HQ Sustainable Maritime Industries Acquires Nutraceutical Products Company for $20 Million

NEW YORK, Aug. 31 /PRNewswire-FirstCall/ -- HQ Sustainable Maritime Industries, Inc. (HQ) (OTC Bulletin Board: HQSM), a Delaware corporation engaged in integrated aquaculture and aquatic product processing, announced today that it has acquired Hainan Jiahua Marine Bio-products Company Limited (Jiahua), a leading nutraceutical and healthcare products company in China, located in Wenchang City of Hainan Province, the PRC. A Form 8K announcing this transaction has been filed by HQ with the SEC.

The purchase price in this acquisition was $20 million, which has been paid by HQ with shares and a promissory note convertible into shares. Because this was a related-party transaction, in that the seller of Jiahua is an entity owned by some of HQ's directors and executive officers, an appraisal by Vigers was commissioned, and the purchase price for Jiahua was subsequently set at an approximately 15% discount in relation to the appraised value of Jiahua.

The acquisition of Jiahua provides HQ with the capacity to manufacture nutraceuticals to enrich feed formulations for tilapia and shrimp farmed in the Hainan area. These ingredients are directed at improving general health, growth, feed conversion and meat quality of fish and shrimp. Such products boost the immune system of shrimp to ward off common viruses and deliver various functional food nutrients to humans through the fish and shrimp they eat. HQ is working with leading technology providers throughout the world, in particular in the United States, to deliver these new nutraceutical additives to the fish and shrimp farming industry.

Jiahua is also engaged in the production and sales of marine bio-products and healthcare products in the PRC. It currently holds two subsidiaries, a marine bio-products factory and the Marine Organism Research Institute. The marine bio-products factory is located in Wenchang City of Hainan Province, with a ground floor area of 16,667 square meters and a construction area of approximately 8,000 square meters. It operates two production lines: the powder-product line and the oil-product line. The bio-products factory has obtained HACCP certification from the CIQ (China Entry-Exit Inspection and Quarantine Bureau). Jiahua currently sells six healthcare products under the brand name "Jiahua." Sales for its fiscal year ended December 31, 2003 were over $7 million and after-tax net profit was approximately $2.7 million. Sales in 2004 presently outpace those of 2003.

Jiahua's second subsidiary, the Marine Organism Research Institute, is headed by a group of experts specializing in the research and development of products derived from marine organisms in China. Clinical trials and laboratory testing on Jiahua's various healthcare products have resulted in National Certification. These products, currently sold throughout China, are naturally derived from ocean-harvested byproducts and are winners of Science and Technology Progress Awards in China. Jiahua also has established a long-term relationship with the Qingdao University of Oceanography for production-research and training.

Jiahua's production lines are ideally suited for the manufacture of nutraceutical components. The plant is equipped with specific gravity molecular separator and accessory equipment for the manufacture of nutraceutical products that can serve as feed additives in the production of feed, including tilapia and shrimp feed.

Said Norbert Sporns, CEO of HQ, "The Jiahua acquisition gives HQ proprietary technology, opening the door to manufacturing the nutraceuticals that we require for our company's growth. Continued product differentiation of our farmed tilapia and shrimp products is possible through the fabrication of unique feeds providing accrued natural health benefits to consumers. This acquisition fits well with our growth strategy to provide our clients with the highest quality aquatic products possible."

About HQ Sustainable Maritime Industries, Inc.

HQ Sustainable Maritime Industries, Inc. is an integrated aquaculture and aquatic product processing company, with operations based in the environmentally pristine island province of Hainan, in the South China Sea. HQ's activities include using renewable ocean resources, practicing cooperative sustainable aquaculture, using nutraceutically enriched feeds and conducting fish processing and sales. Its variety of farmed and ocean-harvested products -- ranging from tilapia and shrimp to squid and red snapper -- are sold around the world. The Company, a Sino-Canadian Joint Venture, holds HACCP certification from the U.S. FDA and the EU Code assignment of quality, permitting its products to be sold in these international markets; it has also been certified by the Government of China as a leading agricultural enterprise. In addition to operational offices based in Haikou, Hainan, HQ has offices in Montreal, Hong Kong, New York City, Beijing, and Shanghai. (http://www.hqfish.com)

Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use words such as "anticipate, "believe," "expect," "future," "may," "will," "would," "should," "plan," "projected," "intend," and similar expressions. Such forward-looking statements, involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance
or achievements of HQ Sustainable Maritime Industries, Inc. (the Company) to be materially different from those expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to the Company's ability to: (i) obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; and (iv) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission, which are available for review at http://www.sec.gov under "Search for Company Filings."

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