ENGINEERING.com Incorporated

ENGINEERING.com Incorporated

March 14, 2005 14:35 ET

ENGINEERING.com Incorporated Announces Fourth Quarter & Fiscal 2004 Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: ENGINEERING.COM INCORPORATED

TSX VENTURE SYMBOL: EGN

MARCH 14, 2005 - 14:35 ET

ENGINEERING.com Incorporated Announces Fourth Quarter
& Fiscal 2004 Results

TORONTO, ONTARIO--(CCNMatthews - March 14, 2005) - ENGINEERING.com
Incorporated (TSX VENTURE:EGN) ("the Company"), developers and owners of
the ENGINEERING.com online resource and business for engineers, today
announced its financial results for the quarter and year ended December
31, 2004.

ENGINEERING.com revenue from continuing operations was $373,984 for the
three months ended December 31, 2004 and $1,615,013 for the twelve
months of 2004, compared to revenue of $656,841 for the fourth quarter
of 2003 and $4,419,206 for the year 2003. The primary factor
contributing to this decrease is that by the end of 2003, the Company
ceased the sale of software from its two primary software authors,
Parametric Technology Corporation and Autodesk Inc. The Company's
internal sales and service team now focuses primarily on the sale of
ENGINEERING.com's hosted solution named Collaboration Suite, and on the
sale of CATIA from Dassault Systemes.

"We continued to develop our business in 2004 to bring future value to
our shareholders," said John Hayes, President and CFO of
ENGINEERING.com. "While the results of these developments are not yet
apparent in the historic financial results, we are confident that future
reporting periods will demonstrate the value that engineers and
engineering educators are finding in the solutions that we have
introduced."

The gross profit margin from continuing operations for the year ended
December 31, 2004 was 80.6%, compared to 55.8% for 2003. During 2004,
the majority of revenues (77.6%) came from high margin Web development
and marketing services while in 2003 these services amounted to 29.7% of
revenues.

Amortization expense relating to capital assets amounted to $1,060,508
for the year ended December 31, 2004, compared to $1,419,325 for the
previous year. This expense includes $837,870 (2003 - $1,078,119)
relating to the Web site asset, which is being amortized over a
three-year period and was fully amortized by November 2004.

Operating expenses declined by 37% in 2004 from $3,107,359 in 2003 to
$1,942,125 in fiscal 2004. These operating expense reductions closely
tracked the reductions in gross profit associated with the lower
revenues in 2004, such that the operating results of the Company were
similar overall to the prior year. The operating loss (EBITDA) for the
quarter ended December 31, 2004, measured as earnings before interest,
taxes, depreciation and amortization, totaled ($112,208), compared with
a loss of ($151,448) for the previous quarter ended September 30, 2004
and ($640,204) for the fiscal year 2004 (2003 - loss of $641,408).

The Company recorded a loss from continuing operations for the quarter
ended December 31, 2004, of ($253,548), compared with a loss of
($470,006) for the previous quarter. Loss from continuing operations for
the year was ($1,756,726). This is compared with a loss of ($2,152,451)
for all of 2003. Net loss for the year was ($1,802,873) and ($2,276,376)
for 2003. Net loss for the quarter ended December 31, 2004, was ($0.01)
per Common Share (basic and diluted), and ($0.07) per share for fiscal
2004, compared with a net loss of ($0.12) per Common Share (basic and
diluted) for fiscal 2003.

As at December 31, 2004, the Company had working capital of $486,143
(December 31, 2003 - $783,478). The Company had cash on hand in its
continuing operations at December 31, 2004 of $231,222, compared to a
cash balance of $626,480 as at December 31, 2003. The Company does not
expect that the cash on hand at December 31, 2004 will be adequate to
fund future growth objectives or acquisitions and the Company may seek
to raise additional operating funds.

