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IceWEB Reports Fiscal Second Quarter Financial Results
May 17, 2010 (04:05 PM EDT)


Sequential Revenues and Operating Income Increase 68% and 70%, Respectively

STERLING, Va., May 17 /PRNewswire-FirstCall/ -- IceWEB™, Inc., (OTC Bulletin Board: IWEB), a leading provider of unified data storage and building blocks for cloud storage, announced today results for the fiscal 2010 second quarter period ended March 31, 2010.

Quarterly Highlights and Recent Developments

  • Revenue exceeds $1 million in the second quarter

  • Gross margins maintained at 55%

  • Company restates expectation of third quarter profitability and accelerating sales revenue

  • Integrator partner agreement signed with Google

  • Agreement signed with Promark, a leading distributor of storage products

  • Completes channel marketing organization with nationwide coverage

  • Order flow accelerating as channel partners ramp up efforts

In the quarter ending March 31, 2010, the Company reported revenue of $1,011,205, as compared to quarterly revenue of $1,369,702 for the year-ago period. The year-over-year decrease in revenue was due to the Company's exit from the IT reseller business in the year-ago quarter. The March, 2010, quarter showed an increase of 68.3% over prior quarter revenue, as storage sales continued to grow.  For the three month period ending March 31, 2010, the Company reported a non-GAAP adjusted loss of $432,367, versus non-GAAP adjusted earnings of $3,144,561 for the year-ago period.

Gross margin increased to 54.9% in the three months ending March 31, 2010, up from 41.1% in the year earlier period, due primarily to increased sales of high margin data storage products. Storage revenue for the three months ended March 31, 2010, accounted for approximately 95% of the Company's revenue compared to the year earlier period, when sales of storage products accounted for 66% of revenue.

For the six month year-to-date period ending March 31, 2010, the Company reported revenue of $1,612,022, a decrease from the year ago period revenue of $3,110,290.  The Company reported non-GAAP adjusted earnings for the six months ended March 31, 2010 of $808,371 versus non-GAAP adjusted earnings of $2,861,743 in the year earlier period.

Gross margin increased to 54.7% for the fiscal first half of the year, up from 33.3% in the year earlier period, due primarily to increased sales of high margin data storage products. Storage revenue for the six months ended March 31, 2010 accounted for approximately 94% of the Company's revenue compared to the year-earlier period, when sales of storage products accounted for 43% of revenue.  

The Company reports results on both a GAAP and a non-GAAP basis. NonGAAP results exclude the impact of equity-based compensation and amortization of intangible assets, and includes the unrealized gain on marketable securities.

John R. Signorello, Chairman and CEO, stated, "The second quarter of fiscal 2010 attained our internal growth plans while maintaining a tight control on overhead. At the same time, we prepared the Company for significant future growth. We launched our distribution model with Promark Technologies, built out our Channel Sales Model and strengthened our management team with the hiring of Karl Chen, David Skinner, and Bryan Brooks, all of whom were formerly with LeftHand Networks; a successful storage-based company that was acquired by Hewlett Packard."

"These experienced sales professionals, combined with the key alliances with established distributors such as Promark Technologies, give us confidence that our ambitious sales and earnings goals will be attained. Noting the accelerating order inflow for our storage appliances and the rousing acceptance of our recently announced IceWEB 5000 Storage System, leads us to anticipate that an upward revision of those goals may be appropriate in the near future," stated Mr. Signorello.

Mr. Signorello continued, "I am particularly pleased that we have been chosen to work closely with various Google Earth Enterprise™ partners to deliver turnkey Enterprise Visualization Appliance systems pre-loaded with aerial and satellite imagery through other Google integrator partners whose clients are seeking geospatial solutions. We are now seeing strong demand for our Google Earth appliance, our ESRI appliance, as well as for our IceWEB 5000 unified data storage product line."

Mr. Signorello concluded, "The massive amounts of data that are being generated daily will require a vast number of storage appliances to both store and manage the data.  EMC, a leader in the storage industry, recently sponsored an IDC report 'The Digital Universe Decade' that in the period from 2009-2020, the digital universe is expected to grow by a factor of 44. We are very confident that the steps we have taken will position IceWEB as a key supplier in this burgeoning market."

Non-GAAP Financial Measures

In this release, the Company's adjusted net income is not presented in accordance with generally accepted accounting principles (GAAP) and is not intended to be used in lieu of GAAP presentations of results of operations. This measure is presented because management believes it provides additional information to investors with respect to the performance of our fundamental business activities. Adjusted net income is a Non-GAAP financial measure and should not be viewed as an alternative to GAAP measures of performance. Management believes the most directly comparable GAAP financial measure for adjusted net income is net income and has provided a reconciliation of adjusted net income to net income at the end of this release.  GAAP net loss for the fiscal second quarter was $1,838,315 or ($0.02) per share based on 88.2 million weighted average shares outstanding. This compares to GAAP net income of $2,721,940 or $0.08 per share for the second quarter of fiscal 2009.

Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EPS





(Unaudited)












Three Months Ended


Six Months Ended



March 31


March 31



2010


2009


2010


2009










Net income (loss)


($1,888,315)


$2,721,940


($3,347,949)


$2,062,905










Amortization of intangible assets


60,773


83,729


121,545


167,458

Stock-based compensation


1,395,176


338,892


2,162,775


631,379

Unrealized gain on marketable securities


-


-


1,872,000


-

Adjustments to GAAP loss


$1,455,949


$422,621


$4,156,320


$798,837










Adjusted earnings (loss)


($432,367)


$3,144,561


$808,371


$2,861,743










Adjusted EPS


($0.00)


$0.10


$0.01


$0.09




About IceWEB, Inc.

