Capitol Multimedia, Inc. Reports Fiscal Year 1995 Results.

BETHESDA, Md.--(BUSINESS WIRE)--June 23, 1995--Capitol Multimedia, Inc. (NASDAQ: CDIM, CDIMW) headquartered in Bethesda, today reported a net loss of ($4,349,369) or ($0.77) per share for the year ended March 31, 1995 due primarily to a $2.3 million reduction in capitalized software costs and the write off of $747,000 in assets relating to its decision to discontinue title development for the Sega CD and CD-i platforms (other than on a work-for-hire basis).

The 1995 loss compares to a net loss from software operations of ($633,884) or ($0.12) per share in 1994. 1995 revenues from software operations increased to $4,587,777 from $3,902,129 in 1994. Weighted average number of shares also increased during the fiscal year from 5,429,800 to 5,636,128.

According to Robert I. Bogin, Capitol Multimedia President "The Company was disappointed by the market penetration for both the Philips CD-i and Sega CD platforms. Consumers either purchased multimedia computers or awaited advanced video game systems by Sega, Sony and Nintendo." The Company has concluded that the increase in the number of emerging formats and new titles in the entertainment software industry has significantly reduced the predictability of market acceptance and shelf life for products. As of March 31, 1995, virtually all capitalized software costs were fully amortized. Bogin added "The Company remains very strong financially with essentially no long term debt, and sufficient working capital for our future operating needs."

In February 1995, the Company entered the children's edutainment market with the acquisition of Animation Magic, Inc. ("AMI") and its wholly owned subsidiary in St. Petersburg, Russia through the issuance of 703,750 shares of common stock. The transaction was accounted for as a pooling of interests. Accordingly, the selected financial information below includes the accounts of the Company, AMI and its wholly owned subsidiary for both periods presented. The acquisition more than doubled the Company's capacity to develop high-end interactive software for the consumer market.

Given the Company's outstanding animation and creative capabilities, it is focusing on the rapidly growing children's CD-ROM software market. According to Bogin, "The decision to enter the children's edutainment market allows the Company to focus its strengths and resources on primarily one segment of the interactive software market." The Company intends to complete six high-quality animated CD-ROM products during it's fiscal year ending March 1996 and is currently evaluating its sales and distribution alternatives with regard to these titles.

In addition to its involvement in the development of children's CD-ROM titles, the Company recently announced (in conjunction with Bell Atlantic), the successful installation of InfoTravel(TM) in over 4,700 hotel rooms in the Washington, D.C. area. InfoTravel allows hotel guests to access an interactive directory on hotel room televisions. The Company also publishes ShowBuilder(TM), a PC authoring tool which allows users to create their own CD-based multimedia presentations. -0-

                         Capitol Multimedia, Inc.
                   Selected Pro Forma Financial Information
                         (Software Operations Only)

                                            Year Ended
                                              March 31

                                           1995        1994
                                                   (Pro Forma)

Net Sales                                4,587,777   3,902,129

Net Loss                                (4,349,369)   (633,884)

Net Loss Per Share                            (.77)       (.12)

Weighted Average Number
 of Shares Outstanding                   5,636,128   5,429,800

Current Assets                           4,719,552   6,997,672

Total Assets                             7,088,368  11,192,658

Current/Total Liabilities                1,263,711   1,025,317

CONTACT: Capitol Multimedia, Inc.

Robert Bogin or John Donovan

[phone]