Incentra Solutions Reports 2005 Fourth Quarter, Year-End Results; Expects To File Annual Report on Form 10-KSB Today

Year-Over-Year Revenues Increase 216 Percent and 283 Percent, Respectively

April 4, 2006

BOULDER, Colo., April 4, 2006-- Incentra Solutions, Inc. (OTCBB:ICNS), a provider of complete IT and storage management solutions to enterprises, managed service providers and broadcasters worldwide, today announced results for the fourth quarter and year ended December 31, 2005, and that it expects to file its annual report for 2005 on Form 10-KSB with the Securities and Exchange Commission by the close of business today. Year-over-year total revenues for the quarter and year increased a respective 216 percent and 283 percent. These increases were driven by the positive impact on revenues of the Company's strategic acquisitions in mid-2004 and early 2005 to enter the broadcast and media market and expand its geographic reach in the enterprise IT market.

Product sales in 2005 increased year-over-year by 623 percent and sales of the Company's higher margin services increased 63 percent. Excluding the revenue contributions of the two businesses acquired in 2005, on a proforma basis, year-over-year organic revenue growth in 2005 was 17.5 percent. Gross margin as a percentage of revenue for the 2005 fourth quarter was 32.9 percent, up sequentially from 27.5 percent in the 2005 third quarter, reflecting the impact of sales of higher gross margin products and services. Gross margin as a percentage of revenue for 2005 was 32.1 percent.

Total revenue for the fourth quarter of 2005 increased to $14.8 million from total revenues of $4.7 million in the 2004 fourth quarter. The net loss applicable to common shareholders for the 2005 fourth quarter was $7.0 million, or a loss per basic and diluted share of $0.52, compared to a net loss applicable to common shareholders of $3.7 million, or a loss of $0.45 per basic and diluted share in the prior year fourth quarter. The 2005 fourth quarter results included a non-cash impairment charge against goodwill of $4.2 million related to the STAR Solutions acquisition.

Chairman and CEO Thomas P. Sweeney said the Company's increases in revenues demonstrate the substantial progress the Company has made toward its goal of becoming the most comprehensive provider of data protection storage solutions for the world's enterprise and broadcast markets. Sweeney said the acquisitions of STAR Solutions, now called Incentra of CA, and PWI Technologies in 2005 helped broaden Incentra's suite of products and strengthened the Company's sales force and reach, particularly in the western U.S.

"Although we have a number of additional strategic expansion opportunities ahead of us, we are well on our way to successfully building a company with few peers in the rapidly expanding IT solutions industry, a company that offers solutions for all of our customers' storage needs, including engineering, hardware and software procurement, maintenance support services and remote storage operations services," Sweeney said. "When the opportunities arise, we will continue our strategy of seeking acquisitions and strategic alliances to accelerate our growth and enhance shareholder value. Our goal is to become a major player in the growing storage services market, which due to an increasing focus on security and data protection, among other factors, has been projected to grow to a $30 billion market by 2008."

For the 2005 full year, total revenue was $50.8 million, compared to total revenue in 2004 of $13.3 million. The 2005 net loss applicable to common shareholders was $16.8 million, or a loss per basic and diluted share of $1.34, compared to a net loss applicable to common shareholders of $11.8 million, or a loss per basic and diluted share of $2.31 in 2004. The 2005 results included the non-cash impairment charge against goodwill, as well as year-over-year increases in depreciation and amortization of $1.5 million. The weighted average basic and fully diluted common shares outstanding in 2005 were 12,541,642 and in 2004 were 5,102,733.

Total operating expenses for the 2005 fourth quarter and year were $11.4 million and $28.4 million, respectively, compared to total operating expenses in the respective 2004 periods of $4.7 million and $13.7 million. The Company reported EBITDA(1) losses, as adjusted, for the fourth quarter and year-ended December 31, 2005, of $568,000 and $1.2 million, respectively.

