Welcome!

Microsoft Cloud Authors: Pat Romanski, Elizabeth White, Liz McMillan, Mihai Corbuleac, David Bermingham

News Feed Item

ISC8 Reports Fiscal 2012 Results

COSTA MESA, CA -- (Marketwire) -- 12/31/12 -- ISC8® Inc. (OTCBB: ISCI) ("ISC8" or the "Company"), a provider of intelligent cybersecurity solutions, today reported audited operating results for its fiscal 2012 year ended September 30, 2012.

"With 2012 behind us, we believe we have completed the majority of our transformation work and are now in an execution phase," said Bill Joll, President and CEO of ISC8, Inc. "Our Cyber adAPT product has received a very positive response from almost a dozen marquee names requesting trials, and our global business pipeline continues to build for NetFalcon and NetControl, along with our other existing products. With our strategic move to commercialization and broader suite of product offerings, we believe we are well positioned to have a more predictable recurring revenue business model and reduce our exposure to the uncertainties of Government R&D funding cycles."

Recent Business Highlights:

  • 2012 was a year of further transformation for ISC8:
    • Completed sale of Thermal Imaging Group
    • Completed acquisition of key assets of Bivio Networks. The acquisition provided ISC8 with advanced products and technologies for Security Intelligence, Incident Response, Content Control and mitigation of Advanced Persistent Threats (APTs) in enterprise, service provider and government networks.
      • ISC8 purchased the NetFalcon and Network Content Control System business units of Bivio Networks, including all related intellectual property, sales, engineering, managerial, and other operational resources.
      • In addition, ISC8 acquired an installed base of nine customers, including leading Tier 1 service providers, enterprises and government agencies worldwide.
      • The acquisition is expected to accelerate the growth of ISC8's cybersecurity business by adding these existing customer accounts, Bivio's significant sales pipeline, a receivables backlog, an installed base and a global sales force.
    • ISC8 now has three Cybersecurity products:
      • Cyber adAPT capable of detecting targeted attacks such as APTs (with beta trials beginning in January 2013)
      • Cyber NetFalcon capable of identifying perpetrators (currently available), and
      • Cyber NetControl capable of providing more user control and security to service operators, such as Mobile Carriers (currently available).
    • The acquisition expanded ISC8's reach globally with the addition of employees in Europe, Middle East and Asia.
      • ISC8 announced earlier this month that a Middle Eastern service provider selected its Cyber NetControl (formerly known as Bivio's Network Content Control System - NCCS), a carrier grade, policy-based content control and traffic enforcement solution to provide advanced parental control functionality to their subscribers. Cyber NetControl is one of the newest offerings from the Company's cybersecurity division since its acquisition of several products from Bivio Networks.
    • The company's business pipeline continues to grow, although the business climate continues to be challenging with respect to the Government sector, as many agencies have pending projects on hold until there is more clarity with respect to pending US fiscal policy changes.
  • The Company expects 2013 to be a year of execution, having essentially completed its transformation to commercialization, and is planning an aggressive marketing rollout of all 3 Cybersecurity products throughout 2013.

Financial Results:

Total revenues for fiscal 2012 were $4,196,400, an approximate 19% decrease over total revenues of $5,178,300 for fiscal 2011. Net loss in fiscal 2012 was $19,668,400, as compared to a net loss of $15,762,800 in the prior fiscal year. The increase in net loss in Fiscal 2012 as compared to Fiscal 2011 was substantially attributable to lower revenue and higher total operating expense primarily driven by higher research and development costs associated with the Company's our cybersecurity products.

Excluding non-cash charges for changes in fair value of derivative liability, non-cash interest expense, stock-based compensation, depreciation and amortization and net earnings from discontinued operations, non-GAAP net loss was approximately $13.9 million in fiscal 2012, compared to non-GAAP net loss of approximately $10.4 million in fiscal 2011. 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 also on a non-GAAP basis. The Company's presentation of non-GAAP net loss in this press release excludes the impact of changes in fair value of derivative liability, non-cash interest expense, stock-based compensation, depreciation and amortization expense and net earnings from discontinued operations. 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 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 commercial and government environments worldwide. ISC8's Cyber products are aimed at detecting next-generation malware and Advanced Persistent Threats (APTs). ISC8 provides hardware, software and service offerings for Malware Threat Detection leveraging its history in anti-tamper, secure memories, high-speed processors, and miniaturized sensors - all technologies it has developed. ISC8 was founded in 1974 and is headquartered in Costa Mesa, California. For more information about ISC8 visit www.isc8.com


