IMSI Achieves Operating Profit.

Business Editors

NOVATO, Calif.--(BUSINESS WIRE)--July 10, 2000

IMSI(R), (OTC "Pink Sheets": IMSI), developer of design software including TurboCAD and FloorPlan3D, and owner of ArtToday.com and HomeDesignToday.com, Monday announced that it has achieved operating profits and positive operating cash flow for the quarter ending June 30, 2000.

IMSI will hold a national conference call on Thursday, July 13, 2000 at 8:00 a.m. PST to brief investors on current and upcoming corporate events. The call-in number is 800/218-0204 and the confirmation code is 735744. The toll-free call will be accessible to the first 200 participants who call in. Participants are encouraged to call five minutes prior to the scheduled start time. There will be a brief question and answer period at the end of the call.

The conference call can also be heard over the Internet through Vcall at http://www.vcall.com. To listen to the live call, listeners should go to the Web site at least 15 minutes early to register, download and install any necessary audio software. For those who are unable to listen to the live broadcast, a replay will be available shortly after the call on the Vcall.com Web site.

"IMSI had a positive EBITDA and positive cash flow from operations for the quarter ending June 30, 2000, on revenues for the three months of over $3.7 million," said Geoffrey Koblick, chief executive officer and president of IMSI. "Of equal importance, in the four months since I returned to IMSI, we have implemented a new strategic plan and restructured the company for future growth on a profitable operating basis."

"We started by adding experienced management with proven success records, including Jeff Morgan, CFO, and executive vice presidents, Paul Jakab and Mike Gariepy, to an already experienced management team (see more detail below). We have also added three new members to our board. I am confident this team can execute our plans."

"We are pleased with the progress we have made, but the company has several challenges ahead with respect to our balance sheet. While IMSI continues to be in default under its loan agreements, our creditors are working with the company by providing time to remedy this situation. In addition to our goal of continuing to operate profitably, we are exploring a wide range of alternatives to address these issues including bringing in new equity investment and/or the sale of business units or other intellectual property assets."

On June 19, 2000, IMSI became an NSCC (National Securities Clearing Corp.) eligible security designated by the NASD OTC Bulletin Board anticipated additions listing. IMSI is a fully reporting company as defined by the SEC; however, the company has not yet met all of the requirements for re-listing onto the NASD OTC Bulletin Board. Management is working closely with NASD Market Making firms sponsoring IMSI's return and anticipates once the NASDR (Regulations Division) receives notification that IMSI's filings have been approved by the SEC, its shares can then be re-listed.

Renewed Investment in Core Technology and Internet Marketing Opportunities

Over the last 17 years, IMSI has developed and sold millions of units of its award-winning design and graphics software products, which include TurboCAD, FloorPlan3D, TurboProject, FormTool, HiJaak Graphics, Flow, Lumiere, MasterClips and Org Plus. These software products have won industry awards like PC Magazine Editor's Choice and numerous others for their ease of use and power.

Koblick continued, "One of our first steps has been to re-invigorate development and sales of these outstanding software products. To that end, we quickly re-instituted our development efforts in Russia and have already begun shipping a new upgrade to TurboCAD. Secondly, we initiated automated sale and delivery of our software products over the Internet, and we entered into publishing arrangements for the retail versions of our software with strategic partners throughout the world.

"Thirdly, we have renewed development of ArtToday.com, one of the world's largest Internet graphics sites. Finally, the company has initiated two new business divisions: (1) HomeDesignToday.com, which will offer online design tools and content, and (2) LinuxDesignToday which is developing Linux versions of our design software. We see tremendous leverage and synergy with our core technology towards realizing these opportunities."

New Online Technology Ignites Revenue Growth with Digital River, Egghead.com, Beyond.com and Others

To launch the company's Internet sales initiative, IMSI has entered into a strategic agreement with Digital River (Nasdaq: DRIV), wherein Digital River hosts IMSI's software storefront and provides the infrastructure for online promotion and sales of these products. IMSI has seen an average 20 percent month over month growth in online sales of its software over the last three months. The online order process and delivery of software via download is automated, so the costs are minimal compared with retail software sales. IMSI software can also be purchased on the Internet from other online sellers of software including Egghead.com and Beyond.com.

