Questor Technology Inc.
TSX VENTURE : QST

Questor Technology Inc.

November 24, 2010 09:48 ET

Questor Technology Inc. Announces Third Quarter 2010 Financial Results

CALGARY, ALBERTA--(Marketwire - Nov. 24, 2010) -

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 its financial and operating results for the three and nine month periods ended September 30, 2010.

The Company reported net income of $61,438 ($0.003 per basic share) for the third quarter of 2010 compared to a net loss of $139,211 ($0.006 per basic share) for the three months ended September 30, 2009. The net income increase of $200,649 is primarily attributable to higher revenue, lower amortization and lower foreign exchange losses. Partially offsetting these impacts is higher non-cash future income tax expense.

Net income for the nine months ended September 30, 2010 is $63,574 ($0.003 per basic share) compared to a net loss of $35,491 ($0.001 per basic share) for the nine months ended September 30, 2009. The net income increase of $99,065 is primarily attributable to the foreign exchange gains recorded in the first nine months of 2010 compared to the foreign exchange losses recognized in the same period of 2009, plus lower amortization and general and administrative expense, all partially offset by higher income tax expense.



Financial Results Summary

($ unless otherwise noted)

Three months ended Nine months ended
September 30 September 30
For the 2010 2009 2010 2009
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Total revenue 1,987,105 718,799 3,637,935 3,110,579
Gross margin(1) 435,190 235,564 1,071,544 1,049,402
EBITDA(1) 147,855 (130,544) 248,143 119,147
Net income 61,438 (139,211) 63,574 (35,491)
Funds generated from
operations(1) 198,076 (2,944) 234,972 325,657
Total assets 6,660,856 6,196,446 6,660,856 6,196,446
Long-term liabilities 98,116 53,490 98,116 53,490

Shares outstanding
(thousands)(2)
Basic 24,331 24,007 24,137 24,007
Diluted 24,462 24,007 24,359 24,007
Net income per share -
Basic and diluted $ 0.003 $ (0.006) $ 0.003 $ (0.001)

(1) Non-GAAP financial measure. Please see discussion in the Non-GAAP
Financial Measures section of the Company's Management's Discussion and
Analysis for the three and nine months ended September 30, 2010.
(2) Weighted average.


"Our customers are recognizing the value we offer to their operations," said Audrey Mascarenhas, President and Chief Executive Officer. "In third quarter 2010 we completed a substantial incinerator sales contract with a large U.S.-based global integrated energy company for a project located in Indonesia and we received an incinerator sales order from a Calgary-based oil and natural gas exploration and production company for an oil sands in-situ combustion development in Saskatchewan. In both of these projects, Questor's equipment was selected because of the considerable energy savings demonstrated and the provision of a safe and efficient means to destroy sour gas."

Ms. Mascarenhas added, "Our efforts to develop a process to convert waste gas to heat and/or power continue to evolve. In partnership with a large U.S.-based oilfield compression company, we are progressing the development of a pilot project in Colorado which would utilize this emerging technology. In this application,we will be using the waste heat generated from combustion of waste gases to vaporize produced water thereby eliminating the current, expensive practice of trucking the produced water to a disposal site."

"We are poised for growth. Questor has confirmed incinerator sales orders of $2.2 million of which approximately $1.8 million will be delivered in fourth quarter 2010 and the balance in the first half of 2011. The value of confirmed incinerator sales orders delivered and incinerator rental revenue generated to date in fourth quarter 2010 in combination with $3.6 million of total revenue generated to the end of third quarter 2010 means revenue results for 2010 will be the second highest achieved in the Company's history. We continue to actively pursue new business opportunities and currently have proposals outstanding in excess of $31 million," concluded Ms. Mascarenhas.

The Company continues to build market awareness for its expertise in matters relating to clean air technologies. Ms. Mascarenhas made a presentation to the Canada-Russia Energy Forum in Montreal, Quebec, Canada on September 11, 2010 on the topic of "Clearing the Air! Safely, Economically and Efficiently". A copy of this presentation is available on Questor's website. As previously announced, Ms. Mascarenhas is serving as a Society of Petroleum Engineering ("SPE") Distinguished Lecturer for the 2010-2011 lecture season. In that capacity she will be presenting on the topic of "A Sustainable Solution to the Climate Change Dilemma: Eliminate the Flare" to audiences in Awali, Bahrain, Tripoli, Libya, Cairo, Egypt and Islamabad, Pakistan on January 13, 17, 19 and 20, 2011, respectively.

The Company is pleased to announce that Audrey Mascarenhas was selected as an award finalist in the Cleantech category for the Ernst & Young Entrepreneur Of The Year 2010 awards in the Prairies region. Entrepreneur Of The Year recognizes high-achieving entrepreneurs from all areas of business around the world. In conjunction with this award, Ms. Mascarenhas and the Company were featured in the October 2010 issue of Business in Calgary magazine.

