G_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^'#APX,`!#7_^_/GSY\^? M/W_^_/GSY\\??_SQQQ]__/'''W_\\<>."!!QYX2""!!'#0X(<(:?SQQQ]__/'''W_\\< M>."!!QYX2""!!!+`L0<-)(C0P!]__/'''W_\\<"!`EX\.3)DR=/GCQX\$B0`,?&'3-N&OSY M\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY<^#`@0,'-/SY\^?/GS]__OSY M\^?/GS]__OSY\^?/GS]__OSY\^>/'S]^_/CQ<__@SY\3?OSX\>/'SP@+?_[\ M^?/GSY\_?_[\^?/GSQ\_?OSX\>/GP)\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\ MT2'!CQ\_?OSX\>/'CQ\_?OSX\>-GQ`$+?_[\^?/GSY\_?_[\^?/GSY\_?_[\ M^>/'CQ\_?B3\^?/GCP\_?OSX\>/'CY\_?_[\^?/GSY\_?_[\^:-#@A\_?OSX M\>/'CQ\_?OSX\>/'CY\1)_[\^?/GSY\_?_[\\<&;#``@LLL)!!!GG@(<$>-(Q`PA8-_/'' M'W_\\< M/'CPX($``0)@P&S8$"=.G#AQXH!9<@/("!IP\.3)P$*$'#ERY(A@D2&/!!MO M2&3HT^#/GS]__OSY\^?/GS__?_[\^?/GSY\_?_[\^?/GSY\#!PX<.*#ASY\_ M?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_SX\>/'CY\#?_[\L3#"CQ\_ M?OSX.?'GSY\_?_[\^?/''W_\\<>$```6"``08!!'C@ MP1)MM"'`"UV\\$(77=C11AM+>.`!`6"`L<$&&\2QP09@>/]PPPTDO&$#'AFP M(((& M!!\'1$@8X<>/'S]^_/CQXR?%GS]__OSY\^?/GS]__OSY\^=/BA%^_/CQX\>/ M'S\C)(@X<$""!#]^_/CQX\>/'S\2_OSY\^?/GS]__OSY\T>#'S]^_/CQX\>/ M'S]^_/CQX\>/'S]^_OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/ MGS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/ M'RLYJ*A1$$3,A@T;-H`!0\##$@]=NKQX\>+%BQ==NKQ8XL&#&`\>EK1ITX7" M#`W\\<,X(D M\,-#&$AZ(T4$''73000=+./``$'[0L`<>&;#``@LLL)!!'G#8,`()-FA@00-_ M_/'''W_\\</'S\2_OSY\^?/GS]__OSY M\^?/GS]__/CQX\>/!`E^_/CQXT<"!PM__OSY\^?/GS]__OSY\^>/'S]^_/CQ M,T+'GS]__OSY\^?/GS]_./CQX\>/'S]^+/SY\^?/GS]__OSY\^?/GS\Z_/CQ MX\>/'QLZ_OSY\^?/GS]__OSY8\&&'S]^_/CQ\^3/GS]__/'''W_\\<?/GS]__OSY\^?/'S]^_/CQX^?`GS]__OSY\^?/GS]_ M_OSY\^>$'S]^_/CQ,T+'GS]__OSQQQ]__/'''W_\\</'3XH_ M?_[\^?/GSY\_?_[\^?/G@!\_?OSXD?#GSY\_?_[\^?/GSY\_?_[X\>/'CQ\_ M)__^_/GSY\^?/W_^_/GSY\^?/P?\^/'CQX^$/W_^_/GSY\^?/W_^_/GSY\^? M/QK\^/'CQX^$/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^? M/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^? M/W_^W"#2HHJ"(`:R!`@0($``'CRN[/CSY\^?/W_^_/GSY\^?/W^:_/GSY\^? M/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSAX(#%5=X!