CCR TECHNOLOGIES LTD.

CCR TECHNOLOGIES LTD.

March 30, 2005 20:29 ET

CCR Technologies Ltd. Reports Eighth Consecutive Profitable Quarter, Record Annual Revenues at Year End 2004


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: CCR TECHNOLOGIES LTD.

TSX SYMBOL: CRL

MARCH 30, 2005 - 20:29 ET

CCR Technologies Ltd. Reports Eighth Consecutive
Profitable Quarter, Record Annual Revenues at Year End
2004

CALGARY, ALBERTA--(CCNMatthews - March 30, 2005) - CCR Technologies Ltd.
(TSX:CRL) (www.reclaim.com), a leading chemical purification technology
solutions and service provider, today announced financial results for
the year ended December 31, 2004.

For the year ended December 31, 2004, the Corporation achieved its
eighth consecutive profitable quarter. Record annual revenue of $25.8
million generated pre-tax net income of $2.3 million, and net income of
$2.0 million. Comparable previous year results were revenue of $13.0
million, pre-tax net income of $1.9 million and net income of $2.2
million.

President and CEO Bud Bell commented "For the year ended December 31,
2004, the Corporation achieved record revenue of $25.8 million which
generated a pre-tax income of $2.3 million compared to $13.0 million and
$2.0 million respectively for fiscal year 2003. During 2004, net income
tax charges exceeded the comparative prior year amount by $505,000. Net
income for the year 2004 was $2.0 million compared to $2.2 million for
the previous year. The strong trend in the Technology Licensing and
Solutions business continued through the fourth quarter."

The Corporation is a technology solutions company focused on the
purification of process chemicals and sweetening of sour gas through the
use of proprietary patented technologies. The Corporation provides
economic and environmental benefits to the upstream and downstream oil
and gas industry, and is also pursuing new business opportunities in the
petrochemical and international chemical purification markets.

Shares of CCR Technologies Ltd. trade on the Toronto Stock Exchange
under the symbol "CRL".

Management's Discussion and Analysis

This Management's Discussion and Analysis ("MD&A"), dated March 23,
2005, should be read in conjunction with the audited consolidated
financial statements for the years ended December 31, 2004 and December
31, 2003.

General

Revenues of $25,796,000 generated a pretax profit for the year 2004 of
$2,308,000 compared to revenues of $13,012,000 and pretax profit of
$1,934,000 for the year 2003. The increase is attributed to the
Technology Licensing and Solutions ("TLS") portion of the Chemical
Reclaiming business. Year 2004 earnings of $2,033,000 were slightly less
than the prior year of $2,164,000 due to a $505,000 year on year tax
turnaround. Year 2003 utilized a net $230,000 tax credit from prior year
losses. For Year 2004 the Corporation had tax expense of $275,000 which
was after the use of a $647,000 tax reduction from prior year losses.

Chemical Reclaiming revenues increased from $12,962,000 in 2003 to
$25,480,000 in 2004 mainly as a result of Technology Licensing and
Solutions contracts which are nearing completion. The sales cycle for
these contracts is long and the corporation continues to aggressively
pursue prospects for additional contracts.

TLS volumes increased significantly over the prior year both in dollars
and as a percentage of total revenue. TLS as a product line has shown
higher revenue volumes with lower margins than Mobile Reclaiming
Services ("MRS") or Biodesulphurization Process Services in the Natural
Gas Processing industry ("NGP"). This product mix shift resulted in
reduced gross margins from 52% in 2003 to 28% in 2004.

The Corporation's Biodesulphurization Process Services increased in
revenue from $50,000 in 2003 to $315,000 in 2004. A second installation
was successfully launched in late 2004; however, customer operating
problems (unrelated to the patented process) were experienced which
contributed to the overall loss of the segment. Proposed solutions are
expected to be successful.

Fourth quarter 2004 ("Q4, 2004") revenues of $4,633,000 generated a net
profit of $546,000 as compared to $3,366,000 revenues and $362,000 net
profit for the same quarter in 2003. TLS revenues for the quarter ended
December 31, 2004 accounted for the majority of the increase over the
same quarter in 2003.

During 2004 working capital improved from $1,279,000 to $4,043,000 with
a current asset to current liability ratio improvement from 1.3 to 2.4.
This positive increase in liquidity is a result of the year's $2,033,000
earnings as well as an interest reduction from pay down of the current
portion of the term bank loan from $900k to $675k. The total term bank
loan, including the long term portion, was paid down during the year
from $1,575,000 to $675,000.

Currency fluctuation variances are shown on the Balance Sheet as a
cumulative translation adjustment and have periodic positive and
negative effects on Shareholders' Equity. These translation valuations
have had no effect on earnings or cash flow. With over 90% of Capital
Assets in the United States, the fluctuations between the Canadian and
U.S. dollar affect asset carrying value. The 9% decline of the U.S.
dollar in 2004 reduced Capital Asset carried amounts by $370,000 and
working capital by $250,000.

In 2004, shareholders' equity increased from $7,448,000 to $9,311,000.
This $1,863,000 increase is net result of $2,033,000 in earnings,
proceeds of $217,000 from stock options exercised, $170,000 increase in
contributed surplus, $65,000 deferred share subscription, and equity
decrease of ($620,000) from currency translation adjustments due to the
reduction in the relative value of the U.S. dollar.

Shareholders' equity increased in Q4, 2004 by $303,000 as result of
$546,000 net income, $137,000 net effect of issuance and exercise of
stock options, $65,000 deferred share subscription, and equity decrease
of ($445,000) from currency translation adjustments related to the
reduction of the relative value of the U.S. dollar.

