SOURCE: IceWEB Inc.

February 15, 2011 10:00 ET

IceWEB Reports Fiscal First Quarter Financial Results and Projects $2 Million Plus Second Quarter Shipments

Year-Over-Year Revenues Increased 13%; Future Shipment Pipeline Maintained at More Than $10 Million

STERLING, VA--(Marketwire - February 15, 2011) - IceWEB™, Inc., (OTCBB: IWEB), a leading provider of unified data storage and building blocks for cloud storage, announced today results for the fiscal 2011 first quarter period ended December 31, 2010.

Quarterly Highlights and Recent Developments

-- Revenue increased 13% over year-ago period
-- Gross margins maintained at 48%
-- Order flow accelerating as channel partners ramp up efforts
-- Second quarter storage shipments projected at over $2 million
-- Future shipment pipeline continues to grow and exceeds $10 million

In the quarter ending December 31, 2010, the Company reported revenue of $677,853, as compared to quarterly revenue of $600,817 for the year-ago period. The year-over-year increase in revenue was due to the increase in data storage product sales versus the year-ago quarter. For the three month period ending December 31, 2010, the Company reported a loss of $1,255,815, versus a loss of $1,459,634 for the year-ago period.

Gross margin was 48% for the three months ending December 31, 2010, down slightly from 54% in the year earlier period.

The Company reports results on both a GAAP and a non-GAAP basis. Non-GAAP results excludes 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 first quarter of fiscal 2011 attained our internal growth plans while maintaining a tight control on overhead expenses. We have diminished our cash burn level in the quarter and believe we are nearing revenue levels to be cash flow neutral."

"Our 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. Evidence of this growing success is seen in our Channel Sales Model that is continuing to mature and is now delivering new orders at an accelerated rate. We are very confident that storage sales revenues in the second quarter will exceed $2 million," concluded, Signorello.

Karl Chen, VP or Worldwide Channel Sales and Marketing, stated, "In addition, we have also seen our pipeline of future business opportunities continue to grow and is now over $10 million; a direct result of our strong distribution network, that will be expanding further in coming months. Noting the accelerating order inflow for our storage platform and the rousing acceptance of our recently announced IceWEB 3000 Storage System, leads us to anticipate that an upward revision of our goals may be appropriate in the near future."

Mr. Signorello noted, "The massive amounts of data that are being generated daily will require a vast number of storage systems 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."

Mr. Signorello concluded, "We are very confident that the steps we have taken are positioning IceWEB as a key supplier in this burgeoning market."

About IceWEB, Inc.

Headquartered just outside of Washington, D.C., IceWEB manufactures and markets data storage products. For more information, please visit www.IceWEB.com.

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, as amended, or any other document, whether as a result of new information, future events or otherwise, except as otherwise required by applicable federal securities laws.

                             ICEWEB, Inc.
                     Consolidated Balance Sheets



                                               December 31,  September 30,
                                                  2010           2010
                                               (Unaudited)        (1)
                                              -------------  -------------
CURRENT ASSETS:
Cash                                          $     256,107  $     540,156
Accounts receivable, net of allowance of
 $409,000 and $309,000, respectively              1,424,917      1,529,852
Inventory                                           107,093         62,197
Other current assets                                 27,500          6,875
Prepaid expenses                                     46,591         31,230
                                              -------------  ------------- 
                                                  1,862,208      2,170,310
                                              -------------  -------------

OTHER ASSETS:
Property and equipment, net                         328,748        418,873
Deposits                                             13,320         13,320
Marketable securities                                51,840        524,800
Intangible assets, net of accumulated
 amortization of $729,270 and $668,498              486,180        546,952
                                              -------------  -------------
Total Assets                                  $   2,742,296  $   3,674,255
                                              =============  =============

