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May 13, 2005


IMPERIAL INDUSTRIES, INC. ANNOUNCES STRATEGIC ALLIANCE WITH DEGUSSA WALL SYSTEMS, INC. AND SALE OF ACROCRETE MANUFACTURING ASSETS

Pompano Beach , FL………Imperial Industries, Inc. ( NASDAQ SC: “IPII”) (the “Company”) announced today it has entered into a strategic alliance with Degussa Wall Systems, Inc. (“Degussa”). Degussa is part of Degussa Construction Chemicals, the world’s largest construction chemical company with sales in excess of $1.5 billion annually. As a result of the strategic alliance with Degussa, the Company’s wholly owned subsidiary, Acrocrete, Inc., has elected to exit the manufacture of acrylic stucco products and has sold certain assets, including the Acrocrete brand name, to Degussa. Under the terms of the asset purchase agreement with Degussa, the Company will receive an aggregate of $1,100,000 in cash, together with the net book value of certain accounts receivable and equipment.

The Company’s wholly-owned subsidiary, Just Rite Supply, Inc. (“Just-Rite”) entered into a three year distribution agreement with Degussa which provides for the future sale of Acrocrete products manufactured by Degussa. The Distribution Agreement will commence on October 1, 2005.

Acrocrete’s operating results have been the least profitable of the Company’s subsidiaries since the first quarter of 2004 and such profits continued to decline through the first quarter of 2005. For the year ended December 31, 2004 and the three months ended March 31, 2005, Acrocrete products generated net sales of $9,874,000 and $2,443,000, respectively, of which $5,007,000 and $1,446,000 for such periods were sold through Just-Rite.

Just-Rite will continue to market Acrocrete products through its strategic alliance with Degussa. The Company expects Just-Rite will also gain many additional benefits for its customers from Degussa producing and distributing the Acrocrete brand product offerings from this arrangement, including:



a broader product offering to reach new markets and a continuing opportunity to access new products through the research and development activities of a world-wide chemical company.
improved marketing capabilities.
the gaining of additional building code approvals and technology support.
greater access to product application design and engineering assistance.
greater access and recognition from contractors and architects.


The Company determined that it was not likely that sufficient production economies would be realized from Acrocrete’s acrylic stucco manufacturing facility in the future without an inordinate amount of investment and risk to combat increasing costs due to the sharp increase in its raw materials, which are principally oil based. Further, Acrocrete has not been able to obtain product liability insurance related to the sale of its acrylic stucco products used in exterior insulation and finish systems (“EIFS”) since March 15, 2004.

S. Daniel Ponce, Imperial’s Chairman of the Board stated: “We are excited about the strategic alliance we have established with Degussa. We believe this transaction provides our Company the ability to leverage its customer service capability strengths with its Just-Rite distribution network to ultimately grow our business with quality products produced by a world-wide premier chemical products company on a more competitive basis. Just-Rite will be well positioned through its relationship with Degussa to enhance future sales and profits.”

Degussa, headquartered in Jacksonville, Florida, is a leading manufacturer of EIFS, stucco, and specialty finishes and architectural coatings in North America. Degussa provides the technology and research and development activities for new products, as well as the necessary product code approvals and technical knowledge, to enhance its customers’ competitive positions within their markets.

http://www.imperialindustries.com/news/7_26_05.htm