<PAGE>


                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549
                                  __________________
                                           
                                      FORM 10-Q
                                           
/X/   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                          EXCHANGE ACT OF 1934
                                            
              For the quarterly period ended September 30, 1997
                                           
                                          OR
                                           
/ /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                 EXCHANGE ACT OF 1934
                                           
                            Commission file number  2-7670
                                           
                             ENGINEERING ANIMATION, INC.
                [EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER]
                                           
         DELAWARE                                      42-1323712
(STATE OR OTHER JURISDICTION OF                    (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                   IDENTIFICATION NUMBER)
                                           
                                2321 NORTH LOOP DRIVE
                                  AMES, IOWA  50010
                       (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                ______________________
                                           
                                    (515)296-9908
                 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
                                ______________________
                                           

   INDICATE BY CHECK ( X ) WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS 
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE 
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO 
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
                    
                    (1)  YES  /X/            NO  / /
                    
                    (2)  YES  /X/            NO  / /
                    

   AS OF NOVEMBER 12, 1997, THERE WERE 5,778,869 SHARES OF THE REGISTRANT'S 
$0.01 PAR VALUE COMMON STOCK OUTSTANDING.

<PAGE>


                             ENGINEERING ANIMATION, INC.
                                           
                                      FORM 10-Q
                                           
                                        INDEX
                                           
                                           
PART I.        FINANCIAL INFORMATION                                     PAGE

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets 
         At September 30, 1997 and December 31, 1996                        3
         
         Condensed Consolidated Statements of  Income 
         For the three and nine months ended September 30, 1997 and 1996    4
         
         Condensed Consolidated Statements of Cash Flows 
         For the nine months ended September 30, 1997 and 1996              5
         
         Notes to Condensed Consolidated Financial Statements               6
         
Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                8


PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                                  12


SIGNATURES                                                                 13



                                         2



<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                             ENGINEERING ANIMATION, INC.
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                          (in thousands, except share data)

                                                  September 30,  December 31,
                                                      1997          1996
                                                   ------------  ------------
ASSETS                                             (Unaudited)     (Note)
Current assets:
  Cash and cash equivalents                        $  4,842      $  9,350 
  Short-term investments                             33,105         9,884 
  Accounts receivable:
    Billed                                           11,636         6,666 
    Unbilled                                          6,182         3,334 
  Deferred income taxes                                 228            48 
  Prepaid expenses                                    1,312           390 
                                                   --------       -------
       Total current assets                          57,305        29,672 

Property and equipment, net                           9,896         5,192 

Other assets:
  Note receivable                                     1,408         1,408 
  Software development costs, net                     1,400           602 
  Other                                                 762         1,082 
                                                   --------       -------
       Total assets                                $ 70,771       $ 37,956
                                                   ========       ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                 $  1,795      $  1,058 
  Accrued expenses                                    1,192           991 
  Accrued compensation                                1,889         1,135 
                                                   --------       -------
       Total current liabilities                      4,876         3,184 

Debt and lease obligations, long term portion           593           872 
Deferred income taxes                                 1,171           826 

Stockholders' equity                                 64,131        33,074 
                                                   --------       -------
       Total liabilities and stockholders' equity  $ 70,771      $ 37,956 
                                                   ========       =======

Note: The balance sheet at December 31, 1996 has been derived from the 
      audited financial statements at that date but does not include all
      of the information and footnotes required by generally accepted 
      accounting principles for complete financial statements. See 
      accompanying notes.

