I-many Reports Fourth Quarter and Year-End 2005 Financial Results

Highlights:

-- Q4 net revenue $8.9 million, up 26% from Q3

-- Q4 2005 deferred revenue and unamortized subscriptions up 62% vs. Q4 2004

-- Q4 license revenue up 373% to $2.7 million from Q3

-- Gross value of license contracts signed up 13% in 2005 vs. 2004

-- Unamortized subscriptions reached $8.6 million, up 325% at end of 2005 vs. 2004

I-many, Inc. (NASDAQ:IMNY), the leading provider of advancedEnterprise Contract Management (ECM) solutions for managing corporatecommitments, reported financial results for the fourth quarter andyear-end 2005.

Net revenues for the fourth quarter 2005 totaled $8.9 million, anincrease of 26% from $7.1 million reported in the previous quarter,and a decrease of 7% from $9.5 million reported in the fourth quarterof 2004. Net loss for the fourth quarter of 2005 narrowed to $(0.03)per share, from a loss of $(0.07) per share in the previous quarterand $(0.05) per share in the fourth quarter of 2004.

Quarter-end cash, restricted cash and short-term investments was$17.4 million, as compared to $18.2 million at end of the previousquarter.

For the year ended December 31, 2005, net revenues totaled $33.2million, a decrease of 13% from $38.4 million reported in the previousyear. Net loss for 2005 was $(0.19) per share, versus a loss of$(0.18) per share in 2004.

Net revenues exclude the portion of the gross value of license andservice contracts booked during the year that the company cannotrealize until future periods. The gross value of license contractssigned during the year increased from $11.5 million in 2004 to $13.1million in 2005, a gain of 13%.

The value of unamortized subscriptions to be recognized over thenext five years totaled $8.6 million at the end of the fourth quarter2005, an increase of 8% from $7.9 million for the previous quarter,and up 325% from $2.0 million at end of the fourth quarter 2004.Revenue from contracted professional services to be provided in futureperiods totaled $4.1 million at the end of the fourth quarter 2005, up28% from $3.2 million for the previous quarter. The total amount ofdeferred revenue and unamortized subscriptions was $19.4 million atthe end of the fourth quarter 2005, an increase of 11% from $17.5million for the previous quarter, and up 62% from $12.0 million at theend of the fourth quarter 2004.

License revenue for the fourth quarter of 2005 totaled $2.7million, an increase of 373% from $567,000 in the previous quarter,and was down 9% from $2.9 million for the same period in 2004. Servicerevenue of $6.2 million decreased 4% from $6.5 million the previousquarter, and decreased 6% from $6.6 million for the same year-agoperiod.

For the full year of 2005, license revenue of $6.8 milliondecreased 40% from $11.3 million in 2004. Service revenue of $26.4million in 2005 decreased 3% from $27.1 million reported in 2004.

These results are in-line with I-many's guidance provided on itsOctober 26, 2005 conference call.

"I-many maintained its industry leadership position in 2005, whilealso undergoing a significant transformation," notes I-many CEO andpresident, Yorgen Edholm, "including transitions to new seniormanagement; new corporate governance with active shareholderinvolvement; and a new, very powerful, software platform. We've alsoseen a dramatic expansion of subscription-based licenses introducedlast year.

"While some of these changes will take a few quarters to becomefully realized, initial benefits can be seen in our product quality,product roadmap, and the substantial increase in sales in the fourthquarter. We have also seen results from our renewed focus andcommitment to the Life Science market, where 23 of the top 25pharmaceutical companies have chosen I-many as their partner. With thecompletion of the new ECM-F platform, we can now focus on layeringupon it new applications. Because of the efficiencies this willprovide, it will allow us to align, over time, our R&D expenditurescloser to industry averages, and more readily expand to new verticalmarkets. All together, we are now managing a strong deal and productpipeline that has set I-many on an excellent course for 2006."

I-many CFO Kevin Harris added, "It is also important to recognizethe dual impact of our subscription service offering. Externally, itexpands our market to customers that find regular subscriptionpayments an easier and more flexible implementation of ECM.Internally, it provides I-many with the potential for smoother, morepredictable revenue growth. The effect of our increasing subscriptionrevenue is also important to consider when comparing current resultsto previous periods when subscriptions were a smaller percentage ofsales."

