Aeroquest International Limited (TSX:AQL) Announces Financial Results for the Three and Nine Months Ended June 30, 2009

- Revenue of $3.7 million, down by $3.3 million from Q2
- Contract backlog at quarter-end of $6.6 million
- Net loss of $3.5 million in the quarter, or $0.10 per share

• Press Release
• Source: Aeroquest International Limited
• On 5:58 pm EDT, Wednesday August 5, 2009

MISSISSAUGA, ONTARIO--(Marketwire - Aug. 5, 2009) - Aeroquest International Limited (TSX:AQL - News) today reported financial results for the three and nine months ended June 30, 2009. The interim results reflect the ongoing unprecedented economic slowdown in the global economy in general and the mineral and petroleum exploration sectors in particular.

"The extraordinary market conditions in our target markets continue to impact our business," said Roy Graydon, President & CEO of Aeroquest. "The lack of exploration funding available to our clients in their key markets has had a significant negative impact in the third quarter - especially for our helicopter based operations."

Consolidated revenue for the three months ended June 30, 2009 was $3.7 million, a decrease of $10.9 million or 75 percent from the third quarter last year. Revenue from helicopter operations contributed $0.3 million in the quarter, a decline of $6.9 million or 95 percent from the second quarter last year. Revenue from fixed wing operations was $2.9 million, a decline of $4.1 million or 58 percent over the third quarter of last year. Other revenue was $0.4 million.

Helicopter revenue and backlog decreased as helicopter surveys, being generally more expensive on a per line kilometer basis, are normally the first type of surveys to be negatively affected in a downturn such as the one that currently exists.

Contract backlog decreased as expected in the third quarter and sits at $6.6 million at June 30. Backlog is composed of $0.1 million in helicopter backlog, $5.6 million in fixed wing backlog and $0.9 million in other backlog.

Helicopter gross profit declined to negative 110 per cent from a positive 35 percent of revenue in the third quarter last year due to fixed costs in cost of sales impacting against the reduced revenue. Fixed wing gross profit in the quarter was 19 percent compared to 42 percent of revenue in the third quarter last year. Overall Company gross profit in the quarter was $0.4 million, or 12 percent of revenue compared to $5.6 million or 39 percent of revenue in the third quarter last year.

The Company has taken steps throughout the year and into the fourth quarter to reduce the fixed cost component of cost of sales, but expects that below average gross margin profitability will persist until business volumes return to normal in this area.

EBITDA(1) in the quarter was negative $2.7 million compared with EBITDA of $2.7 million in the second quarter last year. In late July, the Company initiated a third round of cost cutting measures including additional headcount reductions and a one-time 10% salary reduction for all senior management in exchange for the equivalent value in employee stock options. The Company estimates that the ongoing cost savings associated with this and other downsizings earlier in the fiscal year will be approximately $3.5 million annually.

Net loss in the quarter was $3.5 million, or $0.10 per share, compared to net earnings of $0.3 million or $0.01 per share in the third quarter last year.

Operating cash flow before changes in working capital was negative $1.7 million or $0.06 per share compared with positive $2.1 million or $0.07 in the third quarter last year. Changes in non-cash working capital, consumed $0.2 million in the quarter resulting in total cash flow from operations at negative $1.9 million.

Capital expenditures totaled $0.5 million in the quarter, representing 15 percent of revenue, the majority of which related to technology improvements to our AeroTEM helicopter based survey platform as well as ongoing acquisition costs related to the total field gravity fixed wing systems acquired earlier in the year.

(1) EBITDA represents earnings before interest, taxes, depreciation and amortization. It is a financial metric used to analyze operating results. The Company defines EBITDA as revenue less cost of sales, cash operating costs (general and administrative expenses as well as foreign currency gains/losses) and stock-based compensation expense. It is not a standard measure under Generally Accepted Accounting Principles and as such EBITDA as calculated may not be comparable to similarly titled amounts reported by other companies.

