BioExx Announces Q2 2009 Results

TORONTO, ONTARIO, Aug 27 (MARKET WIRE) --
Bio-Extraction Inc. (TSX VENTURE: BXI) ("BioExx" or "the Company")
announced today its financial results for the three and six month periods
ended June 30, 2009. Complete financial statements and Management's
Discussion and Analysis have been filed for public review at
www.sedar.com.

Highlights:

- confirmation of the development of high-value canola protein isolates

- significant acceleration of protein isolate business plan
implementation

- initial protein isolate customer product trials

- continued progress towards required food safety certifications (GRAS,
HACCP)

- successful early warrant exercise program to fund protein isolate capex

- commencement and ramp-up of Phase 1 commercial operations in Saskatoon

- completion of preliminary work for a plant expansion into the United
States

"The second quarter of 2009 was an extremely busy and productive time for
BioExx. As a relatively young company with limited resources, we continue
to drive forward on several parallel initiatives. We not only commenced
operations and generated revenue for the first time, but we also
significantly advanced our business plan with respect to protein isolate
production and maintained our expected timing in announcing our second
plant location," said Chris Carl, CEO of BioExx. "The work that has taken
place to achieve these milestones has been dramatic and we continue to be
proud of our growing team of leaders and doers. There are lots of details
to be attended to before we will reach our goal of selling protein
isolates, but our progress is steady and there is little doubt that we
will be successful in the dramatic advancement of isolate production."

Summary of Q2 Events

Confirmation of Production of Protein Isolates: At the beginning of the
quarter, BioExx completed pilot-scale production of its first protein
isolates. The high quality of these isolates was confirmed through third
party testing, including independent laboratories and customer testing.
As a manifestation of intellectual property embodied in a May 2008 patent
filing, the BioExx proteins profiled with outstanding nutritional and
functional properties which are suggestive of a long-term position at the
high end of the protein market. The Company has always maintained that
isolate markets are its ultimate commercial goal, and accordingly this
was considered a watershed moment in the evolution of BioExx.

Acceleration of Protein Isolate Production Plans: During the quarter,
BioExx announced its intention to accelerate the production of protein
isolates at the Saskatoon plant to as early as late 2009, from a prior
target of early 2011. This advancement was enabled by on-going progress
in product development, engineering design, regulatory requirements, and
customer acceptance testing. The process modifications embedded in the
isolate system involve the consolidation of what were previously two
distinct implementation phases (Phase 2 Extraction and Phase 3 Proteins)
into a single implementation phase. Accordingly, operating the Phase 1
Crushing operations on a stand-alone basis is extended by a few months.
This effectively defers some of the expected economic enhancement to
plant operations that would result from the Phase 2 Extraction
implementation, and lengthens the marginally economic interim crush-only
Phase 1. However, the net shareholder value gains and risk mitigation
benefits embedded in the isolate production acceleration should
materially outweigh any negative impact. The acceleration of the BioExx
plan for entry into high-value protein isolate markets should be viewed
as a seminal event in the Company's development, and most certainly the
defining event of the second quarter of 2009.

Successful Early Warrant Exercise Program: In order to fund the increased
and earlier capital expenditures associated with protein isolate
production, BioExx reached out to its warrant holders to request the
early exercise of in-the-money share purchase warrants which were not due
to expire until January 29, 2010. The response to this request and the
support of the warrant holders was tremendous. From the date of the
announcement of the acceleration plan through to mid-August, BioExx has
received approximately $6.3 million of proceeds from early warrant
exercises. Assuming a reasonable continued flow of exercises through
expiry, and together with other potential non-dilutive funding sources,
BioExx is reasonably well positioned financially going into the final
stages of construction of its protein isolate plant. As always however,
the Company will continue to watch for appropriate ways to keep its cash
position strong, and will have greater visibility into the matter as it
gets closer to protein start-up.

Second Plant and Expansion Into the United States: Successful
pre-development efforts during the quarter led to BioExx announcing plans
for its second canola processing and protein production facility, to be
located in Minot (pronounced "my-not"), North Dakota. Through the balance
of 2009, BioExx will engage in further project development activities,
including environmental permitting, site analysis, building design, and
supplier and customer contracting. This would facilitate completion of
project financing and commencement of construction in late spring 2010.
The 80,000 metric tonne per year facility would then be scheduled for
completion and start-up in 2011.

