Aeroquest International Limited
TSX VENTURE : AQL

Aeroquest International Limited

September 14, 2005 09:00 ET

Aeroquest International Limited Announces Financial Results for the Three Months Ended July 31, 2005

MILTON, ONTARIO--(CCNMatthews - Sept. 14, 2005) - Aeroquest International Limited (TSX VENTURE:AQL) ("AQL") has released its financial results for the three months ended July 31, 2005, including its 100% owned subsidiary Aeroquest Limited ("Aeroquest") which has been filed on SEDAR (www.sedar.com).

During the three month period ended July 31, 2005, revenue was $2.78 million, while net loss after tax was $(328,433). After adding back the non cash stock option expense of $36,650, cash flow (EBITDA) was $(210,716).Revenue increased by 79% over the same period in 2004 and was up 6% over revenue in the last quarter. The gross margin declined to 26% from 42% a year ago and 43% over the last fiscal year. The decline is the result of lower average size of contracts, increased field and processing employee expenses, and competitive pricing in the industry.

With the addition of new staff, Aeroquest has decreased its reliance on outside contractors and has implemented cost savings of over $500,000 per annum recently to reduce costs. During the quarter, engineering, marketing and administration staffing was also added to other areas of the company, resulting in higher general and administrative and development expenses. By the end of the quarter, five AeroTEM II, one AeroTEM III, and one Impulse airborne systems were available for survey. In addition, development of 12 meter systems continued, which will be introduced in the next quarter.

Roland Horst, Aeroquest's CEO stated, "We are working with our representatives in China, Russia, and India to pursue international contracts that will result in increased revenues and a decreased reliance on domestic markets. While demand in North America has leveled off recently, the economics continue to drive the demand for base metals, gold, and diamonds and we expect the survey business to increase substantially in the fall." He continued, "Aeroquest has made the investment in people and now has the experienced staff and equipment to meet this anticipated increase in demand."

Aeroquest's consolidated balance sheet remains strong with working capital of over $3.5 million, including cash of $2.3 million. Aeroquest's capital expenditures are expected to decrease substantially during the next year as systems are now available to meet demand. The company also has credit facilities (operating line, credit cards, foreign exchange) of $1.25 million with the Royal Bank of Canada to be used for normal operating purposes.

Aeroquest International Limited (TSX-V:AQL) is the parent company of Aeroquest Limited, a world leader in the development and operation of innovative and proprietary airborne geophysical surveying platforms servicing the mineral exploration, oil and gas, and environmental industries. AQL has 15,840,273 shares outstanding and 17,555,273 shares on a fully diluted basis.

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

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