Irvine Sensors Releases 1st Quarter Results

IRVINE SENSORS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

13 Weeks Ended

January 2,

December 27,

2011

2009

Total revenues

$    4,300,900

$     3,210,200

Cost and expenses

Cost of revenues

4,039,200

2,439,000

General and administrative expense

1,914,400

1,651,400

Research and development expense

533,900

755,200

Total costs and expenses

6,487,500

4,845,600

Gain on sale or disposal of assets

-

12,500

Loss from operations

(2,186,600)

(1,622,900)

Interest expense

(2,156,300)

(114,900)

Provision for litigation judgment

-

(20,200)

Change in fair value of derivative instruments

(6,482,700)

45,500

Other expense

(6,600)

(1,000)

Loss before

provision for income taxes

(10,832,200)

(1,713,500)

Provision for income taxes

-

(3,200)

Net loss

$(10,832,200)

$  (1,716,700)

Less net loss attributable to noncontrolling interests in subsidiary

-

-

Net loss attributable to Irvine Sensors Corporation

$(10,832,200)

$  (1,716,700)

Basic and diluted net loss attributable to Irvine Sensors

    Corporation per common share

$            (0.26)

$          (0.33)

Weighted average number of common shares outstanding, basic and diluted

41,612,200

10,141,400

IRVINE SENSORS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

January 2, 2011

(Unaudited)

October 3, 2010

Assets

Current assets:

Cash and cash equivalents

$     6,746,900

$      281,600

Accounts receivable, net of allowance for doubtful accounts of $13,600 and $15,000, respectively

1,701,400

382,100

Unbilled revenues on uncompleted contracts

492,600

630,300

Inventory, net

1,507,700

1,715,800

Prepaid expenses and other current assets

226,100

182,300

Total current assets

10,674,700

3,192,100

Property and equipment, net (including construction in process of $204,000 and $35,000, respectively)

2,698,400

2,730,000

Intangible assets, net

11,900

12,400

Deferred financing costs

1,540,700

302,900

Deposits

169,000

87,400

Total assets

$   15,094,700

$  6,324,800

Liabilities and Stockholders' Deficit

Current liabilities:

Accounts payable

$    1,672,700

$    4,724,100

Accrued expenses

3,132,300

4,097,700

Accrued estimated loss on contracts

29,000

29,000

Advance billings on uncompleted contracts

352,500

321,800

Advances against accounts receivable

53,100

99,700

Deferred revenue

1,402,200

1,515,400

Restructured debt, net of debt discounts

-

163,100

Secured promissory note, current portion

752,500

402,500

Debentures, net of debt discounts

2,300,900

1,935,200

  Unsecured convertible promissory notes, net of discounts

1,492,900

-

  Settlement agreements obligations, current portion

832,200

-

Total current liabilities

12,020,300

13,288,500

Secured promissory note

1,747,500

2,097,500

Subordinated secured convertible promissory notes, net of discounts

2,335,000

-

Settlement agreements obligations

451,600

-

Derivative liability

13,349,800

4,000

Executive Salary Continuation Plan liability

1,015,400

1,030,700

Total liabilities

30,919,600

16,420,700

Commitments and contingencies

Stockholders' deficit:

Convertible preferred stock, $0.01 par value, 1,000,000 and 1,000,000 shares authorized, respectively;

500

500

  Series A-2 – 3,700 and 8,300 shares issued and outstanding, respectively (1);

     liquidation preference of $154,700 and $333,300, respectively;

  Series B – 1,800 and 1,900 shares issued and outstanding, respectively (1);

     liquidation preference of $1,821,300 and $1,892,700, respectively

  Series C – 37,500 and 37,500 shares issued and outstanding, respectively (1);

     liquidation preference of $1,125,000 and $1,125,000, respectively

Common stock, $0.01 par value, 150,000,000 and 150,000,000 shares authorized, respectively;

98,505,500 and 33,535,400 shares issued and outstanding, respectively (1)

985,100

335,400

Common stock held by Rabbi Trust

(1,169,600)

(1,169,600)

Deferred compensation liability

1,169,600

1,169,600

Paid-in capital

169,492,700

165,039,200

Accumulated deficit

(186,627,600)

(175,795,400)

Irvine Sensors Corporation stockholders' deficit

(16,149,300)

(10,420,300)

Noncontrolling interest

324,400

324,400

Total stockholders' deficit

(15,824,900)

(10,095,900)

Total liabilities and stockholders' deficit

$   15,094,700

$  6,324,800

(1) The number of shares of preferred stock and common stock issued and outstanding have been rounded to the nearest one hundred (100).