Industry Condition and Outlook

The refining industry in North America is currently strong economically
with improved margins. This represents a healthy market for the MRS
business. It is management's opinion this industry trend will continue
into the foreseeable future.

Obligations

The Corporation has committed to project costs of US$2,346,000 of which
US$1,117,000 is included in accrued liabilities, and to lease payments
for premises of US$124,000 in 2005; US$136,000 in 2006; US $139,000 in
2007; US$142,000 in 2008, and US$222,000 thereafter.

Accounting Policies

The consolidated financial statements of the Corporation have been
prepared in accordance with Canadian generally accepted accounting
principles. Significant accounting policies are described in Note 2 of
the Consolidated Financial Statements.

Results of Operations

Revenue

Consolidated revenues almost doubled those of the prior year increasing
from $13,012,000 in 2003 to $25,796,000 in 2004. TLS accounted for the
increase with one customer contributing 74% of total revenues.

Q4, 2004 revenues of $4,633,000 were higher than the $3,366,000 revenues
in fourth quarter 2003 largely due to increases in TLS revenues.

Operating Expenses

Direct operating expenses of $18,505,000 for 2004 were almost three
times the $6,197,000 for 2003. This increase reflects the product line
shift to TLS from MRS. TLS has historically shown higher revenues and
lower margins than MRS. Indirect operating expenses have increased over
2003 due to increased selling and administrative costs required to
support TLS projects.

Fourth quarter, 2004 direct operating expenses increased from 52% to 67%
as a percentage of revenue as compared to same period in 2003. This is a
result of TLS increasing as a percentage of total revenue for 2004.

Interest

The term bank loan decreased during the year from $1,575,000 to
$675,000 as result of continued monthly principal payments of $75,000.
During 2004, the Corporation paid down the bank loan from
US$400,000($518,000 CDN) to US$50,000 ($60,000 CDN).

Interest expense significantly decreased from $227,000 in 2003 to
$91,000 in 2004 as a direct result of these loan pay downs. Fourth
Quarter interest expense similarly declined from $67,000 in 2003 to
$19,000 in Q4, 2004 as a result of loan pay downs during the year.

Income taxes

Income taxes reflect the income tax laws of the various jurisdictions in
which the Corporation operates. For 2004 the Corporation's statutory
rate yields a net tax of approximately $785,000. This amount is reduced
by $19,000 from other differences and by $647,000 in recognition of tax
benefits from prior period losses. This reflects the benefit of certain
prior year losses that have now been recognized for accounting purposes,
as there are sufficient profits to utilize them.

Liquidity and Capital Resources

Cash and cash equivalents decreased during the year from $2,743,000 in
funds to $1,194,000. Operating activities contributed $3,676,000, with
changes in non-cash working capital decreasing cash $4,004,000; pay down
of loans decreasing cash by $1,358,000. Accounts receivable increased
from $2,143,000 to $5,644.000.

Cash and cash equivalents decreased from $1,883,000 on September 30,
2004 to $1,194,000 on December 31, 2004. Operating activities for the
fourth quarter added $758,000, with non-cash working capital changes
decreasing cash $1,249,000; financing activities decreased cash
$150,000, which included loan pay down of $225,000 and cash inflow of
$55,000 from issuance of shares; foreign exchange loss from cash held in
foreign currency reduced cash by $48,000.

The Corporation expects to maintain a self-sustaining cash position with
continued debt reduction. No major asset purchases are committed and
earnings are projected to cover expenses.

Year-end commitments included US$2,543,000 in outstanding letters of
guarantee to cover certain contractual performance guarantees related to
TLS. These commitments are scheduled to expire during 2005.

The available bank line of credit remained at US$400,000, of which
US$50,000 was utilized as at December 31, 2004.

Quarterly Financial Information

The following information sets forth certain selected financial
information for the Company on a quarterly basis. All amounts are
expressed in thousands ($000) except per share amounts.



2003 2004
Mar Jun Sep Dec Mar Jun Sep Dec
31 30 30 31 31 30 30 31
------------------------------------------------------------------------
Revenue 2,838 2,475 4,333 3,366 4,503 6,601 10,059 4,633
Net income 553 418 830 363 478 354 655 546
Income per
share: - basic 0.02 0.01 0.02 0.01 0.01 0.01 0.02 0.02

Note: There were no extraordinary items.


Annual Financial Trends

Year 2001 had shown improvement from the prior year as a result of
increased sales efforts and success in reduction of operating expenses.
These efforts were negated largely as a result of the terrorists'
attacks of September 11, 2001 which abruptly curtailed the demand for
aviation fuel, causing a domino effect of curtailing refinery
expenditures including reclaiming projects.

At the end of 2001, the industry was projected to continue to suffer
through mid-year 2002 with lesser market demands and apprehension
related to events of September 11, 2001. The downturn lasted longer than
expected during 2002, but the Corporation was able to strengthen pricing
and accomplish market penetration. In 2002, costs were higher in
relation to revenue as the Corporation retained both key personnel and
equipment in order to have the capacity to react as the market improved.

In 2003, the market improved as expected and the Corporation had the
resources available to react to the upswing in industry. MRS increased
first as customers' margins improved and contaminants in many of their
systems reached levels sufficiently critical to require remediation
steps to be taken. The TLS segment of the Chemical Reclaiming business
showed greatly increased activity, culminating in three major projects
signed during the year.

In 2004, there was a decrease in MRS as customer contaminant levels
decreased from critical volumes of the prior year and companies began
regularly scheduled maintenance activity. Within the Chemical Reclaiming
product line a marked shift from MRS to TLS occurred which greatly
increased revenues and provided the largest annual pretax profit in the
history of the Corporation.

