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.”
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.
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.
– 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 .
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
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.
(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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