SOURCE: IceWEB, Inc.

August 15, 2011 16:01 ET

IceWEB Reports Fiscal Third Quarter Financial Results

STERLING, VA--(Marketwire - Aug 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 third quarter period ended June 30, 2011.

Quarterly Highlights and Recent Developments

  • IceWEB's NAS (Network Attached Storage) systems received official VMware Ready certification - IceWEB NAS Solutions Certified as Fully Compatible with VMware Environments and Applications
  • IceWEB expanded its Model 3000 and 5000 storage platforms with New Hybrid (HB) models - Both Models are turnkey, ready-to-deploy and include IceWEB's all inclusive Storage Operating system which supports both SAN/block and NAS/file requirements in both data center and cloud environments starting under $30,000
  • IceWEB expanded its storage line with its new, top-of-the-line, highly-redundant 6000-HR series of Unified Storage Systems - New Feature-Rich 6000-HR (High Reliability) series gives IceWEB significant competitive advantages in the fastest growing, mid- to high-end enterprise storage market
  • IceWEB's entire line of storage products is available to Federal, State and Local Governments through Promark Technology's two-tier GSA Services Agreement

Financial Highlights

In the quarter ending June 30, 2011, the Company reported revenue of $719,727, as compared to quarterly revenue of $1,203,878 for the year-ago period. The year over year revenue was directly impacted by delayed and reduced Federal Government spending. While there continues to be growing interest and demand for IceWEB's data storage products many of our channel partners' customers in the public and private sectors have delayed purchasing during the fiscal third quarter that ended June 30, 2011. Historically, the fiscal fourth quarter for the government sector is the strongest for our channel partners and we are hopeful this trend continues.

Gross margin was 47% for the three months ending December 31, 2010, down slightly from 49% in the year earlier period.

The Company reports results on both a GAAP and a non-GAAP basis. Non-GAAP results exclude the impact of equity-based compensation, depreciation and amortization and the expense of common stock issued for services.

For the three month period ending June 30, 2011 the Company reported a non-GAAP loss of $404,935 and a GAAP loss of $698,269, versus a non-GAAP and GAAP loss of $695,512 and $1,423,743, respectively, for the year-ago period. The improved net loss was attributable to significant cost-cutting measures undertaken by the company, in anticipation of the merger with Promark. Operating expenses for the quarter was $932,559, as compared to $1,867,094 in the year ago period, a decrease of 50%. On a non-GAAP basis operating expenses for the quarter was $639,225 versus $1,034,051 for the same period in the prior year.

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 third quarter was $698,269 or ($0.00) per share based on 143.55 million weighted average shares outstanding. This compares to a GAAP net loss of $1,423,743 or ($0.01) per share for the third quarter of fiscal 2010.

Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
(Unaudited)
Three Months Ended Nine Months Ended
June 30 June 30
2011 2010 2011 2010
Net income (loss ) $ (698,269 ) $ (1,423,743 ) $ (2,588,332 ) $ (4,771,693 )
Depreciation and amortization 124,831 165,585 418,625 182,318
Stock-based compensation 152,385 357,173 489,659 2,229,445
Common stock issued for services 16,118 310,285 77,585 480,285
Adjustments to GAAP loss 293,334 833,043 985,869 2,892,048
Adjusted earnings (loss) $ (404,935 ) $ (590,700 ) $ (1,602,463 ) $ (1,879,645 )
Adjusted EPS $ (0.00 ) $ (0.01 ) $ (0.01 ) $ (0.02 )

For the nine months fiscal year to date our total operating expenses decreased approximately 40% to $3,482,289 as compared to $5,822,391 for the nine months ended June 30, 2010.

Acquisition of USI/Promark Technology
As previously announced, IceWEB and Promark Technology continue to work in tandem with its team of consultants, bankers and legal teams to complete the merger initially announced in March 2011. The Company anticipates that the merger with Promark will be completed by the end of this fiscal year and will host a conference call to provide shareholders details of the merger and allow shareholders the opportunity to speak directly to the combined management team. The combined company's revenue would have exceeded $23m for the quarter ended June 30th. Typically, the September quarter tends to be the largest quarter for both companies due to year-end Government spending.

