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XPEL Technologies Corp. Reports First Quarter Results

Published On 5/31/2006

XPEL TECHNOLOGIES CORP. REPORTS FIRST QUARTER RESULTS

- 65% Growth in Design Access Program Revenues - - Overall Gross Margins Improve to 61% - - Decreased Cost of Sales From 48% to 39% -

SAN ANTONIO, TEXAS, May 31, 2006...XPEL Technologies Corp. (TSXV: DAP.U) announced today results for the quarter ended March 31, 2006, as compared to the quarter ended March 31, 2005. XPEL's Chairman and CEO, W. Rege Brunner, commented, "We continue to show impressive growth through the expansion of our Design Access Program ("DAP"). The DAP results as reported for this period, completes five consecutive quarters of double-digit growth for this key revenue metric. XPEL's DAP-driven model is one that produces a high margin revenue stream, scales rapidly, and all without growth in corresponding costs. When one understands the unique dynamics of the XPEL DAP model, they can easily share our excitement for the momentum in our growth trend." Three Months Ended March 31, 2006 Compared to the Three Months Ended March 31, 2005 Revenues increased from US$631,344 to US$796,945, or 26.2% between periods. Design Access Program or "DAP" revenues increased US$145,610 or 64.8% between quarters, while Kit and Material sales increased approximately US$30,039 or 10% between quarters. The growth in DAP revenues continues the significant momentum the Company experienced during the latter stages of 2004 and fiscal year 2005. The margins generated by the DAP are higher than those of the Companys other revenue streams, and it is the main value driver and foundation of XPEL's operations. Cost of sales increased slightly from US$300,578 to US$308,039, but decreased as a percentage of revenues from 47.6% to 38.7%, period to period. Cost of sales is primarily related to the re-selling of third-party enabling equipment such as plotters and bulk paint and headlight film, which are used by the Company's DAP Dealers for the production of products using the DAP software utility. Total expenses increased US$211,658 from US$537,646 to US$749,134, or approximately 39.4% between years. This increase was due to non-recurring and unique legal and professional fees, and increased personnel costs. In the first quarter of 2006 the Company continued to incur legal fees associated with the lawsuits filed in the first half of calendar year 2005. Additionally, the Company successfully obtained a listing on the TSX Venture Exchange and began trading on February 27, 2006. Costs associated with the move were expensed in the 4th quarter of 2005 and the 1st quarter of 2006. The higher personnel costs resulted from an increase in the number of full and part-time employees from 18 to 23 between periods, and the expensing of Company-issued stock options. The options are expensed over the three-year vesting of the options beginning with the date of grant. Research and development costs, related to our continuing efforts to increase the quality and quantity of our designs, increased slightly from US$45,500 to US$55,795 between years. The Company had a net loss of US$260,228 for the quarter ended March 31, 2006 as compared to a net loss of US$206,710 for the quarter ended March 31, 2005. When adjusted for non-cash expenses such as amortization expense and stock option based compensation, and the non-recurring legal and professional fees, the net loss for the quarter was approximately US$50,000. However, management believes its sales and marketing activities, the hiring of key personnel and its increased research and development costs will translate into additional revenues, and when coupled with the elimination of non-recurring, but necessary legal and professional fees, it will lead quickly to profitable operations. XPEL Technologies Corp. (www.xpel.com), publicly traded on the TSXV Exchange, is the worldwide leader in the electronic delivery of top automotive aftermarket products, utilizing the Internet as an integral component for its design, manufacturing, distribution and customer relationship strategies. The Company's DAP software utility offers Dealers the industry's most efficient and productive tool set for better serving customers with best of breed solutions in real-time. XPEL has clear advantages over the competition through its proprietary corporate framework consisting of an expansive library of installation-friendly window tint, paint and headlight protection products, coupled with a unique web-based remote manufacturing and distribution software, superior installation training curriculum and facilities, and established and growing sales distribution channels. Certain statements contained herein ("We continue to show impressive growth through the expansion of our Design Access Program ("DAP"). The DAP results, as reported for this period, completes five consecutive quarters of double-digit growth for this key revenue metric. XPEL's DAP-driven model is one that produces a high margin revenue stream, scales rapidly, and all without growth in corresponding costs. When one understands the unique dynamics of the XPEL DAP model, they can easily share our excitement for the momentum in our growth trend," and "However, management believes its sales and marketing activities, the hiring of key personnel and its increased research and development costs will translate into additional revenues, and when coupled with the elimination of non-recurring, but necessary legal and professional fees, it will lead quickly to profitable operations.") are considered "forward-looking statements." These statements are based upon the belief of the Company's management, as well as assumptions made beyond information currently available to the Company's management. Because "forward-looking statements" are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, price competition, the inability to obtain additional capital, loss of key personnel, unavailability of leased facilities, technological changes, service interruptions, equipment failures, customer attrition, general economic conditions, relationships with vendors, government supervision and regulation, changes in industry practices, the inability to settle legal disputes, and other factors.The TSXV has not reviewed and does not accept responsibility for the adequacy and accuracy of this information.
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Company Contact: Ryan Pape Chief Executive Officer 210-678-3700
Investor Relations: John Nesbett/Jennifer Belodeau Institutional Marketing Services (IMS) (203) 972-9200 jnesbett@institutionalms.com