HQ Sustainable Maritime Reports First Quarter Results

SEATTLE, WA, May 11 (MARKET WIRE) --
HQ Sustainable Maritime Industries, Inc. (NYSE Amex: HQS) ("HQS" or the
"Company"), a leader in all natural integrated aquaculture and aquatic
product processing including fish byproduct personal healthcare products,
today announced its financial results for the first quarter ended March
31, 2009.

First Quarter 2009 Results

For the quarter ended March 31, 2009, sales increased by 18% to $10.8
million, compared to $9.2 million for the first quarter of 2008. The
Aquaculture Product segment accounted for $7.3 million in sales, up 12%
from $6.5 million reported for the same period last year. Sales from the
Health and Bio-product segment were $3.5 million, up 32% from $2.6 million
for the first quarter of 2008.

The gross profit for the first quarter of 2009 increased by 22% to $4.8
million, compared to gross profit of $3.9 million for the same period of
2008. The overall gross profit ratio increased to 44%, compared to 42% for
the three month period ended in March 31, 2008.

"I am very pleased by our performance during the first quarter. We hit the
ground running in 2009, building upon the momentum we gained from a very
strong 2008. Our growth this quarter was achieved in spite of this being a
traditionally slower period as a result of decreased business activity
surrounding the Chinese New Year. Our business also proved resilient in a
tough global economic environment, as we experienced strong sales
improvements in both of our segments. Our push into new product areas is
also progressing positively, highlighted by the favorable reception that
that Lillian's Healthy Gourmet(TM) line of products received at the recent
food shows in Boston and Brussels," said Norbert Sporns, CEO of HQ
Sustainable Maritime Industries, Inc.

Sporns concluded, "I strongly believe that HQS is at the forefront of a
sustainability revolution, driven in part by our customers' desire to
create a greener future for their children. Our customers and clients are
also beginning to recognize that it is possible, even in a recession, to
provide a healthy affordable family meal. From our standpoint, we are
providing a healthy sustainable resource that does not impact our world's
oceans or ecosystems. At HQS, we strongly believe that it is possible to
be both environmentally sound, and profitable, which we continue to prove
quarter after quarter."

Operating income for the first quarter increased to over $1 million, from
$724,077 in March 2008. Although the gross profit increased in 2009 by
approximately $853,000, increased marketing and advertising costs in the
health and bio-product segment, to support the marketing of new products,
reduced income from operations in the current quarter. EBITDA for the
quarter increased 37.6% to $1.5 million, from $1.1 million for the same
period last year.

For the three months ended March 31, 2009, finance costs substantially
decreased to $518,000, or 68.4%, from $1.6 million for the three month
period ended March 31, 2008. The decrease was due to the phasing out of
certain non-cash financial costs.

Net income for the first quarter was $1.1 million, compared to a net loss
of $1 million for the first quarter of 2008.

Financial Condition

As of March 31, 2009, cash and cash equivalents were $54.8 million,
compared to $54.9 million at December 31, 2008. The Company had current
assets of $80.9 million, down from $84.1 million at the end of the
previous year as a result of a decrease in accounts receivable. As of
March 31, 2009, the Company had no long term debt.

Company Updates

-- The Company completed construction of its new feed mill, and it is
currently in the final phases of testing.
-- The Company will be hosting an analyst day on June 9-10, 2009, taking
members of the institutional investment community on tours of its
facilities in China, including the feed mill. Members of the institutional
community, who are interested in attending, may contact Jeffrey Goldberger
at 212-896-1249.

Use of Non-GAAP Financial Information

This press release includes certain financial information (EBITDA), which
is not presented in accordance with GAAP. EBITDA was derived by taking
earnings before financing costs, taxes, depreciation and amortization. The
Company's management believes that this non-GAAP measure provides
investors with a better understanding of the Company's historical results
by focusing on its core business operations. Non-GAAP information is not
meant to be considered in isolation or as a substitute for GAAP
financials. The non-GAAP financial information that the Company provides
also may differ from non-GAAP information provided by other companies. A
table included at the end of the following financial tables provides a
reconciliation of the non-GAAP financial information to the nearest GAAP
measure.

Conference Call

The company will host a conference call at 4:30 p.m. Eastern Time on
Monday, May 11, 2009 to discuss its financial results for the first
quarter of 2009. To participate in this live conference call, please call
the following number five to ten minutes prior to the scheduled
conference call time: (866) 394-1757. International callers should call
(706) 643-3624. The Conference Passcode is 97401223. A replay of the
conference call will be available from 5:15 p.m. Eastern Time on Monday,
May 11 through Thursday, June 11, 2009. To access the replay, please call
(800) 642-1687. International callers should call (706) 645-9291. The
Conference Passcode is 97401223.