John R. Signorello, Chairman and CEO, stated, "IceWEB continued its significant product development and R&D efforts during the quarter as we prepare to close the transaction with Promark. We are especially encouraged by our progress in product development, as we expect to see revenue growth from the recent VMware certifications, as well as the launch of the 6000 series family of products. These developments demonstrate the effectiveness of our continued product line expansion, technology developments, and our calculated decision to invest in R&D and engineering support to spur present and future growth."

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.

- Tables to Follow -

IceWEB, Inc.
Consolidated Balance Sheets
June 30, 2011 September 30, 2010
(Unaudited) (1)
CURRENT ASSETS:
Cash $ 4,184 $ 540,156
Accounts receivable, net 1,777,160 1,466,483
Inventory 73,163 62,197
Other current assets 15,650 6,875
Prepaid expenses 36,046 31,230
Total Current Assets 1,906,203 2,106,941
OTHER ASSETS:
Property and equipment, net 242,628 418,873
Deposits 13,320 13,320
Marketable securities 140,800 524,800
Intangible assets, net 364,632 546,952
Total Assets $ 2,667,583 $ 3,610,886
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,587,217 $ 1,648,252
Notes payable 1,871,408 1,649,140
Deferred revenue 14,904 59,582
Total Liabilities 3,473,529 3,356,974
Stockholders' Equity (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; 146,661,939 shares issued and 146,499,439 shares outstanding and 134,443,725 and 134,281,225 issued and outstanding, respectively) 146,501 134,445
Additional paid in capital 31,261,249 29,360,833
Accumulated deficit (32,211,122 ) (29,622,792 )
Accumulated other comprehensive income 92,800 476,800
Subscription receivable (83,000 ) (83,000 )
Treasury stock, at cost, (162,500 shares) (13,000 ) (13,000 )
Total stockholders' equity (deficit) (805,946 ) 253,912
Total Liabilities and stockholders' Equity (Deficit) $ 2,667,583 $ 3,610,886

(1) Derived from audited financial statements

See accompanying notes to unaudited consolidated financial statements

IceWEB, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2011 2010 2011 2010
Sales $ 719,727 $ 1,203,878 $ 2,514,164 $ 2,815,900
Cost of sales 380,784 613,287 1,317,299 1,343,006
Gross profit 338,943 590,591 1,196,865 1,472,894
Operating expenses:
Sales and marketing 123,955 404,443 898,299 1,189,661
Depreciation and amortization expense 124,831 165,585 418,625 495,984
Research and development expense 187,810 167,061 547,579 353,092
General and administrative 495,963 1,130,005 1,617,786 3,783,654
Total Operating Expenses 932,559 1,867,094 3,482,289 5,822,391
Loss from operations (593,616 ) (1,276,503 ) (2,285,424 ) (4,349,497 )
Other expense:
Interest expense (104,653 ) (147,240 ) (302,908 ) (422,196 )
Total other expenses: (104,653 ) (147,240 ) (302,908 ) (422,196 )
Net loss $ (698,269 ) $ (1,423,743 ) $ (2,588,332 ) $ (4,771,693 )
Basic and diluted loss per common share $ (0.00 ) $ (0.01 ) $ (0.02 ) $ (0.05 )
Basic and diluted weighted average common shares outstanding 143,553,735 110,570,437 140,673,273 92,635,584
IceWEB, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
June 30,
2011 2010
NET CASH USED IN OPERATING ACTIVITIES $ (1,827,791 ) $ (2,900,065 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in marketable securities -- (48,000 )
Purchase of property and equipment (60,061 ) (85,624 )
NET CASH USED IN INVESTING ACTIVITIES (60,061 ) (133,624 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of restricted common stock 409,464 2,320,630
Proceeds from notes payable 818,481 985,900
Proceeds from exercise of common stock options 720,148 1,898,374
Payments on notes payable (596,213 ) (957,662 )
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,351,880 4,247,242
NET INCREASE (DECREASE) IN CASH (535,972 ) 1,213,553
CASH - beginning of period 540,156 63,310
CASH - end of period $ 4,184 $ 1,276,863
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 198,225 $ 402,056
Income taxes -- --

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