ENGINEERING.com Incorporated
TSX VENTURE : EGN

ENGINEERING.com Incorporated

November 14, 2013 16:28 ET

ENGINEERING.com Incorporated Announces Third Quarter 2013 Results and Approves Proposal to Take ENGINEERING.com Incorporated Private at $0.03 Per Share

TORONTO, ONTARIO--(Marketwired - Nov. 14, 2013) - ENGINEERING.com Incorporated (TSX VENTURE:EGN), a digital media company that informs, inspires and engages engineers, today announced its unaudited financial results for the third quarter ended September 30, 2013 and that it has approved, subject to shareholder and regulatory approval, a proposal (the "Proposal") by Frank Baldesarra ("Baldesarra"), a director and the Chief Executive Officer, Secretary and Treasurer of the Corporation, to take ENGINEERING.com private by way of a share consolidation.

Third Quarter 2013 Results

Revenue was $495,031 for the three months ended September 30, 2013 and $1,369,260 for the year-to-date, compared to revenue of $383,485 for the third quarter and $1,437,075 for the first nine months of 2012.

Operating loss (EBITDA) measured as earnings before interest, taxes, amortization and stock-based compensation, was ($7,760) for the third quarter of 2013 and ($33,744) for the year-to-date, compared with an operating loss of ($56,780) for the three month period ended September 30, 2012 and ($67,533) for the first nine months of 2012.

The operating expenses in the latest quarter were $308,756 compared to $263,408 in the third quarter a year earlier and $894,401 for year-to-date, compared to $857,577 for the first nine months of 2012.

The net loss for the three months ended September 30, 2013, totaled ($11,239) and $0.00 per Common Share and ($45,229) and $0.00 per Common Share for the September 30, 2013 year-to-date. These results are compared to a net loss of ($63,634) and $0.00 per Common Share for the third quarter of 2012 and ($90,627) and $0.00 per Common Share for the first nine months of 2012.

As at September 30, 2013, the Company had a cash balance of $223,560 compared to a cash balance of $231,196 as at December 31, 2012.

Going Private Transaction

Under the Proposal, the going private transaction will be accomplished through the consolidation of ENGINEERING.com's issued and outstanding Common Shares. The Proposal contemplates the consolidation of the Common Shares on the basis of one new common share for each 350,000 Common Shares now outstanding (the "Consolidation). Those shareholders who would otherwise have been entitled to receive fractional shares will instead be paid $0.03 in cash per Common Share held by them prior to the consolidation (the "Consolidation Price"), and Baldesarra, together with those shareholders of ENGINEERING.com who held at least 350,000 Common Shares prior to the Consolidation, will be the only shareholders of ENGINEERING.com following the Consolidation.

The Consolidation Price represents a 100% premium to the volume-weighted average closing price of ENGINEERING.com's Common Shares on the TSX Venture Exchange for the 30 trading days ended November 8, 2013, and a 126% premium to the volume-weighted average closing price of ENGINEERING.com's Common Shares on the TSX Venture Exchange for the 52 weeks ended November 8, 2013. The Consolidation is subject to the approval of 2/3 of the Common Shares voted at ENGINEERING.com's upcoming special meeting of shareholders scheduled to occur on December 19, 2013 at 10:00 am at the Company's offices at 5285 Solar Drive in Mississauga (the "Meeting") as well as the approval of a majority of the votes cast by minority shareholders at the Meeting pursuant to the requirements of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions.

Baldesarra, who owns or controls approximately 52.3% of the outstanding Common Shares, and his associates and affiliates, and members of management and the directors of ENGINEERING.com, who collectively own or control 19.4% of the outstanding Common Shares, have advised ENGINEERING.com that they intend to vote all of their Common Shares in favour of the Consolidation.

The board of directors of ENGINEERING.com established an independent special committee to review the Consolidation and the Proposal and engaged Industrial Alliance Securities Inc. to provide a fairness opinion in relation to the Consolidation Price (the "Fairness Opinion"). The special committee recommended to ENGINEERING.com's board of directors that the Consolidation be approved. The Fairness Opinion will be attached to ENGINEERING.com's management information circular for the Meeting, which will be available under ENGINEERING.com's profile at www.sedar.com.

Subject to the approval of the Consolidation at the Meeting and the acceptance of the TSX Venture Exchange, ENGINEERING.com intends to file articles of amendment to effect the Consolidation. Once the Consolidation is completed, ENGINEERING.com intends to apply to have its Common Shares delisted from the TSX Venture Exchange and intends to apply to cease to be a reporting issuer with the applicable securities regulatory authorities.

ENGINEERING.com proposes to complete the going private transaction in order to eliminate the financial burden of continuing as a reporting issuer. ENGINEERING.com believes that the anticipated time, costs and regulatory requirements that are entailed in meeting the legal obligations to public shareholders cannot be justified in view of its present circumstances, including very low trading volumes and a limited number of public shareholders.

About ENGINEERING.com Incorporated

ENGINEERING.com Incorporated (TSX VENTURE:EGN) inspires, informs and entertains a worldwide audience of engineers through the www.ENGINEERING.com web site, mobile and social media channels. ENGINEERING.com offers marketing services to manufacturers, technology inventors and engineering academia. 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, amortization, stock - based compensation, asset dispositions and provision for discontinued operations. The Company has included information concerning EBITDA because it believes that EBITDA is used by certain investors as one measure of the Company's financial performance. EBITDA is not a measure of financial performance under International Financial Reporting Standards 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 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.

