Quality Products Announces Results For the Three and Twelve Months Ended September 30, 2006.

COLUMBUS, Ohio -- Quality Products, Inc. (Pink Sheets:QPDC), a manufacturer and distributor of aircraft ground support equipment ("Columbus Jack & Regent Manufacturing") and hydraulic press machine tools ("Multipress"), today reported fiscal 2006 fourth quarter and twelve months operating results.

QUARTERLY RESULTS

Net income from continuing operations was $2,604,697 compared to $356,520 earned last year, an increase of $2,248,177 or 630.6%. The current period net income includes a benefit of $3,251,956 relating to income taxes, a charge of $307,867 for increasing the inventory reserve and, as required by GAAP accounting rules, a charge of $316,906 for estimated losses on sales contracts we have entered into but not yet shipped. Excluding these adjustments results in a net loss of $(22,486) for the quarter. Revenues were $2,741,448 compared to $2,519,673 last year, an increase of $221,775 or 8.8%. Gross margins decreased to 3.0% this year from 28.3% last year resulting from the increase of $307,867 in the inventory reserve and the charge of $316,906 for estimated losses on sales contracts we have entered into but not yet shipped. Excluding these two adjustments, gross margins were 25.7% in the current period. Most of the remaining 2.6% difference between the periods resulted from higher costs in the current period associated with the Regent acquisition, including some lower margin Regent sales orders accepted by Columbus Jack at the transaction closing date.

S G & A expenses increased to 25.4% of sales in the current quarter compared to 14.1% in 2005. In terms of dollars, S G & A increased by approximately $342,000. Over $107,000 of this increase relates to one-time expenses for the Regent acquisition including travel, moving, and consulting expenses. The increase also includes over $43,000 of salaries for former Regent employees now on our payroll, and $46,000 for amortization of intangible assets, such as the tradename and engineering designs, acquired through the Regent transaction, although these are not one-time expenses. Approximately $21,000 of the increase represents wages & benefits paid to Mr. Steve Schroeder who had been hired as President of Columbus Jack in July but is no longer with the Company. Commissions for external sales reps were approximately $31,000 higher in the current period. The prior year includes a $25,000 gain related to the reversal of legal expenses accrued for the dismissed Jackson v. Multipress case. Approximately $20,000 of the remaining increase in the current period relates to wages and benefits.

Basic EPS from continuing operations was $0.91, up from $0.12 and diluted EPS from continuing operations increased to $0.61 from $0.09.

FISCAL YTD RESULTS

Net income from continuing operations was $4,630,918 compared to $1,731,967 earned last year, an increase of $2,898,951 or 167.4%. The current year net income includes a benefit of $3,251,956 relating to income taxes, a charge of $307,867 for increasing the inventory reserve and, as required by GAAP accounting rules, a charge of $316,906 for estimated losses on sales contracts we have entered into but not yet shipped. Excluding these adjustments, net income from continuing operations was $2,003,735. Revenues were $12,161,574, an increase of $1,949,223 or 19.1% compared to $10,212,351 last year. Gross margins decreased to 30.4% this year from 33.9% last year resulting from the charge of $307,867 for increasing the inventory reserve and the charge of $316,906 for estimated losses on sales contracts we have entered into but not yet shipped. Excluding these two adjustments, gross margins increased to 35.6% in fiscal 2006.

S G & A expenses increased to 18.9% of sales in 2006 from 16.7% in 2005. In terms of dollars, S G & A increased by approximately $589,000. Over $178,000 of this increase relates to one-time expenses for the Regent acquisition including travel, moving, and consulting expenses. The increase also includes over $43,000 of salaries for former Regent employees now on our payroll, and $46,000 for amortization of intangible assets, such as the tradename and engineering designs, acquired through the Regent transaction, although these are not one-time expenses. Approximately $21,000 of the increase represents wages & benefits paid to Mr. Steve Schroeder who had been hired as President of Columbus Jack in July but is no longer with the Company. Commissions increased by approximately $60,000. The 2006 bad debt expense increased by over $14,000, whereas 2005 includes a gain of more than $43,000 from the reversal of bad debt expense. 2005 also includes a $25,000 gain related to the reversal of legal expenses accrued for the dismissed Jackson v. Multipress case. Excluding the addition of the former Regent employees, approximately $148,000 of the increase relates to wages and benefits.

Basic EPS from continuing operations increased to $1.58 from $0.54 and diluted EPS from continuing operations increased to $1.09 from $0.43.