The following information sets forth certain selected financial
information for the Company on an annual basis. All amounts are
expressed in thousands ($000) except per share amounts.



2001 2002 2003 2004
------------------------------------------------------------------------
Revenue 8,503 4,441 13,012 25,796
Net income (loss) (657) (2,607) 2,164 2,033
Income (loss) per share: - basic $ (0.02) $ (0.08) $ 0.06 $ 0.06
Total assets 15,347 11,862 12,121 12,248
Total liabilities 6,038 5,030 4,672 2,937

Note: There are no extraordinary items.


Related Party Transactions

The Corporation has engaged a consulting firm for management services
and expertise and the Chairman of the consulting firm is also the
Chairman for the Corporation. During 2004 the Corporation paid $34,750
in fees and $27,133 in office expenses to this firm.

A law firm, of which the Corporate Secretary is a partner, was paid
$115,387 for professional legal fees and disbursements on behalf of the
Corporation during 2004. In 2004, a law firm of which a director of the
Corporation is a partner, was paid $88,769 for professional legal fees
and disbursements rendered on behalf of the Corporation.

Business Risk

The demand for the Corporation's services is largely dependent upon the
quantity and deterioration rate of the chemicals used by its customers
in refineries, gas plants and petrochemical plants. It is further
affected by the Corporation's ability to convince its customers to
reclaim rather than replace contaminated chemicals. The decision by a
customer to reclaim is often dependent upon the economic value of the
Corporation's services versus the alternatives, as well as sensitivity
to environmental issues.

CCR Technologies Ltd. is a leading technology solutions company focused
on the purification of process chemicals and sweetening of sour gas
through the innovative use of proprietary patented technologies. The
Corporation provides economic and environmental benefits to upstream oil
and gas producers, and downstream refiners and petrochemical processors
both domestically and internationally. Further information may be
obtained at the corporate website www.reclaim.com.

The Corporation licenses Natural Gas processing Technologies ("NPG")
through New Paradigm Limited Partnership, a wholly owned subsidiary.

Shares of CCR Technologies Ltd. trade on the Toronto Stock Exchange
under the symbol "CRL".



CCR Technologies Ltd.
Consolidated Balance Sheets

December 31 2004 2003
------------------------------------------------------------------------

ASSETS

Current
Cash and cash equivalents $ 1,194,354 $ 2,743,013
Accounts receivable
- Trade 4,472,812 1,230,066
- Unbilled 1,170,798 912,804
Prepaid expenses and deposits 141,381 391,030
-----------------------------
6,979,345 5,276,913

Future tax asset (Note 13(c)) 43,388 230,000
Property and equipment (Note 3) 4,997,897 6,325,043
Intangibles and long-term deposit (Note 4) 227,387 288,595
-----------------------------

$ 12,248,017 $ 12,120,551

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

LIABILITIES AND SHAREHOLDERS' EQUITY

Current
Bank loan (Note 5) $ 60,000 $ 518,000
Accounts payable and accrued liabilities 2,147,249 1,863,143
Deferred revenue 54,295 716,334
Current portion of term bank loan (Note 6) 675,000 900,000
-----------------------------
2,936,544 3,997,477

Term bank loan (Note 6) - 675,000
-----------------------------
2,936,544 4,672,477
-----------------------------

Shareholders' Equity
Share capital (Note 7 (b)) 9,965,799 9,749,189
Contributed surplus (Note 7(e)) 189,719 20,000
Deferred share subscription (Note 7(d)) (65,000) (130,000)
Retained earnings (deficit) 1,319,223 (713,649)
Cumulative translation adjustment (Note 8) (2,098,268) (1,477,466)
-----------------------------
9,311,473 7,448,074
-----------------------------

$ 12,248,017 $ 12,120,551
------------------------------------------------------------------------
------------------------------------------------------------------------

On behalf of the Board:

Signed "Henry R. Lawrie" Director Signed "Elson J. McDougald" Director
------------------------ ---------------------------
Henry R. Lawrie Elson J. McDougald

The accompanying notes are an integral part of these consolidated
financial statements.


CCR Technologies Ltd.
Consolidated Statements of Operations and Retained Earnings (Deficit)

For the years ended December 31 2004 2003
------------------------------------------------------------------------
Revenue $ 25,795,734 $ 13,012,348

Operating expenses 18,505,287 6,197,220
-----------------------------
Gross margin 7,290,447 6,815,128

Research costs, net of recoveries - 215,705

Selling and administrative costs 3,684,705 2,932,801

-----------------------------
Earnings before interest,
taxes and amortization 3,605,742 3,666,622

Interest
Current 16,573 28,848
Long-term 74,253 198,046
-----------------------------
90,826 226,894
-----------------------------

Earnings before taxes and amortization 3,514,916 3,439,728

Amortization
Operating assets 1,109,251 1,174,334
Administrative and other assets 87,708 60,791
-----------------------------
1,196,959 1,235,125
-----------------------------

Earnings before the under noted 2,317,957 2,204,603
Interest income 19,252 4,704
Loss on investment (29,461) -
Miscellaneous expense - (55,614)
Loss on foreign exchange (232) (220,131)

-----------------------------
Profit before income taxes 2,307,516 1,933,562
-----------------------------

Income taxes (recovery)
Future (Note 13) 274,644 (230,000)
-----------------------------
274,644 (230,000)
-----------------------------
Net income for the year 2,032,872 2,163,562

Deficit, beginning of year (713,649) (2,877,211)

-----------------------------
Retained earnings (deficit), end of year $ 1,319,223 $ (713,649)

------------------------------------------------------------------------
Earnings per share - basic and diluted $ 0.06 $ 0.06
Weighted average number of shares outstanding
Basic 34,701,251 33,912,769
Diluted 35,572,941 34,488,000
------------------------------------------------------------------------
------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated
financial statements.


