Irvine Sensors Releases FY10 Results

IRVINE SENSORS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Fiscal Years Ended

October 3, 2010

September 27, 2009

Revenues:

Contract research and development revenue

$   8,526,200

$ 10,003,500

Product sales

3,177,800

1,515,900

Other revenue

12,800

16,800

Total revenues

11,716,800

11,536,200

Costs and expenses:

Cost of contract research and development revenue

6,659,000

8,467,800

Cost of product sales

3,150,900

1,494,400

General and administrative expense

6,589,900

9,561,700

Research and development expense

2,639,000

2,266,700

Total costs and expenses

19,038,800

21,790,600

Gain on sale or disposal of assets

12,600

8,640,800

Loss from operations

(7,309,400)

(1,613,600)

Interest expense

(1,692,600)

(1,635,500)

Provision for litigation judgment

(20,200)

(834,300)

Litigation settlement expense

(2,270,700)

-

Gain on elimination of consolidated debt

-

2,539,200

Gain from reduction in pension liability

-

2,442,900

Change in fair value of derivative instrument

95,500

-

Interest and other income

48,900

31,200

Income (loss) from continuing operations before minority

interest and benefit (provision) for income taxes

(11,148,500)

929,900

Provision for income taxes

(7,300)

(73,600)

Income (loss) from continuing operations

(11,155,800)

856,300

Discontinued operations:

     Income from discontinued operations

-

58,400

Net income (loss)

$ (11,155,800)

$     914,700

Add net income attributable to noncontrolling

   interests in subsidiary

-

100

Net income (loss) attributable to Company

$ (11,155,800)

$     914,800

Basic net income (loss) per common share information:

From continuing operations attributable to Company

$            (0.70)

$          0.06

From discontinued operations attributable to Company

-

0.01

Basic net income (loss) attributable to Company per common share

$            (0.70)

$          0.07

Diluted net income (loss) per common share information

From continuing operations attributable to Company

$            (0.70)

$          0.05

From discontinued operations attributable to Company

-

0.00

Diluted net income (loss) attributable to Company per common share

$            (0.70)

$          0.05

Basic weighted average number of common shares outstanding

18,116,700

6,730,500

Diluted weighted average number of common shares outstanding

18,116,700

16,735,900

IRVINE SENSORS CORPORATION

CONSOLIDATED BALANCE SHEETS

October 3, 2010

September 27, 2009

Assets

Current assets:

Cash and cash equivalents

$      281,600

$      125,700

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

382,100

1,396,300

Unbilled revenues on uncompleted contracts

630,300

885,300

Inventory, net

1,715,800

441,100

Prepaid expenses and other current assets

182,300

53,200

Total current assets

3,192,100

2,901,600

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

2,730,000

2,898,100

Intangible assets, net

12,400

14,400

Deferred financing costs

302,900

-

Deposits

87,400

37,500

Total assets

$  6,324,800

$  5,851,600

Liabilities and Stockholders' Deficit

Current liabilities:

Accounts payable

$    4,724,100

$    3,427,100

Accrued expenses

4,101,700

3,730,800

Accrued estimated loss on contracts

29,000

-

Advance billings on uncompleted contracts

321,800

249,600

Advances against accounts receivable

99,700

985,800

Deferred revenue

1,515,400

180,000

Restructured debt, net of debt discounts

163,100

188,400

Promissory note payable – related party

-

400,000

Secured promissory note, current portion

402,500

-

Debentures, net of debt discounts

1,935,200

-

Capital lease obligations

-

11,200

Total current liabilities

13,292,500

9,172,900

Secured promissory note

2,097,500

-

Executive Salary Continuation Plan liability

1,030,700

1,057,600

Total liabilities

16,420,700

10,230,500

Commitments and contingencies

Stockholders' deficit:

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

500

1,200

  Series A-1 – 0 and 99,900 shares issued and outstanding, respectively (1);

     liquidation preference of 0 and $3,586,200, respectively;

  Series A-2 – 8,300 and 25,000 shares issued and outstanding, respectively (1);

     liquidation preference of $333,300 and $1,043,500, respectively;

  Series B – 1,900 and 0 shares issued and outstanding, respectively (1);

     liquidation preference of $1,892,700 and $0, respectively

  Series C – 37,500 and 0 shares issued and outstanding, respectively (1);

     liquidation preference of $1,125,000 and $0, respectively

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

33,535,400 and 9,694,500 shares issued and outstanding, respectively (1)

335,400

96,900

Common stock held by Rabbi Trust

(1,169,600)

(1,169,600)

Deferred compensation liability

1,169,600

1,169,600

Paid-in capital

165,039,200

162,497,700

Accumulated deficit

(175,795,400)

(167,299,100)

Irvine Sensors Corporation stockholders' deficit

(10,420,300)

(4,703,300)

Noncontrolling interest

324,400

324,400

Total stockholders' deficit

(10,095,900)

(4,378,900)

Total liabilities and stockholders' deficit

$  6,324,800

$  5,851,600

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