Exhibit 99.1
IceWEB Reports First Quarter of Net Income
Improved Operating Results, Gain on Sale of Subsidiary Lead to Q2 EPS of $0.08
| • | On Thursday May 14, 2009, 2:54 pm EDT |
DULLES, Va.--(BUSINESS WIRE)--IceWEB, Inc.™ (OTCBB:IWEB - News), www.iceweb.com, today announced financial results for its fiscal second quarter for the period ended March 31, 2009.
Some of the highlights include:
| • | Net income of $2.7 million, or $0.08 per diluted share, compared to a loss of $(1.6) million, or $(0.10) per diluted share in the year-earlier period. |
| • | Gross margin increases to 41.1% compared to 16.4% in the 2008 fiscal second quarter and 27.2% from the 2009 fiscal first quarter. |
| • | Loss from continuing operations was reduced by 59.7% to $0.56 million |
| • | Debt and liabilities declined from approximately $9 million at its fiscal year ended September 30, 2008, to $4.0 million. |
Revenue for the 2009 second quarter was $1.4 million compared to $3.9 million for the same period in fiscal 2008. Revenue declined due to the Company’s decision to divest its IceWEB Solutions Group, Inc. (VA) subsidiary, a reseller of low-margin hardware & software products. IceWEB recognized a one-time gain on the divestiture of the subsidiary of approximately $3.5 million. Second quarter total operating expenses were $1.1 million, which included $510,000 of non-cash items, compared to $2.0 million in the year-earlier period, which included $520,000 of non-cash items. After adjusting for non-cash items and interest expense, the Company’s pro-forma EBITDAs (Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-based compensation) for the 2009 fiscal second quarter was $3.4 million, compared to a loss of $872,000 in the previous year.
“We believe the improved operating results for the second fiscal quarter are a result of the transition from sales of lower margin products to proprietary storage products we own and manufacture,” said John R. Signorello, Chairman and Chief Executive Officer of IceWEB, Inc. “The sale of IceWEB Solutions Group improves our balance sheet, and allows management to focus on the many opportunities to increase sales of our storage products. We believe that these initiatives will favorably impact results over the balance of the year, leading to growing sales, additional margin improvement and improved profitability.”
NON-GAAP Financial Measures
The Company uses non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparison. Company management believes that the non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of the performance of our core cash operations. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. The Company believes these non-GAAP financial measures are useful to investors because they allow for greater transparency with respect to key metrics used by management.
EBITDA
As is common in the industry, the Company uses EBITDA as a measure of performance to demonstrate earnings exclusive of interest and non-cash items. (e.g. depreciation, amortization & stock-based compensation expense). The Company, in its daily management of its business affairs and analysis of its monthly, quarterly and annual performance, makes its decisions based on cash flows. In managing its current and future affairs, the Company cannot affect the amortization of the intangible assets to any material degree, and therefore uses EBITDA as its primary management guide. Since an outside investor may base its evaluation of the Company’s performance on the Company’s net loss, not its cash flows, there is a limitation to the EBITDA measurement. EBITDA is not, and should not be considered, an alternative to net loss, loss from operations or any other measure for determining operating performance of liquidity, as determined under GAAP. The most directly comparable GAAP reference in the Company’s case is the removal of interest, depreciation, amortization, taxes and other non-cash expenses.
About IceWEB, Inc.
Headquartered just outside of Washington, D.C., IceWEB manufactures and markets storage solutions and on-line application services. Its customer base includes U.S. government agencies, enterprise companies, and small to medium sized businesses (SMB). For more information, please visit 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.
FINANCIAL CHARTS TO FOLLOW
ICEWEB, Inc.
Consolidated Balance Sheet
March 31, 2009
(Unaudited)
CURRENT ASSETS: |
| March 31, 2009 |
|
| September 30, 2008 (1) |
|
|
Cash | $ | 8,358 |
| $ | 4,780 |
|
|
Accounts receivable, net of allowance for doubtful accounts of $9,000 |
| 840,282 |
|
| 3,094,110 |
|
|
Inventory, net |
| 122,334 |
|
| 400,312 |
|
|
Other current assets |
| 23,905 |
|
| 21,572 |
|
|
Prepaid expenses |
| 46,820 |
|
| 55,155 |
|
|
|
| 1,041,699 |
|
| 3,575,929 |
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS: |
|
|
|
|
|
|
|
Property and equipment, net of accumulated depreciation of $1,505,014 |
| 1,004,899 |
|
| 1,169,369 |
|
|
Deposits |
| 73,955 |
|
| 61,418 |
|
|
Intangible assets, net of accumulated amortization of $303,862 |
| 911,588 |
|
| 1,132,612 |
|
|
Total Assets | $ | 3,032,141 |
| $ | 5,939,328 |
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
Accounts payable and accrued liabilities | $ | 1,244,421 |
| $ | 7,762,872 |
|
|
Notes payable |
| 1,577,640 |
|
| 1,372,565 |
|
|
Deferred revenue |
| 12,476 |
|
| 13,164 |
|
|
|
| 2,834,537 |
|
| 9,148,601 |
|
|
|
|
|
|
|
|
|
|
Long-Term Liabilities |
|
|
|
|
|
|
|
Notes Payable |
| 1,197,536 |
|
| 956,520 |
|
|
Total Liabilities |
| 4,032,073 |
|
| 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; 41,267,950 shares issued and 41,105,250 shares outstanding) |
| 41,270 |
|
| 24,690 |
|
|
Additional paid in capital |
| 17,039,595 |
|
| 15,953,221 |
|
|
Accumulated deficit |
| (18,069,050 | ) |
| (20,131,957 | ) |
|
Treasury stock, at cost, (162,500 shares) |
| (13,000 | ) |
| (13,000 | ) |
|
Total stockholders’ deficit |
| (999,932 | ) |
| (4,165,793 | ) |
|
|
|
|
|
|
|
|
|
Total Liabilities and stockholders’ deficit | $ | 3,032,141 |
| $ | 5,939,328 |
|
|
(1) Derived from audited financial statements
ICEWEB, Inc.
