Seguridad Mania.com - España y América Latina

COSTA MESA, CA -- (Marketwired) -- 05/15/13 -- ISC8® Inc. (OTCBB: ISCI) ("ISC8" or the "Company"), a provider of intelligent cybersecurity solutions, today reported unaudited operating results for its fiscal 2013 second quarter ended March 31, 2013.

"We have completed the company's transformation to commercialization, including the spinoff of our government focused business units in the second quarter, to become a pure play, global cybersecurity company solely focused on the rapidly growing market for adaptive cybersecurity products and solutions," said Bill Joll, President and CEO of ISC8 Inc. "We now provide a comprehensive offering of solutions that address key cybersecurity requirements facing enterprise, service provider and government networks such as Big Data security analytics and detection of Advanced Persistent Threats (APTs).

"We remain focused on aggressively marketing our three key cybersecurity products to accelerate revenue and continue to see positive market reception and significant opportunities. Cyber NetFalcon® and Cyber NetControl™ continue to gain traction in the global market and Cyber adAPT™ is gaining recognition as an advanced and uniquely critical solution for prevention of sophisticated malware attacks that are not immediately detectible by existing cybersecurity platforms in the marketplace."

Recent Business Highlights:

• Established a Malware Research Team critical to the advancement of ISC8's Cyber adAPT solution to detect next generation threats
• Continued with trial rollouts with both Cyber NetFalcon and Cyber adAPT in new markets
• Accelerated development of the Company's three leading edge technology Cybersecurity products:
  • Cyber adAPT, to detect advanced targeted attacks such as APTs in larger corporate enterprise
  • Cyber NetFalcon, capable of identifying perpetrators, and
  • Cyber NetControl, capable of providing more user control and security to service operators, such as Mobile Carriers
    
    

Financial Results:
In March 2013, the Company announced that it had discontinued its government focused business, including the Secure Memory Systems, Cognitive and Microsystems business units (the "Government Business"), to focus on the Company's cybersecurity business. The operations of the Thermal Imaging Business and Government Business are presented as discontinued operations. To provide comparability between the periods, the consolidated financial information for all periods presented has been reclassified to reflect the Company's results of continuing operations. As a result, the business and results of operations will be materially affected in the short-term, as the Company transitions to its cybersecurity business.

Total revenues for the second quarter of fiscal 2013 were $102,000, which was primarily the result of an increase in software maintenance revenue. Software maintenance revenue did not exist in the year ago period. Net loss from continuing operations in the second quarter of fiscal 2013 was $9.6 million, compared to a net loss of $11.3 million in the same quarter last year.

For the first six months of fiscal 2013, total revenues were $196,000. Net loss for the first six months was $11.8 million, compared to a net loss of $19.6 million for the comparable year ago period.

ISC8 believes that the Company's losses in recent years have been primarily the result of increased research and development expenditures related to the cyber technology, and efforts to productize those technologies and bring them to market. These losses were augmented by insufficient revenue to support the Company's growth in a skilled and diverse technical staff, which is considered necessary to support commercialization of the Company's technologies.

ISC8 is focused on managing costs in line with estimated future revenues, including contingencies for cost reductions if projected revenues are not fully realized.

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.

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.

SAFE HARBOR STATEMENT

Statements in this press release that relate to future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ are identified in our public filings with the Securities and Exchange Commission (SEC), and include the fact that we have disclosed that you should not rely upon our previously published financial statements and the fact that we have not filed all of our reports required by the Securities Exchange Act of 1934. More information about factors that could affect our business and financial results are included in our public filings with the SEC, which are available on the SEC's website located at www.sec.gov.

The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

                                 ISC8 INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                                (Unaudited)

                                                 March 31,    September 30,
                                                  2013 (1)       2012 (1)
                                               -------------  -------------
Assets
Current assets:
    Cash and cash equivalents                  $     322,000  $   1,738,000
    Accounts receivable, net                         127,000              -
    Due from Vectronix, Inc.                               -      1,200,000
    Prepaid expenses and other current assets        264,000         59,000
    Current assets from discontinued
     operations                                    1,047,000      1,048,000
                                               -------------  -------------
      Total current assets                         1,760,000      4,045,000
Property and equipment, net                          147,000        121,000
Deferred financing costs                             908,000        963,000
Goodwill                                             393,000              -
Intangible assets, net                               851,000          8,000
Deposits                                              58,000         63,000
Non-current assets from discontinued
 operations                                          602,000        941,000
                                               -------------  -------------
      Total assets                             $   4,719,000  $   6,141,000
                                               =============  =============
Liabilities, Non-Controlling Interest, and
 Stockholders' Deficit
    Current liabilities:
    Accounts payable                           $     853,000  $     604,000
    Accrued expenses                               2,391,000      2,203,000
    Deferred revenue                                 306,000              -
    Senior secured revolving credit facility,
     net of discount                               4,733,000      4,567,000
    Senior subordinated secured convertible
     promissory notes, net of discount                     -      1,119,000
    Senior subordinated secured convertible
     2013 Notes, net of discount                   7,104,000              -
    Senior subordinated secured promissory
     notes                                         5,081,000      4,790,000
    Other current liabilities                         27,000         34,000
  Current liabilities from discontinued
   operations                                      1,001,000        819,000
                                               -------------  -------------
      Total current liabilities                   21,496,000     14,136,000
Subordinated secured convertible promissory
 notes, net of discount                            7,336,000      6,470,000
Derivative liability                              17,893,000     19,925,000
Executive Salary Continuation Plan liability         968,000        975,000
Other liabilities                                     55,000         65,000
                                               -------------  -------------
      Total liabilities                           47,748,000     41,571,000
                                               -------------  -------------
Commitments and contingencies (Note 11)
Stockholders' deficit:
    Convertible preferred stock, $0.01 par
     value, 1,000,000 shares authorized,
     Series B - 900 shares issued and
     outstanding as of March 31, 2013 and
     September 30, 2012 (2); liquidation
     preference of $866,000 and $926,000 as of
     March 31, 2013 and September 30, 2012,
     respectively                                          -              -
    Common stock, $0.01 par value, 800,000,000
     shares authorized, 165,529,000 and
     131,559,000 shares issued and outstanding
     as of March 31, 2013 and September 30,
     2012, respectively(3)                         1,679,000      1,316,000
    Additional paid-in capital                   178,087,000    174,157,000
    Accumulated other comprehensive loss            (137,000)             -
    Accumulated deficit                         (222,982,000)  (211,227,000)
                                               -------------  -------------
      ISC8 stockholders' deficit                 (43,353,000)   (35,754,000)
Non-controlling interest                             324,000        324,000
                                               -------------  -------------
      Total stockholders' deficit                (43,029,000)   (35,430,000)
                                               -------------  -------------
      Total liabilities, non-controlling
       interest, and stockholders' deficit     $   4,719,000  $   6,141,000
                                               =============  =============