                                 ISC8 Inc.
              Consolidated Statements of Operations (Audited)


                                                    Fiscal Years Ended
                                               ----------------------------
                                               September 30,    October 2,
                                                    2012           2011
                                               -------------  -------------
Revenues
    Product sales                              $     241,600  $     686,900
    Contract research and development revenue      3,954,800      4,491,400
                                               -------------  -------------

  Total revenues                                   4,196,400      5,178,300
                                               -------------  -------------

Cost of revenues
    Cost of product sales                            765,400        234,300
    Cost of contract research and development
     revenue                                       2,383,600      4,537,400
                                               -------------  -------------

Total cost of revenues                             3,149,000      4,771,700
                                               -------------  -------------

Gross margin                                       1,047,400        406,600
Operating expenses
    General and administrative expense             8,708,800      7,874,600
    Research and development expense               7,875,600      3,171,600
                                               -------------  -------------

  Total operating expenses                        16,584,400     11,046,200
                                               -------------  -------------

Loss from operations                             (15,537,000)   (10,639,600)
    Interest expense                              (6,581,100)    (7,544,700)
    Change in fair value of derivative
     liability                                    (4,822,100)     1,512,700
    Other income (expense)                            15,200         (3,400)
                                               -------------  -------------

Loss from continuing operations before
 provision for income taxes                      (26,925,000)   (16,675,000)
Benefit (provision) for income taxes                  (3,200)        37,400
                                               -------------  -------------

Net loss from continuing operations              (26,928,200)   (16,637,600)
Net earnings from discontinued operations          7,259,800        874,800
                                               -------------  -------------

Net loss                                         (19,668,400)   (15,762,800)
Less net loss attributable to noncontrolling
 interests in subsidiary                                  --             --
                                               -------------  -------------

Net loss                                       $ (19,668,400) $ (15,762,800)
                                               =============  =============

Basic and diluted net loss per common share
  Loss from continuing operations              $       (0.22) $       (0.18)
                                               -------------  -------------
  Net earnings from discontinued operations    $        0.06  $        0.01
                                               -------------  -------------
  Net loss per common share                    $       (0.16) $       (0.17)
                                               =============  =============

Basic and diluted weighted average number of
 common shares outstanding                       123,624,400     90,728,100



                                 ISC8 Inc.
              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.


                                                    Fiscal Years Ended
                                               ----------------------------
                                               September 30,    October 2,
                                                    2012           2011
                                               -------------  -------------
GAAP net loss attributable to ISC8             $ (19,668,400) $ (15,762,800)
Plus:
  Change in fair value of derivative
   instrument                                      4,822,100     (1,512,700)
  Non-cash interest expense                        5,877,000      4,593,000
  Stock-based compensation, including employee
   retirement plan contributions                   1,618,600      2,019,300
  Depreciation and amortization                      723,700      1,112,900
  Net earnings from discontinued operations       (7,259,800)      (874,800)
                                               -------------  -------------
Non-GAAP net loss attributable to ISC8         $ (13,886,800) $ (10,425,100)
                                               =============  =============



                                 ISC8 Inc.
                   Consolidated Balance Sheets (Audited)