Outlook - Q4

Given the ongoing global recession and its impact on worldwide exploration in the mining and petroleum industries, the Company believes that it is difficult to provide revenue guidance with a high degree of certainty. With contract backlog of $6.6 million and existing open quotes in excess of $20 million, Company management believe that revenue will improve from the weak levels indicated in Q3 but management declines to provide revenue guidance at this time.

Acquisition of Optimal Geomatics Inc.

As previously announced, the Company entered into an Arrangement Agreement on July 29, 2009 with Optimal Geomatics Inc. (TSX VENTURE:OPG - News) whereby Optimal will be acquired by the Company. Under the terms of the Arrangement Agreement, the proposed transaction will be effected by way of a Plan of Arrangement completed under the Canada Business Corporations Act. Optimal shareholders will receive 1 common share of Aeroquest for each 21 common shares of Optimal owned and will result in the Company issuing approximately 3.0 million common shares to Optimal shareholders.

Completion of the transaction is conditional on the approval of Optimal shareholders and satisfaction of other customary conditions including stock exchange and court approvals. The required shareholder approval will be two-thirds of the votes cast by holders of common shares at a meeting of Optimal shareholders held to consider the proposed transaction. The optimal shareholders meeting, to approve the Arrangement, will be held in mid-September, 2009 with closing expected by the end of September, 2009.

Analyst Conference Call

Aeroquest International will hold a Q3 2009 conference call at 11:00 a.m. ET on Thursday, August 6, 2009. On the conference call management will review Aeroquest's results for the quarter ended June 30, 2009. The scheduled speakers for the Company on the conference call Interested parties can access the conference call by dialing from North America 1-888-789-0089. The international or local dial-in number is 416-695-9701. Please dial in approximately five minutes prior to the start time.

A replay service will be available from two hours following the conference call until midnight on August 20, 2009. To access this recording, dial 1-800-408-3053 or 1-416-695-5800 and enter passcode 7226304.

About Aeroquest International

Aeroquest International is a global information and technology services company and a leader in the development and operation of innovative and proprietary geophysical surveying platforms for the mineral and petroleum exploration, and environmental services industries. Through its subsidiary companies Aeroquest Surveys, UTS Geophysics and Geophex, Aeroquest International fields a fleet of over two dozen helicopter and fixed wing survey systems and is active around the world. More information about Aeroquest International can be found at www.aeroquest.ca.

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, available on SEDAR.

Aeroquest International Limited

Consolidated Balance Sheets (Unaudited - Prepared by Management)

----------------------------------------------------------------------------
                                       As at     Jun. 30, 09    Sep. 30, 08
Assets                                            (Unaudited)      (Audited)
Current
 Cash and cash equivalents                      $  8,001,020   $ 15,373,132
 Accounts receivable                               2,435,513      8,640,293
 Income taxes recoverable                          1,917,565              -
 Unbilled contracts in progress                      672,849      2,169,861
 Inventory                                           157,028        132,853
 Prepaid expenses and deposits                     1,391,393        640,875
                                                ----------------------------
Total current assets                              14,575,368     26,957,014
 Long term
  Long term investments                               99,138         30,501
  Capital assets                                  13,070,653     10,890,000
  Intangible assets                               19,192,397     19,847,842
  Goodwill                                        12,800,843     11,662,115
  Future income taxes                                501,380        152,584
                                                ----------------------------
Total long term assets                            45,664,411     42,583,042
                                                ----------------------------
    Total Assets                                $ 60,239,779   $ 69,540,056
                                                ----------------------------
                                                ----------------------------

Liabilities and Shareholders' Equity
 Current
  Accounts payable and accrued liabilities      $  3,394,381   $  5,946,706
  Income taxes payable                                     -      1,083,701
  Deferred revenue                                   450,080      3,274,382
  Capital lease obligations                          353,617        321,426
                                                ----------------------------
Total current liabilities                          4,198,078     10,626,215
 Long term
  Capital lease obligations                          252,344        469,575
  Future income taxes                              6,526,985      6,640,227
                                                ----------------------------
Total liabilities                                 10,977,407     17,736,017
                                                ----------------------------

 Shareholders' equity
  Share capital                                   46,827,533     46,506,445
  Contributed surplus                              2,371,215      2,411,281
  Accumulated other comprehensive income (loss)    1,296,182     (1,794,758)
  Retained earnings/(deficit)                     (1,232,558)     4,681,071
                                                ----------------------------
Total shareholders' equity                        49,262,372     51,804,039
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 Total Liabilities and Shareholders' Equity     $ 60,239,779   $ 69,540,056
----------------------------------------------------------------------------
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The accompanying summary of significant accounting policies and notes are an
integral part of these financial statements.



