Intelligent Medical Imaging Inc. Reports Year End Results; Revenue Increased 78% and Net Losses Reduced 18% for the Fourth Quarter.

PALM BEACH GARDENS, Fla.--(BW HealthWire)--April 16, 1999--

Intelligent Medical Imaging Inc. (Nasdaq:IMII) Friday announced results for the three month period and year ended Dec. 31, 1998.

Revenue for the three month period ended Dec. 31, 1998 increased 78% to $1,648,632 as compared to $926,930 reported for the three month period ended Dec. 31, 1997. Net losses decreased 18% to $4,112,627, or $0.36 loss per share, for the current three month reporting period compared to net losses of $5,021,414, or $0.46 loss per share, reported for the three month reporting period in the prior year.

For the year ended Dec. 31, 1998, revenue slightly decreased to $3,762,035 compared to revenue of $3,770,489 posted for the year ended Dec. 31, 1997. Net losses in 1998 increased 29% to $15,167,333, or $1.33 loss per share, compared to net losses of $11,729,165, or $1.07 loss per share reported in the previous year.

Tyce Fitzmorris, chairman and chief executive officer of Intelligent Medical Imaging, stated: "Our operating expenses for 1998 reflect the signing of distribution agreements with industry leaders, Bayer and Beckman-Coulter; significant expansion of the IMII product line; and the establishment of a Micro21 reference base at some of the country's most prestigious institutions. Our development effort during the year was the most significant in the company's history, resulting in the expansion of Micro21's procedures capabilities -- not the least of which is the FDA clearance of the urine analysis procedure. Additionally, we succeeded in developing the urine slide maker (USM), the blood slide maker (HSM) and the integrated blood analysis capability (Corelab) and are currently in the process of preparing for delivery or actively marketing each new product at this time."

Continuing Fitzmorris added: "During 1998, we established our presence in the market with sales to a broad and prestigious group of medical institutions such as Bethesda Naval, Walter Reed, Vanderbilt, Cleveland Clinic...just to name a few. This growing list of customers, combined with our successfully concluding agreements with Bayer and Beckman-Coulter, has elevated the company to an entire new level of achievement and regard in the medical industry as evidenced by recent multi-unit orders for our products."

Fitzmorris concluded: "The significant investments we made in the company during 1998 to build a solid infrastructure and diversified product line are now beginning to deliver quantifiable results. Ultimately, we believe IMII will emerge as the worldwide standard for automated microscopy and have products engaged by every major medical institution. Because of the foundation for growth we established in 1998, we have been able to significantly reduce our operating expenses -- leveling them at $4 million annually. In 1999, at this reduced overhead level, we will focus on an aggressive sales and marketing initiative, which will leverage our product offering and distribution agreements to achieve significant increased revenues and profitability."

In other news, the company noted that it had its NASDAQ hearing on April 8, 1999. Fitzmorris commented: "We were pleased to be able to show the Panel that we have met the requirement for our stock price to be over $1 for ten or more days. Although the company does require an additional capital infusion and is currently in discussion with some funding groups, we believe we addressed their concern regarding our tangible net worth. As such, we expect to receive their decision by the end of April."

Intelligent Medical Imaging, Inc. (IMII) is the premier designer and manufacturer of intelligent automated microscopic systems. The company developed and globally markets the MICRO21 System, an intelligent, automated microscope system; the HSM, an automated blood slide maker; and the USM(tm), an automated urine slide maker for diagnostic use in hospitals, commercial reference, physician group practice laboratories and pharmaceutical and veterinary laboratories. IMII's systems are currently in operation at some of the world's most prestigious medical teaching and healthcare institutions including Emory University, Vanderbilt University, Cleveland Clinic, Beth Israel, University of Illinois, Walter Reed Memorial Hospital, Bethesda Medical College, and Cedar Sinai. Partnering with healthcare giant Beckman-Coulter (NYSE:BEC) and global pharmaceutical leader Bayer Corporation via global distribution and/or licensing agreements, IMII is engaged in marketing its products in the United States, Europe, Japan, Israel and Korea. -0-

                    INTELLIGENT MEDICAL IMAGING INC.
                      CONSOLIDATED BALANCE SHEET
                               (Audited)