To listen via the web, please go to http://www.hqfish.com/ approximately
twenty minutes before the conference call is scheduled to begin in order
to register as well as download and install any necessary audio software.
The Webcast will be archived for 30 days.

About HQ Sustainable Maritime Industries, Inc.

HQ Sustainable Maritime Industries, Inc., headquartered in the United
States, is an integrated aquaculture and aquatic product processing
company, with production facilities in Hainan, PRC. HQS also uses North
American based production facilities for its new line of meal products.
HQS practices cooperative sustainable aquaculture, using nutraceutically
enriched feeds and produces and markets its products. The company is
dedicated to sustainable all natural methods giving its customers the
purest products possible. The Company holds HACCP certification from the
U.S. FDA and the EU Code assignment of quality, permitting its products to
be sold in international markets. The Aquaculture Certification Council,
Inc. (ACC) certified that tilapia processing standards met Best
Aquaculture Practices, and the Chinese government gave organic
certification to the Company's tilapia production, processing, labeling,
marketing and management system. The Company owns a nutraceuticals and
health products subsidiary, which is HACCP and GMP certified, and
produces and sells products subject to stringent laboratory tests
certified by the China Ministry of Health. The Company has recently
completed a 100,000 Metric Tonne annual production extruded Feed Mill
with state-of-the-art extruded feed production equipment. This feed is
highly efficient and is sold to the market and used by HQ's cooperative
farmers. In addition to headquarters in Seattle, HQ has operational
offices in Wenchang, Hainan. The Company's website is:
http://www.hqfish.com.

Safe Harbor Statement

Certain statements in this press release that are not historical facts are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements may be identified by the
use of words such as "anticipate," "believe," "expect," "future," "may,"
"will," "would," "should," "plan," "projected," "intend," and similar
expressions. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of HQ Sustainable Maritime Industries, Inc.
(the Company) to be materially different from those expressed or implied
by such forward-looking statements. The Company's future operating
results are dependent upon many factors, including but not limited to the
Company's ability to: (i) obtain sufficient capital or a strategic
business arrangement to fund its expansion plans; (ii) build the
management and human resources and infrastructure necessary to support
the growth of its business; (iii) competitive factors and developments
beyond the Company's control; and (iv) other risk factors discussed in
the Company's periodic filings with the Securities and Exchange
Commission, which are available for review at www.sec.gov under "Search
for Company Filings."

HQ SUSTAINABLE MARITIME INDUSTRIES, INC. AND SUBSIDIARIES
(INCORPORATED IN THE STATE OF DELAWARE WITH LIMITED LIABILITY)
CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, March 31,
2009 2008
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 54,829,017 $ 54,920,548
Trade receivables, net of provisions 24,009,228 27,689,410
Inventories 1,602,061 1,041,628
Prepayments 429,152 464,919
------------- -------------
TOTAL CURRENT ASSETS 80,869,458 84,116,505
------------- -------------

PROPERTY, PLANT AND EQUIPMENT, NET 7,984,622 8,315,593
CONSTRUCTION IN PROGRESS 8,725,589 6,622,501
INTANGIBLE ASSETS 1,059,333 1,112,904
OTHER ASSETS
Deferred expense 13,145 18,770
------------- -------------
TOTAL ASSETS $ 98,652,147 $ 100,186,273
============= =============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 4,684,288 $ 5,787,514
Tax payable 246,907 823,382
Due to directors 7,079 698,429
Derivative liabilities 3,942,819 -
Current portion of promissory notes 4,722,741 4,603,920
------------- -------------
TOTAL CURRENT LIABILITIES 13,603,834 11,913,245
------------- -------------

SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value, 10,000,000
shares authorized, 100,000 shares issued and
outstanding 100 100
Common stock, $0.001 par value, 200,000,000
shares authorized, 12,146,656 and 12,085,846
shares issued and outstanding as of March
31, 2009 and December 31, 2008 respectively 12,147 12,086
Additional paid-in capital 59,396,767 61,572,410
Accumulated other comprehensive income 9,405,210 9,615,956
Retained earnings 9,520,371 10,510,961
Appropriation of retained earnings (Reserves) 6,713,718 6,561,515
TOTAL SHAREHOLDERS' EQUITY 85,048,313 88,273,028
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 98,652,147 $ 100,186,273
============= =============