CCR Technologies Ltd.
Consolidated Statements of Cash Flows

For the years ended December 31 2004 2003
------------------------------------------------------------------------

Cash flows from operating activities
Net income $ 2,032,872 $ 2,163,562
Add (deduct) items not affecting cash:
Stock based compensation 169,719 20,000
Amortization 1,196,959 1,235,125
Future income taxes 211,115 (230,000)
Non-cash compensation 65,000 65,000
-----------------------------
3,675,665 3,253,687

Increase (decrease) in working
capital items other than cash
Accounts receivable (3,500,740) (1,046,441)
Prepaid expenses and deposits 249,649 (187,758)
Accounts payable and accrued liabilities 284,105 1,292,620
Deferred revenue (662,039) 64,283
Foreign exchange (374,894) 47,412
-----------------------------
(328,253) 3,423,803
-----------------------------

Cash flows from investing activity
Purchase of property and equipment (11,847) (253,629)
-----------------------------

Cash flows from financing activities
Foreign exchange 3,000 -
Repayment of bank loan (458,000) -
Repayment of term bank loan (900,000) (900,000)
Issuance of shares (net of issuance costs) 216,610 123,597
-----------------------------
(1,138,390) (776,403)
-----------------------------

Foreign exchange loss on cash held
in a foreign currency (70,169) (233,346)
-----------------------------

Increase (decrease) in cash and
term deposits (1,548,659) 2,160,425

Cash and cash equivalents,
beginning of year 2,743,013 582,588
-----------------------------

Cash and cash equivalents, end of year $ 1,194,354 $ 2,743,013
------------------------------------------------------------------------
------------------------------------------------------------------------

The accompanying notes are an integral part of these consolidated
financial statements.


CCR Technologies Ltd.
Notes to Consolidated Financial Statements
December 31, 2004 and 2003


1. Operations

The Company uses patented technology and mobile processing equipment
primarily for the purification and reclamation of amines and glycols in
the refining, natural gas processing, petrochemicals manufacturing and
offshore gas processing industries. The Company provides its services to
major Canadian, U.S. and International corporations. The Company also
licenses natural gas processing technologies.

2. Significant Accounting Polices

The consolidated financial statements of the Company have been prepared
by management in accordance with Canadian generally accepted accounting
principles. The preparation of financial statements in conformity with
Canadian generally accepted accounting principles requires management to
make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates. The consolidated financial statements have, in
management's opinion, been properly prepared using careful judgement
with reasonable limits of materiality and within the framework of the
significant accounting policies summarized below.

Basis of consolidation

These consolidated financial statements include the accounts of the
Company and its 100% owned subsidiaries. All significant intercompany
transactions have been eliminated.

Foreign currency

The Company translates foreign currencies into Canadian dollars for the
parent and its subsidiaries with integrated operations using the
temporal method on the following basis:

(i) Monetary items are translated at the rate prevailing at the date of
the balance sheet;

(ii) Non-monetary items are translated at historical exchange rates;

(iii) Revenue and expenses are translated at an average exchange rate
for the year; and

(iv) Gains or losses arising on translation are credited or charged to
income in the year in which they arise.

The Company translates amounts of foreign currency into Canadian dollars
for its subsidiary with self-sustaining operations using the current
rate method on the following basis:

(i) Assets and liabilities are translated at the rate prevailing at the
balance sheet date;

(ii) Revenue and expenses items are translated at an average exchange
rate for the year; and

(iii) Exchange gains and losses arising on translation are deferred and
included in a separate component of shareholders' equity.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, bank balances and
short-term investments with maturities of three months or less.

Revenue recognition, work in progress and deferred revenues

The Company recognizes its processing revenue as services are provided.

The Company recognizes its bio desulphurization revenue on a net basis
as services are provided.

The Company issues site specific licenses along with the sale of a
processing package which may include equipment, integration, engineering
and commissioning services. In these cases, the Company recognizes total
revenues on the contract on a percentage of completion basis. The
revenue recognized is determined based on the total contract value and
the percentage of the contract estimated completed to the end of the
reporting period.

Some of the Company's contracts are subject to a performance test and
final customer acceptance. Revenue on these contracts is only recognized
if the nature and extent of the acceptance required is standard based on
the Company's prior experience and performance levels. In the event that
the performance criteria are significantly different from the standard,
revenue is recognized when customer acceptance is achieved.

Work in progress includes costs incurred on jobs that have not yet been
expensed under the Company's percentage of completion accounting policy
as well as unbilled revenues earned on contracts in progress.

The Company recognizes stand alone licensing revenue for fixed term
licenses ratably over the term of the license.

To the extent that billings are issued in excess of the revenue being
recognized, the excess amounts
are recorded on the balance sheet as deferred revenue.

Capital assets

Capital assets are recorded at cost. Amortization is provided using the
following rates and methods:



Automotive - 5 - 7 years straight-line
Computer equipment - 30% declining balance
Equipment - 20% - 30% declining balance
Processing equipment - 10 years straight-line


The cost of processing equipment constructed by the Company includes
direct construction and development costs and the net expense incurred
during commissioning.

Intangible assets

Some costs directly attributable to technology development are
capitalized on a project-by-project basis and are amortized over a
10-year period commencing with the commercial utilization of the process
under development. The costs associated with a particular technology
development project are written off to income should that development
project prove to be of no commercial value. Research costs are expensed
as incurred.

Intellectual property costs reflect the cost of acquired technologies
and are included with technology development costs and are amortized on
the same basis.

