MANAGEMENT’S DISCUSSION & ANALYSIS QUARTERLY INFORMATION The following selected financial information is derived from Ceapro’s unaudited quarterly financial statements for each of the last eight quarters, all of which cover periods of three months. All amounts shown are in Canadian currency. Ceapro’s quarterly sales and results primarily fluctuate due to variations in the timing of customer orders, different product mixes, and the capacity to manufacture products. LIQUIDITY AND CAPITAL RESOURCES CAPITAL EMPLOYED Non-current assets decreased by $799,000 due to reclassification of restricted cash and cash equivalent of $709,000 and decreased by $41,000, a depreciation provision of $293,000 offset by the acquisition of $200,000 of property and equipment, and $44,000 for a new license agreement for avenanthramide technology. Current assets increased by $514,000. Inventories were higher by $99,000; accounts receivables and prepaid expenses were higher by $25,000. Cash decreased over 2011 by $319,000 and restricted cash and cash equivalent was reclassified from non-current assets of $709,000. Current liabilities totaling $2,566,000 increased by the net amount of $1,056,000 mostly due to sales orders prepayments increased by $418,000 and restricted cash and cash equivalent received in 2011 under a capital expenditure grant agreement and recorded as deferred revenue, reclassified from non-current liabilities in the amount of $709,000, current portion of long-term debt increase of $14,000, royalty financial liability increased by $21,000, repayable research funding repayments of $52,000, trade payables and accrued liabilities decreased by $46,000, royalty interest accrued of $96,000 and repaid of $104,000. Non-current liabilities totaling $1,306,000 decreased by the net amount of $837,000 due to long-term debt reclassification to current liabilities of $14,000 and repayment of $154,000, repayable research funding repayment of $32,000, royalty financial liability decreased by $80,000 and deferred revenue reclassified to current liabilities in the 18 CEAPRO Annual Report 2012 $000S December 31, 2012 December 31, 2011 Non-current assets 1,508 2,307 Current assets 2,378 1,864 Current liabilities (2,566) (1,510) Total assets less current liabilities 1,320 2,661 Non-current liabilities 1,306 2,143 Shareholders’ equity 14 518 Total capital employed 1,320 2,661 2012 2011 $000S EXCEPT PER SHARE DATA Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Total revenues 1,202 1,283 1,490 1,190 1,552 1,515 1,185 1,534 Net income (loss) (237) (137) (160) (4) 252 (108) 104 330 Basic net income (loss) per common share (0.004) (0.002) (0.003) (0.000) 0.005 (0.002) 0.002 0.006 Diluted net income (loss) per common share (0.004) (0.002) (0.003) (0.000) 0.005 (0.002) 0.002 0.006