New Licensing Strategy To Yield More Than $2.5 Million from Worldwide Distribution Agreements

Koblick continued, "One of our main goals in restructuring the company was to find partners with strong distribution resources to relaunch worldwide our software products into retail and other channels."

IMSI has entered into publishing agreements with ValuSoft in the United States, Sumitomo (SMI) and Rock Intl. in Japan, and SoftChina for Southeast Asia. IMSI also has entered into publishing agreements with MicroBasic in Germany, Austria and German speaking parts of Switzerland, with AB Soft in France, Belgium, and French speaking parts of Switzerland, and with MediaGold for the rest of Europe, Africa and Middle East.

These distribution arrangements generate more profitable revenues to IMSI than doing direct distribution because the publisher does all manufacturing, co-op and other promotion, technical support, and shipping and fulfillment, and pays IMSI a guaranteed royalty. In April and May, IMSI also entered into licensing agreements with Corel Corp. and Jasc Software, wherein IMSI received payments for non-exclusive source code licenses of its proprietary software technology.

The above contracts are expected to generate more than $2.5 million in present and future revenues for the company.

ArtToday.com Memberships Grow to 1.5 million

IMSI has refocused its efforts and investment in growing its wholly owned subsidiary, ArtToday.com. ArtToday is a leading site for graphics content on the Web with more than 1 million graphic images, photos and fonts available online. ArtToday.com currently has more than 1.5 million members, and according to PC Data Online, it is generating approximately 1.3 million unique visitors per month. ArtToday is operating profitably and is cash-flow positive.

"Our immediate goals for ArtToday.com are to leverage and grow our base of over 100,000 paying subscribers to the site, increasing advertising revenues from our over 20 million page views per month, and grow e-commerce from our over 1 million active e-mail names. We also hope to expand our content by forging new relationships with branded content suppliers and by entering the fast emerging digital photo market," said Koblick.

New "Online Design" Technology

IMSI has just launched a separate division, focused on creating new Web-based 3D design technology to allow people to design their dream home or to do remodeling projects on the Internet. Leveraging technology which has been developed over 10 years and which forms the basis for award-winning FloorPlan3D and TurboCAD software (1999 PC Magazine Editors Choice Award and 1999 PC Direct Editors Choice Award respectively), this technology will represent a revolutionary change in home design on the Internet.

IMSI also owns and licenses thousands of pre-designed home plans, kitchens, bathrooms, fixtures, appliances, electrical and plumbing fixtures to help people design their dream home or remodeling project. Koblick continued, "Our new Web-based 3D design technology will be of benefit to hundreds of leading companies in the home design/remodeling/construction/home furnishings industry. Our goal is to partner with several of these companies and license our online 3D design software to them."

TurboCAD for Linux Announced

IMSI has embarked on porting the company's key software product, TurboCAD, to run on the Linux operating system. According to the April 11, 2000 report on Yahoo News, with an estimated 20 million people now using the Linux operating system on personal computers, many industry experts are projecting that the open source system used in Linux will change the way the world computes. Linux's creator Linus Torvalds recently said, "Vertical markets like the CAD and graphics software markets are perfect for Linux ... and they will be next in line," (LinuxWorld 4/14/00). Porting IMSI's software products over to the Linux operating system is facilitated by the availability of several new tools and is planned to be accomplished before the end of this calendar year.

Board of Directors and Management Team

An integral part of IMSI's restructuring over the last 90 days has been to revitalize its board of directors and management team. In addition to the appointment of the company founder Geoffrey Koblick as CEO and chairman in February, the company has appointed the following new board members and key employees:

Mark T. Boyer, director: Boyer has been in the investment business for more than 18 years. Since July 1992, he has been the president and a director of ROI Capital Management. Prior to his work at ROI, Boyer was a general partner and portfolio manager with Volpe, Welty, & Co. in San Francisco, Calif., and has also worked as an analyst and fund manager with Fidelity Management Research Inc. in Boston.