                                              September 30,     October 2,
                                                  2012            2011
                                             --------------  --------------
Assets
  Current assets:
  Cash and cash equivalents                  $    1,738,400  $    2,734,600
  Accounts receivable, net of allowance for
   doubtful accounts of $51,300 and $13,800,
   respectively                                     445,300         562,700
  Due from Vectronix, Inc.                        1,200,100               -
  Unbilled revenues on uncompleted contracts        549,200         526,500
  Prepaid expenses and other current assets         111,900         165,400
  Current assets of discontinued operations               -       2,786,200
                                             --------------  --------------
    Total current assets                          4,044,900       6,775,400
Property and equipment, net                         952,400       1,237,900
Deferred financing costs, net                       963,200       1,052,300
Other assets                                        180,200         207,000
Non-current assets of discontinued
 operations                                               -       1,312,200
                                             --------------  --------------
    Total assets                             $    6,140,700  $   10,584,800
                                             ==============  ==============
Liabilities and Stockholders' Deficit
Current liabilities:
  Accounts payable                           $      814,600  $      677,500
  Accrued expenses                                2,513,900       1,075,200
  Advance billings on uncompleted contracts         296,700         397,200
  Senior secured revolving credit facility,
   net of discount                                4,566,800               -
  Senior subordinated secured convertible
   promissory notes, net of discount              1,119,000               -
  Secured promissory note                                 -       2,097,200
  Senior subordinated secured promissory
   notes                                          4,790,400       4,257,600
  Settlement agreements obligations, current
   portion                                           17,200         632,200
  Capital lease obligations, current portion         17,100          13,800
  Current liabilities from discontinued
   operations                                             -       1,744,500
                                             --------------  --------------
    Total current liabilities                    14,135,700      10,895,200
Subordinated secured convertible promissory
 notes, net of discounts                          6,470,300       3,944,800
Settlement agreement obligations, less
 current portion                                      1,400          18,700
Derivative liability                             19,925,400      13,352,800
Executive salary continuation plan liability        975,000       1,005,400
Other liabilities                                    62,700          79,400
                                             --------------  --------------
    Total liabilities                            41,570,500      29,296,300
                                             --------------  --------------
Commitments and contingencies (Note 11)
Stockholders' deficit:
  Convertible preferred stock, $0.01 par
   value, 1,000,000 shares authorized;                    -               -
  Series B - 900 and 1,800 shares issued and
   outstanding, respectively (1);
   liquidation preference of $926,300 and
   $1,785,600, respectively
  Common stock, $0.01 par value, 800,000,000
   and 500,000,000 shares authorized,
   respectively; 131,558,800 and 113,695,800
   shares issued and outstanding,
   respectively (1)                               1,315,600       1,137,000
  Common stock held by Rabbi Trust               (1,020,700)     (1,020,700)
  Deferred compensation liability                 1,020,700       1,020,700
  Paid-in capital                               174,156,800     171,385,300
  Accumulated deficit                          (211,226,600)   (191,558,200)
                                             --------------  --------------
    ISC8 stockholders' deficit                  (35,754,200)    (19,035,900)
Noncontrolling interest                             324,400         324,400
                                             --------------  --------------
    Total stockholders' deficit                 (35,429,800)    (18,711,500)
                                             --------------  --------------
    Total liabilities and stockholders'
     deficit                                 $    6,140,700  $   10,584,800
                                             ==============  ==============

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

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@ThingsExpo Stories
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Connected devices and the industrial internet are growing exponentially every year with Cisco expecting 50 billion devices to be in operation by 2020. In this period of growth, location-based insights are becoming invaluable to many businesses as they adopt new connected technologies. Knowing when and where these devices connect from is critical for a number of scenarios in supply chain management, disaster management, emergency response, M2M, location marketing and more. In his session at @Th...
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his Day 2 Keynote at @ThingsExpo, Henrik Kenani Dahlgren, Portfolio Marketing Manager at Ericsson, discussed how to plan to cooperate, partner, and form lasting all-star teams to change t...
The cloud market growth today is largely in public clouds. While there is a lot of spend in IT departments in virtualization, these aren’t yet translating into a true “cloud” experience within the enterprise. What is stopping the growth of the “private cloud” market? In his general session at 18th Cloud Expo, Nara Rajagopalan, CEO of Accelerite, explored the challenges in deploying, managing, and getting adoption for a private cloud within an enterprise. What are the key differences between wh...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. Big Data at Cloud Expo - to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is...
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to imp...
There are several IoTs: the Industrial Internet, Consumer Wearables, Wearables and Healthcare, Supply Chains, and the movement toward Smart Grids, Cities, Regions, and Nations. There are competing communications standards every step of the way, a bewildering array of sensors and devices, and an entire world of competing data analytics platforms. To some this appears to be chaos. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, Bradley Holt, Developer Advocate a...
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
industrial company for a multi-year contract initially valued at over $4.0 million. In addition to DataV software, Bsquare will also provide comprehensive systems integration, support and maintenance services. DataV leverages advanced data analytics, predictive reasoning, data-driven diagnostics, and automated orchestration of remediation actions in order to improve asset uptime while reducing service and warranty costs.
Vidyo, Inc., has joined the Alliance for Open Media. The Alliance for Open Media is a non-profit organization working to define and develop media technologies that address the need for an open standard for video compression and delivery over the web. As a member of the Alliance, Vidyo will collaborate with industry leaders in pursuit of an open and royalty-free AOMedia Video codec, AV1. Vidyo’s contributions to the organization will bring to bear its long history of expertise in codec technolo...