I-many Releases Second-Quarter 2005 Results

Net revenues for the second quarter totaled $8.4 million, adecrease of 6.4% versus $8.9 million reported in the first quarter of2005 and an increase of 2.6% versus $8.2 million reported in thesecond quarter of 2004. License revenue of $1.5 million decreased28.7% from $2.1 million in the first quarter of 2005 and increased42.3% from $1.0 million in the second quarter of 2004. Service revenueof $6.9 million was equal to the service revenue recorded in theprevious quarter and decreased 3.2% from $7.1 million in the secondquarter of 2004.

The company also signed additional subscription deals in thequarter with an aggregate value over their expected terms of $3.8million that are not reflected in current revenue. I-many's totalrecognized revenue plus deferred subscription revenue of $12.1 millionin Q2 marks the second time in three quarters that the company hastopped $12 million of combined recognized and deferred/subscriptionrevenue. I-many's backlog of revenue from subscription licenses, whichtypically are for a term of 3 to 5 years and are not cancelable by thecustomer without cause, grew to $6.7 million at June 30, 2005.

GAAP loss for the second quarter of 2005 was $(0.05) per share, animprovement over the $(0.07) loss per share in the same quarter lastyear. On a pro forma basis, second quarter 2005 loss per share was$(0.04) versus a pro forma loss per share of $(0.03) in the secondquarter 2004. Pro forma net income/(loss) per share differs from GAAPloss per share as it excludes impairment of goodwill and acquiredintangible assets, amortization of acquired intangibles, depreciationexpense, non-cash option and warrant charges, acquired in processresearch and development, terminated merger transaction costs andrestructuring and other charges. A more detailed reconciliation of thedifferences between pro forma and GAAP results is included in thefinancial tables in this press release.

Quarter-end cash, restricted cash and short-term investmentsdecreased to $19.1 million as of June 30, 2005 versus $19.2 million asof March 31, 2005 and $21.5 million as of December 31, 2004.

I-many CEO and President A. Leigh Powell commented, "The secondquarter continued a strong trend of new client acquisitions and theclosing of significant subscription and deferred revenue streams inaddition to revenue recognized in the quarter. When I-many's totalrecognized revenue is considered together with deferred subscriptionrevenue, this quarter saw our second-highest revenue results in twoand a half years." Mr. Powell continued, "An important part of ourstrategy is to increase our base of predictable, recurring revenue,and in the second quarter we performed extremely well against thismetric. In fact, the nearly $3.8 million of subscription revenuearrangements we signed in the quarter is higher than the total ofdeferred subscription revenue from the prior four quarters combined.At the end of the second quarter, on an annualized basis goingforward, recurring quarterly revenue streams from maintenance, supportand subscription licenses exceeded $14.4 million, an increase of morethan 20% compared with full year 2004's results. As we prepare for thelaunch of significant new products on our advanced Enterprise ContractManagement Foundation (ECMF) in Q3 and Q4, I-many is well positionedto expand on these trends in the second half of 2005 and beyond."

Transactions in the quarter included companies such as ProethicPharmaceuticals, KV Pharmaceutical, Amylin Pharmaceuticals and PlivaPharmaceuticals. Over the past three quarters including Q2 of 2005,I-many has acquired 19 new customers and executed 38 total softwaretransactions. Other significant operating milestones achieved duringthe past quarter include:

-- The release of I-many/Validata and its certification by a large pharmaceutical customer;

-- The commitment of a significant life sciences customer to migrate to I-many's next-generation technology platform, the Enterprise Contract Management Foundation (ECMF);

-- The release of ScoringManager(TM), part of the ContractAnalytics(TM) group of products, on the ECMF platform; and

-- Significant progress toward the general release of ContractManager(R) version 4 and ComplianceManager(TM) version 4 on the ECMF platform.

