Net income for the three months ended September 30, 2008 was $154,000, or $0.01 per fully diluted share, compared to net income of $489,000, or $0.02 per fully diluted share, in the same period in the prior year. Adjusted EBITDA (as defined) decreased to $448,000 in the first quarter of fiscal 2009, from adjusted EBITDA of $959,000 in the prior year period.

George Davis, President and Chief Executive Officer of Avatech Solutions, commented, "The unprecedented macroeconomic pressures that have weakened the building and manufacturing sectors, significantly impacted our performance for the September 2008 quarter. During this time of uncertainty, our customers are faced with considerable challenges that are limiting their ability to move forward with technology upgrades and engineering support services. Due to our efforts over the last year to improve our fundamentals with an emphasis on expense and cash management we were able to deliver a sound quarter in the face of a difficult economic environment. This quarter's highlights include delivering our fifth consecutive quarter of profitability, generating free cash flow and maintaining a sound balance sheet with $4.3 million in cash with no debt. We are maintaining stability and market share in our business due to the efforts of our dedicated software sales and engineering services teams, and a diverse client base."

"In addition, over the past few quarters we have looked to diversify our revenue by dedicating more resources towards selling professional services in the Architecture, Engineering and Construction (AEC) and Manufacturing verticals. We expect these efforts to provide incremental support for our business model on a going forward basis. It is our goal to prudently leverage our strong financial position during this difficult market environment to ensure that we are uniquely positioned to come out strong when the economy eventually rebounds," concluded Mr. Davis.

Conference Call Information

Avatech Solutions will hold a conference call to discuss its first quarter results at 11:00 a.m. ET on November 14, 2008. The dial-in number for the conference call is (888) 680-0865 (Domestic) or (617) 213-4853 (International), and enter the passcode (91800494). A replay of the call will also be available through November 21, 2008 and can be accessed by dialing (888) 286-8010 (Domestic) or (617) 801-6888 (International), and enter the passcode (17476623).

A live webcast of the call will be broadcast in the Investor Relations section of the Company's website, http://www.avatech.com. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site for a limited time.

Note Regarding Use of Non-GAAP Financial Measure

This news release contains the non-GAAP measure Adjusted EBITDA. Adjusted EBITDA represents earnings (or losses) before interest, income taxes, depreciation and amortization, and stock-based compensation expense.

Adjusted EBITDA is used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry, as the calculation of EBITDA as adjusted eliminates the effect of financing, income taxes, stock-based compensation costs, the accounting effects of capital spending and certain other merger related expenses, which items may vary from different companies for reasons unrelated to overall operating performance.

Avatech believes this non-GAAP measure provides useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measure included in this press release has been reconciled to the GAAP results in the accompanying table.

About Avatech Solutions

Avatech Solutions, Inc. (OTCBB: AVSO) is America's leading professional services company for design and engineering technologies. Avatech advances the way organizations design, develop, and manage building, infrastructure, and manufacturing projects. Fortune 500 and Engineering News Record's Top 100 companies work with Avatech to gain a competitive advantage through technology consulting, implementation, training, and support services. One of the world's largest integrators of Autodesk software, Avatech designs systems that accelerate innovation while improving quality and profitability. For more information please visit www.avatech.com.

Forward-looking Statement

This press release contains forward-looking statements about the expectations, beliefs, plans, intentions, and strategies of Avatech Solutions, Inc. There are a number of important factors that could cause actual results to differ materially from those anticipated by any forward-looking information. Statements that are not historical in nature, including those that include the words "goal," "expect," "anticipate," "estimate," "should," "believe," "intend," and similar expressions, are based on current expectations, estimates and projections about, among other things, the industry and the markets in which Avatech operates, and they are not guarantees of future performance. Whether actual results will conform to expectations and predictions is subject to known and unknown risks and uncertainties, including risks and uncertainties discussed in this report; general economic, market, or business conditions; changes in interest rates, and demand for our products and services; changes in our competitive position or competitive actions by other companies; the ability to manage growth; changes in laws or regulations or policies of federal and state regulators and agencies; and other circumstances beyond our control. Consequently, all of the forward-looking statements made in this document are qualified by these cautionary statements, and there can be no assurance that the actual results anticipated will be realized, or, if substantially realized, will have the expected consequences on our business or operations.

