IceWEB Announces First Quarter Financial Results

DULLES, Va.--([ BUSINESS WIRE ])--IceWEB, Inc.™ (OTCBB:IWEB), [ www.iceweb.com ], today announced financial results for its fiscal first quarter which ended December 31, 2009.

Revenue for the first quarter totaled $1,741,000 compared to $4,213,000 for the same period in 2007. Gross profit margin rose during the same period almost 100% from 14% to 27.2%. Total gross margin for the first quarter was $472,913. First quarter total operating expenses were $936,000, $501,000 of which was non-cash items. After adjusting for non-cash items and interest expense, the Company's pro-forma EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the quarter resulted in a profitable, positive cash flow of $38,000.

John R. Signorello, Chairman and Chief Executive Officer of IceWEB, Inc., stated, "Our first quarter results are the direct result of strategic initiatives we've taken to drastically reduce the corporation's fixed operational costs. Concurrently, we continue to expand our sales, R&D, and marketing efforts on our high-margin proprietary products that we own and manufacture."

Signorello continued, "Our vision is clear and concise – continue to gain market share and profits in the fast-growing GIS (Geographical Information Systems) market place with our high-performance InLINE™ storage solutions and IceWEB OnLINE™ services. We are continuing to develop alliances with several key players in the Geospatial Intelligence community. A plan is already in place to rollout several new products and marketing events with many of our alliance partners in 2009."

Q1 2009 Highlights

Compared to Q1 2008, in Q1 2009…
- Gross Profit Margin increased to 27.2% from 14%.
- Operating Expenses were reduced by 16%
- R&D investments went to $81,000 from $0
- EBITDA profit of $38,000
Interest rates on current loan reduced by 25%
Company compliant with Sarbanes Oxley requirements

Going forward, the Company projects growing revenues with commensurate gross profits for the remainder of 2009 and beyond.

Non-Cash Items

In Q1 there was approximately $501,000 in non-cash expenses; $176,248 in Depreciation and Amortization, $292,488 from FAS123® and stock based compensation, and $32,264 in deferred financing costs. The Company uses the Black-Scholes model for calculating FAS123(R) expense, which is the required methodology for expensing stock options and other equity awards given to our employees. The non-cash expense calculated at the time of an option grant is recognized over the vesting period of the option and has no impact on cash flows. FAS123(R) expenses are estimated to be approximately $160,000 per quarter, through the end of this fiscal year and are categorized as a general and administrative expense.

About IceWEB, Inc.

Through its own suite of proprietary offerings and partnerships with numerous global technology leaders, IceWEB, Inc. delivers high-performance storage solutions, advanced hardware, software, and online services to U.S. government agencies, enterprise companies, small to medium sized businesses (SMB) and tech-savvy consumers. For more information, please visit [ http://www.IceWEB.com ].

"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties, including but not limited to business conditions and the amount of growth in the computer industry and general economy, competitive factors, and other risks detailed from time to time in the Company's SEC reports, including but not limited to its annual report on Form 10-K and its quarterly reports on Forms 10-Q. The Company does not undertake any obligation to update forward-looking statements.


ICEWEB, Inc.
Consolidated Balance Sheets


	December 31,			September 30,
CURRENT ASSETS:	2008			2008 (1)
Cash	$	3,498		$	4,780
Accounts receivable, net of allowance for doubtful accounts of $9,000		3,794,162			3,094,110
Inventory, net		461,055			400,312
Other current assets		16,807			21,572
Prepaid expenses		55,308			55,155
		4,330,830			3,575,929

OTHER ASSETS:
Property and equipment, net of accumulated depreciation of $1,542,871		1,091,968			1,169,369
Deposits		61,418			61,418
Intangible assets, net of accumulated amortization of $542,047		1,048,882			1,132,612
Total Assets	$	6,533,098		$	5,939,328

CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	7,865,191		$	7,762,872
Notes payable		1,842,055			1,372,565
Deferred revenue		14,396			13,164
		9,721,642			9,148,601

Long-Term Liabilities
Notes Payable		1,145,921			956,520
Total Liabilities		10,867,563			10,105,121

Stockholders' Deficit
Preferred stock ($.001 par value; 10,000,000 shares authorized) Series A convertible preferred stock ($.001 par value; 0 shares issued and outstanding)		—			—
Series B convertible preferred stock ($.001 par value; 1,253,334 shares issued and outstanding)		1,253			1,253
Common stock ($.001 par value; 1,000,000,000 shares authorized; 30,979,369 shares issued and 30,816,669 shares outstanding)		30,981			24,690
Additional paid in capital		16,437,291			15,953,221
Accumulated deficit		(20,790,990	)		(20,131,957	)
Treasury stock, at cost, (162,500 shares)		(13,000	)		(13,000	)
Total stockholders' deficit		(4,334,465	)		(4,165,793	)

Total Liabilities and stockholders' deficit	$	6,533,098		$	5,939,328

(1) Derived from audited financial statements

See accompanying notes to unaudited consolidated financial statements


ICEWEB, Inc.
Consolidated Statements of Operations


	Three Months Ended
	December 31,
	2008			2007

Sales	$	1,740,588		$	4,212,732

Cost of sales		1,267,675			3,613,816

Gross profit		472,913			598,916

Operating expenses:
Marketing and selling		11,244			29,405
Depreciation and amortization		176,248			75,831
Research and development		81,665			—
General and administrative		667,059			1,006,948

Total Operating Expenses		936,216			1,112,184

Loss From Operations		(463,303	)		(513,268	)

Other income (expenses):
Interest income		483			924
Interest expense		(196,214	)		(97,636	)

Total other income (expenses):		(195,731	)		(96,712	)

Net loss	$	(659,034	)	$	(609,980	)

Basic and diluted loss per common share	$	(0.02	)	$	(0.05	)

Weighted average common shares outstanding – basic and diluted		28,855,635			13,305,466


See accompanying notes to unaudited consolidated financial statements


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


	Three Months Ended
	December 31,
	2008			2007

NET CASH PROVIDED/(USED) IN OPERATING ACTIVITIES	$	(842,930	)	$	724,231

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(15,119	)		(9,892	)
Cash used in acquisitions, net		—			(1,538,407	)
NET CASH USED IN INVESTING ACTIVITIES		(15,119	)		(1,548,299	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of equipment financing		(26,586	)		(21,480	)
Proceeds from notes payable - related party		—			1,482
Repayment of notes payable - related party		—			(8,540	)
Proceeds from notes payable		1,972,131			2,812,247
Proceeds from exercise of common stock options		600			—
Payments on notes payable		(1,089,378	)		(2,393,414	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		856,767			390,295

NET DECREASE IN CASH		(1,282	)		(433,773	)

CASH - beginning of period		4,780			1,092,470

CASH - end of period	$	3,498		$	658,697

Supplemental disclosure of cash flow information:
Cash paid for :
Interest	$	135,787		$	97,636
Income taxes		—			—

Non-cash transactions affecting investing and financing activities:
Conversion of shares of preferred stock to shares of common stock		—			456,667

Acquisition details:
Fair value of assets acquired	$	—		$	2,688,795
Intangible assets	$	—		$	1,215,450
Liabilities assumed	$	—		$	(614,668	)
Common stock issued in connection with acquisition	$	—		$	876,846


See accompanying notes to unaudited consolidated financial statements

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IceWEB Announces First Quarter Financial Results