MDI Announces Profitability for July 2008

SAN ANTONIO--(BUSINESS WIRE)--MDI, Inc. (NASDAQ: MDII), made the following announcements today:

1. Return to Profitability – For the month of July 2008, MDI was profitable and it is encouraged about its prospects of sustaining profitability for the balance of 2008 and thereafter. The company’s profitability is the result of the successful implementation of its plan for its core lines of business. For July 2008, the Company’s revenue was $1,520,000. EBITDA was $135,000 and operating profit was $16,000. Compared to the second quarter 2008, selling, general and administrative expenses decreased, on average, by a monthly amount of $105,000, reflecting the Company’s ongoing cost management.

2. Results of Q2 2008 – The Company also today announced financial results for the second quarter ended June 30, 2008. Please refer to the Form 10-Q filed today by the Company for complete financial results of the second quarter. Below are selected highlights.

Total revenue for the second quarter was $3,376,000, an increase of $1,533,000, or 83%, over the same period in 2007.

Expressed in dollars, gross profit increased by $585,000. Selling, general and administrative expenses decreased by $388,000 due to the ongoing efforts to reduce costs. Net loss for the quarter decreased by $743,000 from the same period in 2007.

“While I am certainly not satisfied with the results of the second quarter, the reality is that we have been on the path to profitability for the past several quarters, as our government security business and construction management and contractor business continues to gain strength,” according to J. Collier Sparks, CEO and President of the company. Mr. Sparks further stated that, “One important fact is that the achievement in July’s revenue increase did not involve any extraordinary events. The increase was the result of our business plan execution.

“Additionally, with the implementation of two key initiatives during the second quarter of this year, STRUCTURE™ and our new LearnSafe call center, I expect our revenue growth to accelerate substantially during the months ahead.”

3. STRUCTURE™ – In July, MDI formed STRUCTURE™ Real Estate Development Solutions, under the direction of Mr. Tim Cone, AIA, to acquire and develop commercial and residential real estate. The company already has several projects under an option to purchase and it is securing non-recourse financing for these purchases and for their development.

4. LearnSafe® Call Center – In July, the Company hired Mr. Jerry Howell, one of the individuals at Rackspace Hosting responsible for its dramatic increase in its call center revenue, to lead the Company’s newly-formed call-center operation to be located in The MDI Building. This call center will focus on selling to school districts and others in 45 states that may purchase directly from MDI through its TCPN contract without the need for adherence with a competitive procurement process. The initial response has been very encouraging and the company has great hopes that this will be a very successful business.

5. Headquarters Finish-Out – In July 2008, the company completed its $350,000 finish-out of the first floor of its two-story Headquarters building. This 32,000 foot building, to be called “The MDI Building,” will be the headquarters for all of MDI and FAS Construction Management operations.

6. Office Leasing Business – The 18,000 foot two-story Colonial Building owned by MDI next to The MDI Building is being converted into office suites and a virtual office facility. It is contemplated that the revenue from the leasing of space in the Colonial Building will be sufficient to service the entire $5.5 million debt MDI assumed when it purchased the buildings in October 2007.

7. French Litigation – On May 20, 2008, the French Supreme Court issued its final judgment in favor of the company and its French subsidiary against Aasset Security for damages suffered by the company in 2000. The French Supreme Court sustained the company’s right to be paid Euros 750,000, plus interest, dating back to November 2003. The company is actively attempting to collect this award from which it will also be obligated to pay legal fees as approved of by the French courts.

8. Staybridge Hotel – Site excavation work is now complete on the Staybridge Suites Hotel located in San Antonio, Texas near the busy intersection of Loop 1604 and Highway 281. Work on structural concrete footings and foundations is starting in August. The Company expects to book approximately $11,000,000 in revenue and recognize between $400,000 and $450,000 in profit from this construction project over the next twelve months.

About MDI, Inc.

MDI, Inc. (NASDAQ: MDII), is the parent company of a diverse set of wholly-owned subsidiaries that have successfully serviced the construction and security industries for over 28 years. MDI companies deliver security technology products, services and training for government, homeland security, commercial and educational markets as well as comprehensive construction solutions for a variety of clients on an international scale. MDI companies include:

MDI, Inc. - www.mdiincorporated.com

MDI Security Systems™ - www.mdisecure.com

MDI Professional Services Group - http://www.mdiincorporated.com/MDI_PSG.pdf

The LearnSafe Initiative™ - www.learnsafe.org

FAS Construction Management - www.fascompanies.com

FAS Construction, LLC

STRUCTURE Real Estate Development Company

Forward-Looking and Cautionary Statements

Except for historical information and discussions contained herein, certain statements included in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included in this document, other than statements of historical fact, that address activities, events or developments that management expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements represent our reasonable judgment on the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “project,” “forecast,” “plan,” “may,” “will,” “should,” “expect” and other words of similar meaning. Investors should not rely on forward-looking statements because they are subject to a variety of risks and uncertainties and other factors that could cause actual results to differ materially from the Company’s expectation. Additional information concerning risk factors is contained from time to time in the Company’s SEC filings. The Company expressly disclaims any obligation to update the information contained in this release.

All product and company names mentioned herein may be the trademarks of their respective owners.