COSTA MESA, Calif., Dec. 15, 2011 /PRNewswire/ -- ISC8 (Irvine Sensors Corporation) (OTCBB: IRSN.OB), a provider of intelligent Cybersecurity solutions and supporting technologies, today reported audited operating results for its fiscal 2011, the 52 weeks ended October 2, 2011.
Total revenues for fiscal 2011 were $14,095,000, an approximate 20% increase over total revenues of $11,716,800 for fiscal 2010. Net loss in fiscal 2011 was $15,762,800, as compared to a net loss of $11,155,800 in the prior fiscal year. The increase in net loss includes the effect of approximately $7.5 million in interest expense in the current fiscal year, of which approximately $4.6 million was of a non-cash nature, mostly derived from features of the various debt financings closed by ISC8 in fiscal 2011. These financings facilitated ISC8's payment in full of short-tem debt of approximately $4.2 million when due in fiscal 2011.
Excluding non-cash charges for changes in fair value of derivative liability, non-cash interest expense, stock-based compensation and depreciation and amortization, non-GAAP net loss was approximately $9.6 million in fiscal 2011, compared to non-GAAP net loss of approximately $8.4 million in fiscal 2010. See "Use of Non-GAAP Financial Information" below for important information regarding the Company's use of non-GAAP financial measures.
Use of Non-GAAP Financial Information – ISC8 reports net loss in accordance with accounting principles generally accepted in the United States ("GAAP") and supplementally on a non-GAAP basis. The Company's presentation of non-GAAP net loss attributable to the Company in this press release excludes the impact of changes in fair value of derivative liability, non-cash interest expense, stock-based compensation and depreciation and amortization expense. Stock-based compensation expense primarily includes the impact of stock options issued by the Company and stock contributions to the employees' retirement plan. A reconciliation of these GAAP and non-GAAP financial measures for all periods presented is found in the attached "Unaudited Reconciliation of Non-GAAP Adjustments."
ISC8 believes that the presentation of non-GAAP net loss provides useful supplemental information to management and investors regarding financial and business trends related to the Company's financial condition and results of operations. The Company also believes that examination of non-GAAP net loss can facilitate consistency and comparability among and between prior periods, as well as comparison with other companies that present similar non-GAAP financial measures. However, the Company's presentation of non-GAAP information is not necessarily equivalent to non-GAAP measures presented by other reporting companies and should be considered in that context. The Company's management generally uses non-GAAP loss to evaluate the Company's operating performance because management believes that the exclusion of the non-cash items described above, in the changes in the fair value of derivative instruments, provides insight into the Company's core ongoing operating results, particularly from a cash generation or use perspective, and underlying business trends affecting the Company's performance. ISC8 has chosen to provide this non-GAAP information to investors to enable them to perform additional analyses of past, present and future operating performance and as a supplemental means to evaluate the Company's ongoing core operations. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
For more information on ISC8 and its products, visit www.ISC8.com.
About ISC8
ISC8 is actively engaged in the development and sale of intelligent Cybersecurity solutions for information technology (IT) for commercial and government environments worldwide. ISC8 provides hardware, software and cloud-based product and service offerings that enable Enterprise Threat Management. It leverages anti-tamper, 3D stacked chip assemblies, high-speed processors, and miniaturized sensors – all technologies it has developed. The Company also manufactures and sells thermal imaging systems for current U.S. Military force platforms. ISC8 (Irvine Sensors Corporation) was founded in 1974 and is headquartered in Costa Mesa, California.
Irvine Sensors Corporation Consolidated Statements of Operations (Audited)
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Fiscal Years Ended |
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October 2, 2011 |
|
October 3, 2010 |
Revenues |
|
|
|
Product sales |
$ 8,574,200 |
|
$ 8,526,200 |
Contract research and development revenue |
5,520,800 |
|
3,177,800 |
Other revenue |
- |
|
12,800 |
Total revenues |
14,095,000 |
|
11,716,800 |
Costs and expenses |
|
|
|
Cost of product sales |
6,469,500 |
|
3,150,900 |
Cost of contract research and development revenue |
5,609,200 |
|
6,659,000 |
General and administrative expense |
8,101,800 |
|
6,589,900 |
Research and development expense |
3,679,300 |
|
2,639,000 |
Total costs and expenses |
23,859,800 |
|
19,038,800 |
Gain on sale of assets |
- |
|
12,600 |
Loss from operations |
(9,764,800) |
|
(7,309,400) |
Interest expense |
(7,544,700) |
|
(1,692,600) |
Provision for litigation judgment |
- |
|
(20,200) |
Litigation settlement expense |
- |
|
(2,270,700) |
Change in fair value of derivative instrument |
1,512,700 |
|
95,500 |
Other income (expense) |
(3,400) |
|
48,900 |
Loss from operations before benefit (provision) for income taxes |
(15,800,200) |
|
(11,148,500) |
Benefit (provision) for income taxes |
37,400 |
|
(7,300) |
Net loss |
(15,762,800) |
|
(11,155,800) |
Less net loss attributable to noncontrolling interests in subsidiary |
- |
|
- |
Net loss attributable to Irvine Sensors Corporation |
$ (15,762,800) |
|
$ (11,155,800) |
Basic and diluted net loss attributable to Irvine Sensors |
|
|
|
Corporation per common share |
$ (0.17) |
|
$ (0.70) |
Basic and diluted weighted average number of common shares outstanding |
90,728,100 |
|
18,116,700 |
|
|
|
|
|
|
|
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RVINE SENSORS CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
The following non-GAAP adjustments are based upon the Company's audited consolidated statements of operations for the periods shown. These adjustments are not in accordance with or an alternative for GAAP. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. ISC8 intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules, regulations and guidance, and may change its reporting of such non-GAAP results in the future as a result of such assessment.
