CEAPRO INC.
TSX VENTURE : CZO

CEAPRO INC.

August 23, 2006 18:10 ET

Ceapro announces 2006 second quarter financial results

EDMONTON, Aug. 23 - Ceapro Inc. (TSX VENTURE:CZO) today released its
second quarter financial results for 2006. Revenue from product sales rose 23%
to $1.8 million in the first six months of 2006, resulting in income from
operations of $133,000, and a net loss of $55,000. In the second quarter of
2006, Ceapro generated income from operations of $115,000, more than doubling
the $50,000 generated in the second quarter in 2005. This resulted in a net
loss of $3,000 in the quarter; $(0.00)/share.

"We have sold more active ingredients in each of the first two quarters
than ever before, and the second quarter set a new record for active
ingredient sales of $929,000," stated Dr. Mark Redmond, President and CEO of
Ceapro. "The expansion of sales to existing customers and the introduction of
new products to new customers have boosted sales of active ingredients, which
are up 27% over the second quarter of last year. This success comes from
strong relationships with our partners and the dedication and hard work of the
Ceapro manufacturing team. We are encouraged with third quarter orders and
look forward to growing sales throughout 2006."

Gross margins were strong at 58% of sales revenue, primarily as a result
of higher product sales, greater economies of scale, and improvements in
process efficiency. The expansion of sales to existing customers and the
introduction of new products to new customers have boosted sales of active
ingredients, which are up 27% over the second quarter of last year. Increased
sales of beta glucan were notable as new European customers placed orders
ahead of new product introductions. Ceapro's export sales have continued to
increase despite the continued strengthening of the Canadian dollar over the
last few years.

Our outlook continues to be positive. We are encouraged by strong first
half results and anticipate further revenue growth throughout 2006. Our
objective for the remainder of 2006 is to increase revenues and utilize cash
flow on a discretionary basis to enhance the scale of operations. As a
strategic focus, we continue to concentrate on 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 North American
corporations as part of corporate wellness programs, and to healthcare
providers internationally for point-of-care diagnosis of diabetes and impaired
glucose tolerance.

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, Recent Close: $0.32.

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
June 30 December 31
2006 2005
(Unaudited) (Audited)
-------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 953,434 $ 438,045
Accounts receivable 703,617 982,347
Inventories 189,652 228,158
Prepaid expenses and deposits 68,102 90,761
-------------------------------------------------------------------------

1,914,805 1,739,311

PROPERTY AND EQUIPMENT (NET OF ACCUMULATED
AMORTIZATION) 627,735 679,623
-------------------------------------------------------------------------

$ 2,542,540 $ 2,418,934
-------------------------------------------------------------------------
-------------------------------------------------------------------------

LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 673,863 $ 284,863
Deferred revenue - 229,676
Callable debt 59,384 81,584
Current portion of long-term debt 35,030 33,519
Current portion of royalties payable 156,009 106,508
-------------------------------------------------------------------------

924,286 736,150

DEFERRED ROYALTY REVENUE 435,930 457,000
EMPLOYEE FUTURE BENEFITS OBLIGATION 188,344 159,946
LONG-TERM DEBT 418,830 436,731
ROYALTIES PAYABLE 153,789 167,770
-------------------------------------------------------------------------

2,121,179 1,957,597
-------------------------------------------------------------------------

SHAREHOLDERS' EQUITY

SHARE CAPITAL 2,421,524 2,414,830
CONTRIBUTED SURPLUS 114,932 106,888
DEFICIT (2,115,095) (2,060,381)
-------------------------------------------------------------------------

421,361 461,337
-------------------------------------------------------------------------

$ 2,542,540 $ 2,418,934
-------------------------------------------------------------------------
-------------------------------------------------------------------------



CEAPRO INC.
Consolidated Statements of Net (Loss) Income and Deficit
Unaudited

Six Months Ended June 30 Quarters Ended June 30
2006 2005 2006 2005
----------------------------------------------- -------------------------
Revenue
Sales $ 1,844,242 $ 1,420,323 $ 945,043 $ 1,031,795
Cost of goods sold 768,800 640,152 331,687 415,849
----------------------------------------------- -------------------------

Gross margin 1,075,442 780,171 613,356 615,946
Royalties, licenses,
and product
development fees - 80,000 - -
----------------------------------------------- -------------------------

1,075,442 860,171 613,356 615,946
----------------------------------------------- -------------------------