Commencement of Commercial Operations at Saskatoon Plant: The second
quarter was also notable for the commencement and ramp-up of Phase 1 seed
crushing operations at the Saskatoon plant. These operations faced many
of the customary and expected plant start-up challenges, but continued to
show improved metrics during the quarter, across the key variables of
quality, yield, and throughput.

BioExx meal values progressed from below market at start-up to earning a
consistent premium over market later in the quarter, reflective of good
quality. BioExx oil also gained ground on quality measures during the
quarter. The most dramatic gains came however just after quarter-end with
the installation of an additional piece of key equipment, the delivery of
which had been delayed, resulting in oil now meeting de-gummed
specification and on a path to meeting the end target a of super
de-gummed quality. Yields also improved each month during the quarter and
are tracking towards Phase 1 yield targets.

It is notable that BioExx has achieved substantially higher oil yields
from its pressing operation than was originally designed for the press.
This has been driven by a desire to maximize yield and press oil
production during interim crush-only operations. However, the higher oil
yields will limit throughput to about 60% of final design capacity,
although this will be negated once extraction operations commence later
in the year. At that time press oil yields will be significantly and
intentionally reduced and throughput capacity will be increased to 100%
of original design. In strong crush margin periods, Phase 1 would have an
ability to operate on a break-even cash basis within the parameters
described above. While the current crush margin environment is weak,
management is of the view that there remains room for improvement in its
crush operations and that any losses incurred during this period are
minimal compared to the ultimate operating performance anticipated upon
the introduction of extraction and protein production.

Commodity Market Dynamics: Crush margins were healthy at the beginning of
Q2 relative to historical averages, and spending most of the quarter in
the C$120 - C$140 range. However, a number of factors subsequent to
quarter-end conspired to create significant crush margin weakness with
most of July and August in the C$80 - C$100 range. On the revenue side,
general weakness in the influential energy markets and soy complex have
pressured canola oil and meal prices lower, while on the cost side,
canola seed prices were buoyed by supply stocks moving to the end of the
crop year and also by concerns about the possible negative effect of
prairie weather on the 2009 harvest.

It is also important to understand that, while board crush margins (which
are derived from CBOT soy numbers) are a good proxy for general economic
trends within the oilseed processing industry, they are not a perfectly
correlated indicator of individual local or regional plant profitability.
One example of this has been the particular weakness of late in Canadian
canola meal markets, which has likely caused actual processing margins to
be even lower than those suggested by board margins. Notably of course,
at other times and under other circumstances, this divergence may work in
favour of actual regional processing margins. An understanding of this
point is important, and it also speaks to the stability and risk
management gains embedded in the Company's strategy to geographically
diversify its processing base.

Patents and Intellectual Property: BioExx continues to expand its family
of patents-pending with the addition of one more US patent application in
the quarter related to specialized solvent recovery. BioExx also confirms
that it has completed extensive legal and scientific review of all
published canola extraction and canola protein process and product
patents, pending and issued, and remains confident about the uniqueness
of the products and processes that it has developed.

Financial Results (excerpted from MD&A)

Revenue

During the quarter, the Corporation earned $1,152,492 of revenue from
canola oil and canola meal sales at its Saskatoon plant. This was the
first quarter of commercial operations at the plant and while revenues
consistently improved on a month-over-month basis for each month during
the quarter, the total revenues are still reflective of the initial
ramp-up stages of crush-only plant operations. Revenues are driven by
product quality, oil yields, throughput, and commodity market prices.
Each of these measures also improved on a month-over-month basis for each
month during the quarter, with the exception of commodity market prices
which fluctuated throughout the quarter and which are an uncontrollable
variable. Notably, the plant was down for the last ten days of the
quarter, on a scheduled basis, for the installation of a key process
equipment item which had the effect of causing revenue to be lower than
it would otherwise have been. As this was the first commercial operating
quarter at the plant, there are no comparable prior periods to provide a
basis for analysis versus historical results. Cost of Goods Sold

Cost of Goods Sold includes canola seed, direct labour and utilities.
These components were generally in line with expectations during the
quarter. However, given that product quality and oil yields had not
reached plan goals during this ramp-up quarter, sufficient revenue was
not generated to cover the Cost of Goods Sold, resulting in a negative
Gross Margin of $434,310.

