eAutoclaims Sees Revenue of $3.8M for Three-Months Ended Oct. 31

December 15, 2005

Florida-based eAutoclaims, a provider of managed collision repair
services and insurance claims processing technology applications, reported financial results for the first quarter ending Oct. 31, 2005 for
fiscal year 2006.

Total revenue for the three-months ended Oct. 31, 2005 was some $3.8 million, representing an 8% decrease from the $4.1 million for the same three months ended Oct. 31, 2004. The decrease in revenue is partially the result of a reduction by consumers in the usage of network shops and the result of the loss of revenues from our two largest clients as discussed in the company’s previous filings with the Securities and Exchange Commission.

Included in the collision management revenue is revenue earned through repairs processed for clients acquired as a result of the ADP Co-Marketing agreement. This revenue is recorded at net value, which significantly reduces the amount of gross revenue reported by the company, resulting in the overall gross margins increasing as a result of not having to pay the shops for the work performed.

During the three months ended Oct. 31, 2005, the company generated more than $110,000 in net revenue from clients acquired as a result of the agreement with ADP. The additional revenue resulted in the gross margin percent for collision management to increase from 10% to 13%, not including fees.

The company anticipates meaningful growth in new clients based on these favorable early results of its co-marketing agreement with ADP Claims Services Group. The company’s overall gross margin has grown from 18% during the first quarter of FY 04, to a current gross margin of 29% of first quarter FY06. This additional growth is a result of the company changing its mix of product sales to its higher margin products.

Claims processing charges for the three-months ended Oct. 31, 2005 was approximately $2.7 million. This was 71% of total revenue, compared to approximately $3.2 million, or 78% of total revenue for the three-months ended Oct. 31, 2004.

Claims processing charges include the costs of collision and glass repairs paid to repair shops within the company’s repair shop network. Claims processing charges are primarily the costs of collision repairs paid by the company to its collision repair shop network. The decrease in claims processing charges as a percentage of total revenue is a result of the change in the product mix by the company focusing on a greater percentage of higher margin products as compared to lower margin products. This also includes the growth in click fees charged when a client uses the company’s technology that has little to no associate cost of sale, for each transaction.

EACC recognized a net loss for the three-months ended Oct. 31, 2005 of approximately $486,000 compared to a net loss of approximately $545,000 for the three-month period ended Oct. 31, 2004. These amounts include non-cash expenses of approximately $305,000 and $230,000, respectively.

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