Expenses
General and
administration 512,386 522,166 276,645 319,575
Royalties (net) 178,840 177,122 89,287 125,200
Sales and marketing 154,282 119,586 84,066 67,910
Amortization 71,962 78,820 36,231 39,925
Interest on long-term
debt 20,576 18,254 10,197 10,897
Interest on callable
debt and other 3,932 6,619 2,399 2,813
----------------------------------------------- -------------------------

941,978 922,567 498,825 566,320
----------------------------------------------- -------------------------

Income (loss) from
operations 133,464 (62,396) 114,531 49,626
----------------------------------------------- -------------------------

Other income (expenses)
Research and product
development (148,734) (227,226) (77,377) (183,026)
Other income
(expenses) (39,444) 234,639 (40,582) 234,881
----------------------------------------------- -------------------------

(188,178) 7,413 (117,959) 51,855
----------------------------------------------- -------------------------

Income (Loss) before
income taxes (54,714) (54,983) (3,428) 101,481

Income Taxes
Current 84,000 76,000 61,000 102,000
Reduction as a result
of applying non-capital
losses carried forward
against the current
period's taxable
income (84,000) (76,000) (61,000) (102,000)
----------------------------------------------- -------------------------

NET (LOSS) INCOME FOR
THE PERIOD (54,714) (54,983) (3,428) 101,481

Deficit, beginning
of period (2,060,381) (2,003,374) (2,111,667) (2,159,838)
----------------------------------------------- -------------------------

Deficit, end
of period $(2,115,095) $(2,058,357) $(2,115,095) $(2,058,357)
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------

Net (loss) income
per share:
Basic $ (0.00) $ (0.00) $ (0.00) $ 0.00
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------
Diluted $ (0.00) $ (0.00) $ (0.00) $ 0.00
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------



CEAPRO INC.
Consolidated Statements of Cash Flows
Unaudited

Six Months Ended June 30 Quarters Ended June 30
2006 2005 2006 2005
----------------------------------------------- -------------------------
Operating Activities
Net (loss) income
for the period $ (54,714) $ (54,983) $ (3,428) $ 101,481
Items not affecting
cash
Amortization 71,962 78,820 36,231 39,925
Employee future
benefits obligation 28,398 6,000 15,498 3,000
Recognition of
deferred royalty
revenue (21,070) - (10,797) -
Stock based
compensation 9,113 1,798 4,557 572
----------------------------------------------- -------------------------

33,689 31,635 42,061 144,978

Changes in Non-Cash
Working Capital Items
Accounts receivable 278,730 (246,531) 168,594 (79,078)
Inventories 38,506 75,000 (6,074) 42,728
Prepaid expenses
and deposits 22,659 14,467 (2,449) 9,338
Accounts payable and
accrued liabilities 389,000 (28,819) 201,113 (152,170)
Deferred revenue (229,676) (80,000) (114,644) -
----------------------------------------------- -------------------------

532,908 (234,248) 288,601 (34,204)
----------------------------------------------- -------------------------

Investing Activities
Purchase of property
and equipment (20,074) (62,804) (9,626) (14,483)
Restricted cash for
the purchase of
property and equipment - 49,880 - 11,252
----------------------------------------------- -------------------------

(20,074) (12,924) (9,626) (3,231)
----------------------------------------------- -------------------------

Financing Activities
Repayment of long-term
debt (16,390) (12,551) (8,284) (7,586)
Repayment of callable
debt (22,200) (19,766) (11,206) (9,976)
Repayment of convertible
debenture - (20,000) - (20,000)
Proceeds from issuance
of share capital - 204,800 - -
Proceeds from exercise of
stock options 5,625 9,500 - -
Increase (decrease) in
royalties payable 35,520 99,239 (64,307) 47,318
----------------------------------------------- -------------------------

2,555 261,222 (83,797) 9,756
----------------------------------------------- -------------------------

Increase (decrease)
in cash 515,389 14,050 195,178 (27,679)
Cash at beginning of
period 438,045 96,266 758,256 137,995
Cash at end of period $ 953,434 $ 110,316 $ 953,434 $ 110,316
----------------------------------------------- -------------------------
----------------------------------------------- -------------------------

Supplementary
information:
Interest paid $ 23,371 $ 28,325 $ 11,460 $ 14,583
Royalties paid $ 164,393 $ 77,883 $ 164,393 $ 77,883


Contact Information

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