`@0($``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`$Q9`"`S!@P(`!PX`!`_A/'S]^-/SY\^?/GS]__OSY\^?/GS]__OSY\^?/'PE^_/CQXT?" MGS]__OSY\^?/GS]__OSQX\>/'S]^-/SY\^?/GS]__OSY\^?/GS]__OSY\^?/ MGS]__ECPX<>/'S]^_/CQX\>/'S]^_/CQX\=/!@Y__OSY\^?/GS]__OSY\^?/ MGS]__OSY\^>/A2<9_/CQX__'CQ\_?OSX\>/'CQ\_?OSX\>/'CX0_?_[\^?/G MSY\_?_[\^?/GSY\_&OSX\>/'CX0_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/G MSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/' M'W_\\</GP-__OSY M\^?/GS]__OSY\T>#'S]^_/CQH^'/GS]__OSY\^?/GS]__OSY\^?/GS]__DCP MX\>/'S\2_OSY\^?/GS]__OSY\^>/'S]^_/CQH^'/GS]__OSY\^?/GS]__OSY M\^?/GS__?_[\^?/GSY\_?RQPR.#'CQ\_?OSX\>/'CQ]^^.&''W[X<<`??_SQ MQQ]__/'''W_\\<LX`(72OSQQQ]__/'''U!PX<(*-?#!!Q]\\,''"E(` M4,`0*.!P1!`*5-$"$1/\\<?/GS]_ M_OQIPR4,A`LU:O#APX/'S]^#OSY\^?/GS]__/'''W_\\<L`($44@!00`%#H'"$`4$HH`85.?SQQQ]__/'''W_\ M\</'CY\G?_[\^?/GSY\_?_[\^?/GSY\_.OSX\>/'CQ\- M?_[\^?/GSY\_?_X<\./'CQ\_?O[\^?/GSY\_?_[\^?/GSY\_?WSX\>/'CQ\_ M$O[\^?/GSY\_?_[\^?/GSY\_?_YH\./'CQ\_$O[\^?/GSY\_?_[\^?/GSY\_ M?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_ M?_[\^?/GSY\_?_[\^?/GSY\_?P004:/_((B!(RB&%"@`0(H4"!`@0(```0($ M*0!0&"CQY\^?/W_^_%&`(XP4""O0H$&#!@T:-&C0H$ @4$`$.."/CSY\^? M/W_^0#&`HH`4*1!```$$$$@A!0``%#`$"C@8$(0"55"1@P5__/'''W_\\<$(04$*ZR` M!AIHH($&&FB@@08:*ZP``0!#'"'`'W_\\</'S\'_OSY\^?/GS]__OSY\^?_SY\_?_[\^?/G@!\_?OSX\>/' MCQ\_?@[\^?/GSY\_?_[\^?/GSY\_?_X<\./'CQ\_?OR(^//GSY\_?_[\^?/G MSQ\=(_SX\>/'CY\1*?[\^?/GSY\_?_[\^?/GSY\_?OSX\>/'CX8_?_[\^?/G MSY\_?_[\^?/GSY\_?_[\^/' MCQ\_?OSXD?#GSY\_?_[\^?/GSY\_?_[\^?-'@Q\_?OSX\?/GSY\_?_[\\</'CQ\_?OSX\7/@SY\_?_[\^?/GSY\_?_[\^?/GCXX1?OSX\>/'CQ\_-@YH M2/%'PPD1(_SX\>/'CQ\_?D3\^?/GSY\_?_[\^?/''W_\\<`0 M1`E__/'''W_\\8<"1PP!@!000+#""BNLL,(**ZRPP@H00"`%`$,8(,`??_SQ MQQ]__`%%$"@4((44$$```0002"$%``44,`0*1Q@0A`+_:E"QQA]__/'''W_\ M\</'S]^_/CQX\>/'S]^_/CQX\>/'Q%^ M_/CQX\>/'S]^-/SY\^?/GS]__OSY\^?/GS\T_/CQX\>/'S]^_/CQX^?/GS]_ M_OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]_ M_OSY\^?/GS]__OSY\^?/GS]__OSY\^=/CQPMJB@(<@0'BB$%`$B1`@$"!`@0 M($"0`J``CB`E_OSY\^?/GS\*C@P!(`4"!`@0($"```$"!`@0($"0`@"%`0%_ M_OSY\__GSQ\H05`4D"(%`@0($"!