Capitol Multimedia to acquire Client Server Technologies.

CONCORD, Mass.--(BUSINESS WIRE)--March 31, 1997--Capitol Multimedia Inc. (NASDAQ: CDIM, CDIMW, or the "company") announced today that it has acquired Client Server Technologies Inc. (CSTI), a privately held developer and integrator of supply chain management software based in Dedham, Mass., for approximately $4.2 million, consisting of $1.17 million in cash, 1.2 million in Capitol unregistered common stock and notes payable beginning in fiscal 1999.

CSTI's financial performance (unaudited) in calendar 1996 included sales of approximately $3.7 million, income before taxes of approximately $360,000 and a positive cash flow of approximately $500,000. CSTI is debt free and does not capitalize software development costs.

According to Luda Kopeikina, Capitol's president, "This acquisition represents the first step in realization of our strategic initiative to diversify into a business software market. This acquisition is an entry for Capitol into a fast growing sector of the application software industry -- supply chain management software. We selected this software market because of its high growth, the existing fragmentation and the fact that larger competitors like Manugistics Group, Baan Company, PeopleSoft and others are enjoying high revenue and earnings multiples. We believe that this market will experience further growth enhanced by the Internet. CSTI is expected to serve as a base for Capitol's expansion through future acquisitions and internal growth. We expect to realize synergistic benefits through leveraging our competitive development capability, senior management knowledge of the industry and international channel development expertise."

Client Server Technologies Inc.'s "Continuum" product set provides software solutions and integration services for logistics, planning, distribution and financial functions within a business to increase productivity and improve planning and control. CSTI solutions can significantly increase profitability of its customers through inventory reductions and cost savings. Included in the "Continuum" product line are modules for distribution resource planning, sales order processing, inventory planning and control, purchase order management and financial management. The software is available in client/server environment utilizing Microsoft Windows and several widely used relational database products, including Oracle, Ingres and Sybase. The software is fully Year 2000 compliant. CSTI has over 75 customers in the United States and over 30 customers in Europe in the middle market (companies ranging in size from $50 million to $1 billion) of manufacturing, distribution and retail businesses. CSTI employs approximately 40 people with offices in Dedham, Mass., Denver and Los Angeles.

The senior management of CSTI intends to stay with the company. Paul Carr, president of CSTI has entered into a three-year Employment Agreement with the company in conjunction with the acquisition.

Capitol Multimedia Inc. is a high-end producer of CD-ROM software with offices in Concord, Mass., and St. Petersburg, Russia.

This press release contains forward-looking statements. The phrase "expects to," "believe" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those presently anticipated or projected. Capitol cautions readers not to place undue reliance on any forward looking statements, which speak only as to management's expectations on the date hereof. Capitol does not undertake -- and specifically declines any obligation -- to publicly release the result of any revision which may be made to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events.

CONTACT: Capitol Management Inc.

Luda Kopeikina, 508/287-5888 ext. 114

[e-mail]

or

Edward Terino, 508/287-5888 ext. 113

[e-mail]