The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

STATEMENTS OF FINANCIAL POSITION
Expressed in Canadian Dollars
As at September 30, 2013
(With comparative amounts as at December 31, 2012)
Sep. 2013 Dec. 2012
ASSETS
CURRENT ASSETS
Cash $ 223,560 $ 231,196
Accounts receivable 218,513 248,662
Prepaids expenses and deposits 31,488 24,529
TOTAL CURRENT ASSETS 473,561 504,387
NON-CURRENT ASSETS
Property and equipment 8,476 10,334
Intangible assets 333,940 331,522
TOTAL NON-CURRENT ASSETS 342,416 341,856
TOTAL ASSETS $ 815,977 $ 846,243
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable & accrued liabilities $ 436,887 $ 429,433
Deferred revenue 207,678 207,179
TOTAL LIABILITIES 644,565 636,612
SHAREHOLDER'S EQUITY
Share capital 15,450,966 15,450,966
Contributed surplus 524,844 517,834
Deficit (15,804,398 ) (15,759,169 )
TOTAL SHAREHOLDERS EQUITY 171,412 209,631
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 815,977 $ 846,243
NOTICE: The Company's auditors have not audited or reviewed these financial statements.
STATEMENTS OF CHANGE IN SHAREHOLDERS' EQUITY
Expressed in Canadian Dollars
For the period ended September 30, 2013
(With comparative balances for the period ended September 30, 2012)
Number
of
Common
Shares
Share
Capital
Contributed
Surplus
Deficit Total
At December 31, 2011 43,870,623 $ 15,450,966 $ 497,899 $ (15,602,800 ) $ 346,065
Net loss for the period (90,627 ) (90,627 )
Stock based compensation 16,285 16,285
At September 30, 2012 43,870,623 $ 15,450,966 $ 514,184 $ (15,693,427 ) $ 271,723
At December 31, 2012 43,870,623 $ 15,450,966 $ 517,834 $ (15,759,169 ) $ 209,631
Net loss for the period (45,229 ) (45,229 )
Stock based compensation 7,010 7,010
At September 30, 2013 43,870,623 $ 15,450,966 $ 524,844 $ (15,804,398 ) $ 171,412
NOTICE: The Company's auditors have not audited or reviewed these financial statements.
STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
Expressed in Canadian Dollars
For the period ended September 30, 2013
(With comparative amounts for the period ended September 30, 2012)
Three months ended Nine months ended
2013 2012 2013 2012
REVENUE $ 495,031 $ 383,485 $ 1,369,260 $ 1,437,075
COST OF SALES 194,035 176,857 508,603 647,031
GROSS PROFIT 300,996 206,628 860,657 790,044
OPERATING EXPENSES
Salaries and marketing 118,085 103,850 346,259 338,117
Development and operations 96,372 85,658 279,082 246,402
General and administrative 94,299 73,900 269,060 273,058
TOTAL OPERATING EXPENSES 308,756 263,408 894,401 857,577
INCOME (LOSS) BEFORE UNDERNOTED ITEMS: (7,760 ) (56,780 ) (33,744 ) (67,533 )
Stock based compensation (2,169 ) (4,591 ) (7,010 ) (16,285 )
Amortization expense (1,310 ) (2,263 ) (4,475 ) (6,809 )
NET INCOME (LOSS) & COMPREHENSIVE INCOME $ (11,239 ) $ (63,634 ) (45,229 ) $ (90,627 )
Earnings (Loss) Per Share
Basic $ 0.00 $ 0.00 $ 0.00 $ 0.00
Diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00
Weighted average number of common shares
(Basic and Diluted) 43,870,623 43,870,623 43,870,623 43,870,623
NOTICE: The Company's auditors have not audited or reviewed these financial statements.
STATEMENTS OF CASH FLOWS
Expressed in Canadian Dollars
For the period ended September 30, 2013
(With comparative amounts for the period ended September 30, 2012)
Three months ended Nine months ended
2013 2012 2013 2012
OPERATING ACTIVITIES
Net Income (Loss) $ (11,239 ) $ (63,634 ) $ (45,229 ) $ (90,627 )
Add items not affecting cash
Stock based compensation 2,169 4,591 7,010 16,285
Amortization 1,310 2,263 4,475 6,809
Changes in operating assets and liabilities other than cash (26,220 ) (40,987 ) 31,142 131,432
CASH FLOWS FROM OPERATING ACTIVITIES (33,980 ) (97,767 ) (2,602 ) 63,899
INVESTING ACTIVITIES
Additions to property and equipment (401 ) (1,133 ) (2,616 ) (5,301 )
Additions to intangible assets (2,113 ) (527 ) (2,418 ) (5,595 )
CASH FLOWS FROM INVESTING ACTIVITIES (2,514 ) (1,660 ) (5,034 ) (10,896 )
INCREASE (DECREASE) IN CASH (36,494 ) (99,427 ) (7,636 ) 53,003
CASH, Beginning of period 260,054 411,444 231,196 259,014
CASH, End of period $ 223,560 $ 312,017 $ 223,560 $ 312,017
NOTICE: The Company's auditors have not audited or reviewed these financial statements.

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