(D0*@0`$4.(X8"**@!94;?_[\^?/GSY\_ M?_[\^?/GSY\_?_[\^?/GSQ]__/'''W_\\</'S]^_/C1\.?/ MGS]__OSY\^?/GS]__OSY\^?/GS]__OSY\\>''S]^_/CQX\>/'S]^_/CQX\>/ M'S]^_-#0\.?/GS]__OSY\^?/GS]__OSY\T>$'S]^_/CQX\>/'S]^_/CQX\>/ MGQ$G_OS)X,>/'S]^_/CQH^'/GS]__OSY\^?/GS]__ORQ8,./'S]^_/CQX\>/ M'S]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/ MGS]__/'''W_\\<@ M,$0!!0`@A1000``!!!!`(`4`!>`01`E__/'''W_\\8<"1PP!@!000``!!!!` M``$$$$```0002"%%`2@8(,`??_SQQQ]__`%%$"@4`(`4$$```0122`$```4, M@0(.!@2A0!4MY##!'W_\\<@,$0!!0`@A1000``!!!!`(`4` M!>`01`E__/'''W_\\8<"`#DR!(`4"!`@0%BQ8L6*%2L@0(``04H!%`8$_/GS MY\^?/W^@!,%1`(`4"!`@0)`B!4"!`D-0'#$01$$5*CDH_/GSY\^?/W_^_/GS MY\^?/W_^_/GSY\^?/W_^_/GSY\^?/P<.'#AP0,.?/W_^_/GSY\^?/W_^_/GS MY\^?/W_^_/GSY\^?/W_^'#APX,"!`QK^_/GSY\^?/W_^_/GSY\^?/W___OSY M\^?/GS]_+!PX<.#`@0,'-/SY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__J1X M(F&$'S]^_/CQX\>&"`Y__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS\'#APX M<.!`BC]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OR1`@<9V."''W[X MX8@$`8`4JRPP@H7 M7+`"&A!(`4`8*!P11!4"_/'''_]__/'''U:TH$`01Z`P1`$```````44,`0* M1Q@0A`)J4)'#$W_\\<@,,00**!P MA`%!*%!%"T24\</'S]^_OSY\^?/GS]__OSY\^?/ MGS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/ MGS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/ MGS]__OSY\^?/GS]__OSY\\>/'S]^#OSY\^?/GS]__OSY\^?/GS]__OSY\^?/ MGS]___[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_X<\./' MCY\_?_[\^?/GSY\_?_[\\>/'CQ\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/G MSQ]__/'''W_\\<@@`(..!QA0!`*J$%%#A/\\</'CPX,&#'3MV['AHH^+*%1X!`@0( M$$`,CRM75+2Q8\>.!P\>/'CPX,&#!P\>EL@P<`0'#A0H/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY M\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__/'''_]__/'''W_\ M\</D1Q4U"@($L0`#A1#AA0H4*!`&```I$2)$B7*E"E3IERY? M/QQ$2)!P0,>?/W_^:-`@PH\?/WXT:-!@X<^?/W_^Z#B004*&`RG^_/GSY\^? M%!HT:-#QYX\&'Q(._+&@08,_^:/`A08(/#G_^_/GSY\^?/W]T'!`A04*& M`R/!0X^)$@0\23%GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/ MGS]__OSY\\/'CY\_?_X<\./'CQ\_?OSX\>/'CQ\_?BS\ M^?/G@!