HQ Sustainable Maritime Reports Third Quarter Results

SEATTLE, WA, Nov 09 (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 and personal healthcare
products, today announced its financial results for the third quarter
ended September 30, 2009.

Third Quarter 2009 Results

For the quarter ended September 30, 2009, sales decreased by 1.4% to $22.2
million, compared to $22.4 million for the third quarter of 2008. The
Aquaculture Product segment accounted for $14 million in sales, down 7%
from $15.1 million reported for the same period last year. Sales from the
Health and Bio-product segment were $8.1 million, up 10% from $7.3 million
for the third quarter of 2008.

Gross profit for the third quarter of 2009 increased by 5% to $10 million,
compared to gross profit of $9.5 million for the same period of 2008.
Operating income for the third quarter decreased to $4.9 million, from
$6.5 million in September 2008. The decrease experienced in the quarter
was mainly the result of the provision for potential losses in the
Company's receivables in its health and bio-product segment which had not
materialized to date, as well as an increase in advertising and marketing
expenses within the same segment. EBITDA for the quarter decreased by 27%
to $5.2 million, from $7.1 million for the same period last year.

Net income for the third quarter was $4 million, or $0.268 cents per fully
diluted share compared to net income of $5.6 million, or $0.427 cents per
fully diluted share, for the third quarter of 2008. Net income during the
current quarter was affected by increases in doubtful accounts of
approximately $1,606,000 and marketing and advertising expenses by
approximately $979,000 from the health and bio-product segment.

"Our Company continues to see significant demand for its biomass products,
and to benefit from the manner in which we have balanced our portfolio of
product offerings to reduce the impact of seasonality and price
fluctuations. During the quarter, increased demand for our Marine Bio and
Healthcare products resulted in much improved sales, and helped to
mitigate the impact of the reduction in the selling price of tilapia in
our aquatic products segment that we have seen this year. Increased
vertical integration is also beginning to pay dividends, as we saw
decreased raw material costs with respect to our fish and other indirect
expenses during the quarter. This has resulted in a significant
improvement in our profitability so far in 2009, and we hope to see this
trend continued in future quarters," said Norbert Sporns, CEO of HQ
Sustainable Maritime Industries, Inc.

Nine Month Financial Results

Revenues for the first nine months of 2009 were $49 million, up 6% from
revenues of $46.2 million in the first nine months of 2008. Approximately
22% of the increase in sales revenue was a result of increased sales from
the aquaculture product segment, and 78% of the increase was from sales
from the health and bio-product segment. Gross profit margin reached $21.6
million, up 17.3% from gross profit of $18.4 million for the first nine
months of 2008. The Company's gross profit ratio was 44% for the first
nine months of 2009, compared to 39.8% for the first nine months of 2008.
Operating income reached $8.7 million, up 17.6% from $7.4 million for the
first nine months of 2008. Net income increased by 75% to $6.2 million, or
$0.472 cents per fully diluted share, compared to net income of $3.6
million, or $0.291 cents per fully diluted share, for the same period a
year earlier.

Financial Condition

As of September 30, 2009, cash and cash equivalents were $55.5 million,
compared to $54.9 million at December 31, 2008. The Company had total
assets of $120 million, up from $100.2 million at the end of the previous
year. As of September 30, 2009, the Company had no long term debt.

Company Updates

-- The Company began production of extruded feed from its new feed mill,
and revenues will flow through from the sale of feed to its cooperative
farmers during the last quarter of 2009.

-- The Company's tilapia grow out operations, as well as its processing
plant operations for tilapia in its wholly owned, Hainan-based subsidiary
Hainan Quebec Ocean Fishing Co. Ltd., have been certified by Moody
International Certification Ltd., as being in conformity with the GLOBALGAP
Tilapia Standard recently launched in April 2009. HQS is the first company
to be certified to this standard.

