iMedia Announces Results of Second Quarter Operations -- Company Sees First Revenues From Hollywood Previews Newspaper Syndication


SANTA MONICA, Calif., Aug. 18, 2006 (PRIMEZONE) -- iMedia International, Inc. (OTCBB:IMNL) (www.imedia-intl.com) announced today the results of its second quarter operations. While the Company saw a decrease in net sales for the period, it realized its first material revenues from its newspaper syndication program, and the distribution of Hollywood Previews Entertainment iMagazine. In addition, the Company continues to show an increase in gross profits from its custom disc productions.

"Since the beginning of the year, we have concentrated our full sales efforts towards the launch of our newspaper syndication in Dallas," said David MacEachern, CEO of iMedia International. "We knew that this would result in an immediate reduction of our custom disc sales, but believe that our intensive focus and the investment made to launch Hollywood Previews will have a greater long-term benefit for the Company."

During the six-month period ending June 30, 2006, the Company accomplished the following milestones:


 1  Secured a full-circulation distribution and partnership agreement 
    with the Dallas Morning News, and began distribution of 640,000 
    Hollywood Previews discs each month beginning April 30.
 2  Secured a second, full circulation distribution and partnership 
    agreement with the New York Daily News, a newspaper boasting the 
    highest readership of any paper in the New York City area.
 3  Produced an interactive custom promotional disc for the NCAA 
    basketball championship featuring sponsors Cingular and Coke which 
    was distributed in WalMart stores nationally.
 4  Produced an interactive promotional disc for PGA Golf sponsored by 
    FedEx.  1,600,000 discs were distributed in Sports Illustrated 
    magazines and in FedEx-Kinko's retail stores.
 5  Produced five new interactive discs for Cirque du Soliel.
 6  Completed custom disc reorders for current clients Wynn Las Vegas 
    Resort, Embassy Vacations, and Cirque du Soliel and Doyle's Room.
 7  Received it first royalty payment from Google for click-through 
    advertising response from the Hollywood Previews website.

Net Sales were essentially flat for the six month period ending June 30, 2006 but decreased $1,005,000 or 59% from $1,701,000 during the three month period ended June 30, 2006 compared to the comparable period during 2005. The decrease in net sales was primarily due to the reduction in sales efforts for our custom digital disc programs as sales activity was re-focused on Dallas Morning News, whereby we realized our first revenues from our newspaper syndication program.

Cost of sales decreased $161,000 or 11% from $1,447,000 to $1,286,000 for the three months ended June 30, 2005 to $1,286,000 for the three months ended June 30, 2006. However, during the period we experienced a negative gross profit of $(589,613) compared to a $253,000 gross profit for the comparable period during 2005. The negative gross profit is primarily due to the anticipated subsidies to launch Hollywood Previews in the Dallas Morning News. The negative gross profit was partially offset by the continued improvement of gross profits for our custom disc sales which improved to 35% for the three months ended June 30, 2006 compared to 15% during the three month period ending June 30, 2005.

Selling expenses increased $156,000 or 35% for the three months ended June 30, 2006 to $595,000 from $439,000 for the comparable period during 2005. The increase in selling expenses was primarily attributable to various travel and entertainment expenses and non-cash compensation associated with the launch of Hollywood Previews in the Dallas Morning News.

Our General and Administrative expenses decreased $1,005,000 or 57% for the three months ended June 30, 2006 to $770,000 from $1,775,000 for the comparative period during 2005. The decrease in general administrative expenses was primarily attributable to non-reoccurring cash and non-cash expenses for warrants and offering costs realized in the prior year that were not realized during this period.

About iMedia International Inc.

iMedia International, Inc. (IMNL) is a publicly held digital media solutions company producing DVD's, and CD-ROM's for digital multimedia marketing and promotional campaigns. iMedia publishes proprietary and custom digital iMagazines and offers expert digital media solutions services including: strategic planning, content aggregation and production, disc audio/video design, authoring, editing and compression, disc packaging manufacturing and distribution. A key feature of iMedia's technology is its iReporting(tm) real-time, online tracking system which provides quantitative data on disc viewer usage patterns and effectiveness of iMedia marketing and promotional campaigns.