                                    3
<PAGE>


                                ENGINEERING ANIMATION, INC.   
                        CONDENSED CONSOLIDATED STATEMENTS OF INCOME     
                      (in thousands, except per share data; unaudited)

<TABLE>
<CAPTION>

                                       Three Months ended September 30   Nine Months ended September 30
                                           1997               1996          1997             1996
                                       -----------       -------------    ---------       -----------
  <S>                                  <C>               <C>              <C>            <C>
 Net revenues:                                           
  3D visualization software products      $  6,978       $  2,922         $ 13,635       $ 5,022
  Interactive Products                       4,108          2,793           13,929         8,330
                                          --------       --------         ---------      --------

Total revenues                              11,086          5,715           27,564        13,352
    
Cost of revenues                             3,158          1,812            8,362         4,466
                                          --------       --------         ---------      --------
Gross profit                                 7,928          3,903           19,202         8,886
    
Operating expenses:                                        
  Sales and marketing                        3,267          2,192            8,224         4,810
  General and administrative                 1,073            569            2,968         1,661
  Research and development                   1,415            623            3,361         1,261
                                          --------       --------         ---------      --------
Total operating expenses                     5,755          3,384           14,553         7,732
                                          --------       --------         ---------      --------
Income from operations                       2,173            519            4,649         1,154
    
Interest income, net                           594            336            1,154           731
                                          --------       --------         ---------      --------
Income before income taxes                   2,767            855            5,803         1,885
Income taxes                                 1,078            334            2,288           754
                                          --------       --------         ---------      --------
Net income                                $  1,689         $  521          $ 3,515        $ 1,131
                                          ========       ========          ========       =======
Earnings per share of common stock         $  0.25        $  0.10           $ 0.59        $  0.22
                                          ========       ========          ========       =======
Weighted average number of common and       
  equivalent shares outstanding              6,659          5,387            5,950          5,052
                                          ========       ========          ========       =======
</TABLE>
See accompanying notes.                                    
    

                                     4
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                      ENGINEERING ANIMATION, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (in thousands; unaudited)


                                                 Nine Months ended September 30,
                                                 -------------------------------
                                                      1997              1996
                                                     -----             -----
NET CASH USED BY OPERATING ACTIVITIES             $  (1,470)     $  (2,585)

INVESTING ACTIVITIES
Purchase of notes receivable                              -           (658)
Purchases of property and equipment                  (5,795)        (3,009)
Development of software                                (948)          (182)
Other activities                                         (9)          (145)
Purchases of marketable securities                  (23,221)           -  
                                                   ---------        --------
       Net cash used by investing activities        (29,973)        (3,994)

FINANCING ACTIVITIES
Proceeds from short-term borrowing                        -            600
Payments on short-term borrowing                          -           (600)
Decrease in restricted cash                             212           -   
Payments on long-term debt                             (278)        (1,208)
Net proceeds from issuance of common stock           27,001         29,066
                                                    --------        -------
       Net cash provided by financing activities     26,935         27,858
                                                    --------        -------
       Net (decrease) increase in cash and 
        cash equivalents                             (4,508)        21,279

Cash and cash equivalents at beginning of period      9,350            491
                                                   --------      ---------
Cash and cash equivalents at end of period         $  4,842      $  21,770
                                                  =========      ==========


See accompanying notes.

<PAGE>

                             ENGINEERING ANIMATION, INC.
                                           
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)
                                           
1.  BASIS OF PRESENTATION

    The consolidated financial statements include the accounts of Engineering
Animation, Inc. and the Company's wholly-owned subsidiaries.  All significant
intercompany accounts and transactions have been eliminated in consolidation. 
The unaudited condensed consolidated financial statements included herein
reflect all adjustments, consisting only of normal recurring accruals which in
the opinion of management are necessary to fairly state the Company's financial
position, results of operations, and cash flows for the periods presented. 
These financial statements should be read in conjunction with the Company's
audited financial statements as included in the Company's Form 10-K as filed
with the Securities and Exchange Commission on March 31, 1997.  The results of
operations for the nine month period ended September 30, 1997 are not
necessarily indicative of the results that may be expected for any subsequent
quarter or for the fiscal year ending December 31, 1997.  The December 31, 1996
balance sheet was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting principles.

2.  PUBLIC OFFERINGS

    In February 1996, the Company completed its initial public offering and
issued 1,825,000 shares of its common stock.  The Company received approximately
$29.0 million of cash, net of underwriting discounts and other offering costs. 
In June 1997, the Company completed a follow-on offering of 1,000,000 shares of
its common stock.  The Company received approximately $26.6 million of cash, net
of underwriting discounts and other offering costs.

