IceWEB Reports Fiscal Third Quarter Results

Gross Margin Improves 300% Over Prior Year, Exceeding 50% for the First Time,
Due to Sale of High-Margin Proprietary Storage Products; Company Significantly
Reduces Debt
DULLES, Va.--(Business Wire)--
IceWEB, Inc.™ (OTCBB:IWEB), www.iceweb.com, today announced financial results
for its fiscal third quarter for the period ended June 30, 2009.

Recent Operational highlights

* Chief Executive Officer recently acquired the remaining Series B preferred
Stock
* Company executed $3MM Series C preferred investment
* Revenue margins for the IceWEB family of products eclipsed 50% for the first
time ever, compared to 12.2% in the same period in fiscal 2008.
* 100% of the company`s revenue was generated through the sales of high-margin
proprietary storage solutions; the Company exited the lower-margin reseller
business earlier this year
* Company Launched its Iplicity enterprise platform
* Company added 30+ new customers
* Loss from operations was reduced by 61.2% to $804K, from $2.07 million. Of
this loss, non-cash expenses accounted for $322K.
* Selling, general and administrative expenses totaled $1.0 million, versus $2.4
million in the year-ago period. Excluding non-cash expense, G&A for the quarter
ended June 30, 2009 was $765,000 versus $1,200,000 in the year ago period, a
reduction of $435,000 or 36%.
* Current liabilities declined from approximately $9 million at its fiscal year
ended September 30, 2008, to $3.0 million. Total debt declined from $10.1
million at September 30, 2008 to $4.3 million at June 30, 2009.
* Actual operating cash loss for the quarter was $233,000, including one- time
legal charges of $123,000

Revenue for the 2009 third quarter was $826,000 compared to $6.0 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 and software products. Third quarter total operating
expenses were $1.2 million, which included $322,000 of non-cash items, compared
to $2.8 million in the year-earlier period.

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 third quarter was a loss of
$396,000, compared to a loss of $617,000 in the previous year. The actual
operating loss was $233,000 after taking into account one time legal charges of
$123,000.

"We believe the improved operating results for the third fiscal quarter reflect
our commitment to our proprietary storage products we own and manufacture," said
John R. Signorello, Chairman and Chief Executive Officer of IceWEB, Inc. "We are
now focused 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."

Strategic Update

With the recent preferred stock financing in place, and with recent product
development progress, including the roll-out of the Company`s Iplicity 2.0
Enterprise Platform, the Company is positioned to place even greater emphasis on
penetrating key markets and increase its sales and marketing efforts.

Mark B. Lucky, IceWEB Chief Financial Officer stated, "Our efforts over the last
nine months to improve our balance sheet and right size the Company's operations
and capital structure will greatly enhance the Company`s prospects for
profitable financial performance in the coming fiscal year."

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.

This press release may contain forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. In some cases you can identify those so-called "forward
looking statements" by words such as "may," "will," "should," "expects,"
"plans," "targets," "believes," "anticipates," "estimates," "predicts,"
"potential," or "continue" or the negative of those words and other comparable
words. These forward looking statements are subject to risks and uncertainties,
product tests, commercialization risks, availability of financing and results of
financing efforts that could cause actual results to differ materially from
historical results or those anticipated. Further information regarding these and
other risks is described from time to time in the Company's filings with the
SEC, which are available on its website at: http://www.sec.gov. We assume no
obligation to update or alter our forward-looking statements made in this
release or in any periodic report filed by us under the Securities Exchange Act
of 1934 or any other document, whether as a result of new information, future
events or otherwise, except as otherwise required by applicable federal
securities laws.

ICEWEB, Inc.