The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements to the future financial performance of the Company. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development and acceptance, the impact of competitive services and pricing, general economic risks and uncertainties, and various other information detailed from time to time in the Company's filings with the United States Securities and Exchange Commission. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date thereof. Please refer to the full filing of the Company's Quarterly Report on Form 10-Q at http://www.sec.gov.


 iMedia International, Inc.
 Condensed Combined Balance Sheet
 As of June 30, 2006 (unaudited)

                                ASSETS
 Current Assets
  Cash                                               $   66,693
  Accounts receivable, net of allowance 
   for doubtful accounts of $60,000                     428,038
  Work in process                                        59,947
  Due from affiliate                                      5,331
  Prepaid expense                                         9,601
                                                     ----------
    Total current assets                                569,610
  Property and equipment, net                           173,173
                                                     ----------
    Total Assets                                     $  742,783
                                                     ----------
              LIABILITIES AND SHAREHOLDERS' DEFICIT
 Current liabilities:
  Accounts payable and accrued expenses              $1,753,771
  Accrued liquidated damages                          2,506,654
  Deferred revenue and customer deposits                311,983
  Warrant derivative liability                        1,484,052
                                                     ----------
    Total current liabilities                         6,056,460
                                                     ----------
 Series A - Convertible preferred stock 
  subject to redemption, net of discount 
  of $1,427,113                                       1,612,887
                                                     ----------
   Total Shareholders' deficit                       (6,926,564)
                                                     ----------
   Total Liabilities and shareholders' deficit       $  742,783
                                                     ----------


 iMedia International, Inc.
 Condensed Combined Statements of Operations
 For the Three and Six Months Ended June 30, 2006 and 2005 (unaudited)

                       2006        2005        2006          2005
                               (as restated)             (as restated)
                     ----------  ----------    ----------  ----------
 Net sales          $   696,460  $1,700,886    $2,120,538  $2,147,351
 Cost of sales        1,286,073   1,447,278     2,263,445   1,715,232
                     ----------  ----------    ----------  ----------
 Gross profit (loss)   (589,613)    253,608      (142,907)    432,119
                     ----------  ----------    ----------  ----------
 Operating expenses:
 Selling and marketing  594,874     439,243     1,787,528     778,933
 General and
  administrative        769,592   1,774,866     1,321,202   3,929,431
 Operating expenses-
  related party         157,625     135,000       322,625     291,000
                     ----------  ----------    ----------  ----------
 Total operating
  expenses            1,522,091   2,349,109     3,431,355   4,999,364
                     ----------  ----------    ----------  ----------
 Loss from 
  operations         (2,111,704) (2,095,501)   (3,574,262) (4,567,245)
                     ----------  ----------    ----------  ----------
 Other (income) expense:
 Net (gain) Loss on
  revaluation of
  warrant
  derivatives        (2,232,911)  2,428,952    (3,631,253)  2,428,952
 Penalty on late
  filing of SB2         782,794          --     1,297,136          --
 Warrants issued for
  extension on
  Convertible note
  payable                    --     340,478            --     340,478
 Interest on
  amortization of
  debt discount              --      31,551            --     126,204
 Interest (income)
  expense, net            1,127      29,679        (6,370)     67,572
 Loss on investment          --       6,436            --     149,913
 Impairment loss on
  investment in
  available for
  sale securities            --      57,720            --   1,570,750
                     ----------  ----------    ----------  ----------
 Total other (income)
  expense            (1,448,990)  2,894,816    (2,340,487)  4,683,869
                     ----------  ----------    ----------  ----------
 Loss before provision
  for income taxes     (662,714) (4,990,317)   (1,233,775) (9,251,114)
 Provision for
  income taxes            3,000       3,200         4,092       4,000
                     ----------  ----------    ----------  ----------
 Net loss              (665,714) (4,993,517)   (1,237,867) (9,255,114)
 Interest on fixed
  conversion feature
  and accretion of
  discount on
  Series A redeemable
  preferred stock       379,998      92,889       759,996      92,889
 Preferred stock                   
  dividends                        
  Series A and B        119,400      18,746       238,800      18,746
 Preferred stock                   
  dividends -                      
  iPublishing,                     
  an affiliated                    
  company                 6,750       6,750        13,500      13,500
                     ----------  ----------    ----------  ----------
 Net loss allocable
  to common
  shareholders      $(1,171,862)$(5,111,902)  $(2,250,163)$(9,380,249)
                     ----------  ----------    ----------  ----------
 Net loss per
  common share
  allocated to
  common shareholders,
  Basic and Diluted    $  (0.02)   $  (0.07)     $  (0.03)   $  (0.14)
                     ----------  ----------    ----------  ----------
 Weighted average
  common shares
  outstanding
   Basic and Diluted 73,154,739  70,960,230    73,071,727  69,004,890
                     ----------  ----------    ----------  ----------