Other significant milestones during the fourth quarter and theyear included:

-- 12 license transactions for the quarter (standard and subscription), up from nine during the previous quarter.

-- 37 new license transactions (standard and subscription) for the year.

-- Three new subscription transactions were signed during the quarter, for a total of 16 for the year and up from five signed in all of 2004.

-- Three new customers were signed in the fourth quarter, bringing the total to 14 for the year and further expanding the company's industry-leading customer base. Most notably, nine of the year's new customers are in vertical markets outside of Life Sciences. This includes three members of the Fortune 200 that were signed during the third and fourth quarters: a world-leading manufacturer and marketer of imaging products; a leading global technology corporation; and one of the largest health benefits companies.

2006 Guidance

2006 will see the phased release of applications based on I-many'snext generation software platform that unifies different productofferings and provides a common, interoperable foundation. Benefitsinclude faster, more efficient introduction and implementation of newECM solutions. Management believes this new platform will set theindustry standard for contract management solutions for years to come,supporting both licensed solutions and new hosted services.

The company plans to strengthen its important base of Life Sciencecustomers, and expects to see significant growth in this area as ithelps customers meet constantly changing regulatory requirements, likeMedicare Part D. I-many also plans to further leverage its success inLife Science by providing ECM to other industries, where newgovernment compliance rules, like Sarbanes-Oxley, and the drive toreduce cost and increase profits, are increasing the demand forsolutions like those offered by I-many.

Management anticipates these efforts will drive growth in 2006 interms of both recognized revenue and total recognized and deferredrevenue from new contracts. While it is difficult to predict the mixof recognizable and deferred transactions the company will sign,management expects the gross value of new license transactions in 2006to be in excess of $14 million. This result could be substantiallyhigher if the company realizes one or more new large customers.

Recurring revenue from maintenance and support, hosting andsubscription revenue is anticipated to be approximately $16 million in2006. Total recognized revenues are expected to be the in the range of$38 to $42 million.

Management expects GAAP expenses to range from $44 to $46 million,including approximately $2.5 million of non-cash charges, and cash atyear end to be between $14 and $16 million.

Management is including additional financial information in thispress release and in its annual report on Form 10-K that it believeswill give shareholders additional insight into quarterly and annualresults. Following the balance sheet and income statement, managementhas included a table that shows the results for the fourth quarter andthe full year 2005 compared to the comparable periods in 2004 for newlicense transactions including subscription contracts, the recognitioninto reportable revenue of subscriptions and other deferredtransactions, and the reconciliation of those numbers to total productrevenue according to generally accepted accounting principles("GAAP").

I-many will hold a conference call tomorrow, Wednesday, February1st, 2006, at 10:00 a.m. Eastern Time. The call-in number is (866)202-3048 or (617) 213-8843, passcode 96029238. The call is also beingwebcast and 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 with anon-GAAP quarterly and annual reconciliation of the gross value oflicense transactions to its reported GAAP product revenues. Thisnon-GAAP financial information is provided as additional informationfor investors and is not in accordance with or an alternative to GAAP.Management believes its inclusion can enhance an overall understandingof the company's past operational performance and also its prospectsfor the future. This reconciliation of product revenues is made withthe intent of providing both management and investors a more completeunderstanding of the revenue performance of the company, as opposed toGAAP revenue results, which do not include the impact ofnewly-executed subscription agreements and other deferred revenuearrangements that are material to the ongoing performance of thecompany's business. This information quantifies the various componentscomprising current revenue, which in each quarter consists of revenuesfrom licenses sold in current periods plus revenues deferred fromprior periods, less revenue deferred from licenses sold in currentperiods. Management uses this information as a basis for planning andforecasting core business activity in future periods and believes itis useful in understanding our results of operations. The presentationof this additional revenue information is not meant to be consideredin isolation or as a substitute for revenues reported in accordancewith generally accepted accounting principles in the United States.