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Three Months Ended
--------------------------
March 31, March 31,
2009 2008
------------ ------------
SALES $ 10,840,821 $ 9,210,490
COST OF SALES 6,087,507 5,310,702
------------ ------------
GROSS PROFIT 4,753,314 3,899,788
SELLING AND DISTRIBUTION EXPENSES 254,152 229,176
MARKETING AND ADVERTISING 1,426,625 1,164,518
GENERAL AND ADMINISTRATIVE EXPENSES 1,606,372 1,452,800
DEPRECIATION AND AMORTIZATION 427,111 339,755
DOUBTFUL ACCOUNTS (RECOVERY) 31,566 (10,538)
------------ ------------
INCOME FROM OPERATIONS 1,007,488 724,077
FINANCE COSTS 518,445 1,639,405
FAIR VALUE CHANGE IN DERIVATIVE FINANCIAL
INSTRUMENTS (825,871) -
OTHER (INCOME)/EXPENSES (27,011) 1,765
------------ ------------
INCOME / (LOSS) BEFORE INCOME TAXES 1,341,925 (917,093)
INCOME TAXES
CURRENT 226,569 112,350
DEFERRED - -
------------ ------------
NET INCOME/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS 1,115,356 (1,029,443)
OTHER COMPREHENSIVE INCOME
Foreign currency translation (loss)/gain (210,746) 2,763,843
------------ ------------
COMPREHENSIVE INCOME $ 904,610 $ 1,734,400
============ ============
NET INCOME/(LOSS) PER SHARE
BASIC $ 0.092 $ (0.089)
============ ============
DILUTED $ 0.089 $ (0.089)
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC 12,137,999 11,572,458
============ ============
DILUTED 13,424,809 11,572,458
============ ============

HQ SUSTAINABLE MARITIME INDUSTRIES, INC. AND SUBSIDIARIES
(INCORPORATED IN THE STATE OF DELAWARE WITH LIMITED LIABILITY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended
--------------------------
March 31, March 31,
2009 2008
------------ ------------
OPERATING ACTIVITIES
Net income/(loss) $ 1,115,356 $ (1,029,443)
Non-cash items:
Depreciation and amortization 427,111 339,755
Loss of disposal of fixed assets - 1,765
Fair value change in derivative financial
instruments (825,871) -
Financial and other non-cash services 785,679 1,908,580
Change in non-cash working capital items:
Inventories (561,878) (591,275)
Trade receivables, net of provisions 3,646,355 (180,872)
Prepayments 35,188 (65,448)
Accounts payables and accrued expenses (922,645) (1,541,200)
Tax payable (575,767) (841,598)
------------ ------------
Cash flow generated from/(used in) operating
activities $ 3,123,528 $ (1,999,736)
------------ ------------
INVESTING ACTIVITIES
Acquisition of property, plant and equipment (54,611) (142,307)
Sales proceeds of disposal of fixed assets - 2,375
Construction in progress (2,288,983) (1,917,782)
Acquisition of intangible assets - (76,958)
------------ ------------
Cash flow used in investing activities (2,343,594) (2,134,672)
------------ ------------
FINANCING ACTIVITIES
Cash proceeds from issuance of common stock - 137,536
Due to directors (691,520) (392,416)
------------ ------------
Cash flow used in financing activities (691,520) (254,880)
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 88,414 (4,389,288)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (179,945) 2,151,363
Cash and cash equivalents, beginning of period 54,920,548 46,959,908
------------ ------------
Cash and cash equivalents, end of period $ 54,829,017 $ 44,721,983
============ ============
SUPPLEMENTARY CASH FLOWS DISCLOSURES
============
Interest paid $ - $ -
============ ============
Taxes paid $ 803,044 $ 975,806
============ ============
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES

Common shares issued for services $ 295,784 $ 3,673,349
============ ============

Three Months Ended
--------------------------
March 31, March 31,
2009 2008
------------ ------------
Net Income/(Loss) Attributable to Shareholders $ 1,115,356 $ (1,029,443)
Income Tax 226,569 112,350
FAIR VALUE CHANGE IN DERIVATIVE FINANCIAL
INSTRUMENTS (825,871) -
Finance Costs 518,445 1,639,405
Deprecation and Amortization 427,111 339,755
------------ ------------
EBITDA $ 1,461,610 $ 1,062,067
============ ============

Contact:
Jeffrey Goldberger
KCSA Strategic Communications
212-896-1249
Email Contact

Yemi Rose
KCSA Strategic Communications
212-896-1233
Email Contact

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