XPEL Reports Third Quarter Financial Results

SAN ANTONIO--XPEL Technologies Corp. (TSXV:DAP.U) announced today results for the three and nine months ended September 30, 2006, as compared to the three and nine months ended September 30, 2005.

XPEL’s Chairman and CEO, W. Rege Brunner, commented, “We are extremely pleased with what we were able to accomplish during the third quarter. During the second quarter of this year, we communicated to shareholders the two primary areas to which we intended to apply a great deal of effort--the first being a focus to continue growing the Design Access Program (“DAP”) revenue stream, and the second being to take the necessary steps for controlling expenses, specifically reducing the substantial one-time legal and professional fees that were incurred over the prior 18 months. During the third quarter, DAP revenues reached record-breaking levels for the third back-to-back quarter and the tenth quarter of the previous eleven. Additionally, we settled outstanding lawsuits with a former employee and a former distributor.” Mr. Brunner further added, “Absent these significant legal and professional expenses, our cash loss for the quarter and year-to-date would have approximated US$74,000 and US$215,000, respectively. Maintaining growth of the DAP and elimination of these large and unusual charges have us on the verge of sustainable, profitable operations.”

Three Months Ended September 30, 2006 Compared to the Three Months Ended September 30, 2005

Revenues. While total revenues remained flat at $826,497, the increasing shift toward a larger Design Access Revenue stream component continued. DAP revenues increased 33% to $458,346 for the quarter and accounted for 55.46% of XPEL’s total revenues for the quarter. The DAP revenues represented a third consecutive quarter of record revenues and the tenth quarter out of the past eleven.

Cost of Sales. Cost of sales decreased not only in actual dollars to US$276,113 but as a percentage of revenues to 33% for the quarter. 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. As the Design Access Revenues, which are higher margin, continue to grow, and the mix of revenues continues to evolve, management believes XPEL’s cost of sales, as a percentage of revenues will continue to improve as well.

Expenses. Total expenses increased approximately 37% from US$618,287 to US$845,425 between periods. The increased expenses were primarily a result of increased general and administrative expenses. General and administrative expenses increased from US$511,715 to US$687,497, or 34% between periods. This increase was due to increased legal and professional fees, and increased personnel costs. During September of 2006, the Company settled lawsuits it had filed in the first half of calendar year 2005.

While there may be slight expenses related to the lawsuit during the fourth quarter of 2006, management believes its general and administrative expenses will decrease as a result of the settlement of the lawsuits. The increased personnel costs resulted from the expensing of stock options granted to the Company’s employees and directors through September 2006. The options are being expensed over the three-year vesting of the options beginning with the date of grant.

Net earnings (loss). The Company had a net loss of US$295,041 for the quarter ended September 30, 2006 as compared to a net loss of US$115,310 for the quarter ended September 30, 2005. When adjusted for non-recurring legal and professional expenses incurred during the quarter and non-cash expenses such as depreciation, amortization and the expensing of stock options, the cash loss for the third quarter of 2006 would have been approximately US$74,000. As discussed previously, the increased net loss was due primarily to increased general and administrative expenses. Management believes that continued growth of its Design Access Revenues when coupled with the elimination of necessary, yet non-recurring legal and professional fees, would drive XPEL to achieve sustainable, profitable operations.

Nine Months Ended September 30, 2006 Compared to the Nine Months Ended September 30, 2005

Revenues. Revenues increased from US$2,281,305 to US$2,548,266. The increase in revenues between years continues to be largely driven by the increases in our Design Access Revenues. Design Access Revenues increased US$393,706 or 45% between years. Even more noteworthy, Design Access Revenues represent 49.5% of XPEL’s total revenues year-to-date.

Cost of Sales. Cost of sales decreased slightly from US$1,012,699 to US$958,042 and decreased as a percentage of revenues from 44% to 38%, period to period.

Expenses. Total expenses increased from US$1,774,983 to US$2,478,494, or approximately 40% between years. The increased expenses were primarily a result of increased general and administrative expenses. General and administrative expenses increased 45% to US$1,962,108, between periods. This increase was due to increased legal and professional fees, and increased personnel costs. In September of 2006 the Company settled lawsuits filed in the first half of calendar year 2005. Additionally, as noted in the notes to the financials, XPEL successfully obtained a listing on the TSX Venture Exchange and began trading on February 27, 2006.

Net earnings (loss). The Company had a net loss of US$888,270 for the period ended September 30, 2006 as compared to a net loss of US$506,377 for the period ended September 30, 2005. When adjusted for non-recurring legal and professional expenses incurred during the nine months ended September 30, 2006, and non-cash expenses such as depreciation, amortization and the expensing of stock options, the cash loss for the nine months ended September 30, 2006 would have been approximately US$215,000.

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 are considered forward-looking statements such as “Absent the significant one-time legal and professional expenses, our normalized cash loss for the quarter would have approximated US$74,000. Maintaining growth of the DAP and elimination of these large and unusual charges have us on the verge of sustainable, profitable operations,” and “Management believes that continued growth of its Design Access Revenues when coupled with the elimination of necessary, yet non-recurring legal and professional fees, would drive XPEL to achieve sustainable, profitable operations.” Statements such as these 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.

CUSIP: U98409102