IMSI Annual Sales Growth Hits 39 Percent

Growth With Higher Margins in Software Lines and Houseplans(TM) Business

NOVATO, Calif., Sept. 29 /PRNewswire-FirstCall/ -- IMSI(R) (BULLETIN BOARD: IMSI) , a leading provider of house plans online and a leading developer and publisher of precision design, and consumer and business software solutions, today announced its financial results for the fiscal year ended June 30, 2005. For the twelve months ended June 30, 2005, IMSI reported a net loss of $1.8 million, or ($0.06) per share on net revenues of $13.9 million. Pro forma revenue including discontinued operations was $23.3 million versus $12.0 million reported the prior year. Net revenues increased by thirty nine percent (39%) in our core Houseplans(TM) and software businesses, as compared to the previous fiscal year, reflecting the continued growth in the Houseplans(TM) business and in software product sales led by our flagship application TurboCAD(R).

The following are highlights for the fiscal year ended June 30, 2005:

-- Sales from the more profitable direct marketing channel accounted for 67% of total revenues for fiscal year 2005 as compared to 51% in fiscal year 2004. 

-- Gross margins improved to 65% from 64% during fiscal 2005, as compared to the previous fiscal year. 

-- Operating loss narrowed to 29% of net revenue as compared to an operating loss of 38% of net revenue in the prior fiscal year.

Non GAAP Information

-- GAAP net income (loss) when adjusted for certain non-cash activity and taxes to "EBITDA" was a negative $328,000 for the fiscal year.

"The Houseplans(TM) business continued to grow both organically and with the acquisition of homeplanfinder.com, and we are extremely pleased with the business' 266% annualized growth rate. In July we acquired globalhouseplans.com and expect this business to help us achieve additional significant revenue growth during 2006 in the sale of stock house plans," said Martin Wade III, Chief Executive Officer. "Our balance sheet is newly strengthened with certain discontinued operations converting to cash as a result of a sale closed in the September quarter," continued Mr. Wade. "We had approximately $4.3 million cash or cash equivalents as of June 30, 2005. This does not include the $11 million in cash and escrow from the sale of Allume subsequent to fiscal year end, which provides us with additional cash to fund our net working capital needs and planned acquisition activity. Our resulting current cash and cash equivalents balance represents a significant opportunity to invest in high-return operations during fiscal 2006."

"With the annual launch of new versions of our flagship product TurboCAD(R) and with our other award winning products, we are continuing to deliver excellent products in our software business," stated Gordon Landies, IMSI President. "We continue to utilize our strengths in acquiring, developing and distributing products and services directly to consumers and businesses to generate sales momentum. Our productivity tools and precision design products, as well as our house plans business, all had solid results during fiscal 2005. In addition, we are pleased by the growth of our Houseplans(TM) network of websites which now have an online library of over 21,000 stock house plans, the largest collection of exceptional house plans online. We plan additional investments in our Houseplans(TM) business, adding properties to our network while including more features and functionality to our existing sites to increase sales and profits."

www.imsisoft.com

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