CEAPRO INC.
TSX VENTURE : CZO

CEAPRO INC.

May 29, 2006 16:54 ET

Ceapro announces 2006 first quarter financial results

EDMONTON, May 29 / - Ceapro Inc. (TSX VENTURE:CZO) today released its
first quarter financial results for 2006. Ceapro produced solid financial
results with strong performance in sales. Sales increased by 131% to $899,000
in the first three months. Income from operations increased $131,000 to
$19,000 in the first quarter; however, research and product development costs
affected the overall financial results producing a net loss of $51,000 for the
three month period ending March 31, 2005.

"We are satisfied with our quarterly financial results especially the
continued growth of revenues which maintains the strong positive trend
achieved in 2005." stated Dr. Mark Redmond, President and CEO of Ceapro. "We
continue to focus on growth by increasing sales and developing new
opportunities, with emphasis placed on securing new pharmaceutical customers
to use our active ingredients and launching our veterinary products in the
United States. We are introducing CeaProve® to Canadian corporations, as
part of corporate wellness programs, and to several countries for point-of-
care diagnosis of diabetes and impaired glucose tolerance."

We have realized a significant increase in sales of oat extracts most
notably to Johnson and Johnson, for use in line-extensions to the Aveeno®
brand of skincare products. Brennen Medical has also increased their orders
for beta glucan for use in the wound-care market, and Genzyme has introduced a
beta glucan-based hernia treatment. Ceapro's technical team continues to
develop these markets by working with new customers in developing over-the-
counter products containing pharmaceutical beta glucan.

In our latest annual report we announced our intention to open the US
market for our animal health products. Our market strategy calls for
distribution and promotion through a regional network of suppliers. In
preparation for entering this market we are developing a comprehensive brand
strategy to create a single name for the US product range, which will create
brand equity and a unified marketing message across the country. We anticipate
making further US market announcements later this year.

We expect the prestigious Frost & Sullivan Innovative Product award for
CeaProve® to establish a global profile for Ceapro. The associated coverage
will be an opportunity to focus on CeaProve®, and provide a stage from which
to present CeaProve® to healthcare providers. This award can open doors for
Ceapro to fulfill its goal to enhance health internationally, specifically
addressing the global diabetes epidemic.

Our outlook continues to be positive. We are encouraged by continued
strong second quarter sales and anticipate further revenue growth throughout
2006. We expect the expansion of sales to existing customers, and the
introduction of new products to new customers to further increase sales of
both active ingredients and veterinary therapeutic products. Ceapro expects to
undertake further expansion of manufacturing capacity to meet this increased
demand.

About Ceapro Inc.

Ceapro Inc is a Canadian growth stage biotechnology company. Ceapro's
core technology is the extraction of functional, active ingredients from
plants and other renewable resources. We add further value to our extracts by
manufacturing medical and therapeutic products, and by supporting the use of
our extracts in products for human and animal health. We have also introduced
health and wellness services employing our CeaProve® diagnostic technology.
Ceapro shares trade on the Canadian TSX Venture Exchange under the symbol CZO.
To learn more about Ceapro, visit our website at www.ceapro.com. Shares
Outstanding: 37,098,670.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this news release.

This release may contain forward-looking statements. Various factors
could cause actual results to differ materially from those projected in
forward-looking statements. Although the Company believes that the forward-
looking statements contained herein are reasonable, it can give no assurance
that the Company's expectations are correct. All forward-looking statements
are expressly qualified in their entirety by this cautionary statement.