About ENGINEERING.com Incorporated

ENGINEERING.com (TSX VENTURE: EGN) is the developer and owner of the
"www.engineering.com" Web site and Internet-based business, being
developed to become the ultimate resource tool for the global
engineering community. ENGINEERING.com offers hosted and deployed
engineering software and services to manufacturers, design consultants
and engineering students around the world. The ENGINEERING.com
Incorporated head office is located in Mississauga, Ontario, Canada and
can be reached toll-free at 1- (877) 997-9917, by facsimile at (905)
273-6691 or through the Internet at www.ENGINEERING.com.

EBITDA

EBITDA is defined by the Company as operating income before interest
expense, income taxes, depreciation and amortization, stock-based
compensation and asset writedowns. The Company has included information
concerning EBITDA because it believes that it is used by certain
investors as one measure of the Company's financial performance. EBITDA
is not a measure of financial performance under Canadian generally
accepted accounting principles and is not necessarily comparable to
similarly titled measures used by other companies. EBITDA should not be
construed as an alternative to operating income or to cash flows from
operating activities (as determined in accordance with Canadian
generally accepted accounting principles) as a measure of liquidity.

Forward Looking Statements

This press release may contain forward-looking statements based on
management's current projections, beliefs and opinions at the date of
this press release. Actual results could differ materially from those
anticipated in these statements. ENGINEERING.com Incorporated undertakes
no responsibility to update forward-looking statements if circumstances
or management's projections, beliefs or opinions change.

The contents of this News Release have been reviewed and approved by the
Audit Committee and the Board of Directors.



ENGINEERING.com Incorporated
Consolidated Balance Sheets
(Cdn. $)

As at Dec 31, As at Dec 31,
2004 2003
---------------------------------------------------------------------
ASSETS
Current Assets
Cash 231,222 626,480
Accounts receivable 115,327 427,292
Taxes recoverable -- 85,357
Prepaid expenses and deposits 63,975 70,288
Due from related parties 153,648 1,021,069
Note receivable - short-term 308,712 --
Current assets of discontinued
operations -- 1,602,650
---------------------------------------------------------------------
Total Current Assets 872,884 3,833,136
---------------------------------------------------------------------
Note receivable - long-term 296,362 --
Capital assets, net 163,494 1,207,824
Intangible assets, net 308,847 308,847
---------------------------------------------------------------------
TOTAL ASSETS 1,641,587 5,349,807
---------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Current Liabilities
Accounts payable & accrued liabilities 375,486 373,132
Due to related parties -- 411,705
Deferred revenue 11,255 190,171
Related party note payable - short-term -- 472,000
Current liabilities of discontinued
operations -- 1,392,313
---------------------------------------------------------------------
Total Current Liabilities 386,741 2,839,321
---------------------------------------------------------------------
Long-term Liabilities
Related party note payable - long-term -- 472,000
---------------------------------------------------------------------
TOTAL LIABILITIES 386,741 3,311,321
---------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Share capital 14,455,463 13,492,244
Contributed surplus 126,255 --
Deficit (13,326,872) (11,453,758)
---------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 1,254,846 2,038,486
---------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 1,641,587 5,349,807
---------------------------------------------------------------------
---------------------------------------------------------------------

ENGINEERING.com Incorporated
Consolidated Statedments of Income
(CDN. $)

Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2004 2003 2004 2003
---------------------------------------------------------------------

Revenue 373,984 656,841 1,615,013 4,419,206
Cost of sales 73,671 51,986 313,092 1,953,255
---------------------------------------------------------------------
GROSS PROFIT 300,313 604,855 1,301,921 2,465,951
---------------------------------------------------------------------
Expenses
Salaries & benefits 209,596 382,387 940,293 1,679,932
Management fees 11,693 33,308 74,290 185,062
Marketing expenses 1,812 1,935 13,919 102,435
Development costs 60,566 100,461 324,742 451,977
General & administrative 128,854 29,519 588,881 687,953
---------------------------------------------------------------------
412,521 547,610 1,942,125 3,107,359
---------------------------------------------------------------------

