ENGINEERING.com Incorporated
TSX VENTURE : EGN

ENGINEERING.com Incorporated

October 30, 2006 16:36 ET

ENGINEERING.com Incorporated Announces Third Quarter Fiscal 2006 Results

Company reports 21% revenue growth

TORONTO, ONTARIO--(CCNMatthews - Oct. 30, 2006) - ENGINEERING.com Incorporated (TSX VENTURE:EGN), developer of the ENGINEERING.com online resource and business for engineers; today announced its financial results for the third quarter of fiscal 2006.

ENGINEERING.com revenue was $578,291 for the three months ended September 30, 2006, up 21% over the revenue of $478,391 for the third quarter of 2005. Revenue for the nine-month period ended September 30 2006 was $1,731,332 up 41% from $1,229,222 in the same period one year ago. Gross profit for the quarter ended September 30, 2006 was $370,547 (2005 - $317,279) and $1,178,541 for the nine months ended September 30, 2006 (2005 - $822,513). The increase in revenues and gross profit is attributed to growth in software sales to the education market, increased sales of the Company's proprietary hosted engineering solutions (Collaboration Suite) and the Company's application development and information technology services to RAND Worldwide.

Operating income (EBITDA) for the quarter ended September 30, 2006, measured as earnings before interest, taxes, amortization and stock-based compensation, totaled $5,211 compared with an EBITDA loss of ($137,479) for the same period one year ago. Net loss for the third quarter of 2006 was ($66,180) or a net loss of ($0.00) per Common Share. This is compared with a net loss of ($206,091) or ($0.01) per Common Share for the third quarter ended September 30, 2005. Total operating expenses decreased year over year with $365,336 in the latest quarter compared to $454,758 for the third quarter a year earlier.

Consistent with the first and second quarter of 2006, the Company's sales and service team focused its efforts in the third quarter on the sale of the company's Collaboration Suite hosted service to commercial customers and CATIA from Dassault Systemes to the education market. Both hosted solutions and education software are sold as annual licenses.

"During the third quarter we increased the number of customers using our hosted solutions and the number of customers in our resale software business," said John Hayes, President of ENGINEERING.com. "Both of these lines of business have recurring revenue streams, which bodes well for future quarters. At the same time, our operating expenses are significantly lower than last year."

As at September 30, 2006, the Company had a cash balance of $180,633 compared to a cash balance of $229,712 as at June 30, 2006.

About ENGINEERING.com Incorporated

ENGINEERING.com Incorporated (TSX VENTURE:EGN) is the developer-owner of the www.ENGINEERING.com Web site and Internet-based software and business. ENGINEERING.com offers hosted and deployed engineering software and services to manufacturers, design consultants and engineering academia 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, 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 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
BALANCE SHEET
(Cdn. $)

(unaudited) (audited)
As at As at
Sept. 30, 2006 Dec. 31, 2005
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$ $
ASSETS
CURRENT ASSETS
Cash 180,633 179,347
Accounts receivable 192,561 148,041
Prepaid expenses and deposits 71,121 60,258
Due from related parties 209,723 204,327
Notes receivable - Short-term 74,090 296,363
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TOTAL CURRENT ASSETS 728,128 888,336

CAPITAL ASSETS 29,228 55,289
INTANGIBLE ASSETS 993,232 1,127,134
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TOTAL ASSETS 1,750,588 2,070,759
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities 435,690 504,964
Deferred revenue 82,136 76,680
Promissory notes - Short-term 203,986 246,887
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TOTAL CURRENT LIABILITIES 721,812 828,531

LONG-TERM LIABILITIES
Promissory notes - Long-term 179,702 250,935
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TOTAL LIABILITIES 901,514 1,079,466
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SHAREHOLDERS' EQUITY
Share capital 14,759,008 14,759,008
Contributed surplus 252,359 191,015
Deficit (14,162,293) (13,958,730)
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TOTAL SHAREHOLDERS' EQUITY 849,075 991,293
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,750,588 2,070,759
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ENGINEERING.COM INCORPORATED
STATEMENT OF OPERATIONS AND DEFICIT
(Cdn. $, unaudited)

Three Months Ended Three Months Ended
Sept. 30, 2006 Sept. 30, 2005
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$ $

REVENUE 578,291 478,391
COST OF SALES 207,744 161,112
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GROSS PROFIT 370,547 317,279
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OPERATING EXPENSES
Salaries and benefits 202,828 247,094
Management fees 0 11,043
Marketing expenses 799 15,706
Development costs 67,045 47,560
General and administrative 94,664 133,355
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365,336 454,758
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INCOME (LOSS) BEFORE UNDERNOTED ITEMS 5,211 (137,479)
Stock based compensation (21,237) (14,004)
Depreciation expense (50,154) (54,608)
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(71,391) (66,612)
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NET LOSS (66,180) (206,091)
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Basic and diluted loss per share - Total (0.00) (0.01)

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES (basic and diluted) 29,496,499 28,744,968
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Consolidated Statements of Deficit
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Deficit, beginning of Period (14,096,113) (13,709,890)
Net loss (66,180) (206,091)
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DEFICIT, end of period (14,162,293) (13,915,981)
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