SOURCE: HQ Sustainable Maritime Industries, Inc.

May 29, 2007 08:18 ET

HQ Updates "Blue Ocean" Roadmap for the New Year

The 'Value of Sustainability' Positions HQ for Record Growth

SEATTLE, WA--(Marketwire - May 29, 2007) - HQ Sustainable Maritime Industries, Inc. (AMEX: HQS), a leader in toxin-free integrated aquaculture and aquatic product processing, announced today its updated roadmap for growth for the coming year.

Dear Shareholders:

Since my last communication in November, 2006, HQ Sustainable Maritime Industries, Inc. has continued its growth and is now newly listed as an AMEX company. This growth reflects the market's response to the 'value of sustainability' and 'quality,' as opposed to sales based on price alone. Management believes that HQ is responding to new "Blue Ocean" opportunities for aquaculture

"... Value innovation is the corner stone of blue ocean strategy. We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space. ...blue and not red ocean " excerpt from the, "Blue Ocean Strategy" a Harvard Business School Publication."

HQ's value innovation in aquaculture and marketing is a response to market demands. This is the "blue ocean" opportunity in aquaculture for HQ. Our roadmap follows. This value innovation is divided into;

--  Innovations in vertical integration
--  Innovations in product differentiation
--  Innovations in market demand and HQ
--  "Blue Ocean" Growth
    
1. Innovations in Vertical Integration

Organic feed production

We have a new 100,000 tonne per year feed mill under construction which will be the first haccp and EU certified feedmill in China. The feedmill is expected to be completed later this year. Currently we formulate the feed to our specifications. We do not use fishmeal in the feed to avoid the introduction of ocean pollutants such as heavy metals, PCBs and dioxins. In stead we choose vegetal ingredients and nutrients which favor growth and provide the best nutrition for the consumer of our products. We own our own nutraceutical plant which among other products manufactures a high grade vitamin E from palm oil which when added to the feed promotes vigorous growth and disease resistance of the Tilapia, further reducing the need for anti-biotics as well as embedding in the flesh of the tilapia for the benefit of our consumers. The feed produced will be extruded which increases feed efficiency decreasing costs of aquaculture production.

Sustainable Cooperative Farming Practices

HQ's pond farms demonstrate environmentally friendly aquaculture solutions that ensure sustainable production of good-tasting fish that are free of all toxins, including hormones and antibiotics.

HQ's Pond Raised Solutions

--  Pond environment controls inflow and outflow of water avoiding the
    need for any prophylactic use of antibiotics required for cage-raised
    Tilapia;
--  Pond-grown algae provide excellent feed supplement where adequate
    quantities of dissolved oxygen are present, which eliminates any off-flavor
    from anaerobic algae cultures.
--  HQ's poly-species approach mimics nature by introducing natural bottom
    feeder fish and predator fish to maintain the pond eco-system.
--  Tilapia are herbivores and no fishmeal need be added to tilapia feed
    which could possibly introduce ocean-sourced pollutants such as heavy
    metals, PCBs or dioxins. Pond stability provides favorable feed conversion
    rates over cage-raised tilapia.
--  Finally ponds are located away from mangrove swamp areas to preserve
    crucial natural habitat and used pond water provides valuable natural
    nutrients to neighboring farmers' fields instead of being released into
    waterways which could create downstream concerns to other waterway users.
    
2. Innovations in Product Differentiation

Breaded and Flavored Innovations

HQ has joined with Newly Weds™ Foods, Inc. to introduce an exclusive innovative line of battered and breaded flavored TiLoveYa™ fillet products and a range of flavored products.

This new line of products uses the vast international taste technology of Newly Weds™ Foods Inc., as developed in its China operations, to manufacture value-added breaded "TiLoveYa™" toxin-free fillet products to consumers in China. Most breaded value-added fish products currently marketed in China and the West suffer in quality from multiple rounds of freezing, deteriorating the taste, juiciness, texture and quality of the product.

HQ will focus on fresh fillets that are frozen only once, coupled with Newly Weds™ food technology know-how, to bring a higher quality, breaded value-added TiLoveYa™ fillet to market. Fast food chains and big city service and retail industry outlets have been targeted and the initial response has been very positive.

"Sea Flavored" Innovations

HQ co-owns with Newly Weds™ Foods, Inc., technology to naturally flavor tilapia, giving it the taste, texture and aroma of fresh ocean caught fish.

