Integrated Paving Concepts Inc.: 2006 Second Quarter Financial Results

Integrated Paving Concepts Inc. (TSX: IPA) released today the unaudited financial results for the three and six month periods ending June 30, 2006.

The Company's income before interest, depreciation and income taxes ("EBITDA") for the three months ended June 30, 2006 decreased by 56% to $406,000 over the same 2005 period. On a year to date basis, the loss before interest, depreciation and income taxes increased to $630,000 from $179,000. The term "EBITDA" is not a financial measure recognized by Canadian generally accepted accounting principals ("GAAP") and does not have standardized meanings prescribed by GAAP. Management cautions investors that EBITDA should not replace net income or loss as an indicator of performance, or cash flows from operating, investing and financing activities as a measure of the Company's liquidity and cash flows. Management considers EBITDA to be a useful measure in assessing ongoing performance.

Total revenues for the second quarter were down 21% compared to the second quarter of 2005. On a year to date basis, revenues have declined 16% from the previous year.

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Revenue (in thousands)
For the three months ended June 30
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                                                               Other
                 North America         Europe          International
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                             %                   %                 %
            2006   2005 change   2006  2005 change 2006  2005 change
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Coatings  $1,937 $2,411   (20%)  $609  $408    49% $274  $428   (36%)

DuraTherm    307    540   (43%)    18     3   602%   30    19    55%
Equipment
 & Tooling   366    714   (49%)   156   148     6%   51   103   (51%)
Other        176    219   (20%)    12    18   (35%)   2     -      -
Total     $2,786 $3,884   (28%)  $795  $577    38% $357  $550   (35%)
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Revenue (in thousands)
For the six months ended June 30
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                                                               Other
                 North America         Europe          International
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                             %                   %                 %
            2006   2005 change   2006  2005 change 2006  2005 change
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Coatings  $2,543 $2,928   (13%)  $814  $683    19% $411  $638   (36%)
DuraTherm    499    598   (17%)    18     3   602%   34    19    79%
Equipment
 & Tooling   573  1,032   (45%)   271   244    11%   53   149   (64%)
Other        260    245     7%     12    20   (40%)   3     1   620%
Total     $3,875 $4,803   (19%)$1,115  $950    17% $501  $807   (38%)
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Revenue was impacted by the following:

- The Company is exposed to risk due to fluctuations in the exchange rates of the U.S. dollar and to a lesser extent, the euro. Compared to 2005 exchange rates, there was a negative impact on 2006 revenue for the quarter of $400,000 and for the year of $540,000. Adjusting for the fluctuations in exchange rates, revenues declined 13% and 8% for the quarter and the year to date respectively.

- The decline in coating volumes in North America is predominantly in the northeastern United States which has had a very slow start to the season due to wet weather. Coating volumes in this area were down 48% compared to the prior year. Volumes in all other North American regions were up 5%. Management expects sales in the northeast to recover to last year's levels on a full year basis.

- In North America, DuraTherm square footage is flat compared to the first half of 2005. Sales to the largest DuraTherm customer, representing 31% of DuraTherm volumes in the first half of 2005, are down 44% due primarily to the timing of additional projects. Sales for installations of less than 2,000 square feet (which are typically used for trial and demonstration purposes), representing 26% of volumes in the first half of 2005, are down 56%. Sales for installations larger than 2,000 square feet (which typically involve multiple intersections and are not trials or demonstrations), representing 43% of volumes in the first half of 2005, have increased by 59%. In general, management is pleased by the market acceptance of DuraTherm as evidenced by the shift from trial installations to larger projects. However, year to date growth objectives for the product have not been met as many larger road reconstruction projects are experiencing budget pressures due to escalating costs. Asphalt costs have increased by approximately 50% over the past year due primarily to a near doubling of the price of petroleum-based liquid asphalt, resulting in many projects being delayed, cancelled or reduced in size.

- North American equipment revenue is down 45% through the first half of the year and is generally in line with expectations. The Company continues to be focused on growing its existing base of Licensed Applicators rather than adding new applicators. In addition, the SR-60 Pavement Reheater is now in its fifth year of production and sales of this machine have slowed.

- Total international revenues are in line with expectation after adjusting out the negative impact of foreign exchange fluctuations.

Gross profit margins remained relatively flat to last year at 56.6% for the quarter and 55.5% for the year to date. The small change in gross profit margin compared to the prior year is a function of shifts in geographic and product mix.

Total expenses declined 5.3% for the three months ended June 30, 2006 and 4.1% for the 6 months then ended compared to the previous year. This decline is largely due to the impact of foreign exchange gains in the current year compared to losses in the prior year.

At June 30, 2006, the Company's financial position remains strong with $4.1million (June 30, 2005 - $3.9 million) in working capital and $828,000 (June 30, 2005 - $964,000) in cash and cash equivalents. Included in prepaid expenses is $205,000 of costs incurred related to the proposed privatization of the Company. If the privatization transaction does not proceed, these costs will be expensed.

