Questor Technology Inc.
TSX VENTURE : QST

Questor Technology Inc.

November 28, 2008 09:25 ET

Questor Technology Inc. Announces Third Quarter 2008 Results

CALGARY, ALBERTA--(Marketwire - Nov. 28, 2008) -

THIS DOCUMENT IS NOT INTENDED FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES.

Questor Technology Inc. ("Questor" or the "Company") (TSX VENTURE:QST) announced today it's financial and operating results for third quarter 2008. The Company reported net income of $286,313 ($0.012 per basic share) for third quarter 2008 and net income of $51,388 ($0.002 per basic share) for the nine months ended September 30, 2008 compared to net income of $1,883,793 ($0.079 per basic share) and $1,870,992 ($0.079 per basic share) for the three and nine months ended September 30, 2007, respectively. 2007 was an exceptional year for Questor and the net income variance is primarily attributable to a significant incinerator sales contract completed in the third quarter of 2007, the magnitude of which has not been repeated in 2008. To a much lesser extent, higher general and administrative expenses in 2008 also contributed to the change on a comparative basis. The net income variance was partially mitigated by higher combustion services revenue, other revenue, foreign exchange gains and lower current and future income tax expense.

"We have had a strong third quarter and, despite the current market turmoil, are anticipating similar positive results in the fourth quarter of 2008 and the first quarter of 2009. Incinerator sales orders have already been received on which we'll be delivering over the next four months. The majority of incinerators in our rental fleet are deployed under contract and will be utilized to the end of the year. Our combustion services division is fully engaged servicing long-term permanent maintenance contracts. Our core business is solid and our balance sheet healthy," said Audrey Mascarenhas, President and Chief Executive Officer. "It isn't meaningful to compare the results of third quarter 2008 to the same quarter in 2007 given the magnitude of revenue recorded from completion of a material sales contract with China Petrochemical International Company Ltd. ("SINOPEC") in July 2007. Without the impact of this one contract, revenue for the three and nine months ended September 30, 2008 would exceed the comparable 2007 periods by 340 percent and 49 percent, respectively. Contrasted with total revenue for third quarter 2006, arguably a more typical third quarter for Questor, third quarter 2008 total revenue was higher by $0.5 million, further demonstrating that the Company continues to experience steady growth each year."

Ms. Mascarenhas commented, "The Company's overall outlook is quite positive given a heightened corporate focus on sustainable development. We continue to see a marked increase in domestic and international interest for permanent applications of our technology. The Company currently has over $10.5 million of bids outstanding pending completion of the tender process and notification of the clients' purchase decision. While the number of these bids that will ultimately be successful by Questor is not determinable, the opportunity to increase our revenue is clearly present. Additionally, on the basis of the superior performance of the gas well test incinerators supplied to SINOPEC, we have been invited to commence technical discussions regarding the application of our technology for other opportunities in China. Finally, with the recent completion of our first landfill project and ongoing discussions with prospective customers regarding a carbon capture opportunity, a gasification project and a coal mine methane elimination project which would generate carbon credits, the world-wide market interest in and potential application of our combustion technology are exceptional. Our efforts are focused to capitalize on this important business opportunity."

The Company has been invited to present environmental perspectives and to share its technical expertise and will do so at the following events in the near term:

- Ms. Mascarenhas is scheduled to co-chair and present at the "Canadian Sour Gas Forum" in Calgary, Alberta at the beginning of December 2008; and

- Ms. Mascarenhas will present on the topic of emerging gas utilization technologies and participate in the panel discussion at the "Global Forum on Flaring Reduction and Natural Gas Utilization" hosted by the World Bank in Amsterdam, The Netherlands on December 4, 2008.

Questor's third quarter 2008 financial statements and notes thereto and Management's Discussion and Analysis for the three and nine months ended September 30, 2008 and September 30, 2007 will be available shortly on the Company's website at www.questortech.com and through SEDAR at www.sedar.com.

ABOUT QUESTOR TECHNOLOGY INC.

Questor is an international environmental oil field service company founded in late 1994 and headquartered in Calgary, Alberta, Canada with a field office located in Grande Prairie, Alberta, Canada. The Company is focused on clean air technologies with activities in Canada, the United States, Europe and Asia. Questor designs and manufactures high efficiency waste gas incinerators for sale or for use on a rental basis and also provides field burner services. The Company's proprietary incinerator technology destroys noxious or toxic hydrocarbon gases which ensures regulatory compliance, environmental protection, public confidence and reduced operating costs for clients. Questor is recognized for its particular expertise in the combustion of sour gas (H2S). While the Company's current client base is primarily in the oil and gas industry, this technology is applicable to other industries such as landfills, water and sewage treatment, tire recycling and agriculture.

Questor trades on the TSX Venture Exchange under the symbol "QST".

Certain information in this news release constitutes forward-looking statements. When used in this news release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to future events based on certain material factors and assumptions and are subject to certain risks and uncertainties, including without limitation, changes in market, competition, governmental or regulatory developments, general economic conditions and other factors set out in the Company's public disclosure documents. Many factors could cause the Company's actual results, performance or achievements to vary from those described in this news release, including without limitation those listed above. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release and such forward-looking statements included in, or incorporated by reference in this news release, should not be unduly relied upon. Such statements speak only as of the date of this news release. The Company does not intend, and does not assume any obligation, to update these forward-looking statements. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.



