IceWEB: Fiscal 3Q10 Financial Results

IceWEB, Inc. announced results for the fiscal 2010 third quarter period ended June 30, 2010.

Quarterly Highlights and Recent Developments

• Revenue exceeds $1.2 million in the fiscal third quarter
• Gross margins maintained at 49%
• Company completes equity raise of $2.3 million
• Positive shareholders’ equity at June 30, 2010
• Order flow accelerating as channel partners ramp up efforts
• Company signs 29 VARs in 1st quarter of channel partner program launch

In the quarter ending June 30, 2010, the Company reported revenue of $1,203,878, as compared to quarterly revenue of $826,182 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 June 30, 2010, the Company reported a loss of $1,423,743, versus a loss of $948,906 for the year-ago period.

Gross margin was 49% for the three months ending June 30, 2010, down slightly from 51% in the year earlier period.  Storage revenue for the three months ended June 30, 2010, accounted for approximately 95% of the Company’s revenue compared to the year earlier period, when sales of storage products accounted for 92% of revenue.

For the nine month year-to-date period ending June 30, 2010, the Company reported revenue of $2,815,900, a decrease from the year ago period revenue of approximately $3,936,500. The Company reported a loss for the nine months ended June 30, 2010 of $4,771,693 versus earnings of $1,114,000 in the year earlier period. In March 2009, IceWEB sold a subsidiary that accounted for prior year year-to-date sales of approximately $1,625,700. After adjusting for the sale of the subsidiary, prior year year-to-date revenue would have been approximately $2,310,800. Excluding the revenue from the disposed-of subsidiary, year-over-year revenue increased approximately $505,100, or 21.9%. The sale of the subsidiary was facilitated to ensure focus on the data storage business model.

Gross margins were 52% for the fiscal nine months ending June 30, 2010, up from 37% in the year earlier period, due primarily to increased sales of high margin data storage products. Storage revenue for the nine months ended June 30, 2010 accounted for approximately 94.6% of the Company’s revenue compared to the year earlier period, when sales of storage products accounted for 53% of revenue.

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 third quarter of fiscal 2010 attained our internal growth plans while maintaining a tight control on overhead expenses. At the same time, we prepared the Company for significant future growth by securing funds of $2.3 million through a private offering. We have diminished our cash burn level in the quarter and believe we are nearing revenue levels to be cash flow neutral. We also launched our distribution model with Promark Technologies."

"Our management team combined with the key alliances, such as Promark Technologies, ESRI and Google, give us confidence that our ambitious sales and earnings goals will be attained. We have also seen our pipeline of new business opportunities rise into the millions of dollars, which is a direct result of our strong distribution network, which we expect to expand upon in coming months. Noting the accelerating order inflow for our storage platform and the rousing acceptance of our recently announced IceWEB 5000 Storage System, leads us to anticipate that an upward revision of our goals may be appropriate in the near future," stated Mr. Signorello.

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