Tables Below

Avatech Solutions, Inc.
Summary Consolidated Financial Data
                                                                   Three Months Ended September 30,
                                                                   2008                        2007
Revenues-
Product sales                                                      $       6,113,000           $       7,255,000
Service revenue                                                            2,574,000                   2,823,000
Commission revenue                                                         2,127,000                   2,339,000
Total revenues                                                             10,814,000                  12,417,000
Cost of revenues-
Cost of product sales                                                      4,069,000                   4,946,000
Cost of service revenue                                                    1,954,000                   2,032,000
Total cost of revenues                                                     6,023,000                   6,978,000
Gross margin                                                               4,791,000                   5,439,000
Operating income                                                           214,000                     643,000
Net income                                                                 154,000                     489,000
Earnings per share:
Basic                                                              $       0.01                $       0.03
Diluted                                                            $       0.01                $       0.02
Weighted average common shares outstanding:
Basic                                                                      16,656,834                  15,779,015
Diluted                                                                    16,883,805                  20,007,314
                                                                   September 30,               June 30,
                                                                   2008                        2008
Total assets                                                       $       19,779,000          $       22,596,000
Total liabilities                                                  $       6,814,000           $       9,425,000
Series F convertible preferred stock                                       3,187,000                   3,629,000
Total stockholders' equity                                                 9,778,000                   9,542,000
Total liabilities and stockholders' equity                         $       19,779,000          $       22,596,000

Avatech Solutions, Inc.
Reconciliation of non-GAAP financial measure
                               Three Months Ended
                                          9/30/2008                                   9/30/2007
GAAP net income                $          154,000                          $          489,000
Provision for income taxes                96,000                                      167,000
Income before income taxes                250,000                                     656,000
Stock-based compensation                  53,000                                      124,000
Net interest (income) expense             (23,000    )                                4,000
Depreciation and amortization             168,000                                     175,000
Adjusted EBITDA                $          448,000                          $          959,000
Note 1 - Management uses adjusted EBITDA, a non-GAAP measure, to
evaluate the Company's operating performance and compare the
Company's current results with those for prior periods, but
cautions that they should not be considered as a substitute for
disclosures made in accordance with GAAP

SOURCE: Avatech Solutions, Inc.

Company 
Avatech Solutions, Inc. 
Jean Schaeffer, +1 410-581-8080 
Fax +1 410-753-1591 
jean.schaeffer@avatech.com 
OR 
Investor Relations 
KCSA Strategic Communications 
Todd Fromer / Garth Russell 
+1 212-896-1215 / 1250 
tfromer@kcsa.com 
grussell@kcsa.com

A live webcast of the conference call will be available to all investors in the Investor Relations section of the Company's website, www.avatech.com. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the Company's site for a limited time.

About Avatech Solutions, Inc.

Avatech Solutions, Inc. (OTCBB: AVSO) is America's leading professional services company for design and engineering technologies. Avatech advances the way organizations design, develop, and manage building, infrastructure, and manufacturing projects. Fortune 500 and Engineering News Record's Top 100 companies work with Avatech to gain a competitive advantage through technology consulting, implementation, training, and support services. One of the world's largest integrators of Autodesk software, Avatech designs systems that accelerate innovation while improving quality and profitability. For more information please visit www.avatech.com.

This release is available on the KCSA Strategic Communications Web site at www.kcsa.com.

SOURCE: Avatech Solutions, Inc.

Company: 
Avatech Solutions, Inc. 
Jean Schaeffer, +1 410-581-8080 
Fax: +1 410-753-1591 
jean.schaeffer@avatech.com 
or 
Investor Relations: 
KCSA Strategic Communications 
Todd Fromer / Garth Russell 
+1 212-896-1215 / 1250 
tfromer@kcsa.com / grussell@kcsa.com

For the fiscal year ended June 30, 2008, the Company reported revenues of $49.6 million, compared to $50.5 million in the prior year. During the year, Avatech increased Service revenue by 6% to $11.4 million as a result of the Company's increased focus on growing this business to diversify its revenue base. SG&A expense was $18.5 million, or 37% of sales, compared to $22.7 million, or 45% of sales, in the prior year. For the year ended June 30, 2008, the Company reported net income of $3.1 million, or $0.15 per fully diluted share, compared to a net loss of $(555,000), or $(0.07) per fully diluted share for fiscal year 2007. Adjusted EBITDA increased to $4.7 million in fiscal 2008, as compared to adjusted EBITDA of $1.2 million in fiscal 2007.

George Davis, President and Chief Executive Officer of Avatech Solutions, commented, "In fiscal 2008 we returned to profitability with record net income and strengthened our balance sheet, which includes increasing our cash position more than three-fold since the beginning of the year. These achievements are the result of our new strategy implemented at the end of fiscal 2007 to improve productivity, diversify revenue with an expanded focus on services, all while reducing operating expenses throughout the Company. I am especially pleased with our ability to achieve record profitability in fiscal 2008 when considering the challenging macro-economic environment that had both direct and indirect impacts on our U.S. based design engineering markets throughout the year."