CEAPRO INC.
Consolidated Balance Sheets
March 31 December 31
2006 2005
(Unaudited) (Audited)
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ASSETS
CURRENT ASSETS
Cash $ 758,256 $ 438,045
Accounts receivable 872,211 982,347
Inventories 183,578 228,158
Prepaid expenses and deposits 65,653 90,761
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1,879,698 1,739,311
PROPERTY AND EQUIPMENT (NET OF
ACCUMULATED AMORTIZATION) 654,340 679,623
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$ 2,534,038 $ 2,418,934
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LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 472,750 $ 284,863
Deferred revenue 114,644 229,676
Callable debt 70,590 81,584
Current portion of long-term debt 31,293 33,519
Current portion of royalties payable 206,335 106,508
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895,612 736,150

DEFERRED ROYALTY REVENUE 446,727 457,000
EMPLOYEE FUTURE BENEFITS OBLIGATION 172,846 159,946
LONG-TERM DEBT 430,851 436,731
ROYALTIES PAYABLE 167,770 167,770
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2,113,806 1,957,597
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SHAREHOLDERS' EQUITY

SHARE CAPITAL 2,421,524 2,414,830
CONTRIBUTED SURPLUS 110,375 106,888
DEFICIT (2,111,667) (2,060,381)
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420,232 461,337
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$ 2,534,038 $ 2,418,934
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CEAPRO INC.
Consolidated Statements of Net (Loss) Income and Deficit
Unaudited

Three Months and Quarter
Ended March 31
2006 2005
-------------------------------------------------------------------------
Revenue
Sales $ 899,199 $ 388,528
Cost of goods sold 437,113 224,303
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Gross margin 462,086 164,225
Royalties, licenses, and product
development fees - 80,000
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462,086 244,225
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Expenses
General and administration 235,741 202,590
Royalties 89,553 51,922
Sales and marketing 70,216 51,675
Amortization 35,732 38,895
Interest on long-term debt 10,379 7,357
Interest on callable debt and other 1,532 3,806
-------------------------------------------------------------------------

443,153 356,245
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Income (loss) from operations 18,933 (112,020)
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Other income (expenses)
Research and product development (71,356) (44,202)
Other income (expenses) 1,137 (242)
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(70,219) (44,444)
-------------------------------------------------------------------------

NET (LOSS) INCOME FOR THE PERIOD (51,286) (156,464)

Deficit, beginning of period (2,060,381) (1,605,637)
-------------------------------------------------------------------------

Deficit, end of period $(2,111,667) $(1,762,101)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Net (loss) income per share:
Basic $ (0.00) $ (0.00)
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-------------------------------------------------------------------------
Diluted $ (0.00) $ (0.00)
-------------------------------------------------------------------------
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CEAPRO INC.
Consolidated Statements of Cash Flows
Unaudited

Three Months and Quarter
Ended March 31
2006 2005
-------------------------------------------------------------------------

Operating Activities
Net (loss) income for the period $ (51,286) $ (156,464)
Items not affecting cash
Amortization 35,732 38,895
Employee future benefits obligation 12,900 3,000
Recognition of deferred royalty revenue (10,273) -
Stock based compensation 4,556 1,226
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(8,371) (113,343)

Changes in Non-Cash Working Capital Items
Accounts receivable 110,136 (167,453)
Inventories 44,580 32,272
Prepaid expenses and deposits 25,108 5,129
Accounts payable and accrued liabilities 187,887 123,351
Deferred revenue (115,032) (80,000)
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244,308 (200,044)
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Investing Activities
Purchase of property and equipment (10,449) (48,321)
Restricted cash for the purchase of property
and equipment - 38,628
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(10,449) (9,693)
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Financing Activities
Repayment of long-term debt (8,106) (4,965)
Repayment of callable debt (10,994) (9,790)
Proceeds from issuance of share capital - 204,800
Proceeds from exercise of options 5,625 9,500
Increase (decrease) in royalties payable 99,827 51,921
-------------------------------------------------------------------------

86,352 251,466
-------------------------------------------------------------------------

Increase (decrease) in cash 320,211 41,729
Cash at beginning of period 438,045 96,266
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Cash at end of period $ 758,256 $ 137,995
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Supplementary information:
Interest paid $ 11,911 $ 12,659
Royalties paid $ - $ -

Contact Information

  • Dr. Mark Redmond, Telephone: (780) 421-4555