3.  EARNINGS PER SHARE

    Per share earnings are based on the weighted average number of shares of
common stock and common stock equivalents outstanding. The dilutive effect of
outstanding stock options was determined based upon the treasury stock method. 
Pursuant to the Securities and Exchange Commission Staff Accounting Bulletin No.
83, common stock equivalents granted at exercise prices less than the initial
public offering price during the twelve months immediately preceding the initial
public offering have been included in the determination of shares used in the
calculation of earnings per share as if they were outstanding for all periods.

    The Company repaid approximately $1,712,000 of bank debt with the proceeds
of the initial public offering.  The impact on earnings per share was not
significant.

    In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, EARNINGS PER SHARE, which is required to be adopted on December 31,
1997.  At that time, the 

                                       6

<PAGE>

Company will be required to change the method currently used to compute 
earnings per share and to restate all prior periods.  Under the new 
requirements for calculating primary earnings per share, the dilutive effect 
of stock options will be excluded.  The impact is expected to result in an 
increase in primary earnings per share for the three months ended September 
30, 1997 and September 30, 1996 of $0.04 and $0.01 per share, respectively 
and an increase in primary earnings per share for the nine months ended 
September 30, 1997 and September 30, 1996 of $0.10 and $0.04 per share, 
respectively.  The impact of Statement 128 on the calculation of fully 
diluted earnings per share for these quarters is not expected to be material.


4.   PENDING MERGERS WITH ROSETTA TECHNOLOGIES, INC. AND CIMTECHNOLOGIES
     CORPORATION

     On October 30, 1997, the Company entered into definitive merger 
agreements with Technology Company Ventures L.L.C. ("Ventures"), the majority 
shareholder of Rosetta Technologies, Inc., ("Rosetta") and Cimtechnologies 
Corporation ("Cimtech"). Both the Ventures and Cimtech mergers will be 
accounted for as poolings of interests. In a separate transaction, the 
Company will acquire the remaining minority interest in Rosetta. This 
transaction will be accounted for as a purchase. The definitive agreements 
provide that, upon the effective date of the transactions, the Company will 
acquire Ventures and the minority interest in Rosetta for approximately 
$25.5 million of the Company's common stock and Cimtech for approximately 
$6 million of the Company's common stock. The Company expects all the 
transactions to be completed in the fourth quarter of 1997, subject to 
regulatory and shareholder approvals.

                                      7

<PAGE>

                             ENGINEERING ANIMATION, INC.
                                           
Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

RESULTS OF OPERATIONS

NET REVENUES  

The Company's total revenues are derived from sales of three dimensional ("3D")
visualization software products and interactive products. Interactive products
combines two products, formerly referred to as interactive software products and
custom animation products.  Revenues from sales of 3D visualization software
products are recognized upon delivery of the product to the customer and
satisfaction of significant related obligations, if any.  Revenues from customer
support are included in 3D visualization software products revenue and represent
less than 5% of total revenues. Customer support revenues are deferred and
recognized ratably over the period the customer support services are provided. 
The Company recognizes revenues from interactive products based upon labor and
other costs incurred and progress to completion on contracts.

The Company's total revenues increased 94% to $11.1 million for the three 
months ended September 30, 1997 from $5.7 million for the three months ended 
September 30, 1996, and increased 106% to $27.6 million for the nine months 
ended September 30, 1997 from $13.4 million for the nine months ended 
September 30, 1996.  3D visualization software products revenue increased 
139% to $7.0 million for the three months ended September 30, 1997 from $2.9 
million for the three months ended September 30, 1996, and increased 172% to 
$13.7 million for the nine months ended September 30, 1997 from $5.0 million 
for the nine months ended September 30, 1996, as a result of increased 
product sales.  Interactive product revenues increased 47% to $4.1 million 
for the three months ended September 30, 1997 from $2.8 million for the three 
months ended September 30, 1996, and increased 67% to $13.9 million for the 
nine months ended September 30, 1997 from $8.3 million for the nine months 
ended September 30, 1996, primarily due to additional projects for 
interactive products.  