Consolidated Balance Sheet

June 30, 2009

(Unaudited)

CURRENT ASSETS: June 30, September 30,

2009
2008(1)
Cash $ 25,339 $ 4,780
Accounts receivable, net of allowance for doubtful accounts of $9,000 859,623 3,094,110
Inventory, net 107,204 400,312
Other current assets 28,704 21,572
Prepaid expenses 43,106 55,155
1,063,976 3,575,929

OTHER ASSETS:
Property and equipment, net of accumulated depreciation of $1,505,014 993,079 1,169,369
Deposits 74,571 61,418
Intangible assets, net of accumulated amortization of $303,862 850,816 1,132,612
Total Assets $ 2,982,442 $ 5,939,328

CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 1,277,169 $ 7,762,872
Notes payable 1,773,445 1,372,565
Deferred revenue 11,101 13,164
3,061,715 9,148,601

Long-Term Liabilities
Notes Payable 1,252,085 956,520
Total Liabilities 4,313,800 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; 49,767,950 shares issued and 49,605,250 shares outstanding at June 30, 2009 and 24,688,088 shares issued and 24,425,588 outstanding at September 30, 2008) 49,770 24,690
Additional paid in capital 17,648,572 15,953,221
Accumulated deficit (19,017,953 ) (20,131,957 )
Treasury stock, at cost, (162,500 shares) (13,000 ) (13,000 )
Total stockholders` deficit (1,331,358 ) (4,165,793 )

Total Liabilities and stockholders` deficit $ 2,982,442 $ 5,939,328

(1) Derived from audited financial statements

ICEWEB, Inc.

Consolidated Statements of Operations

(Unaudited)

Three Months Ended Nine Months Ended
June 30 June 30
2009 2008 2009 2008

Sales $ 826,182 $ 5,981,083 $ 3,936,472 $ 14,095,946

Cost of sales 404,641 5,249,906 2,478,707 12,127,796

Gross profit 421,541 731,177 1,457,765 1,968,150

Operating expenses:
Marketing and selling 18,266 50,208 48,778 138,927
Depreciation and amortization 85,793 259,933 432,839 412,297
Research and development 94,020 121,906 250,450 207,636
General and administrative 1,027,484 2,369,286 2,554,898 5,187,547

Total Operating Expenses 1,225,563 2,801,333 3,286,965 5,946,407

Loss From Operations (804,022 ) (2,070,156 ) (1,829,200 ) (3,978,257 )

Other income (expenses):
Gain from sale of subsidiary - - 3,452,236 -
Interest income - 682 1,142 3,266
Interest expense (144,884 ) (196,450 ) (510,178 ) (481,457 )

Total other income (expenses) (144,884 ) (195,768 ) 2,943,200 (478,191 )

Net income (loss) $ (948,906 ) $ (2,265,924 ) $ 1,114,000 $ (4,456,448 )

Basic income (loss) per common share $ (0.02 ) $ (0.12 ) $ 0.03 $ (0.28 )
Diluted income (loss) per common share $ (0.02 ) $ (0.12 ) $ 0.03 $ (0.28 )

Weighted average common shares outstanding-basic 38,794,632 19,172,959 35,431,837 16,162,168
Weighted average common shares outstanding-diluted 38,794,632 19,172,959 37,637,725 16,162,168

ICEWEB, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended
June 30,
2009 2008

NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES $ (1,408,644 ) $ (385,319 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (28,318 ) (65,923 )
Cash used in acquisitions, net - (1,311,318 )
NET CASH USED IN INVESTING ACTIVITIES (28,318 ) (1,377,241 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of equipment financing (45,114 ) (60,068 )
Repayment of notes payable - related party - (115,767 )
Proceeds from notes payable 7,060,871 7,092,685
Payments on notes payable (6,122,036 ) (6,476,876 )
Common stock issued for services rendered 12,500 -
Proceeds from exercise of common stock options 454,300 198,450
Proceeds from sale of common stock 97,000 80,000

NET CASH PROVIDED BY FINANCING ACTIVITIES 1,457,521 718,424

NET INCREASE (DECREASE) IN CASH 20,559 (1,044,136 )

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

CASH - end of period $ 25,339 $ 48,334

Supplemental disclosure of cash flow information:
Cash paid for :
Interest $ 365,294 $ 463,245
Income taxes - -

Non-cash transactions affecting investing and financing activities:
Conversion of shares of preferred stock to shares of common stock 1,037,000

Acquisition details:
Liabilities assumed $ - $ 614,668
Common stock issued $ - $ 276,8456
Direct costs - 740,000
Fair value of assets acquired $ - $ 3,904,245
Cash paid $ - $ 2,412,731

See accompanying notes to unaudited consolidated financial statements

IceWEB, Inc.
Investor Relations, 571-287-2400
investor@IceWEB.com
or
CEOcast
Gary Nash, 212-732-4300

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