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, fair value change in derivative
financial instruments, 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 attached 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
November 9, 2009 to discuss its financial results for the third 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 38267189. A replay of the conference
call will be available from 5:15 p.m. Eastern Time on Monday, November 9
through Wednesday, December 9, 2009. To access the replay, please call
(800) 642-1687. International callers should call (706) 645-9291. The
Conference Passcode is 38267189.

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 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 is the first to be certified
to GLOBALGAP Tilapia standards for its farms and processing. 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 STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended
------------------------ ----------------------
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ---------- -----------
SALES $22,156,867 $22,470,184 49,007,445 $46,212,161
COST OF SALES 12,148,026 12,936,090 27,433,355 27,819,402
----------- ----------- ---------- -----------
GROSS PROFIT 10,008,841 9,534,094 21,574,090 18,392,759
=========== =========== ========== ===========
SELLING AND DISTRIBUTION
EXPENSES 417,076 557,763 961,378 1,111,871
MARKETING AND ADVERTISING 1,703,664 724,511 4,469,149 3,175,561
GENERAL AND
ADMINISTRATIVE EXPENSES 1,432,869 1,466,174 5,062,834 4,862,649
DEPRECIATION AND
AMORTIZATION 281,044 554,741 1,048,335 1,257,004
DOUBTFUL/(RECOVERY OF)
ACCOUNTS 1,309,803 (296,655) 1,328,990 585,197
----------- ----------- ---------- -----------
INCOME FROM OPERATIONS 4,864,385 6,527,560 8,703,404 7,400,477
=========== =========== ========== ===========
FINANCE COSTS 146,791 60,240 793,251 2,502,864
FAIR VALUE CHANGE IN
DERIVATIVE FINANCIAL
INSTRUMENTS (154,200) - 75,798 -
OTHER EXPENSES - - - 1,765
----------- ----------- ---------- -----------
INCOME BEFORE INCOME
TAXES 4,871,794 6,467,320 7,834,355 4,895,848
=========== =========== ========== ===========
INCOME TAXES
Current 824,360 852,638 1,586,831 1,304,047
Deferred -- - -- -
----------- ----------- ---------- -----------
NET INCOME ATTRIBUTABLE
TO SHAREHOLDERS 4,047,434 5,614,682 6,247,524 3,591,801
=========== =========== ========== ===========

OTHER COMPREHENSIVE
INCOME
Foreign currency
translation income (51,777) 37,053 (104,177) 4,359,375
----------- ----------- ---------- -----------
COMPREHENSIVE INCOME $ 3,995,657 $ 5,651,735 $6,143,347 $ 7,951,176
=========== =========== ========== ===========

NET INCOME PER SHARE
Basic $ 0.297 $ 0.466 $ 0.491 $ 0.303
----------- ----------- ---------- -----------
Diluted $ 0.268 $ 0.427 $ 0.472 $ 0.291

WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic 13,639,455 12,052,075 12,716,956 11,844,792
----------- ----------- ---------- -----------
Diluted 14,840,283 13,345,883 13,912,762 13,162,048

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

September 30, December 31,
2009 2008
(Unaudited) (Audited)
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 55,543,309 $ 54,920,548
Trade receivables, net of provisions 40,379,485 27,689,410
Inventories 1,409,199 1,041,628
Prepayments 727,335 464,919
------------- -------------
TOTAL CURRENT ASSETS 98,059,328 84,116,505
============= =============

PROPERTY, PLANT AND EQUIPMENT, NET 7,553,047 8,315,593
CONSTRUCTION IN PROGRESS 13,193,220 6,622,501
INTANGIBLE ASSETS 987,969 1,112,904
OTHER ASSETS
Deferred expenses 1,895 18,770
------------- -------------
TOTAL ASSETS $ 119,795,459 $ 100,186,273
============= =============