COST OF REVENUES

The Company's cost of revenues includes cost of production, packaging and
distribution costs, royalties and amortization of capitalized software costs. 
The Company's cost of revenues increased 74% to $3.2 million for the three
months ended September 30, 1997 from $1.8 million for the three months ended
September 30, 1996, and increased 87% to $8.4 million for the nine months ended
September 30, 1997 from $4.5 million for the nine months ended September 30,
1996, primarily due to expenses associated with new development contracts in 3D
visualization software products and increased development costs for interactive
projects. The Company's cost of revenues as a percentage of revenues decreased
to 29% for the three months ended September 30, 1997 from 32% for the three
months ended September 30, 1996 and decreased to 30% for the nine months ended
September 30, 1997 compared to 33% for the nine months ended September 

                                      8

<PAGE>

30, 1996. The decrease in cost of revenues as a percentage of revenues was 
primarily the result of spreading expenses over higher revenues.

OPERATING EXPENSES

SALES AND MARKETING.    The Company's sales and marketing expenses include
personnel costs related to sales, marketing and customer service activities, as
well as costs attributable to promotional materials, mail campaigns, trade shows
and advertising.  The Company's sales and marketing expenses increased 49% to
$3.3 million for the three months ended September 30, 1997 from $2.2 million for
the three months ended September 30, 1996, and increased 71% to $8.2 million for
the nine months ended September 30, 1997 from $4.8 million for the nine months
ended September 30, 1996, primarily due to costs associated with expansion of
sales force and increased marketing costs. Sales and marketing expenses
decreased to 30% of total revenues for the three months ended September 30, 1997
from 38% for the three months ended September 30, 1996, and decreased to 30% of
total revenues for the nine months ended September 30, 1997 from 36% for the
nine months ended September 30, 1996. The decrease in sales and marketing
expenses as a percentage of revenues was primarily the result of spreading
expenses over higher revenues. 

GENERAL AND ADMINISTRATIVE.  The Company's general and administrative expenses
consist of salaries and facility costs for administrative, executive and
accounting personnel, as well as consulting expenses, insurance costs,
professional fees and other costs.  The Company's general and administrative
expenses increased 89% to $1.1 million for the three months ended September 30,
1997 from $569,000 for the three months ended September 30, 1996, and increased
78% to $3.0 million for the nine months ended September 30, 1997 from $1.7
million for the nine months ended September 30, 1996, primarily a result of
increased administrative staff and related costs.  General and administrative
expenses remained at 10% of total revenues for the three months ended September
30, 1997 and 1996, and decreased to 11% of total revenues for the nine months
ended September 30, 1997 from 12% for the nine months ended September 30, 1996. 
The decrease of general and administrative expenses as a percentage of revenues
was primarily a result of  spreading expenses over higher revenues.   

RESEARCH AND DEVELOPMENT.    The Company's research and development expenses
consists of salaries, related facility costs, equipment costs and outside
consulting fees.  The Company's research and development expenses increased 127%
to $1.4 million for the three months ended September 30, 1997 from $623,000 for
the three months ended September 30, 1996, and increased 166% to $3.4 million
for the nine months ended September 30, 1997 from $1.3 million for the nine
months ended September 30, 1996.  Research and development expenses increased to
13% of total revenues for the three months ended September 30, 1997 from 11% for
the three months ended September 30, 1996, and increased to 12% of total
revenues for the nine months ended September 30, 1997 from 9% for the nine
months ended September 30, 1996.  The increase in research and development
expenses was primarily due to additional personnel and related costs required to
meet the increased demand for 3D visualization software and interactive software
products.

                                     9

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company historically has satisfied its cash requirements through borrowings,
customer advances, capital lease financing and net proceeds of approximately
$29.0 million from the Company's initial public offering of Common Stock in
February 1996 and approximately $26.6 million from the Company's follow-on
offering of Common Stock in June 1997.  As of September 30, 1997, the Company
had $37.9 million in cash, cash equivalents and short-term investments.