Questor's third quarter 2010 financial statements and notes thereto and Management's Discussion and Analysis for the three and nine months ended September 30, 2010 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 oilfield 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 combustion-related oilfield 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 customers. Questor is recognized for its particular expertise in the combustion of sour gas (H2S). While the Company's current customer 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 2010 2009
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ASSETS
Current assets
Cash $ 3,750,704 $ 3,080,997
Accounts receivable 930,332 864,260
Income and other taxes receivable 381 306,850
Inventory 486,700 433,145
Prepaid expenses and deposits 124,455 101,072
Deferred expenses - 2,356
Future income tax asset - 50,113
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5,292,572 4,838,793
Property and equipment 1,357,221 1,418,524
Intangibles 11,063 15,682
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$ 6,660,856 $ 6,272,999
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 480,495 $ 348,150
Current portion of long-term debt - 15,232
Income and other taxes payable 52,987 19,034
Deferred revenue and deposits 173,564 198,641
Future income tax liability - 2,281
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707,046 583,338
Future income tax liability 98,116 74,057
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805,162 657,395
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Shareholders' equity
Share capital 5,390,049 5,265,736
Contributed surplus 499,854 447,651
Retained earnings (deficit) (34,209) (97,783)
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5,855,694 5,615,604
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$ 6,660,856 $ 6,272,999
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QUESTOR TECHNOLOGY INC.
STATEMENTS OF INCOME (LOSS), COMPREHENSIVE INCOME (LOSS)
AND RETAINED EARNINGS (DEFICIT)
(unaudited)


Three months ended Nine months ended
September 30 September 30
For the 2010 2009 2010 2009
---------------------------------------------------------------------------
Revenue
Incinerator sales and
services $ 1,502,612 $ 419,334 $ 2,353,936 $ 1,924,308
Incinerator rentals and
services 394,175 205,001 942,066 776,295
Combustion services 58,293 92,477 307,765 353,652
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1,955,080 716,812 3,603,767 3,054,255
Less: Direct costs 1,519,890 481,248 2,532,223 2,004,853
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435,190 235,564 1,071,544 1,049,402
---------------------------------------------------------------------------
Other revenue 32,025 1,987 34,168 56,324

Expenses
General and
administrative 312,404 313,733 965,462 1,011,952
Foreign exchange loss
(gain) 38,434 84,391 (12,495) 63,032
Depreciation and
amortization 3,663 10,170 14,297 30,796
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354,501 408,294 967,264 1,105,780
---------------------------------------------------------------------------
Income (loss) before
interest expense and
income tax expense 112,714 (170,743) 138,448 (54)
Interest expense 4 1,637 1,012 2,967
---------------------------------------------------------------------------
Income (loss) before income
tax expense 112,710 (172,380) 137,436 (3,021)
Income tax expense
(recovery)
Current income tax (8,568) (7,398) 1,971 54,713
Future income tax 59,840 (25,771) 71,891 (22,243)
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Net income (loss) and
comprehensive income
(loss) 61,438 (139,211) 63,574 (35,491)
Retained earnings
(deficit), beginning of
period (95,647) 107,900 (97,783) 4,180
---------------------------------------------------------------------------
Deficit, end of period $ (34,209) $ (31,311) $ (34,209) $ (31,311)
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Net income (loss) per share
Basic and diluted $ 0.003 $ (0.006) $ 0.003 $ (0.001)

Weighted average number of
shares outstanding
Basic 24,331,283 24,007,370 24,137,223 24,007,370
Diluted 24,461,645 24,007,370 24,359,365 24,007,370



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QUESTOR TECHNOLOGY INC.
STATEMENTS OF CASH FLOWS
(unaudited)

Three months ended Nine months ended
September 30 September 30
For the 2010 2009 2010 2009
---------------------------------------------------------------------------

Operating activities
Net income (loss) $ 61,438 $ (139,211) $ 63,574 $ (35,491)
Items not affecting cash:
Depreciation 34,837 32,950 105,077 97,452
Amortization 304 7,249 4,618 21,749
Unrealized foreign exchange
loss (gain) 7,477 84,546 (124,204) 141,935
Future income tax expense
(recovery) 59,840 (25,771) 71,891 (22,243)
Share-based compensation 34,180 42,742 114,016 122,253
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198,076 2,505 234,972 325,655
Net change in non-cash
working capital 475,074 154,573 303,536 (136,381)
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673,150 157,078 538,508 189,274
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Investing activities
Additions of property and
equipment (13,442) (52,619) (41,802) (153,442)
---------------------------------------------------------------------------
(13,442) (52,619) (41,802) (153,442)
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Financing activities
Repayment of long-term debt (5,077) (9,883) (15,232) (29,649)
Exercise of share options 45,000 - 62,500 -
---------------------------------------------------------------------------
39,923 (9,883) 47,268 (29,649)
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Effect of exchange rates on
cash (5,367) (51,660) 125,733 (114,477)
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Increase (decrease) in cash 694,264 42,916 669,707 (108,294)
Cash, beginning of period 3,056,440 3,107,827 3,080,997 3,259,037
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Cash, end of period $ 3,750,704 $ 3,150,743 $ 3,750,704 $ 3,150,743
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