CURRENT LIABILITIES:
Accounts payable and accrued liabilities      $   1,846,861  $   1,711,619
Notes payable                                     1,726,993      1,649,140
Deferred revenue                                     43,271         59,582
                                              -------------  -------------
Total Liabilities                                 3,617,125      3,420,341
                                              -------------  -------------

STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock ($.001 par value; 10,000,000
 shares authorized) Series B convertible
 preferred stock ($.001 par value; 626,667
 shares issued and outstanding)                         626            626
Common stock ($.001 par value; 1,000,000,000
 shares authorized; 138,841,375 shares issued
 and 138,678,875 shares outstanding and
 134,443,725 and 134,281,225 issued and
 outstanding, respectively)                         138,678        134,445
Additional paid in capital                       29,956,633     29,360,833
Accumulated deficit                             (30,878,606)   (29,622,792)
Accumulated other comprehensive income                3,840        476,800
Subscription receivable                             (83,000)       (83,000)
Treasury stock, at cost, (162,500 shares)           (13,000)       (13,000)
                                              -------------  -------------
Total stockholders' equity (deficit)               (874,829)       253,912
                                              -------------  -------------

Total Liabilities and Stockholders' Equity
 (Deficit)                                    $   2,742,296  $   3,674,255
                                              =============  =============

(1) Derived from audited financial statements



                               ICEWEB, Inc.
                  Consolidated Statements of Operations
                               (Unaudited)

                                                    Three Months Ended
                                                        December 31
                                                --------------------------
                                                    2010          2009
                                                ------------  ------------

Sales                                           $    677,853  $    600,817

Cost of sales                                        350,657       273,624

                                                ------------  ------------
Gross profit                                         327,196       327,193
                                                ------------  ------------

Operating expenses:
   Sales and marketing                               455,022       312,857
   Depreciation and amortization                     166,617       167,474
   Research and Development                          206,126        79,565
   General and administrative                        657,366     1,093,970

                                                ------------  ------------
Total operating expenses                           1,485,131     1,653,866
                                                ------------  ------------

                                                ------------  ------------
Loss from operations                              (1,157,935)   (1,326,673)
                                                ------------  ------------
Other income (expenses):
   Interest expense                                  (97,880)     (132,961)

                                                ------------  ------------
Total other income (expenses):                       (97,880)     (132,961)
                                                ------------  ------------

                                                ------------  ------------
Net loss                                        $ (1,255,815) $ (1,459,634)
                                                ------------  ------------


Loss per common share, basic and diluted        $      (0.01) $      (0.02)

Weighted average common shares outstanding
 basic and diluted                               136,447,266    78,328,313



                                 ICEWEB, Inc.
                    Consolidated Statements of Cash Flows
                                 (Unaudited)



                                                      Three Months Ended
                                                         December 31,
                                                    ----------------------
                                                       2010        2009
                                                    ----------  ----------
NET CASH USED IN OPERATING ACTIVITIES               $ (697,182) $ (848,697)
                                                    ----------  ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Investment in marketable securities                      --     (48,000)
   Purchase of property and equipment                  (15,720)    (35,090)
                                                    ----------  ----------
NET CASH USED IN INVESTING ACTIVITIES                  (15,720)    (83,090)
                                                    ----------  ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from the sale of restricted common
    stock                                                   --     190,000
   Proceeds from notes payable                         399,012     337,209
   Proceeds from exercise of common stock options      351,000     650,000
   Payments on notes payable                          (321,159)   (304,617)

                                                    ----------  ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES              428,853     872,592
                                                    ----------  ----------

NET DECREASE IN CASH                                  (284,049)    (59,195)

CASH - beginning of period                             540,156      63,310

                                                    ----------  ----------
CASH - end of period                                $  256,107  $    4,115
                                                    ==========  ==========

Supplemental disclosure of cash flow information:
Cash paid for :
                                                    ----------  ----------
   Interest                                         $           $  126,571
                                                    ==========  ==========
   Income taxes                                             --          --
                                                    ==========  ==========

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