The product is being produced in block and fillet format, catering to both retail and service industry applications of HQ's branded "TiLoveYa™" tilapia. The new product has successfully met sensory testing with a variety of industry leaders anxious to access a quality farmed supplement to dwindling ocean sourced product.

The new product line responds to industry demand for a range of products that better imitate "sea flavor" fish without the drawbacks of ocean caught product. HQ's "TiLoveYa™" tilapia has the following advantages over ocean-caught fish:

--  Farmed tilapia is 100% sustainable and does not deplete our oceans of
    its crucial bio-diversity. If we do not change current consumption
    practices many are predicting disaster by 2048 (See National Geographic at
    http://news.nationalgeographic.com/news/2006/11/061102-seafood-threat.html).
--  Farmed product allows for "just-in-time" delivery to service industry
    and retail consumers, unlike limited and often seasonal ocean production
    from such dwindling species as Pollock.
    
3. Innovations in Market Demand and HQ

'Value innovation' has also led to the creation of the Aquaculture Certification Council where HQ actively participates in vetting through its operations 'Best Aquaculture Practices (BAP),' with Industry support from the likes of Wal-Mart and McDonalds.

HQ recently celebrated 'Earth Day' by donating one percent of its sales of "TiLoveYa™" toxin free, fresh water, farmed Tilapia. One half of proceeds going to the Ocean Trust (See www.oceantrust.org) for its sustainable ocean harvest program and one half to the Nature Conservancy (See www.nature.org) and its 'Rescue the Reef' program.

Announced sales of HQ's unique "TiLoveYa™" branded product signify market endorsement of its innovative quality and sustainability.

--  Sam's Club is a division of Wal-Mart Stores, Inc. and ranks as one of
    the nation's largest warehouse clubs with more than 47 million U.S.
    members. The first Sam's Club opened its doors in Midwest City, Oklahoma in
    1983. Sam's Club offers exceptional values on merchandise and services for
    business owners and consumers. Online merchandise and Club information is
    available at www.samsclub.com.
--  Grocery Outlet sells HQ's branded "TiLoveYa™" products to its
    nearly 150 stores on the West Coast. The Grocery Outlet chain (See
    http://www.groceryoutlets.com/home.aspx) is headquartered in Berkeley,
    California, and has annual revenues exceeding $600 million. The Grocery
    Outlet to sell HQ's brand of frozen fillets within its chain of stores in
    the states of California, Washington, Oregon, Nevada, Idaho and Hawaii.
--  A variety of other stores including Metropolitain, QFC and online
    sales through Ultimate Entree
    
4. 'Blue Ocean' growth

HQ is making the competition irrelevant. 'Blue Ocean' growth will continue through an announced funding initiative, drawing on the proceeds of a Follow-on offering led by our Investment Bankers, Roth Capital and Ladenburg & Thalmann, to;

--  Build a new processing plant to more than double capacity;
--  Build new hormone-free fry breeding facilities
--  Complete its new Organic feedmill
--  Process its own waste products to extract valuable omega 3 oils and
    protein nutrients to be used by other aquaculture farmed species like
    shrimp
--  Upgrade and expand nutraceutical product production and quality and
    expand marketing to other countries in Asia
    
In 2006 HQ achieved more than 8 million 'EBIDTA' and, although no assurances can be given, management expects to continue growth at an unprecedented rate.

We welcome any questions or concerns that you, our investors, might have concerning our plans for growth and our partnership with you. Please contact us at hq@hqfish.com.

Lillian Wang, Chairman

About HQ Sustainable Maritime Industries, Inc.

HQ Sustainable Maritime Industries, Inc. is an integrated aquaculture and aquatic product processing company, with operations based in the environmentally pristine island province of Hainan, in the South China Sea. HQ practices cooperative sustainable aquaculture, using nutraceutically enriched feeds and conducting fish processing and sales. The company is dedicated to sustainable toxin-free 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 these international markets. It owns a nutraceuticals and health products company, which is HACCP and GMP certified, and produces and sells products subject to stringent laboratory tests certified by the China Ministry of Health. This GMP certified plant produces nutraceuticals, which enrich feed used by HQ's cooperative aquaculture operations. In addition to headquarters in Seattle, HQ has operational offices in Haikou, Hainan. (http://www.hqfish.com).

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."

Contact Information

  • Contacts:

    Norbert Sporns
    Chief Executive Officer
    HQ Sustainable Maritime Industries, Inc.
    Tel: 206-621-9888
    Fax: 206-621-0318
    Email Contact