Plant Margin

Other Plant Expenses includes items such as maintenance expenses, QA/QC
expenses, production supervision, plant supplies, and miscellaneous other
plant expenses. This item increased month-over-month during the quarter,
reflecting the ramp-up of plant activities and also reflecting one-time
departmental setup and programmatic costs in maintenance and QA/QC. For
the 2nd quarter, Other Plant Expenses was $282,255. Together with a
non-cash Amortization of Plant and Plant Equipment of $280,653, this
resulted in a negative total Plant Margin of $997,218 for the Quarter.

Administrative and General Expenses

The Company incurred Administrative and General Expenses of $1,360,558,
versus $1,064,090 in the prior quarter and $877,399 in the comparable
prior year period. The increase reflects increased activity levels across
the Company, as well as the inclusion of administrative expenses related
to the plant. Research and development expense was $352,597 versus
$144,119 in the prior quarter and $210,230 in the comparable prior year
period, being higher than the long term average and reflective of a
greater intensity of program efforts towards the development and
commercialization of the Company's protein products. Sales and marketing
expense was $137,425 versus $61,354 in the prior quarter and $66,209 in
the 2nd quarter of 2008, reflecting increased resource allocations
towards customer-focused activities as the Company is now in commercial
operations, and also reflecting higher travel-related investor relations
expenditures.

Net Loss

The Net Loss for the quarter was $2,347,257, compared to $1,054,823 in
the prior quarter and $796,126 in the 2nd quarter of 2008. The increase
flows from the operating losses at the plant in the quarter, together
with increased Administrative and General Expenses as discussed above. On
a per share basis, the Net Loss is $0.02 for the quarter, versus $0.01 in
the comparable periods.

Working Capital and Liquidity

As at June 30, 2009, current assets were $6,477,178, including cash of
$4,585,643. Against current liabilities of $1,167,645, this results in
net working capital of $5,309,533 (exclusive of availability of
additional funds under the Corporation's various credit facilities). This
compares to current assets of $3,895,293 and net working capital of
$1,594,700 at March 31, 2009.

Cash Flows

BioExx Cash Flow Used In Operating Activities during the quarter was
($2,005,829), compared to ($993,369) in the prior quarter and ($476,936)
in the comparable prior year period, reflective primarily of the net
losses discussed above as well as the increase in accounts receivable
resulting from this quarter being the first quarter of commercial product
sales.

BioExx Cash Flow From Financing Activities during the quarter was
$7,500,691, comprised of $663,197 in drawdown of credit facilities,
$1,999,990 from the exercise of options and warrants, and $4,840,315 from
an equity private placement, net of issue costs, completed in the
quarter. This compares to $2,957,499, driven by a $2,893,346 drawdown of
credit facilities, in the prior quarter, and $3,298,993 in the 2nd
quarter of 2008 resulting primarily from the amount received on
completion of a private placement in that quarter.

BioExx Cash Flow Used In Investing Activities during the quarter was
($2,671,801). This results from ($3,082,745) of Property, Plant &
Equipment and equipment deposits, reflecting the continued capital
expenditure program at the Saskatoon plant, net of a $410,944 reduction
in restricted cash due to construction lien holdback releases. This
compares to ($4,403,847) in the prior quarter, comprised of ($2,871,515)
for Property, Plant & Equipment and equipment deposits and ($1,478,725)
of restricted cash allocations for construction lien holdbacks and a
Letter of Credit Facility.

About Bio-Extraction Inc.

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 market. BioExx's
patented technology allows for the use of significantly lower
temperatures than conventional methods in extracting the active
ingredients and oils from oilseeds, resulting in higher yields and
higher-quality meal, oils and proteins. BioExx's low energy requirements,
environmentally sound process, and high-yield production have the
potential to make a valuable contribution in alleviating food scarcity.
BioExx operates a commercial scale extraction facility in Saskatoon,
Saskatchewan, and has a mission to construct additional and larger
processing facilities on a global basis. To find out more about
Bio-Extraction Inc. (TSX VENTURE: 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."

Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of
this release.

Contacts:
Bio-Extraction Inc.
Chris Schnarr
Chief Financial Officer
(416) 588-4442 x111
cschnarr@bioexx.com

Investor Relations
Brisco Capital Partners
Scott Koyich
President
(403) 262-9888
scott@briscocapital.com

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