"Looking forward to fiscal 2009, we expect that macro-economic pressures will continue to exist requiring that we prudently manage our plans; maintaining focus on our fundamentals while we engage in efforts to return to top line revenue growth. Our efforts over the last year have significantly improved our financial baseline which uniquely positions us to execute on our strategy. We are moving forward with plans that will support our top-line growth initiatives by expanding both our software sales and engineering services teams, in anticipation that we will see positive results as the year progresses. We remain focused on establishing Avatech as the "Go To" company for design engineering technology, service and support. Since being launched in May 2008, our Manufacturing Consulting Services Group has established a solid pipeline of incremental services business in line with our stated objectives. We believe that through a combination of maintaining and profitably growing our core business and prudently engaging in diverse yet complimentary strategic initiatives, we will continue to position Avatech for a strong future," concluded Mr. Davis.

"The turnaround at Avatech was achieved with exceptional commitment and hard work by the company's management team and employees, and was attained via great attention to detail and a bottom line orientation," noted Thom Waye, Chairman of the Board. "As a major shareholder in the company I could not have asked for better financial performance than what was accomplished this past year. Although we have entered turbulent economic times, with a strong balance sheet and reduced operating costs, the company is well positioned to work toward achieving revenue growth and continued profitability in Fiscal 2009."

Conference Call Information

Avatech Solutions will hold a conference call to discuss its fiscal fourth quarter and year end results at 11:00 a.m. ET on September 29, 2008. The dial-in number for the conference call is 888.680.0865 (Domestic) or 617.213.4853 (International), and enter the passcode (96245152). A replay of the call will also be available through October 6, 2008 and can be accessed by dialing 888.286.8010 (Domestic) or 617. 801.6888 (International), and enter the passcode (35013558).

A live webcast of the call will be broadcast in the Investor Relations section of the Company's website, http://www.avatech.com. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site for a limited time.

Note Regarding Use of Non-GAAP Financial Measure

This news release contains the non-GAAP measure Adjusted EBITDA. Adjusted EBITDA represents earnings (or losses) before interest, income taxes, depreciation and amortization, and stock-based compensation expense.

Adjusted EBITDA is used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry, as the calculation of EBITDA as adjusted eliminates the effect of financing, income taxes, stock-based compensation costs, the accounting effects of capital spending and certain other merger related expenses, which items may vary from different companies for reasons unrelated to overall operating performance.

Avatech believes this non-GAAP measure provides useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measure included in this press release has been reconciled to the GAAP results in the accompanying table.

About Avatech Solutions

Avatech Solutions, Inc. (OTCBB: AVSO) is America's leading professional services company for design and engineering technologies. Avatech advances the way organizations design, develop, and manage building, infrastructure, and manufacturing projects. Fortune 500 and Engineering News Record's Top 100 companies work with Avatech to gain a competitive advantage through technology consulting, implementation, training, and support services. One of the world's largest integrators of Autodesk software, Avatech designs systems that accelerate innovation while improving quality and profitability. For more information please visit www.avatech.com.

Forward-looking Statement

This press release contains forward-looking statements about the expectations, beliefs, plans, intentions, and strategies of Avatech Solutions, Inc. There are a number of important factors that could cause actual results to differ materially from those anticipated by any forward-looking information. Statements that are not historical in nature, including those that include the words "goal," "expect," "anticipate," "estimate," "should," "believe," "intend," and similar expressions, are based on current expectations, estimates and projections about, among other things, the industry and the markets in which Avatech operates, and they are not guarantees of future performance. Whether actual results will conform to expectations and predictions is subject to known and unknown risks and uncertainties, including risks and uncertainties discussed in this report; general economic, market, or business conditions; changes in interest rates, and demand for our products and services; changes in our competitive position or competitive actions by other companies; the ability to manage growth; changes in laws or regulations or policies of federal and state regulators and agencies; and other circumstances beyond our control. Consequently, all of the forward-looking statements made in this document are qualified by these cautionary statements, and there can be no assurance that the actual results anticipated will be realized, or, if substantially realized, will have the expected consequences on our business or operations.

Avatech Solutions, Inc.
Reconciliation of non-GAAP financial measure
                                                Three Months Ended                                Twelve Months Ended
                                                6/30/2008                6/30/2007                6/30/2008                 6/30/2007
GAAP net income (loss)                          $    742,000             $    (874,000  )         $    3,091,000            $    (555,000   )
Provision for (benefit) from income taxes            (296,000  )              27,000                   493,000                   227,000
Income (loss) before income taxes                    446,000                  (847,000  )              3,584,000                 (328,000   )
Stock-based compensation                             204,000                  61,000                   499,000                   739,000
Interest income                                      (21,000   )              (19,000   )              (114,000   )              (62,000    )
Interest expense                                     9,000                    5,000                    28,000                    198,000
Depreciation and amortization                        170,000                  174,000                  693,000                   689,000
Adjusted EBITDA                                 $    808,000             $    (626,000  )         $    4,690,000            $    1,236,000
Note 1 - Management uses adjusted EBITDA, a non-GAAP measure, to
evaluate the Company's operating performance and compare
theCompany's current results with those for prior periods, but
cautions that they should not be considered as a substitute for
disclosures made in accordance with GAAP