Headquartered just outside of Washington, D.C., IceWEB manufactures and markets purpose built appliances, network and cloud storage solutions and delivers on-line cloud computing application services. Its customer base includes U.S. government agencies, enterprise companies, and small to medium sized businesses (SMB).

This press release may contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases you can identify those so-called "forward-looking statements" by words such as "may," "will," "should," "expects," "plans," "targets," "believes," "anticipates," "estimates," "predicts," "potential," or "continue" or the negative of those words and other comparable words. These forward looking statements are subject to risks and uncertainties, product tests, commercialization risks, availability of financing and results of financing efforts that could cause actual results to differ materially from historical results or those anticipated. Further information regarding these and other risks is described from time to time in the Company's filings with the SEC, which are available on its website at: http://www.sec.gov. We assume no obligation to update or alter our forward-looking statements made in this release or in any periodic report filed by us under the Securities Exchange Act of 1934 or any other document, whether as a result of new information, future events or otherwise, except as otherwise required by applicable federal securities laws.

CONTACT:


John Signorello, CEO

Stephen D. Axelrod, CFA

Mark Lucky, CFO

Adam Lowensteiner

IceWEB, Inc.

Wolfe Axelrod Weinberger Assoc. LLC

(571) 287-2380

(212) 370-4500; (212) 370-4505 fax


steve@wolfeaxelrod.com


adam@wolfeaxelrod.com











- Tables to Follow -



ICEWEB, Inc.

Consolidated Balance Sheets


CURRENT ASSETS:


March 31, 2010

(Unaudited)



September 30, 2009  (1)



Cash

$

147,300


$

63,310



Accounts receivable, net


891,382



424,919



Inventory, net


151,937



151,361



Other current assets


20,625



6,390



Prepaid expenses


33,396



25,180





1,244,640



671,160











OTHER ASSETS:








Property and equipment, net


580,752



752,162



Deposits


13,320



13,320



Investment in marketable securities available for sale


1,920,000



-



Intangible assets, net


668,496



790,042



Total Assets

$

4,427,208


$

2,226,684











CURRENT LIABILITIES:








Accounts payable and accrued liabilities

$

1,933,104


$

1,971,376



Notes payable


1,759,410



1,847,755



Deferred revenue


21,719



10,261





3,714,233



3,829,392











Long-Term Liabilities








Notes Payable


1,011,480



934,756



Total Liabilities


4,725,713



4,764,148











Stockholders' Deficit








Series B convertible preferred stock ($.001 par value; 626,667 shares issued and outstanding)


626



626



Common stock ($.001 par value; 1,000,000,000 shares authorized; 104,605,817 shares issued and 104,443,317 shares outstanding)


104,607



68,471



Additional paid in capital


23,826,769



20,064,998



Accumulated deficit


(26,006,507)



(22,658,559)



Accumulated other comprehensive income


1,872,000



-



Subscription receivable


(83,000)



-



Treasury stock, at cost, (162,500 shares)


(13,000)



(13,000)



Total stockholders' deficit


(298,505)



(2,537,464)











Total Liabilities and stockholders' deficit

$

4,427,208


$

2,226,684




(1) Derived from audited financial statements



ICEWEB, Inc.

Consolidated Statements of Operations

(Unaudited)



Three Months Ended
March 31


Six Months Ended
March 31


2010


2009


2010


2009













Sales

$

1,011,205


$

1,369,702


$

1,612,022


$

3,110,290













Cost of sales


456,094



806,391



729,718



2,074,066













Gross profit


555,111



563,311



882,304



1,036,224













Operating expenses:












Sales and marketing


472,359



195,825



785,217



422,877

Depreciation and amortization


162,926



170,798



330,399



347,045

Research and development


105,745



76,865



185,311



156,431

General and administrative


1,560,401



681,699



2,654,370



1,135,050













Total Operating Expenses


2,301,431



1,125,187



3,955,297



2,061,403













Income (loss) From Operations


(1,746,320)



(561,876)



(3,072,993)



(1,025,179)













Other income (expenses):












Gain from sale of subsidiary


-



3,452,236



-



3,452,236

Interest income


-



660



-



1,142

Interest expense


(141,995)



(169,080)



(274,956)



(365,294)













Total other (expenses):


(141,995)



3,283,816



(274,956)



3,088,084













Net income (loss)

$

(    1,888,315)


$

2,721,940


$

(    3,347,949)


$

2,062,905

























Basic income (loss) per common share

$

(0.02)


$

0.08


$

(0.04)


$

0.07

Diluted loss per common share

$

(0.02)


$

0.08


$

(0.04)


$

0.06













Weighted average common shares outstanding-basic


88,205,555



32,671,802



83,652,224



30,736,308

Weighted average common shares outstanding-diluted


88,205,555



34,667,320



83,652,224



32,829,375



ICEWEB, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)



Three Months Ended


Six Months Ended


March 31


March 31


2010


2009


2010


2009

Net income (loss)

$     (1,888,315)


$ 2,721,940


$           (3,347,949)


$     2,062,905









Unrealized gain on marketable securities

-


-



1,872,000)  


-

Comprehensive income (loss)

$     (1,888,315)


$ 2,721,940


$           (1,475,949)


$     2,062,905




SOURCE IceWEB, Inc.