A soft(ware) touch for interior design.

MODACAD'S CD-ROM PRODUCT ALLOWS PC USERS TO DESIGN THEIR INTERIOR LIVING SPACES AND ORDER WALLPAPER, PAINT AND FURNITURE ONLINE

In the brave new world of cyberspace, visiting a furniture store or hiring an interior designer to remodel your living room could become as obsolete as eight-track tapes.

At least that's the hope of executives at West Los Angeles-based ModaCAD Inc. Their recently released software, "3-D Home Interiors," allows PC users to design interior living spaces using a range of more than 100,000 materials and furnishings stored on CD-ROM.

Once an interior is designed, the items chosen, from wallpaper to sofa, can be ordered online from retailers such as Ikea, Wallpapers-to-Go and Whirlpool.

Since its release last May, Home Interiors has become the No. 2- selling home improvement software nationwide, according to industry database PC Data.

Home Interiors is based on ModaCAD's core rendering technology that enables computers to create photo-realistic 3-D images.

The quality of the image is its key selling point, said Sheila Lee, senior marketing manager at Broderbund Software, which is marketing the software as part of its home improvement series.

"The 3-D rendering is better than anything else we have seen. The more realistic your design, the more valuable it is to your customers," she said.

The technology has already made ModaCAD a leader in the field of computer-aided fashion and textile design.

Retailers licensing the firm's professional software include Levitz furniture and recreational vehicle manufacturer Fleetwood Enterprises.

For example, the software allows a furniture buyer to choose a fabric for a couch and see an image of what it would look like before ordering. An RV buyer, by the same token, could view different configurations of a motor home before making a purchase.

"Our product allows the user to break through what normally would be a cartoon experience and makes it a real-life experience," said Maurizio Vecchione, executive vice president and co-founder of ModaCAD. "If you can pre-sell your product before it is manufactured you are greatly reducing your cost cycle."

The challenge now, said Vecchione, "is to emerge out of a niche market and get our product into every computer in the country."

ModaCAD was founded in 1988 by its president, Joyce Freedman, who had a background in architecture and retail, and Vecchione, who previously had been involved in computer imaging for NASA.

"We had a common interest in computers and fashion," Freedman said.

The partners funded the company out of their own pockets for the first two years, until receiving a $1.5 million investment from a client.

With that money they were able to develop their fashion and textile industry software.

Last year, the company went public and used funds raised in the initial public offering to develop and market consumer-oriented software such as Home Interiors. Soon after, they signed a marketing agreement with Broderbund Software, which has allowed them to penetrate the mass market.

Freedman and Vecchione believe their software will allow them to ride the rising tide of Internet commerce.

Since the IPO, the stock has risen from $5 to the $20 range last week. The stock's price-earnings ratio has soared to a rich 119.

John Raaf, an analyst for the Red Chip Review, which examines small-cap stocks, estimates that revenues will top $12 million in 1998, up from $3.3 million in 1996.

Raaf is holding a long-term share price target of $32.

"The timing of getting involved with Broderbund was very good," he said.

As sales of its best-selling Myst computer game started to fall off, Raaf said, Broderbund was looking for new titles.

"So I think the terms of ModaCAD's agreement are better than average. Now they are starting to see the first royalty checks."

Vecchione doesn't consider the stock a short-term investment. "We are a very small company and a failure by one of our major customers could cause lumpiness in our quarterly earnings," she said. "You should look at us on a three- to five-year basis. We are a tech play. We are going to change the future."

ModaCAD also appears to be developing a promising relationship with chipmaker Intel Corp., which has highlighted ModaCAD's technology at several recent conferences.

Raaf said: "This indicates that Intel is pointing to ModaCAD for anyone trying to design 3D programs."

Spotlight

ModaCAD Inc.

Year Founded: 1988

Core Business: Software development and marketing

Top Executive: Joyce Freedman

Employees: 67

Revenues: $3.4 million

Goal: To develop software that enables non-technical users to create and model 3-D synthetic objects from 2-D images

Driving Force: Strong growth in use of 3-D software for commerce over the Internet.