INTEGRATED PAVING CONCEPTS INC.
Consolidated Balance Sheets

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                                        June 30,         December 31,
                                           2006                 2005
                                     (unaudited)
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Assets
 Current assets:
  Cash and cash equivalents         $   827,850          $ 2,368,072
  Accounts receivable, net of
   allowance for doubtful
   accounts of $150,001
   (2005 - $120,000)                  3,276,038            3,130,613
  Income taxes receivable               523,257              231,536
  Inventory                           1,454,718            1,087,021
  Prepaid expenses and other assets     422,912              195,659
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                                      6,504,775            7,012,901

 Future income tax asset                164,888              164,907

 Property, plant and equipment        1,176,289            1,142,806

 Other assets                           197,881              249,564
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                                    $ 8,043,833          $ 8,570,178
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Liabilities and Shareholders'
 Equity

 Current liabilities:
  Accounts payable and accrued
   liabilities                      $ 2,355,016          $ 2,415,532
  Deferred revenue                            -               67,890
  Current portion of long-term debt      24,000               24,000
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                                      2,379,016            2,507,422


 Long-term debt                         184,000              200,638

 Shareholders' equity:
  Share capital                       4,630,553            4,620,568
  Share purchase loans                 (519,400)            (565,627)
  Stock-based compensation              184,716              174,186
  Retained earnings                   1,184,948            1,632,991
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                                      5,480,817            5,862,118

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                                    $ 8,043,833          $ 8,570,178
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INTEGRATED PAVING CONCEPTS INC.
Consolidated Statements of Operations and Retained Earnings
(unaudited)

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                       Three Months Ended           Six Months Ended
                             June 30                    June 30
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                        2006         2005           2006        2005
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Revenue          $ 3,937,750  $ 5,010,719    $ 5,491,243  $6,559,704

Cost of
 materials and
 supplies          1,709,067    2,158,781      2,446,220   2,888,601
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                   2,228,683    2,851,938      3,045,023   3,671,103

Expenses:
  Salaries,
   wages and
   fees            1,169,468    1,137,658      2,333,947   2,251,719
  Selling,
   office and
   general           688,515      725,017      1,386,553   1,515,138
  Foreign
   exchange
   loss (gain)       (35,123)      73,550        (45,215)     83,393
  Depreciation
   and
   amortization       97,784       92,834        191,253     180,937
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                   1,920,644    2,029,059      3,866,538   4,031,187
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Earnings (loss)
 before undernoted   308,039      822,879       (821,515)   (360,084)

Interest expense        (918)       2,985          1,210       4,906
Interest and
 other income         (8,758)      (4,005)       (38,433)    (10,019)
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Earnings (Loss)
 before income
 taxes               317,715      823,899       (784,292)   (354,971)

Income tax
 expense
 (recovery)          124,761      365,776       (336,249)   (145,452)
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Net earnings
 (loss)              192,954      458,123       (448,043)   (209,519)

Retained
 earnings,
 beginning of
 period              991,994      731,969      1,632,991   1,399,611
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Retained
 earnings,
 end of period   $ 1,184,948  $ 1,190,092    $ 1,184,948  $1,190,092
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Earnings (loss)
 per share,
 basic           $      0.03  $      0.07    $     (0.06) $    (0.03)
Earnings (loss)
 per share,
 diluted         $      0.03  $      0.06    $     (0.06) $    (0.03)
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INTEGRATED PAVING CONCEPTS INC.
Consolidated Statements of Cash Flows (unaudited)


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                       Three Months Ended           Six Months Ended
                             June 30                    June 30
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                        2006         2005           2006        2005
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Cash provided by
 (used in):
Operations:
 Net earnings
  (loss)         $   192,954  $   458,123    $  (448,043) $ (209,519)
 Items not
  affecting cash:
  Depreciation
   and
   amortization       97,784       92,834        191,253     180,937
  Future Income
   Taxes                  19         (811)            19      (1,201)
  Stock based
   compensation       10,258       36,582         20,515      46,463
 Cash provided
  by (used in):
  Accounts
   receivable       (655,203)  (1,944,370)      (145,425) (1,703,548)
  Inventory         (177,718)     (26,575)      (367,697)   (309,117)
  Prepaid expenses
   and other
   assets           (237,721)      58,962      (227,253)      12,801
  Accounts payable
   and accrued
   liabilities       578,189    1,004,447       (60,516)     986,096
  Deferred Revenue    (6,620)     (67,890)                         -
  Income taxes
   receivable/
   payable           249,428      291,267      (291,721)    (590,217)
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                      51,370      (29,541)   (1,396,758)  (1,587,305)

Investments:
 Purchase of
  property, plant
  and equipment,
  net                (88,385)    (141,638)     (173,053)    (218,219)
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Financing:
 Repayment of
  long-term debt      (6,000)      (6,000)      (16,638)     (12,000)
 Repayment of
  share purchase
  loan                     -            -        46,227       46,372
 Issuance of
  share capital            -      204,827             -      212,827
 Loans to officers         -      (86,724)            -      (86,724)
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                      (6,000)     112,103        29,589      160,475
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Increase (decrease)
 in cash during
 the period          (43,015)     (59,076)   (1,540,222)  (1,645,049)

Cash, beginning
 of period           870,865    1,023,211     2,368,072    2,609,184
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Cash, end
 of period       $   827,850  $   964,135    $  827,850  $   964,135
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Cash is defined as cash and cash equivalents

About Integrated Paving Concepts

Integrated Paving Concepts Inc., founded in 1992 and based in BC, Canada, provides innovative decorative paving processes and products. The Company has two basic product lines, StreetPrint Pavement Texturing(TM) (StreetPrint) and DuraTherm(TM), and all revenue is derived from the sales of Applied Products and Equipment & Tooling related to these product lines. The Company's products are marketed through its Licensed Applicator network throughout North America, and Master Licensees in countries throughout the world. The Company is committed to continued product and market development for decorative asphalt applications.

The shares of Integrated Paving Concepts Inc. trade under the symbol IPA on the Toronto Stock Exchange. Information regarding this news release, Integrated Paving Concepts Inc., or its products can be obtained by calling Janice Stasiuk, Chief Financial Officer & Corporate Secretary at (604) 574-7510 ext.227 or email: janice.stasiuk@streetprint.com. Full financial results and management discussion and analysis will be made available at www.sedar.com and on the Company's website at www.integratedpaving.com.

Integrated Paving Concepts Inc.

Janice Stasiuk, Chief Financial Officer & Corporate Secretary

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