Aeroquest International Limited

Consolidated Statements of Operations (Unaudited - Prepared by Management)

----------------------------------------------------------------------------
       For the period        Three months ended           Nine months ended
----------------------------------------------------------------------------

                      Jun. 30, 09   Jun. 30, 08   Jun. 30, 09   Jun. 30, 08

Sales                $  3,651,233  $ 14,537,044  $ 22,912,163  $ 39,027,862
 Cost of sales          3,217,445     8,933,278    16,297,300    23,433,834
                     -------------------------------------------------------
Gross profit              433,788     5,603,766     6,614,863    15,594,028
                     -------------------------------------------------------

Expenses and other
 items
 General and
  administrative        2,294,909     2,641,229     9,728,343     7,061,986
 Foreign exchange
  (gain)/loss             690,546       135,940      (540,105)      103,790
 Stock based
  compensation
  expense                 108,406       173,209       348,066       729,171
 Amortization of
  intangible assets       785,262     1,155,666     2,417,790     3,226,554
 Depreciation of
  capital assets        1,155,384       907,751     2,967,848     2,074,221
                     -------------------------------------------------------
Total operating
 expenses               5,034,507     5,013,795    14,921,942    13,195,722

Operating profit
 (loss)                (4,600,719)      589,971    (8,307,079)    2,398,306
 Interest income          (23,408)     (128,630)     (198,151)     (419,834)
 Interest expense          18,869        17,685        51,973       297,363
                     -------------------------------------------------------
Income (loss) before
 income taxes          (4,596,180)      700,916    (8,160,901)    2,520,777
Income taxes
 Current                 (850,004)      751,780    (1,420,099)    2,350,698
 Future (recovery)       (247,229)     (354,987)     (775,087)   (1,070,287)
                     -------------------------------------------------------
Total income tax       (1,097,233)      396,793    (2,195,186)    1,280,411
                     -------------------------------------------------------
Net income (loss)
 for the period      $ (3,498,947) $    304,123  $ (5,965,715) $  1,240,366

Earnings (loss) per
 share
 Basic               $      (0.10) $       0.01  $      (0.17) $       0.04
 Fully diluted       $      (0.10) $       0.01  $      (0.17) $       0.03
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Aeroquest International Limited

Consolidated Statements of Retained Earnings/Deficit (Unaudited - Prepared
by Management)

----------------------------------------------------------------------------
       For the period        Three months ended           Nine months ended
----------------------------------------------------------------------------

                      Jun. 30, 09   Jun. 30, 08   Jun. 30, 09   Jun. 30, 08

Retained earnings,
 beginning of period $  2,266,389  $  3,280,994  $  4,681,071  $  2,758,967
Excess of purchase
 price over cost
 on redemption of
 shares                         -      (211,167)       52,086      (625,383)
 Net income (loss)     (3,498,947)      304,123    (5,965,715)    1,240,366
                     -------------------------------------------------------
Retained
 earnings/(deficit),
 end of period       $ (1,232,558) $  3,373,950  $ (1,232,558) $  3,373,950
                     -------------------------------------------------------

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Consolidated Statements of Comprehensive Income

----------------------------------------------------------------------------

       For the period        Three months ended           Nine months ended
----------------------------------------------------------------------------
                      Jun. 30, 09   Jun. 30, 08   Jun. 30, 09   Jun. 30, 08
 Net Income (loss)
  for the period     $ (3,498,947) $    304,123  $ (5,965,715) $  1,240,366
Revaluation of long
 term investments to
 fair market
 value (Net of
 tax $ (46,930),
 2008 - $1,478)           (99,726)       (3,000)       68,637       (28,000)
Unrealized gain
 (loss) on
 translation of
 self-sustaining
 foreign operations     1,208,749       385,873     3,022,303     2,544,548
                     -------------------------------------------------------
Total Other
 Comprehensive
 Income (loss)          1,109,023       382,873     3,090,940     2,516,548
                     -------------------------------------------------------
Total Comprehensive
 Income (loss)       $ (2,389,924) $    686,996  $ (2,874,775) $  3,756,914
                     -------------------------------------------------------

