BioExx Specialty Proteins Ltd. Announces Q1 2010 Results

TORONTO, ONTARIO--(Marketwire - May 13, 2010) - BioExx Specialty Proteins Ltd. (TSX: BXI) announced today its financial results for the quarter ended March 31, 2010. Complete financial statements and Management's Discussion and Analysis have been filed for public review at www.sedar.com.

Summary of Q1 Events

--  Continued progress toward isolate plant completion in Saskatoon
--  Further positive results in protein production pilot runs
--  Expanding success in pre-market customer engagements for protein
products
--  Successful plant operations, including strong results from capacity test
programs
--  Continued weakness in canola crush margins but relative strength in
protein markets

"Due to the recent deferment in planned start date of the Saskatoon protein plant expansion, the project is now being tracked in a substantially more quantified manner on a daily basis. That tracking suggests that all expected timelines are being met up to the current date and all remaining third party deliverables have been indicated in timeframes that will allow the project to be completed as recently announced. Despite the improved tracking, the Company acknowledges that no schedule guarantee can be made prior to actual start-up. Ongoing pilot production continues to result in improving product quality and greater familiarity with key operating variables that will be useful during start-up," said Chris Carl, BioExx CEO.

Financial Results

Revenues

During the quarter, the Company generated $1,695,668 of revenue from canola oil and canola meal sales at its Saskatoon plant, up 22% versus revenue of $1,384,862 in the prior quarter.

Oil and meal pricing in the quarter remained relatively weak due to on-going exogenous market factors. Meal markets were impacted by lingering export troubles due to US restrictions on Canadian canola meal as a result of salmonella concerns at a number of Canadian canola processing plants (no such problems have been found at the BioExx plant). Oil markets were weakened by the expiry, without extension, of the US tax credit for bio-diesel producers, which caused buyers to withdraw from the market pending a resolution of the issue and better visibility into their production economics, thus eroding price support and allowing food-grade canola oil pricing to drift lower. On a positive note, some improvement in the pricing of both commodities, oil and meal, has been noted in early second quarter, and the Company is hopeful that these markets will regain some strength over the balance of the year.

General plant operating performance in Q1 was strong, although March results were significantly impacted by days off-line, for equipment installations and for process testing and refinement, as the Company prepared for its pending commissioning and start-up of protein production operations.

While the Saskatoon plant was designed and engineered for a Phase 1 pressing capacity of 40,000 Mt per year, or approximately 125 Mt/day, at maximum 70% oil yield, the Company is pleased to note that the process testing completed in March demonstrated an ability to actually run the press operations at full capacity with 85% oil yield, which is beyond the plant's original design parameters and is a very significant achievement. This is particularly so in light of the fact that these results were achieved without a material compromise in the protein quality of the resulting press cake (or meal), due to the Company's unique methods of controlling temperatures during pressing. This will be important through the start-up and ramp-up of protein production operations, providing both comfort and operating flexibility through those phases.

Cost of Goods Sold

Cost of Goods Sold for the quarter was $1,965,181, compared to $1,777,703 during the prior quarter, with the increase accruing to higher processing volumes. Notably, on a per metric ton basis, Cost of Goods Sold was down to $423 from $457 during the prior quarter.

Cost of Goods Sold consists primarily of canola seed which is purchased by BioExx for processing, and also includes direct labour and direct utilities. Average seed prices during the two quarters were approximately flat. Direct labour and utilities, were generally stable as well, in aggregate, but declined on a per tonne basis as processing volumes grew, resulting in a reduction of per metric ton Cost of Goods Sold.

Gross Margin

Gross Margin for the quarter was negative $269,513, compared with negative $392,841 for the prior quarter, with the improvement flowing from the changes in Revenue and Cost of Goods Sold as discussed above.

Other plant expenses during the quarter, which includes items such as maintenance expenses, QA/QC expenses, production supervision, plant supplies, and miscellaneous other plant expenses, was $397,376, versus the prior quarter at $306,424. Plant labour costs overall are impacted by the retention of a higher number of staff than would be required if the plant was to remain a pure crushing operation, in order to ensure readiness for protein production operations. Maintenance and QA/QC expenses were higher in the quarter, as a result of the Phase 1 pressing work programs discussed earlier.

Together with amortization of plant and equipment of $167,485, this results in a negative Plant Margin of $834,374, versus a negative Plant Margin of $833,042 in the prior quarter. As the Company has discussed in prior quarters, the operation of a very small 40,000 metric ton crush-only plant is economically challenging in any environment, let alone one which has been characterized by weak crush margins. Thus, until the introduction of protein production, plant operations are best viewed not on a stand-alone basis but rather as a stepping stone towards protein.

Administrative and General Expenses

The Corporation incurred administrative and general expenses during the quarter of $3,307,332, compared to $1,867,319 in the prior quarter. The increases in expenditures reflect the ramp up of efforts in all areas of operations, including research and development, market and customer engagement, plant construction and operations, and public company administration.

Research and development spending was notably higher in the quarter, at $846,241 versus $351,499 in the prior quarter, reflective primarily of the significant costs associated with protein pilot production runs, which are required in order to provide greater experience to assist in the pending commercial protein production ramp-up and also to produce and provide product samples for testing protocols and for evaluation by potential customers. With these activities tapering leading into commercial production, the Company expects this area to revert closer to its historical mean of $75,000 to $100,000 per month.

As a non-cash item, stock based compensation also increased on a quarter over quarter basis, from $424,496 to $1,399,984, driven primarily by annual stock option issuances to staff in January.

Office and general expenses for the quarter increased to $854,228 from $691,941 in the prior quarter, with the main driver being the $158,525 paid as an initial listing fee on the Company's graduation to the Toronto Stock Exchange (TSX) in January 2010.

The sum of the three above items actually exceeds the quarter-over-quarter Administrative & General spending increase, suggestive that other category spending was in fact lower on the quarter.

Net Loss

The Net Loss for the quarter was $4,112,197, compared to $2,662,735 for the prior quarter. This increase in net loss is of course the cumulative result of the various items discussed above. On a per share basis then, the Net Loss is $0.03 for the quarter, versus $0.02 in the prior quarter.

About BioExx Specialty Proteins Ltd.

Headquartered in Toronto, Canada, BioExx is a leading technology and industrial processing company focused on the extraction of oil and high-value proteins from oilseeds for the global food, beverage, and nutrition markets. BioExx uses patented and patent-pending technology that utilizes significantly lower temperatures than conventional methods for extracting the final quantities of oil necessary to enable its simplified and patent- pending methods for separating proteins from oilseeds. Relative to other commercial processes, the low temperature BioExx process results in comparatively low energy requirements, environmentally sound extraction and protein separation processes, and very high human food yield that cumulatively have the potential to make a highly valuable contribution to global food and protein supply while maintaining an excellent environmentally sustainable footprint. BioExx operates a commercial scale extraction facility in Saskatoon, Saskatchewan, is in development stages on it second plant in Minot, North Dakota and has a mission to construct additional and larger processing facilities on a global basis.

To find out more about BioExx Specialty Proteins Ltd. (TSX: BXI), please visit www.bioexx.com.

The statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in its target markets, the demand for BioExx's products, the availability of funding, the efficacy of its technology, and the anticipated costs of BioExx's plant construction and operation. These forward-looking statements are made as of the date hereof and BioExx does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from BioExx's expectations and projections.