Patent rights are recorded at cost and amortized on a straight-line
basis over the remaining useful economic life ranging from 5 to 10 years
(2003 - 17 years).

Research costs

Some costs attributable to technology research were charged to expense
in 2003. Research costs are reduced by the amount of related government
grants and other amounts recoverable. The Company received no government
grants in the current or prior year.

Financial instruments

The Company has financial instruments. Unless otherwise indicated, it is
management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial
instruments. The fair values of these financial instruments approximate
their carrying values, unless otherwise noted.

Future income taxes

The Company has adopted the liability method of tax allocation in
accounting for income taxes. Under this method, future tax assets and
liabilities are determined based on the differences between financial
reporting and tax bases of assets and liabilities and measured using
substantially enacted tax rates and laws that will be in effect when the
differences are expected to reverse.

Measurement uncertainty

The Company recognizes revenue on a percentage of completion basis for a
number of its long term contracts. A number of estimates are made by
management in determining the level of completion of the various
contracts in progress. In addition, management makes estimates with
respect to the expected costs to complete the contracts. While
management has developed systems to track and monitor these factors, on
a contract by contract basis they are estimations and are subject to
measurement uncertainty. The effect of changes in estimates is reflected
in the period that the change in estimate is made.

The Company has conducted a study for its internal policies with respect
to transfer pricing within the consolidated group. The consolidated
income tax provision provided herein has been based on management's best
estimate of the pricing that is equivalent to comparative uncontrolled
pricing for the same or similar services.

The amounts recorded for the valuation allowance for future income tax
assets is based on estimates. By their nature, these estimates are
subject to measurement uncertainty, and the impact on the financial
statements of future changes in such estimates could be material.

Stock-based compensation plan

Stock Based Compensation and Other Stock Based Payments - In September
2003, the Canadian Institute of Chartered Accountants ("CICA") issued an
amendment to section 3870 "Stock based compensation and other stock
based payments". The amended section is effective for fiscal years
beginning on or after January 1, 2004. The amendment requires that
companies measure all stock based payments using the fair value method
of accounting and recognize the compensation expense in their financial
statements. The Company implemented this amended standard in 2003 in
accordance with the early adoption provisions of the standard. Per the
transitional provisions, early adoption required that compensation
expense be calculated and recorded in the income statement for options
and warrants issued on or after January 1, 2003.

Earnings per share

Basic earnings per common share are computed by dividing net earnings by
the weighted average number of common shares outstanding for the period.
Diluted per share amounts reflect the potential dilution that could
occur if securities or other contracts to issue common shares were
exercised or converted to common shares. The treasury stock method is
used to determine the dilutive instruments, in accordance with standards
approved by the CICA.



3. Property and Equipment
2004
------------------------------------------------------------------------
Accumulated Net Book
Cost Amortization Value
---------------------------------------------
Processing equipment $ 10,118,253 $ 5,428,479 $ 4,689,774
Automotive 364,303 307,295 57,008
Computer equipment 261,766 215,003 46,763
Equipment 616,833 412,481 204,352
---------------------------------------------
$ 11,361,155 $ 6,363,258 $ 4,997,897
---------------------------------------------


2003
------------------------------------------------------------------------
Accumulated Net Book
Cost Amortization Value
---------------------------------------------
Processing equipment $ 10,571,057 $ 4,777,872 $ 5,793,185
Automotive 369,800 263,981 105,819
Computer equipment 239,492 196,020 43,472
Equipment 516,442 133,875 382,567
---------------------------------------------
$ 11,696,791 $ 5,371,748 $ 6,325,043
---------------------------------------------



Included in processing equipment are costs of $472,138 (2003 - $332,750)
that are not being amortized as the assets are being held as processing
equipment components and spare parts. Once the assets are available for
use, these costs will be amortized. These assets have been provided as
security for the Company's bank loans. Substantially all of these assets
are held in the United States (Note 8).



4. Intangibles and Long-term Deposit

2004
------------------------------------------------------------------------
Accumulated Net Book
Cost Amortization Value
and write
down
------------------------------------------
Technology development and
intellectual property (i) $ 658,850 $ 620,446 $ 38,404
Patent rights (ii) 206,809 81,826 124,983
Reclamation deposit (iii) 64,000 - 64,000
------------------------------------------
$ 929,659 $ 702,272 $ 227,387
------------------------------------------


2003
------------------------------------------------------------------------
Accumulated Net Book
Cost Amortization Value
and write
down
------------------------------------------
Technology development and
intellectual property (i) $ 658,850 $ 607,655 $ 51,195
Patent rights (ii) 206,809 33,409 173,400
Reclamation deposit (iii) 64,000 - 64,000
------------------------------------------
$ 929,659 $ 641,064 $ 288,595
------------------------------------------


(i) Technology development and intellectual property

Included in technology development and intellectual property is
technology development with a cost of $106,103 and a net book value of
$38,404 and intellectual property with a cost of $552,747 and a net book
value of $nil.

(ii) Patent rights

Included in patent rights are costs of $119,789 that are not being
amortized, as the patent applications have not yet been approved. Once
the patents have been obtained, these costs will be amortized according
to the policy as described in Note 2.

(iii) Reclamation deposit

The reclamation deposit is a cash term deposit made by the company for
future clean up costs on a site being leased for the Company's
operations.

5. Bank Loan

The US$50,000 (CDN$60,000), (2003 - US$400,000 (CDN$518,000)) bank loan
bears interest at 1% above the prime lending rate of the US lender and
is due on demand. The prime rate was 4.00 percent at December 31, 2004.
The available limit on this facility is US$400,000. The bank loan is
secured by a Letter of Credit from a Canadian bank, which in turn is
secured by a general security agreement and a specific charge on certain
processing equipment.