Avatech Solutions, Inc.
Summary Consolidated Financial Data
                                                  Three Months Ended                     Twelve Months Ended
                                                  June 30,                               June 30,
                                                  2008                 2007              2008                 2007
Revenues-
Product sales                                     $6,690,000           $6,511,000        $27,650,000          $30,125,000
Service revenue                                   2,728,000            2,922,000         11,363,000           10,689,000
Commission revenue                                2,126,000            2,061,000         10,631,000           9,721,000
Total revenues                                    11,544,000           11,494,000        49,644,000           50,535,000
Cost of revenues-
Cost of product sales                             4,529,000            4,545,000         18,801,000           19,963,000
Cost of service revenue                           2,016,000            1,975,000         8,145,000            7,416,000
Total cost of revenues                            6,545,000            6,520,000         26,946,000           27,379,000
Gross margin                                      4,999,000            4,974,000         22,698,000           23,156,000
Operating income (loss)                           415,000              (860,000)         3,498,000            (192,000)
Net income (loss)                                 742,000              (874,000)         3,091,000            (555,000)
Earnings (loss) per share:
Basic                                             $ 0.03               $ (0.07)          $ 0.16               $ (0.07)
Diluted                                           $ 0.03               $ (0.07)          $ 0.15               $ (0.07)
Weighted average common shares outstanding:
Basic                                             16,370,186           15,287,598        16,166,067           14,246,390
Diluted                                           16,643,517           15,287,598        20,121,896           14,246,390
                                                  June 30,             June 30,
                                                  2008                 2007
Current assets                                    $13,955,000          $10,840,000
Property and equipment                            781,000              934,000
Other long-term assets                            7,860,000            7,800,000
Total assets                                      $22,596,000          $19,574,000
Current liabilities                               $9,425,000           $9,725,000
Series F convertible preferred stock              3,629,000            3,629,000
Stockholders' equity                              9,542,000            6,220,000
Total liabilities and stockholders' equity        $22,596,000          $19,574,000

SOURCE: Avatech Solutions, Inc.

Avatech Solutions, Inc. 
Jean Schaeffer, +1 410-581-8080 
Fax: +1 410-753-1591 
jean.schaeffer@avatech.com 
or 
Investor Relations: 
KCSA Strategic Communications 
Todd Fromer / Garth Russell, +1 212-896-1215 / 1250 
tfromer@kcsa.com / grussell@kcsa.com

"We have always performed energy analysis, but the use of a BIM model drastically cuts the time required to complete the process. A BIM model quickly connects complex systems together, allowing for more precise analysis of design options for optimal energy savings," says Bob Rayes, director of Advanced Resources for SHW Group, an Avatech client.

Beau Turner, director of business development for Avatech Building Solutions Group, states "In the face of volatile energy costs and environmentally focused government regulations, sustainable buildings are becoming the norm. More firms are turning to Avatech's professional services team to implement the latest technologies to create truly sustainable buildings."

"The long-term implications associated with the downturn in the economy makes going green sensible for our customers," says George Davis, president and CEO, Avatech Solutions. "If done correctly, financial savings from green architecture and construction are realized throughout the building process, as well as the lifetime of the building. In addition to the environmental and building performance benefits, these processes improve the bottom line performance of leading design and construction firms across the country by reducing costs and driving greater efficiencies."

About Avatech Solutions

Avatech Solutions, Inc. (OTCBB: AVSO) is America's leading professional services company for design and engineering technologies. Avatech advances the way organizations design, develop, and manage building, infrastructure, and manufacturing projects. Fortune 500 and Engineering News Record's Top 100 companies work with Avatech to gain a competitive advantage through technology consulting, implementation, training, and support services. One of the world's largest integrators of Autodesk software, Avatech designs systems that accelerate innovation while improving quality and profitability. For more information, please visit www.avatech.com.

All brand names, product names, or trademarks belong to their respective holders.

SOURCE: Avatech Solutions, Inc.

Company: 
Avatech Solutions, Inc. 
Jean Schaeffer, +1 410-581-8080 
Fax: +1 410-753-1591 
jean.schaeffer@avatech.com 
or 
Public Relations: 
Cross Border Communications 
Cyrus Mavalwala, +1 905-477-5535 
cyrus@crossborderpr.com 
or 
Investor Relations: 
KCSA Strategic Communications 
Garth Russell, +1 212-896-1250 
grussell@kcsa.com 
or 
Nick Rust, +1 212-896-1299 
nrust@kcsa.com