About I-many

I-many (NASDAQ:IMNY) is the leading provider of advancedEnterprise Contract Management solutions for managing corporatecommitments. Designed to extend beyond the traditional contractmanagement capabilities, I-many ContractSphere(R) offers an end-to-endsolution, from pre-contract processes and contract management totransaction compliance. Ultimately, this provides companies with thevisibility and control needed to manage any type of commitment - fromcontracts and obligations to payments and collections. The result isincreased revenue, minimized risk and dramatically reduced operatingcosts, which deliver improved profitability with hard return oninvestment. More than 280 customers across 21 industries worldwidehave implemented and realized the value of I-many business solutions.For more 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.
Summary Tables

-----------------------------------------
Fourth Quarter Results Q4 '05 vs. Q3 % vs. Q4 %
'05 (DELTA) '04 (DELTA)
----------------------------------------------------------------------
Net Revenues $8.9 M $7.1 M +26% $9.5 M -7%
----------------------------------------------------------------------
Net loss/Share $(0.03) $(0.07) $(0.05)
----------------------------------------------------------------------
Cash, Restricted Cash
Short Term Investments $17.4 M $18.2 M -4% $21.5 M -19%
----------------------------------------------------------------------
Value of Unamortized
Subscriptions $8.6 M $7.9 M +8% $2.0 M +325%
----------------------------------------------------------------------
Deferred Revenue &
Unamortized Subscriptions $19.4 M $17.5 M +11% $12.0 M +62%
----------------------------------------------------------------------
License Revenue $2.7 M $567,000 +373% $2.9 M -9%
----------------------------------------------------------------------
Service Revenue $6.2 M $6.5 M -4.0% $6.6 M -6%
----------------------------------------------------------------------
New License Transactions
(Traditional & Subscription) 12 9 +33% 16 -25%
----------------------------------------------------------------------
New Subscriptions Only 3 5 -40% 3 0%
----------------------------------------------------------------------
New Customers 3 4 -25% 9 -66%
----------------------------------------------------------------------

M=Millions

---------------------------
Year-end Results FY 2005 vs. FY 2004 %
(DELTA)
----------------------------------------------------------------------
Net Revenues $33.2 M $38.4 M -13%
----------------------------------------------------------------------
Net loss/Share $(0.19) $(0.18)
----------------------------------------------------------------------
Gross Value of License Contracts $13.1 M $11.5 M +13%
----------------------------------------------------------------------
License revenue $6.8 M $11.3 M -40%
----------------------------------------------------------------------
Service Revenue $26.4 M $27.1 M -3%
----------------------------------------------------------------------
New Subscriptions 16 5 +220%
----------------------------------------------------------------------
New License Transactions 37 40 -7%
----------------------------------------------------------------------

M=Millions

I-MANY, INC.
Condensed Consolidated Balance Sheets
(in thousands)

December 31, December 31,
2005 2004
---- ----

Assets
Current Assets:
Cash and cash equivalents $16,805 $6,098
Restricted cash - 161
Short-term investments and securities held
for sale - 14,610
Accounts receivable 9,577 9,964
Other current assets 845 518
--- ---
Total current assets 27,227 31,351

Property and equipment, net 1,188 1,300
Restricted cash 555 663
Other assets 122 120
Acquired intangible assets, net 713 2,097
Goodwill 8,667 8,667
----- -----
Total assets $38,472 $44,198
======= =======


Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $5,618 $6,571
Current portion of deferred revenue 11,521 9,975
Capital lease obligations 8 160
- ---
Total current liabilities 17,147 16,706

Deferred revenue, net of current portion 1,242 275
Other long-term liabilities 1,054 1,347

Stockholders' equity 19,029 25,870
------ ------

Total liabilities and stockholders'
equity $38,472 $44,198
======= =======

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

Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
---- ---- ---- ----

Net Revenues:
Product $2,680 $2,934 $6,804 $11,275
Services 6,219 6,587 26,445 27,138
----- ----- ------ ------
Total net revenues 8,899 9,521 33,249 38,413

Cost of revenues
Product 226 332 520 832
Services 3,399 3,476 14,764 14,733
----- ----- ------ ------
Total cost of revenues 3,625 3,808 15,284 15,565
----- ----- ------ ------

