Aeroquest International Limited
TSX VENTURE : AQL

Aeroquest International Limited

March 28, 2006 16:30 ET

Aeroquest International Limited 'TSX VENTURE:AQL' Announces Financial Results For the Nine Months Ended January 31, 2006

MILTON, ONTARIO--(CCNMatthews - March 28, 2006) - Aeroquest International Limited (TSX VENTURE:AQL) :

- Revenue up 78% over the same quarter last year and 19% year to date

- Cash balance grows by $0.4 million to $2.5 million

Aeroquest International Limited ("Aeroquest")(TSX VENTURE:AQL), 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, today reported financial results for the third quarter ended January 31, 2006, a copy of which is available on the Company's website at www.aeroquestsurveys.com, and on SEDAR at www.sedar.com.

Consolidated revenue for the three month period ended January 31, 2006 was $1.76 million, while year to date revenue is $6.43 million. Revenue was up 78% over the same quarter last year and is up 19% year to date.

Quarterly gross margin improved to 53% from 39% a year ago. This improved result was primarily due to the reversal of an accrual from an earlier interim period. Without this reversal, gross margin would have been unchanged for the quarter.

General and administrative expense for the third quarter was $0.63 million, up from $0.50 million in the same quarter last year. While this is a 6% increase from the same period last year, it is a $0.09 million, or 12% reduction from the level of the last quarter, reflecting the Company's effort in the quarter to reduce discretionary expenditures.

Development expense increased to $0.18 million from $0.17 million in the third quarter of last year but, again, is down $0.09 million, or 33%, from the last quarter, and represented 10% of revenue, down from 14% in the previous quarter. Going forward, the Company will target a level of Development expenditure of approximately 10% of revenue.

Aeroquest recorded a small loss of $0.08 million for the quarter down by 85% from the loss in the last quarter, and down from the loss of $0.34 million in the same quarter last year. It is the Company's objective to be profitable in the fourth quarter.

In the quarter, the Company was cash flow positive by most measures. In particular, Cash Flow from operating activities was a healthy $0.47 million, including a $0.32 million decrease in net non-cash working capital. Aeroquest's capital expenditures were modest in the quarter at $0.08 million but are expected to return to a more normal level over the next few quarters as new systems are manufactured and deployed at a rate of approximately one per quarter, as demand dictates.

"The Company's international expansion is going well; it has recently signed contracts for airborne surveys in Israel and continues to pursue opportunities in Russia, Mexico, Africa, China, India, Indonesia, the Philippines, and South America.", Roy Graydon, the Company's CEO stated, adding: "The positive change in Aeroquest's operating position in the third quarter leaves us well positioned to address new opportunities using AeroTEM, such as the search for oil and gas and the search for unexploded ordinance (UXO)".

Aeroquest's consolidated balance sheet remains strong with no debt, and net working capital of $3.1 million, including cash of $2.5 million.

For Investors

This news release may include statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond its control. Future events and results may vary substantially from what the company currently foresees. Discussion of the various factors that may affect future results is contained in the company's recent filings with the Ontario Securities Commission and SEDAR.

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

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