Consolidated Statements of Operations
(Unaudited)
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
| 2009 |
| 2008 |
| 2009 |
| 2008 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
| $ | 1,369,702 |
| $ | 3,902,131 |
| $ | 3,110,290 |
| $ | 8,114,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
| 806,391 |
|
| 3,264,075 |
|
| 2,074,066 |
|
| 6,877,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 563,311 |
|
| 638,056 |
|
| 1,036,224 |
|
| 1,236,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing and selling |
|
| 19,268 |
|
| 59,314 |
|
| 30,512 |
|
| 88,720 |
|
Depreciation and amortization |
|
| 170,798 |
|
| 76,533 |
|
| 347,045 |
|
| 152,364 |
|
Research and development |
|
| 76,865 |
|
| 85,730 |
|
| 156,431 |
|
| 85,730 |
|
General and administrative |
|
| 858,256 |
|
| 1,811,312 |
|
| 1,527,415 |
|
| 2,818,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses |
|
| 1,125,187 |
|
| 2,032,889 |
|
| 2,061,403 |
|
| 3,145,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) From Operations |
|
| (561,876 | ) |
| (1,394,833) |
|
| (1,025,179 | ) |
| (1,908,101 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain from sale of subsidiary |
|
| 3,452,236 |
|
| — |
|
| 3,452,236 |
|
| — |
|
Interest income |
|
| 660 |
|
| 1,661 |
|
| 1,142 |
|
| 2,584 |
|
Interest expense |
|
| (169,080 | ) |
| (187,371 | ) |
| (365,294 | ) |
| (285,007 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other (expenses): |
|
| 3,283,816 |
|
| (185,710 | ) |
| 3,088,084 |
|
| (282,423 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 2,721,940 |
| $ | (1,580,543) |
| $ | 2,062,905 |
| $ | (2,190,524 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
Basic income (loss) per common share |
| $ | 0.08 |
| $ | (0.10 | ) | $ | 0.07 |
| $ | (0.15 | ) |
Diluted loss per common share |
| $ | 0.08 |
| $ | (0.10 | ) | $ | 0.06 |
| $ | (0.15 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding-basic |
|
| 32,671,802 |
|
| 15,272,865 |
|
| 30,736,308 |
|
| 14,679,343 |
|
Weighted average common shares outstanding-diluted |
|
| 34,667,320 |
|
| 15,272,865 |
|
| 32,829,375 |
|
| 14,679,343 |
|
ICEWEB, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
|
| Six Months Ended |
| ||||
|
| 2009 |
| 2008 |
| ||
|
|
|
|
|
|
|
|
NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES |
| $ | (788,470 | ) | $ | (633,426 | ) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Purchase of property and equipment |
|
| (15,118 | ) |
| (35,691 | ) |
Cash used in acquisitions, net |
|
| — |
|
| (1,311,318 | ) |
NET CASH USED IN INVESTING ACTIVITIES |
|
| (15,118 | ) |
| (1,347,009 | ) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Repayment of equipment financing |
|
| (45,114 | ) |
| (44,136 | ) |
Repayment of notes payable - related party |
|
| — |
|
| (115,767 | ) |
Payment on notes payable with common stock |
|
| 197,274 |
|
| — |
|
Proceeds from notes payable |
|
| 6,175,684 |
|
| 6,043,934 |
|
Payments on notes payable |
|
| (5,684,478 | ) |
| (4,872,667 | ) |
Proceeds from exercise of common stock options |
|
| 163,800 |
|
| — |
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
| 807,166 |
|
| 1,011,364 |
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH |
|
| 3,578 |
|
| (969,071 | ) |
|
|
|
|
|
|
|
|
CASH - beginning of year |
|
| 4,780 |
|
| 1,092,470 |
|
|
|
|
|
|
|
|
|
CASH - end of period |
| $ | 8,358 |
| $ | 123,399 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
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|
Cash paid for : |
|
|
|
|
|
|
|
Interest |
| $ | 365,294 |
| $ | 276,566 |
|
Income taxes |
|
| — |
|
| — |
|
|
|
|
|
|
|
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|
|
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|
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Acquisition details: |
|
|
|
|
|
|
|
Intangible assets |
| $ | — |
| $ | 1,215,450 |
|
Liabilities assumed |
| $ | — |
| $ | (614,668 | ) |
Common stock issued |
| $ | — |
| $ | 876,846 |
|
Direct costs |
|
| — |
|
| 740,000 |
|
Fair value of assets acquired |
| $ | — |
| $ | 2,688,795 |
|
Cash paid |
| $ | — |
| $ | 2,412,731 |
|
See accompanying notes to unaudited consolidated financial statements
Contact:
IceWEB, Inc.
Investor Relations, 703-344-0951
investor@IceWEB.com
or
CEOcast
Gary Nash, 212-732-4300