Gross profit 5,274 5,713 17,965 22,848
----- ----- ------ ------

Operating expenses:
Sales and marketing 2,449 2,685 8,626 9,020
Research and development 2,540 2,995 11,267 11,874
General and administrative 1,206 1,631 4,819 5,552
Depreciation 205 253 796 917
Amortization of acquired
intangible assets 343 378 1,384 1,465
In-process research and
development - - - 290
Restructuring and other
charges (credits) 15 (25) (10) 1,346
-- ---- ---- -----
Total operating expenses 6,758 7,917 26,882 30,464
----- ----- ------ ------

Loss from operations (1,484) (2,204) (8,917) (7,616)

Other income, net 103 77 285 244
--- -- --- ---

Loss before income taxes (1,381) (2,127) (8,632) (7,372)

Benefit from income taxes 0 0 0 (82)
- - - ----

Net loss ($1,381) ($2,127) ($8,632) ($7,290)
======== ======== ======== ========

Basic and diluted net loss per
common share ($0.03) ($0.05) ($0.19) ($0.18)
======= ======= ======= =======

Weighted average shares
outstanding 46,340 42,241 44,548 41,367
====== ====== ====== ======

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

Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
---- ---- ---- ----

Net Revenues:
Product $2,680 $2,934 $6,804 $11,275
Services 6,219 6,587 26,445 27,138
----- ----- ------ ------
Total net revenues 8,899 9,521 33,249 38,413

Operating Expenses:
Cost of third party technology 226 332 520 832
Cost of services 3,399 3,476 14,764 14,733
Sales and marketing 2,449 2,685 8,626 9,020
Research and development 2,540 2,995 11,267 11,874
General and administrative 1,206 1,631 4,819 5,552
Depreciation 205 253 796 917
Amortization of acquired
intangible assets 343 378 1,384 1,465
In-process research and
development - - - 290
Restructuring and other
charges (credits) 15 (25) (10) 1,346
-- ---- ---- -----
Total operating expenses 10,383 11,725 42,166 46,029
------ ------ ------ ------

Loss from operations (1,484) (2,204) (8,917) (7,616)

Other income, net 103 77 285 244
--- -- --- ---

Loss before income taxes (1,381) (2,127) (8,632) (7,372)

Benefit from income taxes 0 0 0 (82)
- - - ----

Net loss ($1,381)($2,127) ($8,632)($7,290)
================ ================

Basic and diluted net loss per
common share ($0.03) ($0.05) ($0.19) ($0.18)
======= ======= ======= =======

Weighted average shares
outstanding 46,340 42,241 44,548 41,367
====== ====== ====== ======

Note: We are transitioning to
the income statement format
presented on this page. We
will no longer use the first
format presented in future
earnings releases. We are
adding additional information
(cost of third party
technology) and removing the
gross profit line. We think
this presentation is
consistent with the
presentation of many other
software companies and adds
additional information to
increase transparency to
investors.

Reconciliation of Value of License Transactions to Reportable Product
Revenue

Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
-------- --------- ---------- --------
(AMOUNTS IN THOUSANDS)
Gross value of license
contracts sold:
Health and Life Sciences $3,599 $3,886 $10,818 $8,477
Industry Solutions 138 1,617 2,282 3,071
--- ----- ----- -----
3,737 5,503 13,100 11,548
Add product revenue recorded
in current quarter from
contracts sold in prior
periods:
Health and Life Sciences
- subscriptions 325 69 926 102
Health and Life Sciences
- other deferrals 0 289 1,476 3,428
Industry Solutions -
subscriptions 35 0 35 0
Industry Solutions -
other deferrals 525 0 525 794
--- - --- ---
885 358 2,962 4,324
Less value of license
contracts sold in current
quarter and deferred to
future periods:
Health and Life Sciences 1,907 2,802 7,840 3,922
Industry Solutions 35 125 1,418 675
-- --- ----- ---
1,942 2,927 9,258 4,597
----- ----- ----- -----
Product revenue recorded:
Health and Life Sciences 2,017 1,442 5,380 8,085
Industry Solutions 663 1,492 1,424 3,190
--- ----- ----- -----
$2,680 $2,934 $6,804 $11,275
====== ====== ====== =======