                                    December 31,        December 31,
                                       1998                 1997

Assets
Current assets:
 Cash and cash equivalents         $   31,923            $   853,164
 Investments available for sale             0              6,230,009
 Accounts receivable, net           1,002,781                671,905
 Notes receivable related party        86,684                      0
 Accrued interest receivable        3,157,537                 13,151
 Inventory                             67,408              5,933,815
 Prepaid expenses                     297,000                 61,799
 Current portion of investment
  in sales-type leases                      0                222,213
                                    ---------             ----------
Total current assets                4,643,333             13,986,056

Long-term portion of
 investment in sales-type
 leases                               451,808                240,145
Revenue equipment, net                544,215                263,632
Property and equipment, net         2,556,347              2,789,693

Deferred financing costs              297,000                      0
Other assets                           52,650                126,883
                                    ---------             ----------
                                    8,545,353             17,406,409
                                   ==========             ==========

Liabilities and stockholders' equity
Current liabilities:
 Notes payable in default        $    335,493            $        --
 Accounts payable                   1,159,737              1,298,811
 Accrued salaries and benefits        372,149                394,190
 Advances from factor and due
  from financing companies            617,000                     --
 Other accrued liabilities            258,671                101,816
 Current portion
  of deferred revenue                 348,943                 74,673
                                   ----------              ---------
Total current liabilities           3,091,993              1,869,490

Deferred revenue                      467,143                219,574
Amount due to financing
 companies                            451,808                     --
Convertible debentures,
 net of unamoritized
 discount of $662,036               2,787,999                      0


Stockholders' equity
Preferred stock, $.01 par
 value-authorized 2,000,000 shares;
 no shares issued or outstanding            0                      0
Common stock, $.01 par
 value-authorized 30,000,000 shares;
 issued and outstanding, 11,583,333
 shares at Sept. 30, 1998  and
 11,023,938 shares at Dec. 31, 1997   116,315                110,239
Additional paid-in capital         44,416,708             42,537,633
Deferred compensation                (486,000)              (228,252)
Accumulated deficit               (42,300,613)           (27,102,575)
                                  -----------            -----------
Total stockholders' equity          1,746,410             15,317,345
                                  -----------            -----------
                                    8,545,353             17,406,409
                                  ===========            ===========

                   INTELLIGENT MEDICAL IMAGING INC.
                       STATEMENT OF OPERATIONS
                              (Audited)

                   Three Months Ended               Year Ended
                      December 31,                 December 31,
                   1998         1997            1998          1997

Product Sales    1,048,632     926,930        3,162,035     3,770,489
License Fees       600,000          --          600,000            --
                 ---------     -------        ---------     ---------
                 1,648,632     926,930        3,762,035     3,770,489

Cost of Sales    1,966,146   1,680,595        3,731,709     3,328,394
Gross Margin      (317,514)   (753,665)          30,326       442,095

Operating expenses:
 Selling,
  general and
  administrative 2,023,617   2,141,556        9,032,740     8,183,800
 Research and
  development    1,264,077   2,289,201        5,311,333     5,022,670
Total Operating
 Expense         3,287,694   4,430,757       14,344,073    13,206,470

Loss From
 Operations     (3,605,208) (5,184,422)     (14,313,747)  (12,764,375)

Other Income (expense):
 Investment,
  interest and
  other income      66,078     163,008          198,125     1,035,210
 Interest expense (573,397)         --       (1,051,711)           --
Other Income
 (expense)        (507,319)    163,008         (853,588)    1,035,210

Net Loss        (4,112,527) (5,021,414)     (15,167,333)  (11,729,165)

Loss per common
 share               (0.36)      (0.46)           (1.33)        (1.07)

Weighted average
 common shares
 outstanding    11,409,499  10,930,096       11,419,666    10,952,330

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements which are not historical facts contained in this press release are forward-looking statements that involve certain risks and uncertainties including but not limited to risks associated with the uncertainty of future financial results, additional financing requirements, continued listing on the Nasdaq Small Cap market, development and marketing of new products, domestic and offshore government approval processes, the impact of competitive products or pricing, technological changes, the effect of global economic conditions and other uncertainties detailed in the company's filings with the Securities and Exchange Commission.