IceWEB Acquisition of Computers and Tele-Comm, KC NAP Completed by Early June

Here is a brief update on the progress of our previously announced plan to acquire Computers and Tele-Comm, Inc. and KC NAP, LLC.
We have completed our due diligence phase, and we are now awaiting the
completion of the final audit. We now estimate that we will have the
acquisition completed by early June.

Since we began delivering our IceBOX product line, the first iteration
of our cloud Services Strategy, we have been successful in selling these
products into a variety of market segments including government,
education, medical and commercial enterprises. We have sold IceBOX
through resellers (providing them with excellent margins), and we have
sold IceBOX direct to the customer. We have sold on-premise versions and
we have sold hosted versions. Just as importantly, IceBOX has pulled
along with its adoption new sales of our Unified Storage Appliances,
which utilize our award-winning IceSTORM OS. In short, our new cloud
Services strategy that I announced late last year is working.

What’s most interesting about the change in our strategy is that our new
products and services generate revenue at the point of sale, as well as
recurring revenue in the form of renewals of annual licenses. Every
time we sell our IceBOX products, we generate recurring revenue. Every
time. Think about that-every year, we’ll be collecting renewals from
IceBOX customers that build not only our revenue line, but also our
profitability line. This is the right strategy, and we are just at the
beginning of it.

We build outstanding hardware platforms that perform brilliantly for our
customers. We have developed and delivered our world-class unified
storage software, IceSTORM, which rivals any in the industry for its
robustness and applicability, but NOW WE ALSO PROVIDE a key solution
with enormous capability, scalability and security for companies who
MUST deal with the BYOD phenomenon. This includes maintaining security
of their corporate data assets and compliance with ever-increasing
regulatory requirements.

Our evolution into a cloud Services company is by no means complete. Our
acquisition of Computers and Tele-Comm, Inc. and KC NAP, LLC is a great
stride forward in that strategy, but we will not be done. We’ll launch
packaged and SKU’ed cloud Services to be sold through the IT VAR and
Reseller channel. They’ll take our products and services into the
heartland of American business-the Small and Medium Enterprises that are
the robust engine of commerce. We will provide those resellers with a
simple, easy, way to sell these mission critical collaborative services
to the customers they already support, and who rely on them for advice
and execution of their IT strategy and implementation. I started in this
business as a reseller almost 30 years ago, and I understand at a
visceral level what resellers need to keep their businesses
flourishing-easy to sell, easy to administer products with high margins.
That’s what we’ll provide to them, and if our early successes are any
indicator, this approach will work and it will work in a big way.

This was our thinking when pursuing acquisition candidates like
Computers and Tele-Comm, Inc. and KC NAP, LLC. We know that only through
this type of willingness to make significant investments with
significant focus, would we achieve our goal of leadership in this
burgeoning sector.

Finally, I get a number of emails every week from you asking me ‘how is
it going’. As you know, I am not able to comment on that other than in
broad generalities, but suffice it to say, we are about where I expect
us to be in this critical strategic transition. I would only ask that
you keep focused on the value of the changes we have been making. We’re
doing the right things. We have excellent people, excellent products and
excellent services that customers need and want, and a clear,
highly-focused vision. I’m excited about the future of our company; I
believe you should be excited as well.