Welcome!

Microsoft Cloud Authors: Pat Romanski, Jnan Dash, Andreas Grabner, Lori MacVittie, Jim Kaskade

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
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, 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.
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in Embedded and IoT solutions, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 7-9, 2017, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and E...
SYS-CON Events announced today that Linux Academy, the foremost online Linux and cloud training platform and community, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Linux Academy was founded on the belief that providing high-quality, in-depth training should be available at an affordable price. Industry leaders in quality training, provided services, and student certification passes, its goal is to c...
IoT is at the core or many Digital Transformation initiatives with the goal of re-inventing a company's business model. We all agree that collecting relevant IoT data will result in massive amounts of data needing to be stored. However, with the rapid development of IoT devices and ongoing business model transformation, we are not able to predict the volume and growth of IoT data. And with the lack of IoT history, traditional methods of IT and infrastructure planning based on the past do not app...
Fact is, enterprises have significant legacy voice infrastructure that’s costly to replace with pure IP solutions. How can we bring this analog infrastructure into our shiny new cloud applications? There are proven methods to bind both legacy voice applications and traditional PSTN audio into cloud-based applications and services at a carrier scale. Some of the most successful implementations leverage WebRTC, WebSockets, SIP and other open source technologies. In his session at @ThingsExpo, Da...
In the next five to ten years, millions, if not billions of things will become smarter. This smartness goes beyond connected things in our homes like the fridge, thermostat and fancy lighting, and into heavily regulated industries including aerospace, pharmaceutical/medical devices and energy. “Smartness” will embed itself within individual products that are part of our daily lives. We will engage with smart products - learning from them, informing them, and communicating with them. Smart produc...
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, discussed the best practices that will ensure a successful smart city journey.
WebRTC sits at the intersection between VoIP and the Web. As such, it poses some interesting challenges for those developing services on top of it, but also for those who need to test and monitor these services. In his session at WebRTC Summit, Tsahi Levent-Levi, co-founder of testRTC, reviewed the various challenges posed by WebRTC when it comes to testing and monitoring and on ways to overcome them.
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.
The best-practices for building IoT applications with Go Code that attendees can use to build their own IoT applications. In his session at @ThingsExpo, Indraneel Mitra, Senior Solutions Architect & Technology Evangelist at Cognizant, provided valuable information and resources for both novice and experienced developers on how to get started with IoT and Golang in a day. He also provided information on how to use Intel Arduino Kit, Go Robotics API and AWS IoT stack to build an application tha...
Every successful software product evolves from an idea to an enterprise system. Notably, the same way is passed by the product owner's company. In his session at 20th Cloud Expo, Oleg Lola, CEO of MobiDev, will provide a generalized overview of the evolution of a software product, the product owner, the needs that arise at various stages of this process, and the value brought by a software development partner to the product owner as a response to these needs.
SYS-CON Events announced today that MobiDev, a client-oriented software development company, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex softw...
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
Internet of @ThingsExpo, taking place June 6-8, 2017 at the Javits Center in New York City, New York, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo New York Call for Papers is now open.
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
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...
WebRTC has had a real tough three or four years, and so have those working with it. Only a few short years ago, the development world were excited about WebRTC and proclaiming how awesome it was. You might have played with the technology a couple of years ago, only to find the extra infrastructure requirements were painful to implement and poorly documented. This probably left a bitter taste in your mouth, especially when things went wrong.
"LinearHub provides smart video conferencing, which is the Roundee service, and we archive all the video conferences and we also provide the transcript," stated Sunghyuk Kim, CEO of LinearHub, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...