Robert Mayer, director: Mayer is vice president of Adventa, an Internet direct marketing company. Formerly, he was executive vice president of Worldwide Sales & Marketing, and a co-founder of IMSI. Mayer received his master's degree from the University of Washington, and bachelor's degree from the University of California at Berkeley.

Richard M. Hall, director: Hall is the vice president, general merchandise manager of Miadora, the leading designer jewelry showcase on the Internet. Hall brings with him more than 20 years of retail and branding experience, managing both buying-line and store-line jewelry operations at the Macy's West Division of Federated Department Stores.

Mike Gariepy, director and senior vice president: In 1985 Gariepy founded Zedcor Inc., a publisher of award winning software products like DeskGallery, DeskPaint, DeskWorks, FutureBASIC and others. In 1996, Zedcor created the Internet's biggest and fastest growing graphics site, ArtToday.com, which was acquired by IMSI in 1998. Today, Gariepy heads the development of IMSI's new e-commerce business, HomeDesignToday.com, which will be offering home design online with 3-D viewing and editing.

Jeffrey B. Morgan, chief financial officer: Morgan brings to IMSI more than 25 years of experience in finance and operations with both large and small companies. His experience includes 11 years of progressively increasing financial responsibilities with Chevron Corp. culminating with full responsibility for accounting principles and policies and regulatory reporting and analysis for this multi-national company. Morgan earned his master's degree in business administration with an emphasis in finance from the University of California at Berkeley and was named a Flood Fellow.

Peter Zingg, chief technical officer: Zingg has been with IMSI since 1993 and brings more than 20 years of computer-aided design and architectural visualization experience to IMSI. Zingg received his bachelor's degree from Yale University and went on to earn a master's degree in architecture at UCLA and is a registered architect in California.

Peter Gariepy, president of ArtToday.com: Gariepy co-founded ArtToday.com in 1988 and has been its president for the last several years. Before joining ArtToday.com, Gariepy established Software Unlimited, one of the first software stores in the United States. He later managed computer retail stores for Vamont Industries and Bell Atlantic Corp.

Paul Jakab, executive vice president Business Development and International Sales: Jakab brings to IMSI four years of international sales and management experience, and more than 20 years of experience advising a variety of high tech companies, including Apple, Mindscape, and several Internet companies, with respect to a broad range of business and legal issues. Jakab has a bachelor's from Harvard, an MBA from Stanford, and a J.D. from Columbia University.

Kathleen Mountanos, vice president of Sales, North America: Mountanos has been in the software industry for more than 17 years and with IMSI for seven of those years. Capitalizing on the strength of TurboCAD and TurboProject in the corporate arena, Mountanos expanded the IMSI sales department to include corporate, government and educational sales divisions. She has extensive contacts throughout the retail and the corporate industry. Mountanos received her bachelor's in Liberal Arts from St. Mary's College and her master's degree from the University of San Francisco.

Ivan Dana, vice president of Direct Marketing: Dana has more than 20 years of experience in sales, business development and operations. Before coming to IMSI in 1993, Dana developed private label programs for companies such as the Nature Co. and Imaginarium. Dana earned his bachelor's degree from the University of Southern California.

Russian Technical Team: For more than six years, IMSI software development has been the result of the extraordinary work of more than 40 engineers and software developers in St. Petersburg, Russia. This team continues to be integral to IMSI's future plans.

Koblick concluded, "The first 90 days of the new IMSI have been challenging in light of the huge transition we have undertaken, and in terms of the financial situation of the company. We are pleased with our progress and have exceeded our expectations so far. We will need the continued support of our creditors, along with the hard work and perseverance of our dedicated team to achieve our goals. IMSI has an excellent technology base and a large amount of intellectual property assets upon which it can rebuild itself. We look forward to meeting this challenge."

Individuals can obtain stock prices and information for IMSI while it is being traded on the "Pink Sheets" at www.Bloomberg.com and other sites on the Internet.

IMSI is a registered trademark of International Microcomputer Software Inc.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of various factors including the ability of the company to successfully commercialize its new technologies as well as risk factors set forth under "Factors Affecting Future Operating Results" in the company's annual report on Form 10-K and such other risks detailed from time to time in the company's reports filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.