6. Term Bank Loan

The terms of the agreements governing the term loan of the Company
include certain covenants regarding working capital, debt to equity and
debt service ratios. As of December 31, 2004 and at the present time the
Company is in compliance with these covenants.

The $675,000 loan bears interest at 2% above the prime-lending rate of
the bank. The prime rate was 4.00 percent at December 31, 2004. The loan
requires monthly principal repayments of $75,000 plus interest. The
amount is secured by a general security agreement on all present and
future personal property and guarantees by the subsidiaries of the
Company.



The required principal repayments over the next year are as follows:

2005 $ 675,000


7. Share Capital

(a) Authorized
Unlimited number of voting common shares
Unlimited number of non-voting preferred shares, issuable in series

(b) Common shares

Issued
Preferred shares - none

2004 2003
------------------------------------------------------
No. of No. of
shares Amount shares Amount
------------------------------------------------------
Balance, beginning
of period 34,254,176 $ 9,749,189 33,871,676 $ 9,625,592
Issued for cash on
exercise of options 1,088,667 216,610 382,500 123,597
------------------------------------------------------
Balance, end
of period 35,342,843 $ 9,965,799 34,254,176 $ 9,749,189
------------------------------------------------------


- The above issuance of 1,088,667 shares related to options includes
629,000 which would have expired May, 2004; 350,667 which would have
expired November, 2004; 9,000 which would have expired May, 2005 and
100,000 which would have expired October, 2005.

- There were 315,000 options granted, 344,667 exercised, and 112,833
options expired during the three months ended December 31, 2004; there
were 833,000 options granted, 644,000 exercised, and 553,000 options
expired during the three months ended June 30, 2004; in the three months
ended March 31, 2004 there were 100,000 exercised.

(c) Options

The Company has granted stock options to certain directors, consultants,
and employees of the Company. The following table summarizes information
about the stock options outstanding at December 31, 2004:



------------------------------------------------------------------------
Exercise Expired or
Price Expiry Date Balance Forfeited Exercised
------------------------------------------------------------------------
0.15 - 0.25 May to Nov 2004 1,063,834 84,167 979,667
1.43 June 2004 530,000 530,000 -
0.60 - 0.64 Nov 2004 36,000 47,666 -
0.15 - 0.25 May 2005 - Nov 2005 740,332 2,000 109,000
0.50 - 0.60 May 2005 - Nov 2005 36,000 - -
0.20 - 0.25 May 2006 223,000 1,000 -
0.50 - 0.64 Aug 2006 - Nov 2006 553,334 1,000 -
0.50 - 0.60 May 2007 - Nov 2007 - - -
0.50 May 2008 - - -
--------------------------------------
3,182,500 665,833 1,088,667
--------------------------------------
Weighed average exercise price $ 0.47 1.21 0.20
--------------------------------------
--------------------------------------

------------------------------------------------------------------------
Exercise
Price Expiry Date Issued Balance Exercisable
------------------------------------------------------------------------
0.15 - 0.25 May to Nov 2004 - - -
1.43 June 2004 - - -
0.60 - 0.64 Nov 2004 11,666 - -
0.15 - 0.25 May 2005 - Nov 2005 - 629,332 413,000
0.50 - 0.60 May 2005 - Nov 2005 114,168 150,168 52,000
0.20 - 0.25 May 2006 - 222,000 -
0.50 - 0.64 Aug 2006 - Nov 2006 20,166 572,500 200,000
0.50 - 0.60 May 2007 - Nov 2007 995,000 995,000 450,000
0.50 May 2008 7,000 7,000 -
--------------------------------------
1,148,000 2,576,000 1,115,000
--------------------------------------
Weighed average exercise price $ 0.57 0.44 0.39
--------------------------------------
--------------------------------------

The following table summarizes information about the stock options
outstanding at December 31, 2003:

------------------------------------------------------------------------
Exercise Expired or
Price Expiry Date Balance Forfeited Exercised
------------------------------------------------------------------------
0.15 - 0.45 May 2003 - Dec 2003 534,668 280,168 254,500
0.65 - 0.70 May 2003 - Nov 2003 356,000 356,000 -
0.15 - 0.25 Mar 2004 - Nov 2004 1,132,333 86,499 28,000
1.43 June 2004 555,500 25,500 -
0.64 Nov 2004 - - -
0.15 - 0.25 May 2005 - Nov 2005 907,333 113,001 100,000
0.64 Nov 2005 - - -
0.20 - 0.32 May 2006 - Aug 2006 - 27,834 -
0.64 Nov - - -
--------------------------------------
3,485,834 889,002 382,500
--------------------------------------
Weighed average exercise price $ 0.46 0.46 0.32
--------------------------------------
--------------------------------------

------------------------------------------------------------------------
Exercise
Price Expiry Date Issued Balance Exercisable
------------------------------------------------------------------------
0.15 - 0.45 May 2003 - Dec 2003 - - -
0.65 - 0.70 May 2003 - Nov 2003 - - -
0.15 - 0.25 Mar 2004 - Nov 2004 46,000 1,063,834 1,063,834
1.43 June 2004 - 530,000 530,000
0.64 Nov 2004 36,000 36,000 36,000
0.15 - 0.25 May 2005 - Nov 2005 46,000 740,332 300,000
0.64 Nov 2005 36,000 36,000 -
0.20 - 0.32 May 2006 - Aug 2006 450,834 423,000 200,000
0.64 Nov 353,334 353,334 100,000
--------------------------------------
968,168 3,182,500 2,229,834
--------------------------------------
Weighed average exercise price $ 0.42 0.47 0.52
--------------------------------------
--------------------------------------


(d) Deferred Share Subscription

Pursuant to a share purchase agreement, the Company loaned an officer of
the Company $325,000 to purchase 500,000 shares of the Company. The loan
is non-interest bearing and is to be repaid over 5 years with equal
annual payments of $65,000 to be funded by bonuses paid to the officer.
As at December 31, 2004, the amount that remains unpaid is $65,000 (2003
- $130,000).