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Fiscal Years Ended |
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October 2, 2011 |
|
October 3, 2010 |
GAAP net loss attributable to Irvine Sensors Corporation |
(15,762,800) |
|
(11,155,800) |
Plus: |
|
|
|
Change in fair value of derivative instrument |
(1,512,700) |
|
(95,500) |
Non-cash interest expense |
4,593,000 |
|
751,500 |
Stock-based compensation, including employee retirement plan contributions |
2,019,300 |
|
853,200 |
Depreciation and amortization |
1,112,900 |
|
1,280,300 |
Non-GAAP net loss attributable to Irvine Sensors Corporation |
$ (9,550,300) |
|
$ (8,366,300) |
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Irvine Sensors Corporation Consolidated Balance Sheets (Audited)
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October 2, 2011 |
|
October 3, 2010 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ 2,734,600 |
|
$ 281,600 |
Accounts receivable, net of allowance for doubtful accounts of $13,800 and $15,000, respectively |
|
1,928,500 |
|
382,100 |
Unbilled revenues on uncompleted contracts |
|
557,200 |
|
630,300 |
Inventory, net |
|
1,437,300 |
|
1,715,800 |
Prepaid expenses and other current assets |
|
117,800 |
|
182,300 |
Total current assets |
|
6,775,400 |
|
3,192,100 |
Property and equipment, net (including construction in process of $0 and $204,000, respectively) |
|
2,550,100 |
|
2,730,000 |
Intangible assets, net |
|
10,400 |
|
12,400 |
Deferred financing costs |
|
1,052,300 |
|
302,900 |
Deposits |
|
196,600 |
|
87,400 |
Total assets |
|
$ 10,584,800 |
|
$ 6,324,800 |
Liabilities and Stockholders' Deficit |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ 1,535,600 |
|
$ 4,724,100 |
Accrued expenses |
|
1,416,800 |
|
4,097,700 |
Accrued estimated loss on contracts |
|
- |
|
29,000 |
Advance billings on uncompleted contracts |
|
397,200 |
|
321,800 |
Advances against accounts receivable |
|
- |
|
99,700 |
Deferred revenue |
|
544,800 |
|
1,515,400 |
Restructured debt, net of debt discounts |
|
- |
|
163,100 |
Secured promissory note, current portion |
|
2,097,200 |
|
402,500 |
Senior subordinated secured promissory notes |
|
4,257,600 |
|
- |
Debentures, net of debt discounts |
|
- |
|
1,935,200 |
Settlement agreements obligations, current portion |
|
632,200 |
|
- |
Capital lease obligations, current portion |
|
13,800 |
|
- |
Total current liabilities |
|
10,895,200 |
|
13,288,500 |
Secured promissory note, less current portion |
|
- |
|
2,097,500 |
Subordinated secured convertible promissory notes, net of discounts |
|
3,944,800 |
|
- |
Settlement agreement obligations, less current portion |
|
18,700 |
|
- |
Derivative liability |
|
13,352,800 |
|
4,000 |
Executive Salary Continuation Plan liability |
|
1,005,400 |
|
1,030,700 |
Capital lease obligations, less current portion |
|
79,400 |
|
- |
Total liabilities |
|
29,296,300 |
|
16,420,700 |
Commitments and contingencies |
|
|
|
|
Stockholders' deficit: |
|
|
|
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Convertible preferred stock, $0.01 par value, 1,000,000 and 1,000,000 shares authorized, respectively; |
|
- |
|
500 |
Series A-2 – 0 and 8,300 shares issued and outstanding, respectively (1); |
|
|
|
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liquidation preference of $0 and $333,300, respectively; |
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|
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Series B – 1,800 and 1,900 shares issued and outstanding, respectively (1); |
|
|
|
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liquidation preference of $1,785,600 and $1,892,700, respectively |
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Series C –0 and 37,500 shares issued and outstanding, respectively (1); |
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liquidation preference of $0 and $1,125,000, respectively |
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Common stock, $0.01 par value, 500,000,000 and 150,000,000 shares authorized, respectively; |
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113,695,800 and 33,535,400 shares issued and outstanding, respectively (1) |
|
1,137,000 |
|
335,400 |
Common stock held by Rabbi Trust |
|
(1,020,700) |
|
(1,169,600) |
Deferred compensation liability |
|
1,020,700 |
|
1,169,600 |
Paid-in capital |
|
171,385,300 |
|
165,039,200 |
Accumulated deficit |
|
(191,558,200) |
|
(175,795,400) |
Irvine Sensors Corporation stockholders' deficit |
|
(19,035,900) |
|
(10,420,300) |
Noncontrolling interest |
|
324,400 |
|
324,400 |
Total stockholders' deficit |
|
(18,711,500) |
|
(10,095,900) |
Total liabilities and stockholders' deficit |
|
$ 10,584,800 |
|
$ 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) |
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SOURCE ISC8
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