Net cash used by operating activities was $1.5 million for the nine months ended
September 30, 1997, primarily due to increases in receivables, offset by net
income, depreciation and increases in accounts payable and accrued compensation.
Accounts receivable at September 30, 1997 increased approximately $4.9 million
to $11.6 million from $6.7 million at December 31, 1996.  The increase in
accounts receivable was due to increased revenues and increased size of the
Company's contracts, which historically have taken a longer period to collect
than smaller contracts.  The Company's accounts receivable balance will vary
from quarter to quarter, depending on the number and size of client projects and
on the timing of completion of the projects.

The Company believes its current cash and short-term investment balances will be
sufficient to meet anticipated cash needs for working capital and capital
expenditures for at least the next twelve months.  There can be no assurance
that additional capital beyond the amounts currently forecasted by the Company
will not be required nor that any such required additional capital will be
available on reasonable terms, if at all, at such time as required by the
Company.


SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

The Company or its representatives from time to time may make or may have made
certain forward-looking statements, orally or in writing, including without
limitations any such statements made or to be made in the Management's
Discussion and Analysis contained in its various SEC filings.  The Company
wishes to ensure that such statements are accompanied by meaningful cautionary
statements, so as to ensure to the fullest extent possible the protections of
the safe harbor established in the Private Securities Litigation Reform Act of
1995.  Accordingly, such statements are qualified in their entirety by reference
to and are accompanied by the following discussion of certain important factors
that could cause actual results to differ materially from those projected in
such forward-looking statements.

The Company cautions the reader that this list of factors may not be exhaustive.
The Company operates in a continually changing business environment, and new
risk factors emerge from time to time.  Management cannot predict such risk
factors, nor can it assess the impact, if any, of such risk factors on the
Company's business or the extent to which any factors, or combination of
factors, may cause actual results to differ materially from those projected in
any forward-

                                   10

<PAGE>

looking statements.  Accordingly, forward-looking statements should not be 
relied upon as a prediction of actual results.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

The Company may experience material fluctuations in future revenues and
operating results on a quarterly or annual basis resulting from a number of
factors, including:  the time of the introduction of new visualization software
and interactive software products by the Company and by its competitors;
seasonality of certain customer purchases of interactive software products;
product mix; general economic conditions; and the Company's ability to obtain
agreements from publishers and distributors to market the Company's interactive
software products.  The Company's products are sold in markets which change
rapidly and the Company must continually anticipate and adapt its products to
emerging computer technologies and capabilities.  The market for the Company's
three-dimensional visualization software products is emerging and dependent upon
a number of a variables, including consumer preferences and the rate of adoption
of new technology.  There is a risk that these markets will not continue to grow
and that the Company's three-dimensional visualization software products will
not be accepted by the markets.  The market for the Company's interactive
software products is emerging and dependent upon a number of variables,
including consumer preferences, shipments of, and the installed base of,
multimedia personal computers, and the number of developers creating interactive
software products.  There is risk that the Company's interactive software
products will not be accepted by the market or that the Company will be unable
to respond to evolving requirements of the market.

For a more complete discussion of these risk factors, see the Company's Form 
10-K, filed March 31, 1997.

                                          11

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PART II. OTHER INFORMATION

Item 6.       Exhibits and Reports on Form 8-K

         (a)  Exhibits - See Index to Exhibits

         (b)  Reports on Form 8-K.

              No Reports on Form 8-K were filed during the quarter ended
              September 30, 1997.
              


                                           12

<PAGE>

                                      SIGNATURES
                                           

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:  NOVEMBER 12, 1997                  ENGINEERING ANIMATION,INC.
                                          (Registrant)

                                          By:  /S/  JEROME M. BEHAR 
                                          ------------------------------
                                          Jerome M. Behar
                                          Vice President of Finance and
                                          Chief Financial Officer
                                          (Duly Authorized Officer and
                                          Principal Financial Officer)

                                      13

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                                  INDEX TO EXHIBITS
                                           
         
         
EXHIBIT  DESCRIPTION    

10.26    1997 Non-Qualified Stock Option Plan

27.      Financial Data Schedule


                                                     14


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