Accumulated Other
 Comprehensive
 Income (loss):
Revaluation of long
 term investments to
 fair market value   $     77,557  $     44,000  $     77,557  $     44,000
Unrealized gain
 (loss) on
 translation of
 self-sustaining
 foreign operations     1,218,625     3,086,539     1,218,625     3,086,539
                     -------------------------------------------------------
Total Accumulated
 Other Comprehensive
 Income (loss)       $  1,296,182  $  3,130,539  $  1,296,182  $  3,130,539
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Consolidated Statements of Cash Flow (Unaudited - Prepared by Management)

----------------------------------------------------------------------------
       For the period        Three months ended           Nine months ended
----------------------------------------------------------------------------

                      Jun. 30, 09   Jun. 30, 08   Jun. 30, 09   Jun. 30, 08
Cash provided by
 (used in)
Operating activities
 Net income (loss)
 for the period      $ (3,498,947) $    304,123  $ (5,965,715) $  1,240,366
 Operating items not
  requiring cash
 Amortization of
  intangible assets       785,262     1,155,666     2,417,790     3,226,554
 Depreciation of
  capital assets        1,155,384       907,751     2,967,848     2,074,221
 Future income taxes
  (recovery)             (247,229)     (354,987)     (775,087)   (1,070,287)
 Interest accretion
  on promissory
  notes                         -             -             -       221,213
 Stock based
  compensation            108,406       173,209       348,066       729,171
 Loss/(gain) on
  disposal of capital
  assets                        -       (86,275)            -      (135,751)
                     -------------------------------------------------------
Operating cash flow
 before changes in
 non-cash working
 capital               (1,697,124)    2,099,487    (1,007,098)    6,285,487
 Changes in non cash
  working capital        (188,061)      677,731    (1,450,794)     (555,901)
                     -------------------------------------------------------
Total cash flow from
 operating
 activities            (1,885,185)    2,777,218    (2,457,891)    5,729,586
                     -------------------------------------------------------
                     -------------------------------------------------------
Investing activities
 Capital asset
  purchases              (550,603)   (1,883,266)   (4,678,509)   (5,057,268)
 Proceeds from sale
  of equipment                  -       187,710             -       421,050
 Mineral rights
  acquired                      -             -       (35,958)            -
 Cash cost of
  acquisition                   -       (34,125)            -    (2,150,741)
                     -------------------------------------------------------
Total cash flow from
 investing
 activities              (550,603)   (1,729,681)   (4,714,468)   (6,786,959)
                     -------------------------------------------------------
                     -------------------------------------------------------
Financing activities
 Promissory note
  payments                      -             -             -    (5,337,600)
 Capital lease
  payments                (42,091)      (44,840)     (184,796)     (273,899)
 Aeroquest shares
  redeemed                      -      (611,282)      (56,815)   (1,426,650)
 Proceeds: issuance
  of common shares         41,857       334,615        41,857    19,648,147
                     -------------------------------------------------------
Total cash flow from
 financing
 activities                  (234)     (321,507)     (199,754)   12,609,998
                     -------------------------------------------------------
                     -------------------------------------------------------
Net change in cash
 and cash
 equivalents for the
 period              $ (2,436,022) $    726,030  $ (7,372,113) $ 11,552,625
Cash and cash
 equivalents,
 beginning of period   10,437,041    16,225,372    15,373,132     5,398,777
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Cash and cash
 equivalents, end of
 period              $  8,001,019  $ 16,951,402  $  8,001,019  $ 16,951,402
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Roy Graydon
Aeroquest International Limited
President & Chief Executive Officer
905-672-9129
rgraydon@aeroquest.ca
www.aeroquest.ca