Regarding guidance, I-many is updating its prior outlook forrevenue and expense and its cash goals to reflect the significantamount of subscription bookings that have been signed in 2005:

-- Recognized revenues of approximately $37 to $41 million. I-many is projecting additional deferred license and subscription bookings of $6 to 8 million in 2005 for a total of approximately $43 to $49 million of recognized revenue and deferred license and subscription revenue;

-- Total GAAP operating expenses, including cost of revenue, of approximately $43-44 million;

-- Total pro forma cash operating expense of approximately $40 to $42 million (pro forma cash operating expenses differ from GAAP operating expenses by excluding impairment of goodwill and acquired intangible assets, amortization of acquired intangibles, depreciation expense, non-cash option and warrant charges, in process research and development, terminated merger transactions costs and restructuring and other charges); and

-- Cash, restricted cash and short-term investments of $19 - $21 million at year end.

Net revenues for the first half of 2005 totaled $17.3 million, adecrease of 11.7% versus $19.6 million reported in the first half of2004. License revenue of $3.6 million decreased 40.2% from $5.9million in the first half of 2004. Service revenue of $13.7 millionincreased slightly versus the $13.6 million reported in the first halfof 2004. GAAP loss for the first half was $(0.09) per share versus$(0.11) in the first half of 2004. On a pro forma basis, first half2005 earnings per share was $(0.06) versus a gain of $0.02 per sharein the first half of 2004. Pro forma net income/(loss) per sharediffers from GAAP loss per share as it excludes impairment of goodwilland acquired intangible assets, amortization of acquired intangibles,depreciation expense, non-cash option and warrant charges, acquired inprocess research and development, terminated merger transaction costsand restructuring and other charges. A more detailed reconciliation ofthe differences between pro forma and GAAP results is included in thefinancial tables in this press release.

I-many will hold a conference call tomorrow, Wednesday, July 27th,2005, at 10:00 a.m. Eastern Time. The call-in number is (866) 202-3048or (617) 213-8843, passcode 96029238. The call is also being webcastand can be accessed at I-many's web site at www.imany.com.

Use of Non-GAAP Financial Information

The Company supplements its GAAP financial statements withnon-GAAP, or pro forma measures of operating results. This non-GAAPfinancial information is provided as additional information forinvestors and is not in accordance with or an alternative to GAAP.These adjusted results exclude certain costs, expenses, gains andlosses, and we believe their exclusion can enhance an overallunderstanding of our past operational performance and also ourprospects for the future. These adjustments to our GAAP results aremade with the intent of providing both management and investors a morecomplete understanding of the operating performance of the Company asopposed to GAAP results, which may include non-recurring, infrequentor other non-cash charges associated with restructuring, amortizationof purchased intangibles or impairment losses that are not material tothe ongoing performance of the Company's business. Company managementuses these non-GAAP results as a basis for planning and forecastingcore business activity in future periods. The presentation of thisadditional information is not meant to be considered in isolation oras a substitute for net earnings or diluted earnings per shareprepared in accordance with generally accepted accounting principlesin the United States.

About I-many

I-many (NASDAQ:IMNY) delivers advanced Enterprise ContractManagement solutions for managing corporate commitments. Designed toextend beyond the traditional contract management capabilities, I-manyContractSphere(R) offers an end-to-end solution, from pre-contractprocesses and contract management to transaction compliance.Ultimately, this provides companies with the visibility and controlneeded to manage any type of commitment - from contracts andobligations to payments and collections. The result is increasedrevenue, minimized risk and dramatically reduced operating costs,which deliver improved profitability with hard return on investment.More than 280 customers across 21 industries worldwide haveimplemented and realized the value of I-many business solutions. Formore information, please visit www.imany.com.

This news release contains forward-looking statements, and actualresults may vary from those expressed or implied herein. Factors thatcould affect these results include: the risk of unforeseen technicalor practical impediments to planned software development, which couldaffect the Company's product release timetable; the inherent risks oflarge software implementation projects, which can cause customerdisagreements that could affect I-many's ability to collect bothservices and license revenue, whether recognized or deferred; thepossibility that customers could cancel maintenance and supportservices at the time of annual renewal, which could decrease I-many'sbase of recurring revenue; the possibility that current economicconditions will not improve as anticipated or will deteriorate; thepossibility that extraordinary events outside the Company's controlcould extend the length of the sales cycle for the Company's productsor make the market for the Company's products more unpredictable; therisk that the Company's historical dependence on the healthcare marketwill continue; the risk that the Company will not be successful inopening new markets for its products; and other risk factors set forthfrom time to time in the Company's filings with the Securities andExchange Commission.
I-MANY, INC.
Consolidated Condensed Balance Sheets
(in thousands)

