IceWEB: Fiscal 2010 Financial Results

 
IceWEB, Inc. announced financial results for the year ended September 30, 2010.

Key Operational Highlights
for fiscal year 2010 include:

• In May 2010, IceWEB launched a 2-tier distribution channel sales model that selected key channel partners to increase IceWEB’s footprint across the U.S., setting as an initial goal 100 channel partners within one year. Through the end of the 2010 fiscal year, IceWEB had signed and trained 53 value-added resellers. The company is on target to attain its goal of 100 channel partners by May 2011.
• IceWEB sold its non-storage business, IceWEB Virginia, in May 2009 and since then has focused on storage. In fiscal 2010, storage sales increased 49% to $3.3 million compared to fiscal 2009 storage sales. Since May 2010, IceWEB has developed an 8-figure storage-sales pipeline.
• IceWEB filed U.S. Non-Provisional Patent Application No.61/289,714 for Locally Connected Cloud Storage Device that supports the company’s leadership position in cloud computing.
• IceWEB hired a senior management team led by Karl Chen. Mr. Chen, formerly a key member of LeftHand Networks, was instrumental in developing LeftHand’s channel. Eventually LeftHand Networks was sold to HP for $360 million. Mr. Chen has attracted other experienced storage professionals to strengthen the management team.
• IceWEB raised $2.4 million from sale of its common stock, renegotiated and retired over $1 million in long-term debt in exchange for equity (at a 37% premium to the then current share price), improved the working capital deficit by $1.9 million and achieved a positive stockholders equity.

John R. Signorello, CEO of IceWEB, stated: "Fiscal year 2010 was a year of many achievements and some disappointments. Early in the year, the company elected to re-invent itself by manufacturing and marketing state-of-the-art, storage appliances for cloud computing and other rapidly growing markets. After consultation with a number of storage VARs (Value Added Resellers), we determined a channel partner distribution system was key to our future success."

Signorello continued: "We were fortunate that a very experienced storage professional, Karl Chen, after successfully guiding LeftHand Networks from start-up to its ultimate sale to HP, was seeking a new challenge. Karl saw an opportunity with IceWEB to use his experience to establish a distribution network for the company. Already the company’s has over 50 plus channel partners selling IceWEB storage systems throughout the nation and is on target to have 100 partners by May 2011.

"Although final 2010 quarter sales appear to be well below expectations, it is important to note that sales valued at over six figures were delivered to a key channel partner in the final quarter but the systems were not delivered to the end user in time to be included in the audited final quarter sales results.


"Storage companies have commanded attention from major computer manufacturers and storage suppliers. Deals in the past year have seen a number of large and small storage companies being acquired at many times trailing sales revenues. As our footprint grows and as sales ramp up, it is reasonable to expect that those who have not added storage appliances to their product offerings will continue to explore the opportunity to do so.


"In 2010 we continued to create the foundation for future profitability by investing in our high-margin storage business. Strategically, we believe we are well-positioned to see significant improvement in our fiscal 2011 operating results. Also, we entered into several key strategic alliances with Promark Technology, a leading value added distributor of data storage products and solutions in the United States, which will provide us with significant growth opportunities.

"At this stage of our development our focus is on expanding our channel partnerships, developing enhancements to our already rich featured storage appliance line and increasing sales. In so doing, we will gain market share and, eventually, a valuation that is in keeping with our success," concluded Signorello.

Operating Results
For fiscal 2010, the company reported sales from continuing operations of $3.3 million as compared to sales of $2.2 million, adjusted for the sale of our IceWEB Virginia subsidiary in March 2009, an increase in sales from continuing operations of $1.1 million or approximately 49.7%. The increase in revenue is attributable to the launch of our two-tier channel sales model.

Gross profit increased to $1.6 million in fiscal 2010, from $900,000 in fiscal 2009, an increase of 76%. Gross margin percent improved from 41% to 48%. The improvement in margins is attributable to the sale of higher margin storage products and improving margins in the hardware and software solutions business. We anticipate that our margins will continue to improve during the next fiscal year.

Non-GAAP Financial Measures
On a Non-GAAP basis, adjusted net loss for fiscal 2010 was $3,239,575 or ($0.03) per share based on 101,379,729 weighted average shares outstanding. This compares to a GAAP net loss of $6,964,233 or ($0.07) per share for the fiscal year ended September 30, 2010.