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QUESTOR TECHNOLOGY INC.
BALANCE SHEETS
(unaudited)

September 30 December 31
As at 2008 2007
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ASSETS
Current assets
Cash $ 2,129,280 $ 2,753,997
Accounts receivable 1,816,030 1,062,716
Inventory 637,888 526,401
Prepaid expenses and deposits 96,660 98,609
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4,679,858 4,441,723
Property and equipment 1,194,434 1,299,677
Intangibles 91,048 73,678
Future income tax asset 28,508 31,480
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$ 5,993,848 $ 5,846,558
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $ 890,818 $ 501,314
Short-term debt - 191,186
Current portion of long-term debt 42,990 60,183
Income and other taxes payable 17,501 115,707
Deferred revenue and deposits - 70,129
Future income tax liability 102,682 102,682
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1,053,991 1,041,201
Long-term debt 23,080 53,206
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1,077,071 1,094,407
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Shareholders' equity
Share capital 5,240,052 5,235,677
Contributed surplus 249,213 140,350
Deficit (572,488) (623,876)
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4,916,777 4,752,151
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$ 5,993,848 $ 5,846,558
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QUESTOR TECHNOLOGY INC.
STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND DEFICIT
(unaudited)

Three months ended Nine months ended
September 30 September 30
For the 2008 2007 2008 2007
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Revenue
Incinerator sales and
services $ 731,660 $ 6,574,506 $ 1,026,024 $ 7,033,624
Incinerator rentals and
services 320,346 231,131 673,729 811,718
Combustion services 241,828 91,658 399,938 318,054
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1,293,834 6,897,295 2,099,691 8,163,396
Less: Direct costs 763,449 3,593,177 1,493,431 4,440,256
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Gross margin 530,385 3,304,118 606,260 3,723,140
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Other revenue 79,104 28,260 286,504 51,866

Expenses

General and
administrative 321,563 270,116 948,499 715,116
Foreign exchange loss
(gain) (103,489) 208,704 (204,383) 180,533
Depreciation and
amortization 11,348 9,236 31,281 27,465
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229,422 488,056 775,397 923,114
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Income before interest
expense and income tax
expense 380,067 2,844,322 117,367 2,851,892
Interest expense
Short-term debt 286 4,703 4,783 19,674
Long-term debt 504 - 1,512 -
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Income before income tax
expense 379,277 2,839,619 111,072 2,832,218
Income tax expense
Current income tax - 155,065 37,711 155,065
Future income tax 92,964 800,761 21,973 806,161
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Net income and
comprehensive income 286,313 1,883,793 51,388 1,870,992
Deficit, beginning of
period (858,801) (2,614,060) (623,876) (2,601,259)
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Deficit, end of period $ (572,488) $ (730,267) $ (572,488) $ (730,267)
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Net income per share
Basic $ 0.012 $ 0.079 $ 0.002 $ 0.079
Diluted $ 0.012 $ 0.075 $ 0.002 $ 0.075

Weighted average number
of shares outstanding
Basic 23,803,702 23,757,370 23,797,835 23,725,319
Diluted 24,724,844 24,981,003 24,718,977 24,948,951



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QUESTOR TECHNOLOGY INC.
STATEMENTS OF CASH FLOWS
(unaudited)

Three months ended Nine months ended
September 30 September 30
For the 2008 2007 2008 2007
---------------------------------------------------------------------------

Operating activities
Net income $ 286,313 $ 1,883,793 $ 51,388 $ 1,870,993
Items not involving
cash:
Depreciation and
amortization 38,317 36,250 115,279 107,294
Future income taxes 92,964 800,761 21,973 806,161
Unrealized foreign
exchange loss (gain) (135,507) 209,567 (141,297) 41,627
Gain on disposition
of assets - - (99,268) -
Share-based
compensation 37,470 27,932 111,988 50,256
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Funds generated from
operations 319,557 2,958,303 60,063 2,876,331
Net change in non-cash
working capital (441,858) 261,890 (691,231) 748,895
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Net cash provided by
(used in) operating
activities (122,301) 3,220,193 (631,168) 3,625,226
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Investing activities
Additions to property
and equipment (6,888) (181,885) (37,324) (185,517)
Dispositions of
property and equipment - - 139,733 -
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Net cash provided by
(used in) investing
activities (6,888) (181,885) 102,409 (185,517)
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Financing activities
Decrease in short-term
debt (410,746) (687,266) (191,186) (436,295)
Increase (decrease) in
long-term debt (15,068) 54,809 (47,319) 3,434
Net proceeds from
issuance of common
shares 1,250 - 1,250 20,500
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Net cash used in
financing activities (424,564) (632,457) (237,255) (412,361)
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Increase (decrease) in
cash and cash
equivalents (553,753) 2,405,851 (766,014) 3,027,348
Cash and cash
equivalents, beginning
of period 2,547,526 818,623 2,753,997 29,186
Effective exchange rates
on cash and cash
equivalents 135,507 (209,567) 141,297 (41,627)
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Cash and cash
equivalents, end of
period $ 2,129,280 $ 3,014,907 $ 2,129,280 $ 3,014,907


The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Questor Technology Inc.
    Audrey Mascarenhas
    President and Chief Executive Officer
    (403) 571-1530
    (403) 571-1539 (FAX)
    Email: amascarenhas@questortech.com