Backlog

As previously advised, we are no longer providing financial estimates for future periods.

On January 9th, the order backlog for Multipress was approximately $180,000, down from $440,000 in the previous quarterly report, and down from last year's level of $678,000. Because the Multipress backlog has continuously decreased during the past year we are in the process of reducing staff associated with this product line. Wages and benefits are the most significant costs we can control as business levels decline. Over the long-term, material costs remain fairly constant as a percentage-of-sales, and most of our overhead expenses such as rent, utilities, and business insurance are outside of our influence.

The backlog for Columbus Jack was approximately $5.2 million, up significantly from both the previous quarter's report of $3.9 million and last year's level of $2.7 million. Much of the increase over last year's amount resulted from the Regent Manufacturing asset purchase, which closed on June 2, 2006. Since then we have received additional business, increasing the backlog to the current level. Although we have experienced this recent strengthening, we do not expect further increases. The aircraft ground support industry remains steady, and based on current production methods we believe the approximately $4.0 million backlog we had when the Regent transaction closed is more representative of long-term levels. However, during the next 6 months we are working with an external manufacturing consultant to determine methods of improving efficiencies and reducing costs companywide. Increased efficiencies may reduce customer delivery times thereby decreasing future backlog levels, assuming new order entry levels remain unchanged from recent history.

Liquidity & Cash Uses

The September 30, 2006 balance sheet shows no cash because we currently have outstanding borrowings under our revolving line of credit. However, accounts receivable and inventories totaled $5.4 million compared to approximately $3.9 million of total liabilities, essentially unchanged from $4.1 million of total liabilities on June 30.

For fiscal year 2006 we generated approximately $1.7 million of free cashflow. We also completed the purchase of certain assets of Regent Manufacturing. The total purchase price of $4,538,466 includes the amounts paid to the sellers as well as the legal, accounting, and consulting fees incurred as part of the transaction. An independent third-party valuation was performed on the assets after purchase resulting in goodwill recognition of approximately $1.8 million. Goodwill is subject to an annual impairment test to determine if it must be written down to fair value. At September 30, 2006 no writedown was required.

The transaction was financed by issuing: 1) 400,000 shares of convertible preferred stock to a third party for $1,160,000, 2) bank debt of $1,837,000 bearing interest at LIBOR + 1.5%, 3) seller note of $975,000 bearing interest at 7.0%, 4) non-interest bearing seller and third-party notes totaling $482,500, and 5) cash payments of $83,966.

The preferred stock discussed in the previous paragraph pays quarterly dividends at a 5.0% annual rate. The shares are convertible, at any time, at a ratio of 1 to 1 into shares of common stock, unless the 30-day average closing price for the common shares is less than $0.75. In that case, each share is converted by the factor of $2.90 divided by the then-30-day average closing price per share.

During the year we used $1,643,677 of cash to repay debt, $303,965 of cash to repurchase stock, and $81,672 of cash to pay preferred dividends.

During the fourth quarter we repurchased 25,500 shares of our common stock. Through January 9th the Company has repurchased 334,828 shares, or 67%, of the 500,000 shares previously authorized by the Board, leaving 165,172 still available for repurchase.

Other Information

In October 2006, subsequent to the balance sheet date, at a cost of $98,388, we repurchased and cancelled warrants for 30,000 shares associated with the October 2002 preferred stock issuance.

Mr. Steve Schroeder, hired in July 2006 as President of Columbus Jack, departed in September 2006. Mr. Ted Schwartz continues in the position of President of Multipress, until his retirement in February 2007. The Company has no immediate plans to fill either of these positions, and their duties will be assumed by various existing employees of the Company.

Our existing building lease expires in July 2007 and at this time no final decision has been made to resolve this issue.

The Company's 2006 audited financial statements and accompanying footnotes will soon be available on our websites. For more information on products and services please visit: www.columbusjack.com, www.multipress.com, and www.regentgse.com.

This press release, other than the historical information, consists of "forward-looking statements" (as defined in the Private Securities Litigation Reform Act of 1995), which are identified by the use of words such as "believes", "expects", "projects", and similar expressions. While these statements reflect the Company's current beliefs and are based on assumptions that the Company believes are reasonable, they are subject to uncertainties and risks that could cause actual results to differ materially from anticipated results.

[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Acquisition of certain Regent assets through issuance of notes payable and preferred stock $4,421,384.

Acquisition of fixed assets through issuance of a note payable of $114,000.