June 30, December 31,
2005 2004
-------------- --------------
(Unaudited)

Assets
Current Assets:
Cash and cash equivalents $18,412 $6,098
Restricted cash 41 161
Short-term investments and securities
held for sale 0 14,610
Accounts receivable 7,591 9,964
Other current assets 1,223 518
-------------- --------------
Total current assets 27,267 31,351

Property and equipment, net 1,447 1,300
Restricted cash 646 663
Other assets 127 120
Acquired intangible assets, net 1,399 2,097
Goodwill 8,667 8,667
-------------- --------------
Total assets $39,553 $44,198
============== ==============


Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $5,541 $6,571
Current portion of deferred revenue 9,487 9,975
Capital lease obligations 41 160
-------------- --------------
Total current liabilities 15,069 16,706

Deferred revenue, net of current portion 252 275
Other long-term liabilities 1,157 1,347

Stockholders' equity 23,075 25,870
-------------- --------------

Total liabilities and
stockholders' equity $39,553 $44,198
============== ==============

I-MANY, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)

Three months Six months
ended June 30, ended June 30,
2005 2004 2005 2004
-------- ------- -------- -------

Net Revenues:
Product $1,480 $1,040 $3,557 $5,948
Services 6,886 7,115 13,743 13,637
-------- ------- -------- -------
Total net revenues 8,366 8,155 17,300 19,585

Cost of revenues 3,969 4,067 7,771 7,969
-------- ------- -------- -------

Gross profit 4,397 4,088 9,529 11,616
-------- ------- -------- -------

Operating expenses:
Sales and marketing 2,177 2,140 4,216 4,371
Research and development 2,886 2,610 5,932 6,120
General and administrative 1,149 1,188 2,293 2,853
Depreciation 207 220 387 431
Amortization of acquired intangible
assets 343 378 698 709
In-process research and development 0 290 0 290
Restructuring and other charges (6) 162 (33) 1,309
-------- ------- -------- -------
Total operating expenses 6,756 6,988 13,493 16,083
-------- ------- -------- -------

Loss from operations (2,359) (2,900) (3,964) (4,467)

Other income, net 41 29 72 60
-------- ------- -------- -------

Net loss ($2,318)($2,871) ($3,892)($4,407)
======== ======= ======== =======

Basic and diluted net loss per common
share ($0.05) ($0.07) ($0.09) ($0.11)
======== ======= ======== =======

Weighted average shares outstanding 43,637 41,000 43,252 40,827
======== ======= ======== =======

I-MANY, INC.
Reconciliation of GAAP Loss to Pro Forma Income (Loss)
(in thousands, except per share amounts)
(unaudited)


Three months Six months
ended June 30, ended June 30,
2005 2004 2005 2004
------- -------- -------- -------

GAAP net loss ($2,318)($2,871) ($3,892)($4,407)

Acquisition-related and other non-cash GAAP
charges:
Amortization of acquired
intangible assets 343 378 698 709
Depreciation expense 207 220 387 431
Non-cash option and warrant
charges 8 580 109 2,443
In-process research and
development 0 290 0 290
Selectica terminated merger
transaction costs 64 0 107 0
Restructuring and other charges (6) 162 (33) 1,309
------- -------- -------- -------

Pro forma net income (loss) ($1,702)($1,241) ($2,624) $775
======= ======== ======== =======

Proforma net income (loss) per common
share ($0.04) ($0.03) ($0.06) $0.02
======= ======== ======== =======

Weighted average dilutive common
shares outstanding 43,637 41,000 43,252 46,462
======= ======== ======== =======

(1)Pro forma amounts exclude charges for: impairment of goodwill and
acquired intangible assets, amortization of acquired intangible
assets, depreciation expense, non-cash option and warrant charges,
in-process research and development, Selectica terminated merger
transaction costs, and restructuring and other charges.