September 30, December 31,
2009 2008
(Unaudited) (Audited)
------------- -------------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 7,299,756 $ 5,787,514
Taxes payable 845,132 823,382
Due to directors 500,626 698,429
Derivative liabilities 4,220,020 -
Current portion of promissory notes 4,713,356 4,603,920
------------- -------------
TOTAL CURRENT LIABILITIES 17,578,890 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,
13,684,575 and 12,085,846 shares issued
and outstanding as of September 30, 2009
and December 31, 2008 respectively 13,685 12,086
Additional paid-in capital 71,226,843 61,572,410
Accumulated other comprehensive income 9,511,779 9,615,956
Retained earnings 14,128,222 10,510,961
Appropriation of retained earnings
(reserves) 7,335,940 6,561,515
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 102,216,569 88,273,028
============= =============

------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 119,795,459 $ 100,186,273
============= =============

HQ SUSTAINABLE MARITIME INDUSTRIES, INC. AND SUBSIDIARIES
(INCORPORATED IN THE STATE OF DELAWARE WITH LIMITED LIABILITY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

September September
30, 2009 30, 2008
(Unaudited) (Unaudited)
------------ ------------
OPERATING ACTIVITIES
Net income $ 6,247,524 $ 3,591,801
Non-cash items:
Depreciation and amortization 1,048,345 1,257,004
Loss on disposal of fixed assets - 1,765
Fair value change in derivative financial
instruments (75,798) -
Financial and other non cash services 1,115,823 2,981,411
Change in non-cash working capital items:
Inventories (367,571) (1,631,806)
Trade receivables, net of provisions (12,690,375) (1,588,938)
Prepayments (262,416) (167,126)
Accounts payable and accrued expenses 1,512,242 (1,533,785)
Taxes payable 21,751 (103,078)
------------ ------------
Cash flow generated from (used in) operating
activities (3,450,476) 2,807,248
============ ============

INVESTING ACTIVITIES
Acquisition of property, plant and
equipment (163,842) (1,286,623)
Sales proceeds of disposal of fixed
assets - 2,375
Construction in progress (6,570,719) (2,195,874)
Acquisition of intangible assets - -
------------ ------------
Cash flow (used in) investing activities (6,734,561) (3,480,122)
============ ============

FINANCING ACTIVITIES
Cash proceeds from issuance of common
stock 10,774,720 137,536
Due to directors (197,803) 440,714
------------ ------------
Cash flow generated from financing
activities 10,576,917 578,250
============ ============

------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 391,880 (94,624)
============ ============

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 230,881 3,096,966
------------ ------------
Cash and cash equivalents, beginning of
year 54,920,548 46,959,908
============ ============

------------ ------------
Cash and cash equivalents, end of year $ 55,543,309 $ 49,962,250
============ ============

SUPPLEMENTARY CASH FLOWS DISCLOSURES
Interest paid
Taxes paid $ 1,565,081 $ 1,009,545

SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
Common shares issued for services $ 461,624 $ 4,425,432

HQ SUSTAINABLE MARITIME INDUSTRIES, INC. AND SUBSIDIARIES
(INCORPORATED IN THE STATE OF DELAWARE WITH LIMITED LIABILITY)
RECONCILIATION OF EBITDA TO GAAP

Three Months Ended Nine Months Ended
------------------------ -------------------------
September September September September
30, 30, 30, 30,
2009 2008 2009 2008
----------- ------------ ------------ ------------
Net Income/(Loss)
Attributable to
Shareholders $ 4,047,434 $ 5,614,682 $ 6,247,524 $ 3,591,801
Income Tax 824,360 852,638 1,586,831 1,304,047
Fair Value Change in
Derivative Financial
Instruments (154,200) 75,798
Finance Costs 146,791 60,240 793,251 2,502,864
Deprecation and
Amortization 281,044 554,741 1,048,335 1,257,004
----------- ------------ ------------ ------------
EBITDA $ 5,145,429 $ 7,082,301 $ 9,751,739 $ 8,655,716
=========== ============ ============ ============

Contact:
Jeffrey Goldberger / Yemi Rose
KCSA Strategic Communications
212-896-1249 / 212-896-1233
Email Contact / Email Contact

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