(e) Stock Options

The Company has a stock option plan under which employees, directors and
consultants are eligible to receive grants. An amount of 4,500,000
common shares were reserved for issuance under the plan. Options granted
under the plan generally have a term of three years to expiry. Initial
grants of options generally vest one-third, one year from the date of
grant, with the balance vesting in equal amounts on the second and third
anniversary of the date of the grant. The exercise price of each option
equals or exceeds the market price of the Company's common shares on the
date of the grant.

(f) Stock Compensation

During the year, $169,719 (2003 - 20,000) was recorded for stock
compensation expense. The fair value of share options was estimated
using the Black-Scholes option-pricing model with the following
assumptions: Dividend yield ($ nil), Expected volatility (0.12 to 0.55),
risk-free interest rate (3%), and weighted average life of three years.

8. Cumulative Translation Adjustment



The changes in the cumulative translation account were:

2004 2003
----------------------------

Cumulative translation gain (loss),
beginning of period $ (1,477,466) $ 278,605
Property and equipment, net loss (358,529) (1,682,570)
Net working capital, loss (262,273) (73,501)
----------------------------
Cumulative translation gain (loss), end of
period $ (2,098,268) $ (1,477,466)
----------------------------
----------------------------


9. Financial Instruments

The Company holds various forms of financial instruments their fair
values approximate their book values. The nature of these instruments
and its operations expose the Company to foreign currency risk, industry
credit risk and interest rate risk.

Foreign currency rate risk

A significant portion of the Company's operations are located in the
United States. The Company's exposure to foreign currency risk for its
foreign operations is partially hedged as foreign currency denominated
monetary assets partially offset foreign currency denominated
liabilities. The Company does not have any exposure to any highly
inflationary foreign currencies.

Credit risk

A significant portion of the company's trade receivables are from
companies in the petroleum and natural gas industry, and as such, the
Company is exposed to normal industry credit risks. At year end one
company accounted for 80% of the total account receivable.

(c) Interest rate risk management

The Company's short and long-term borrowings are subject to floating
rates. The floating rate debt is subject to interest rate cash flow
risk, as the required cash flows to service the debt will fluctuate as a
result of changes in market rates.


10. Segmented Information

(a) The Company's activities are conducted in two segments:

(i) Mobile reclaiming services, sales and development, and technology
licensing and solutions ("chemical reclaiming")

(ii) Bio desulphurization process services in the natural gas processing
industry ("NGP).

The Company eliminates intersegment sales and transfers. The Company
allocates its revenues among countries based on location that has title
to the contract. Segment profit (loss) is measured as net profit (loss)
after consideration of income taxes.



Chemical Corporate &
Description Reclaiming $ NGP $ Other $ Consolidated $
------------------------------------------------------------------------
2004
External revenue 25,480,431 315,303 - 25,795,734
---------------------------------------------------
---------------------------------------------------
Interest revenue 19,252 - - 19,252
---------------------------------------------------
---------------------------------------------------
Amortization 1,109,251 3,015 84,693 1,196,959
---------------------------------------------------
---------------------------------------------------
Interest expense 90,690 136 - 90,826
---------------------------------------------------
---------------------------------------------------
Segment profit (loss) 2,338,557 (317,625) 11,940 2,032,872
---------------------------------------------------
---------------------------------------------------
Capital expenditures 11,847 - - 11,847
---------------------------------------------------
---------------------------------------------------
Segment assets 12,016,032 216,840 15,145 12,248,017
---------------------------------------------------
---------------------------------------------------

Chemical Corporate &
Description Reclaiming $ NGP $ Other $ Consolidated $
------------------------------------------------------------------------
2003
External revenue 12,962,348 50,000 - 13,012,348
---------------------------------------------------
---------------------------------------------------
Interest revenue 4,704 - - 4,704
---------------------------------------------------
---------------------------------------------------
Amortization 1,213,312 - 21,813 1,235,125
---------------------------------------------------
---------------------------------------------------
Interest expense 226,894 - - 226,894
---------------------------------------------------
---------------------------------------------------
Segment profit (loss) 2,406,061 (240,332) (2,167) 2,163,562
---------------------------------------------------
---------------------------------------------------
Capital expenditures 251,405 2,224 - 253,629
---------------------------------------------------
---------------------------------------------------
Segment assets 11,500,047 518,685 101,819 12,120,551
---------------------------------------------------
---------------------------------------------------

(b) The Company has operations in Canada and the United States.
Following is information by geographic areas:

External revenue Property and equipment
---------------- ----------------------
and Intangibles
------------------------------------------------------------------------
2004 2003 2004 2003
-----------------------------------------------------
Canada $ 1,979,723 $ 1,954,638 $ 211,194 $ 314,760
US 3,171,864 10,555,144 5,014,090 6,298,878
Norway 19,278,976 502,566 - -
Others 1,365,171 - - -
-----------------------------------------------------
Total $ 25,795,734 $ 13,012,348 $ 5,225,284 $ 6,613,638
-----------------------------------------------------
-----------------------------------------------------


The U.S. property and equipment are leased as required to the Canadian
segment.

11. Commitments

The Company has committed to project costs of US$2,346,000 of which,
US$1,117,000 is included in accrued liabilities.