\_?OSXH6'#CQ\_?OS8^//GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\ M^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\ M^?/GSY\_?_[\^?/G#Y,R1%I441#$_\`1'"C"`)`"8<6%&GSX#!B``0,&&#!@ M!`@0($"'#ATZ=.C0H4.```$"!(`!`P8&#`,&#.!3X\(*"%(`A!F"XHB!(`JJ MM*"28\*?/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^ M_/GSY\"!`P<.:/CSY\^?/W_^_/GSY\^?/W_\\<.'QI\_?_ZD\./'CY\,?_YPD"!!@H04 M?_[\^7/`CQ\_?O[\^?-'@A\_?B3\^?/GSQ\_?OSX.?#GSQ,_?OSXX?#GSY\_ M?R3X\>/'CX4_?_SX\>/'3XH_?_[\H>''CQ\_?_ZDD"!!@@0.?_[\^:/!CQ\_ M?C3\^7/`CQ\_?O[\^?/GSY\_?_[\^?/'CQ\_?OS\^?/G@!\_?OR(^//GSQ\. M?OSX\7/@SY\G?OSX\/'SX$_?_[\^?/GSY\_?_[\^?/GSY\_ M?_[\^?/GSY\_?__^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^?/W_^_/GSY\^? M/W_^_/GSY\^?/W_^_/'''W_\\</' MSY\_?P[X\>/'SY\_?_[\T>#'CQ\_!_[\^7/`CQ\_?O[\^?-'A!\_?OSX\>/' MCQ\_?OSX\>,GQ9\#?OSX\:/ASY\_?_[\T>#'CQ\_'/[\^?/GCP0_?OQ(^//G MSY\_&@YDD##"CQ\_?OSX\?/GSY\_$OSX\2/ASY\_?_[X\>/'SX$_?VSX\>-' MPI\_?_[\^9/"CQ\_?@[\^>/'CQ\_$O[\^?/GSP$_?OSX^?/GSY\_*9Z(D$"# M'W[XX8%"C1I\^/#A,V#`@`$#!O#APX/'CQ\_?O[\^7/`CQ\_?O[\^?/GCP8_?OSX.?#GSQ\'^.&''W[\\</A#]__OSYX\>/'S\'_OR1X,>/'QM_ M_OSY\^>/!C]^_/AY\N>/'S]^_!SX\^?/GS\'_/CQX^?/GR=^_/CQDR'%GS]_ M-/CQX\>/AC]_#OCQX\?/GS]__OSY\^?/GS]__OCQX\>/GS]__ASPX\>/GS]_ M_OSY\\>/'S]^#OSY0\./'S\V_OSY\^?/'Q\2)$CP\>?/GS]__OSY\^?/GS]_ M_OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]_ M_OSY\^?/GS]__OSY\^?/GS]__OSY\^?/GS]__OSY\R="&2)4_]1441`DB($C M1W"@&!(F#```4J1(@0!AQ8H5*ZRPP@HKK+`"!!!`((44```01AA#H(`##D<8 M8$`0"E2A1@M$Y*!%`W_\\</ M'QL6_OSY8\&&'S]^1/SY<\"/'S]^_OSY\^?/GS\:_/CQXT?#GS]__OR1X,>/ M'PE__OCQX\=/AC]__ORQ,,*/'S]^_OSY\T>"'S]^1ECX\^?/'S]^_/@Y\.>/ M#C]^_/BQ8>'/GS\Z_/CQXX?&GS]__/CQX^?`GS]__OPYX,>/'S]__DCPX\>/ MGS]__OSY(\&/'S]^-/SY<\"/'S]^_OSY\^?/GS]__OSY\\>/'S]^_/SY\^>` M'S]^_/SQQQ]__/&''W[XX</'S\'_OSYH\./'S]^_/CQ MH^'/'PE^_/CQX\>/'S]^_/@Y\.?/GP-^_/CQ\^?/GS]__OS1X(/GP)\_?_[\\>/'CY\#?_[\^?/G@/\?/W[\_/GSQX20`Q%$$$$$$40000011.200PYE"#'!#'_\\<$R9,,&)DPH0)$R+,^//GSY\_?_[\ M^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\^?/GSY\_?_[\ M^?/GSY\_?_[\^?/GSY\_?_[\^?/GSQ\.'#APX*##'W_\\< -----END PRIVACY-ENHANCED MESSAGE-----