President and Chief Operating Officer Shawn O'Grady said the integration of STAR Solutions and PWI Technologies into Incentra is completed and that the operations in the enterprise group are functioning with a consistent set of sales, marketing and support priorities and protocols, as well as common accounting and reporting standards. He added that highlights of the fourth quarter and year in the enterprise business included increased sales of higher gross margin products and value-added services such as First Call and Enhanced First Call, several significant managed services agreements, and a growing number of sales of complete solutions to new and existing customers, which included hardware, software and maintenance services. "We are selling more of our higher gross margin products and services to our installed base and to new customers and we are beginning to see the results," O'Grady said.

"We signed several GridWorks managed services agreements with a number of customers including such key clients as Recycled Paper Greetings, ShopperTrak, Blue Gecko and digital.forest, and our complete solutions sales included orders from TransCore, Cingular, Verisign, Solar Turbines and Xilinx, among others. While in some cases it may cause a temporary lengthening of the sales cycle as the sales team expands its focus and customers and prospects evaluate additional services, over the long run our expanded range of products will create more revenue and bottom-line growth."

Among the 2005 highlights for the Company's Front Porch Digital Broadcast & Media Division, which offers a comprehensive suite of digital video archive management solutions, was further additions to its already high-profile customer list in Europe, Asia, the Middle East and North America. Front Porch's DIVArchive software systems were chosen to manage the high resolution content library for VOOM HD, the first High Definition-dedicated archive in North America, Nickelodeon UK, the leading children's TV network in the UK and multiples projects throughout Europe with the RTL Group. These were only a few of the year's accomplishments as the continued acceptance of DIVArchive around the world has made it the global leader in broadcast archive management software and the dominant brand in Europe, according to industry analyst Datamonitor.

"We are seeing an increased pace of migration to digital workflows by broadcast and media customers, which bodes well for continued growth in the demand for our products," said Front Porch Digital President Michael Knaisch. "Furthermore, we continue to see an increase in digital archives sold and continued growth in the sales of DIVAcomplete solutions. The world markets are moving in our direction and we believe we can generate significant increases in revenue and gross margin as we leverage our longstanding relationships with our world-class customer list."

(1) Although EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles (GAAP), the Company believes the use of the non-GAAP financial measure EBITDA enhances an overall understanding of the Company's past financial performance and is a widely used measure of operating performance in practice. In addition, the Company believes the use of EBITDA provides useful information to the investor because EBITDA excludes significant non-cash interest and amortization charges related to past financings by the Company that, when excluded, the Company believes produces more meaningful operating information. EBITDA also excludes depreciation and amortization expenses, which are significant when compared to such levels prior to the acquisition of MSI. However, investors should not consider this measure in isolation or as a substitute for net income, operating income, cash flows from operating activities or any other measure for determining the Company's operating performance or liquidity that are calculated in accordance with GAAP, and this measure may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of EBITDA to the most comparable GAAP financial measure net loss before deemed dividends and accretion on preferred stock is set forth below.

About Incentra Solutions, Inc.
Incentra Solutions, Inc. (www.incentrasolutions.com, OTCBB:ICNS) is a provider of complete IT & storage management solutions to broadcasters, enterprises and managed service providers worldwide.  Incentra’s complete solution includes professional services, hardware & software products with first call support, IT outsourcing solutions and financing options.  To the broadcast market, Incentra delivers complete digital archive management and transcoding solutions built on its IT and storage expertise and offerings.  

Incentra Solutions Forward Looking Statements
Certain information discussed in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, it can give no assurance that its expectations will be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are inherently subject to unpredictable and unanticipated risks, trends and uncertainties such as the Company’s inability to accurately forecast its operating results; the Company’s potential inability to achieve profitability or generate positive cash flow; the availability of financing; and other risks associated with the Company’s business. For further information on factors which could impact the Company and the statements contained herein, reference should be made to the Company’s filings with the Securities and Exchange Commission, including Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

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Contacts:
Allen & Caron, Inc.
Jill Bertotti (investors)
jill@allencaron.com

Len Hall (financial media)
len@allencaron.com
949-474-4300 

Incentra Solutions, Inc.
Paul McKnight, Chief Financial Officer
pmcknight@incentrasolutions.com
303-449-8279