Letter to Shareholders

ENGLEWOOD, Colo., Feb. 8 /PRNewswire/ -- 1mage Software (OTC: ISOL) achieved positive cash flows and returned to profitability in 2006. During the past year, the company made several innovative changes in order to achieve such results. The changes also resulted in positive effects on the company's software portfolio. The company's profitability eclipsed the results of the previous three years while eliminating all bank debt.

We have engaged an offshore development company to expedite our software development. As a result we cut costs and improved our time-to-market for new offerings. This has enabled us to continually update our software and release new features. We released and began shipping Version 8 of our flagship software, 1MAGE (Document Management System). This new release provides increased security and functionality to our scanning and client software. We have tightly integrated to the Adobe desktop by making it simple to convert documents into pdf formats "on the fly." V1A, ("View Images Anywhere"), a new software client, offers access to documents from most browsers, including Microsoft Internet Explorer, Apple's Safari, and Firefox. V1A works without adding additional PC application software to the users' desktop or laptop. This means that users can retrieve documents from anywhere they have access to the internet or intranet. These new technologies have enhanced the use ability of our products for Software as a Service (SaaS) and Application Service Providers (ASP). V1A is written in AJAX and Web 2 technology. Our software is incorporating more cross platform and internet technologies and at the same time provides a tight integrated solution, to desktop software leaders, Microsoft and Adobe.

We continue to strive to offer, at an affordable price point, the power of document imaging for small businesses. Small businesses may order through the Yahoo business store our Small Business Document Imaging solution (1FILESB). Through http://www.SmallBusinessDocumentImaging.com, small businesses can purchase, with a credit card, the most powerful document imaging solution ever offered at such a low price. The bundled price includes 1FILESB, Dell server, Fujitsu scanner and IBM data base, prepackaged for "out of the box" performance.

In early 2006 we implemented a "WOW" theme for software design and development. We want our customers to have a compelling experience, by providing them secure, solid and innovative software solutions and services. Historically, our products have been extremely solid and provided exceptional results. We continue to build on that commitment, by adding what we call the "WOW" factor. We are excited about our new partnership and the potential it offers our customers in the way of new innovation, at a value price point, and in the shortest time possible. We believe that this strategy has provided a platform for our future financial growth.

All of us at 1mage want to thank our shareholders for your continued support.

David R. DeYoung,

President, CEO.

1mage is a provider of document management software for Linux(R), UNIX(R), and Microsoft(R) Windows. For continued information visit http://www.1mage.com.

Statements expressing the beliefs and expectations of 1mage Software management regarding future performance are forward-looking and involve risks and uncertainties, including but not limited to: market demand for products, the overall demand for imaging software, maintenance of adequate cash flow to sustain operations, quarterly fluctuations in financial results, and other risk factors identified from time to time in 1mage Software's reports