Loss before undernoted
items: (112,208) 57,245 (640,204) (641,408)

Stock based
compensation (20,740) -- (56,014) --
Depreciation expense (120,636) (430,925) (1,060,508) (1,419,325)
Writedown of intangible
assets -- (91,718) -- (91,718)
---------------------------------------------------------------------
(141,376) (522,643) (1,116,522) (1,511,043)
---------------------------------------------------------------------
Loss from continuing
operations (253,584) (465,398) (1,756,726) (2,152,451)
---------------------------------------------------------------------
Net income (loss)
from discontinued
operations -- (33,217) 93,853 (123,925)
Loss on sale of
discontinued operations -- -- (140,000) --
---------------------------------------------------------------------
Net loss (253,584) (498,615) (1,802,873) (2,276,376)
---------------------------------------------------------------------
Loss per share-
Continuing operations (0.01) (0.02) (0.07) (0.11)
Loss per share-
Discontinued operations (0.00) (0.00) (0.00) (0.01)
Loss per share- Total (0.01) (0.02) (0.07) (0.12)
---------------------------------------------------------------------
Weighted average number
of common shares
(basic and diluted) 27,810,136 21,933,207 25,594,532 19,554,027
---------------------------------------------------------------------

---------------------------------------------------------------------
Consolidated Statements
of Deficit
---------------------------------------------------------------------
Deficit, beginning
of period (13,073,288)(10,955,143)(11,453,758) (9,177,382)
Adjustment for
change in accounting
for stock based
compensation -- -- (70,241) --
---------------------------------------------------------------------
Adjusted Deficit (13,073,288)(10,955,143)(11,523,999) (9,177,382)
Net Loss (253,584) (498,615) (1,802,873) (2,276,376)
---------------------------------------------------------------------
Deficit,
end of period (13,326,872)(11,453,758)(13,326,872)(11,453,758)
---------------------------------------------------------------------
---------------------------------------------------------------------

ENGINEERING.com Incorporated
Consolidated Cash Flow Statements
(Cdn. $)

Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2004 2003 2004 2003
---------------------------------------------------------------------

OPERATING ACTIVITIES

Net loss from
continuing operations (253,584) (465,398) (1,756,726) (2,152,451)
ADD-Items not affecting
cash
Stock based
compensation 20,740 -- 56,014 --
Depreciation and
amortization 120,636 430,925 1,060,508 1,419,325
Writedown of intangible
Assets -- 91,718 -- 91,718
Changes in operating
assets and liabilities
other than cash (38,508) (187,911) 31,980 327,724
Non-cash compensation -- -- -- 40,000
---------------------------------------------------------------------
CASH USED IN OPERATING
ACTIVITIES (150,716) (130,666) (608,224) (273,684)
---------------------------------------------------------------------

FINANCING ACTIVITIES

Issuance of share
capital -- 868,343 963,219 868,343
Related party note
payable -- (118,000) (944,000) (236,000)
---------------------------------------------------------------------
CASH FROM FINANCING
ACTIVITIES -- 750,343 19,219 632,343
---------------------------------------------------------------------

INVESTING ACTIVITIES

Additions to Capital
Assets -- (27,812) (16,178) (53,922)
Note receivable 61,743 -- 209,925 --
---------------------------------------------------------------------
CASH FROM (USED IN)
INVESTING ACTIVITIES 61,743 (27,812) 193,747 (53,922)
---------------------------------------------------------------------
INCREASE (DECREASE) IN
CASH (88,973) 591,865 (395,258) 304,737
---------------------------------------------------------------------
CASH, beginning of
period 320,195 34,615 626,480 321,743
---------------------------------------------------------------------
CASH, end of period 231,222 626,480 231,222 626,480
---------------------------------------------------------------------
---------------------------------------------------------------------



-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    ENGINEERING.com Incorporated
    John Hayes
    President & CFO
    (905) 273-9991 ext. 280
    jhayes@ENGINEERING.com
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.