The Company has committed to lease payments for premises. The minimum
annual lease payments for the next five years are as follows:

2005 US$123,984
2006 136,439
2007 139,331
2008 141,653
Thereafter 222,151


Pursuant to a technology acquisition agreement the Company has agreed to
pay 50% of the license fees earned from the first license of the
Technology, and 90% of each subsequent fee. No commitment exists until
the Company earns the license fee.

The Company has entered into an employment agreement with an officer. In
addition to defining the terms of employment, the agreement entitle the
executive to termination payments equal to two years compensation, and
the immediate vesting of all options previously granted, in the event of
termination without cause, and in some cases in the event of termination
due to a change in control of the Company.

The Company has leased a property and is obligated to restore the
property to its original condition. The lease is due to expire in the
year 2090. Thus, at this time a reasonable estimate of the cost required
to return the property back to its original condition at the end of the
lease is not determinable.

12. Related Party Transactions

During the year 2004, the Company incurred the following related party
expenses:

(a) $88,769 ($151,343 in 2003) in consulting fees and related expenses
to firms in which certain directors are partners.

(b) $61,883 ($23,744 in 2003) for consulting services to a firm of which
an officer is President.

(c) $115,387 ($71,707 in 2003) in consulting fees and related expenses
to a firm in which an officer is a partner.

(d) $nil ($32,018 in 2003) to a firm in which a former officer is
President for consulting services.

All of the above fees were for professional services rendered in the
normal course of operations at the exchange amount. That is estimated to
be equivalent to the amount that would be paid to arms length parties.

13. Income Taxes

(a) Income taxes reported differ from the amount computed by applying
the statutory federal and provincial income tax rates to income before
income taxes. The reason for these differences and their tax effects are
as follows:



2004 2003
---------------------------
Statutory tax rate, effective 34% 37%
---------------------------
Income taxes at the statutory rate $ 784,555 $ 715,418
Rate change 118,000 -
Other 18,771 (5,000)
Recognition of previously unrecognized
future tax assets (646,682) (940,418)
---------------------------
Income tax (recovery) $ 274,644 $ (230,000)
---------------------------
---------------------------


(b) The Company incurred cumulative non-capital losses for Canadian
income tax purposes of approximately $2,364,000 (2003- $3,249,000)
(subject to confirmation by income tax authorities) which are available
to reduce taxable income in future years. If not utilized, these losses
will expire in the years ending December 31, 2005 to December 31, 2010.
Of the future tax benefit of $804,000, approximately $422,600 has been
recognized to reduce future tax liability and $381,400 (2003 -
$1,037,000) has not yet been recognized.

The Company's foreign subsidiaries have incurred net operating losses of
approximately US$1,614,000 (2003 - US$3,210,000) (subject to
confirmation by income tax authorities) for foreign income tax purposes
which are available to reduce taxable income in future years. If not
utilized, these losses will expire in the years ending December 31, 2022
and 2023. The future income tax benefit to the extent of $613,000 (2003
- $1,048,900) has been recognized as a reduction of the future tax
provision.

(d) The principal components of the net future tax liability are:



Future tax asset: 2004 2003
------------------------------
Unused tax losses carryforward $ 1,542,890 $ 2,716,595
Future tax liability:
Property and equipment (1,059,184) (1,366,098)
Other assets - (33,497)
------------------------------
483,706 1,317,000
------------------------------
Valuation allowance (440,318) (1,087,000)
------------------------------
Net future tax asset (liability) $ 43,388 $ 230,000
------------------------------
------------------------------


14. Letter of Guarantees

The Company has the following letters of credit/guarantees outstanding:

(a) Stand-by letter of credit and/or letter of guarantee specific to a
certain contract to cover bid and performance guarantee in the amount of
US$1,493,181, bearing interest at prime plus 0.25% expiring December 31,
2005.

(b) Stand-by letter of credit and/or letter of guarantee specific to a
certain contract to cover bid and performance guarantee in the amount of
US$1,050,132, bearing interest at prime plus 0.25% expiring February 28,
2005, which subsequently expired.

(c) Stand-by letter of credit and/or letter of guarantee to secure an
operating line of credit provided to a wholly owned subsidiary in the
amount of US$400,000.

The letters referred to in (a) and (b) above are guaranteed by Export
Development Corporation.



15. Statement of Cash Flows

2004 2003
-----------------------
Interest paid $ 90,826 $ 226,894


16. Significant Customers and Economic Dependence


The Company was engaged in contracts for services with one customer in
the chemical reclaiming segment, which accounted for $18,769,644 or 74%
of the Company's total revenue. The amount of accounts receivable from
this company at year end was $3,745,000.

17. Stock Compensation

The Company did not record compensation expense when stock options were
issued to employees prior to January 1, 2003, as disclosed in Note 2.

Had compensation expense related to employees been determined based on
the estimated fair value of the options at the grant dates, the net loss
and loss per share for the year ended December 31, 2004 and 2003 would
have been as indicated below:



2004 2003
----------------------------

Net Income - as reported $ 2,032,872 $ 2,163,562
- pro forma $ 2,000,435 $ 2,145,541

Earnings per share - basic and diluted
- as reported $ 0.06 $ 0.06
- pro forma $ 0.06 $ 0.06


The fair value of share options was estimated using the Black-Scholes
option-pricing model with the following assumptions: Dividend yield
(Nil), Expected volatility (0.13), risk-free interest rate 5.0%, and
weighted average life of three years.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    CCR Technologies Ltd.
    Bud Bell
    Chief Executive Officer
    (281) 988-5800
    or
    CCR Technologies Ltd.
    Chris Keen, CPA
    Chief Financial Officer
    (281) 988-5800
    Website: www.reclaim.com