 iMedia International, Inc.
 Condensed Combined Statements of Cash Flows
 For the Six months ended June 30, 2006 and 2005 (unaudited)

                                                2006        2005
                                                        (as restated)
                                             ----------  ------------
 Net loss                                   $(1,237,867)  $(9,255,114)
 Adjustments to reconcile net loss to
  net cash used in operating activities:
   Depreciation                                  34,139        24,296
   Allowance for doubtful accounts               34,695            --
   Loss on sale of investments                       --       149,913
   Unrealized loss on investment in available
    for sale securities                              --     1,570,750
   Change in warrant derivative due to
    revaluation                              (3,631,253)    2,428,952
   Options issued for employee compensation      90,475            --
   Options issued to employees                   11,374            --
   Issuance of warrants for extension of
    notes payable                                    --       340,478
   Issuance of additional warrants to investors      --       810,563
   Issuance of warrants for services            199,516        83,584
   Issuance of common stock for services         76,000     1,926,750
   Common stock issued for extension of
    related parties notes payable                    --        94,900
   Net change in deferred compensation          (32,034)      (48,366)
   Changes in assets and liabilities:
    Accounts receivable                       1,357,750      (880,412)
    Work in process                             (32,168)     (129,051)
    Prepaid expenses and other assets             3,962          (245)
    Accounts payable and accrued expenses       655,132       (10,985)
    Accrued liquidated damages                1,297,136            --
    Deferred revenue and customer deposits      221,543       123,260
                                             ----------    ----------
    Net cash used in operating activities      (951,601)   (2,770,727)
                                             ----------    ----------
 Cash flows from Investing activities
  Purchase of equipment                         (66,827)      (16,318)
  Sale of investment in available for
   sale securities                                   --       209,261
  Due to/from affiliates, net                   (52,000)       26,398
                                             ----------    ----------
   Net cash (used in) provided by investing
    activities                                 (118,827)      219,341
 Cash flows from financing activities
  Common stock committed for interest on
   related party notes                               --       (94,900)
  Payments on notes payable                          --    (1,000,000)
  Payments on notes payable - related parties    (8,483)     (130,000)
  Proceeds from notes payable - related parties      --        15,047
  Proceeds from issuance of redeemable
   Series A preferred stock, net                     --     2,712,393
  Proceeds from issuance of common stock
   for cash                                          --     1,149,960
  Dividend on Preferred Series A               (238,800)      (18,746)
  Dividend on iPublishing preferred             (13,500)      (13,500)
                                             ----------    ----------
   Net cash (used in) provided by
    financing activities                       (260,783)    2,620,254
 Net change in cash                          (1,331,211)       68,868
 Cash, beginning of period                    1,397,904       453,304
                                             ----------    ----------
 Cash, end of period                         $   66,693   $   522,172
                                             ----------    ----------
 Supplemental disclosures of cash flow
  information:
   Income taxes paid                         $    3,562   $     3,200
   Interest paid                             $    3,200   $    67,571
 Non-cash investing and financing activities:
                                             $  759,996   $        --
  Issuance of common stock for accrued
   dividends on Series A preferred stock     $   26,122   $        --

            

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