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Subject: IAIC posts profit for 1Q/98 Date: 4/20/1998 6:11 PM
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Monday April 20, 4:00 pm Eastern Time

Company Press Release

SOURCE: Information Analysis Incorporated

Information Analysis Inc. Reports a Profit for FY1998 First
Quarter

Quarterly highlights: * Revenues of $4.2 million, up 167% vs. 1Q97 * Net
income of $60,000, or $0.01 per share, vs. year-earlier loss * Quarterly
bookings of $5.8 million * 17 Year 2000 remediation contracts currently in
house

FAIRFAX, Va., April 20 /PRNewswire/ -- Information Analysis Inc. (Nasdaq: IAIC - news) today reported
results for the first quarter of fiscal 1998 ended March 31, 1998. Revenues were $4,169,000, up 167% from
the $1,562,000 reported in 1997's first quarter. IAI reported net income of $60,000, or $0.01 per share,
compared to a loss of $371,000, or $0.07 per share in 1997's first quarter.

On a sequential basis, revenues improved 43% from the fourth quarter of 1997's $2,914,000, and the company
reversed a loss of $424,000, or $0.07 per share, reported in the prior quarter.

'We're very pleased by these results, and especially pleased that we achieved profitability in the quarter,' said
Sandor Rosenberg, IAI's Chairman and Chief Executive Officer. 'We began the quarter with six Year 2000
contracts in house; we closed the quarter with 17. We are assembling a blue- chip roster of customers for our
UNICAST/2000 software tool, including Canada Life Assurance (UK), Arbitron, Gulfstream International, and
the Bureau of National Affairs. Moreover, our partnership with Computer Associates International, Inc. (CA)
brought us a significant number of new orders in the quarter that just ended, plus leads which we believe we
will convert to orders as this quarter progresses.'

The company reported total Year 2000 bookings in the quarter of $5.8 million, including product and factory
services that will be performed at the company's Year 2000 International Solutions Factory in Fairfax, Virginia.
This compares to product and service bookings of $1.6 million in the fourth quarter of FY1997. In addition to
its own solutions factory, the company now has five solutions partners that use UNICAST/2000 for remediation
of certain CA languages. These partners include CACI International, ManTech, and Software International
Corporation.

Next several quarters will be crucial

'We believe we're successfully positioning ourselves as a provider of Year 2000 software and services,' Mr.
Rosenberg said. 'However, the next few quarters will be crucial to sustaining the momentum we've
established. To maintain our order flow, we are dependent upon the continuing efforts of CA, and their
continued emphasis on finding Year 2000 solutions for their customers. To that end, our highest priority must
be to support and train CA's sales force.'

Mr. Rosenberg said IAI's revenues over the next year would be driven by growth in both professional services
and in sales of UNICAST/2000 software. 'We are aware a general perception that Year 2000 issues may
somehow be overblown, and that the market will be much smaller than previously anticipated,' Mr. Rosenberg
said. 'After meeting with dozens of prospective customers, we do not share this pessimism. Rather, we find
that organizations are coming to terms with the absolute need for Year 2000 compliance, but are doing so
methodically and with costs and resources uppermost in their minds. The ability to both provide a remediation
tool and serve as an external resource to carry out that remediation is a decided plus for IAI.'

Finally, Mr. Rosenberg outlined the company's plan for achieving sustained revenue growth and profitability.
'During the first quarter, UNICAST/2000 for CA-ADS went from factory availability to general availability,
UNICAST/2000 for CA-IDMS COBOL became factory available, and UNICAST/2000-PC for UNISYS
COBOL entered beta testing. Our goal is to quickly follow with remediation tools for other CA and non-CA
languages, and to enhance existing software tools. On the professional services side of our business, we will
staff our Fairfax International Solutions Factory to provide quick, thorough, and accurate remediation services
to our customers. We are currently moving toward a goal of having the capacity to remediate 400 million lines of
code per year.'

About Information Analysis Incorporated

Information Analysis Incorporated (www.infoa.com), headquartered in Fairfax, Virginia, is a world-class
provider of products and services for automated transition engineering of computer systems. IAI provides
highly automated software and platform conversion, modernization and migration. Through its UNICAST/2000
product family, IAI provides clients the ability to achieve Year 2000 compliance in-house or off-site at IAI's or
other certified solution factories.

Additional information for investors

This release may contain forward-looking statements regarding the Company's business, customer prospects, or
other factors that may affect future earnings or financial results. Such statements involve risks and uncertainties
which could cause actual results to vary materially from those expressed in the forward-looking statements.
Investors should read and understand the risk factors detailed in the Company's 10-KSB for the fiscal year
ended December 31, 1997 and in other filings with the Securities and Exchange Commission.

All product names referenced herein are the trademarks of their respective companies.

Information Analysis Incorporated
Condensed Consolidated Income Statements

Three months ended March 31,
(in thousands, except per share
data; unaudited) 1998 1997

Net revenue:
Professional services $2,037 $1,498
Software sales 2,132 64
Total revenue 4,169 1,562
Cost of goods sold and services
provided:
Cost of professional services 1,593 1,200
Cost of software sales 575 51
Total cost of goods sold
and services provided 2,168 1,251
Gross margin 2,001 311
Operating expenses:
Sales, general and
administrative 1,686 579
Research and development 287 24
Total operating expenses 1,973 603
Operating income (loss) 28 (292)
Other income (expense) 32 (5)
Income (loss) before income
taxes 60 (297)
Provision (benefit) for
income taxes -- 74
Net income (loss) $60 $(371)
Net income (loss) per share:
Basic $0.01 $(0.07)
Diluted $0.01 $(0.07)
Shares used in calculating
earnings per share:
Basic 6,497,215 5,007,349
Diluted 8,205,965 5,007,349

Information Analysis Incorporated
Condensed Consolidated Balance Sheets

March 31, December 31,
(in thousands; unaudited) 1998 1997

Assets
Current Assets
Cash and cash equivalents $3,356 $364
Accounts receivable, net 5,089 3,128
Refundable income taxes 33 33
Other 308 156
Total current assets 8,786 3,681
Fixed assets, net 864 780
Capital leases, net 43 50
Capitalized software, net 5,207 4,431
Goodwill and other 61 75
Total assets $14,961 $9,017

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable 1,331 1,122
Payroll and other accrued
liabilities 1,443 1,178
Revolving line of credit -- 600
Current portion of long-
term debt 103 104
Other 20 23
Total current liabilities 2,897 3,027
Long term debt -- --
Other non-current liabilities 12 12
Total liabilities 2,909 3,039

Common stock, par value $0.01,
15,000,000 shares authorized;
8,116,655 and 7,498,430 issued;
6,612,044 and 5,993,819
outstanding at March 31, 1998 and
December 31, 1997 respectively 81 75
Additional paid-in capital 12,527 6,518
Retained earnings 298 239
Less treasury stock;
1,504,611 shares at cost (854) (854)
Total shareholders' equity 12,052 5,978
Total liabilities and
shareholders' equity $14,961 $9,017

SOURCE: Information Analysis Incorporated
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