(1) In March 2013, the Company ceased operations of its government focused
    business, including Secure Memory Systems, Cognitive Systems and
    Microsystems business units (the "Government Business"). In accordance
    with the provisions of the Presentation of Financial Statements Topic
    205 of the Accounting Standards Codification ("ASC"), the assets and
    liabilities related to the Government Business are now presented as
    discontinued operations for all periods presented in the consolidated
    financial statements.

(2) The number of preferred stock issued and outstanding are rounded to the
    nearest hundred (100).

(3) The number of shares of common stock issued and outstanding are rounded
    to the nearest one thousand (1000).



                                 ISC8 INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)

                           13 Weeks Ended              26 Weeks Ended
                     --------------------------  --------------------------
                       March 31,     April 1,      March 31,     April 1,
                       2013 (1)      2012 (1)      2013 (1)      2012 (1)
                     ------------  ------------  ------------  ------------
Total revenues       $    102,000  $          -  $    196,000  $          -
                     ============  ============  ============  ============

Cost and expenses
Cost of revenues           44,000             -        81,000             -
General and
 administrative
 expense                2,320,000     1,094,000     4,290,000     2,206,000
Research and
 development expense    1,799,000     1,504,000     3,464,000     2,950,000
                     ------------  ------------  ------------  ------------
Total costs and
 expenses               4,163,000     2,598,000     7,835,000     5,156,000
                     ------------  ------------  ------------  ------------

Loss from operations   (4,061,000)   (2,598,000)   (7,639,000)   (5,156,000)
Interest expense       (3,806,000)   (1,470,000)   (5,793,000)   (3,139,000)
Gain (loss) from
 change in fair
 value of derivative
 liability               (466,000)  (14,160,000)    4,481,000   (16,470,000)
Other income
 (expense), net           (64,000)        1,000       (63,000)        2,000
                     ------------  ------------  ------------  ------------

Loss from continuing
 operations before
 provision for
 income taxes          (8,397,000)  (18,227,000)   (9,014,000)  (24,763,000)
Provision for income
 taxes                     (3,000)            -        (3,000)       (3,000)
                     ------------  ------------  ------------  ------------
Loss from continuing
 operations            (8,400,000)  (18,227,000)   (9,017,000)  (24,766,000)
                     ------------  ------------  ------------  ------------
  Loss from
   discontinued
   operations (net
   of $0 tax)          (1,191,000)     (848,000)   (2,738,000)   (2,559,000)
  Gain on disposal
   of discontinued
   operations (net
   of $0 tax)                   -     7,748,000             -     7,748,000
                     ------------  ------------  ------------  ------------
Net earnings (loss)
 from discontinued
 operations (net of
 $0 tax)               (1,191,000)    6,900,000    (2,738,000)    5,189,000
                     ------------  ------------  ------------  ------------

Net loss             $ (9,591,000) $(11,327,000) $(11,755,000) $(19,577,000)
                     ============  ============  ============  ============

Basic and diluted
 earnings (loss) per
 share:
  Loss from
   continuing
   operations        $      (0.05) $      (0.15) $      (0.06) $      (0.21)
                     ============  ============  ============  ============
  Earnings (loss)
   from discontinued
   operations        $      (0.01) $       0.05  $      (0.02) $       0.04
                     ============  ============  ============  ============
  Net loss per share $      (0.06) $      (0.10) $      (0.08) $      (0.17)
                     ============  ============  ============  ============

Weighted average
 number of common
 shares outstanding,
 basic and diluted    153,688,000   119,037,000   147,541,000   116,376,000
                     ============  ============  ============  ============

(1) In March 2013, the Company ceased operations of its Government Business,
    and in January 2012 the Company ceased operations of its thermal imaging
    products business (the "Thermal Imaging Business"). In accordance with
    the provisions of the Presentation of Financial Statements Topic 205 of
    the ASC, the assets and liabilities related to the Government Business
    are now presented as discontinued operations for all periods presented
    in the consolidated financial statements.

                                 ISC8 INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (Unaudited)

                                                       26 Weeks Ended
                                                 --------------------------
                                                   March 31,     April 1,
                                                   2013 (1)      2012 (1)
                                                 ------------  ------------
Cash flows from operating activities:
Net loss                                         $(11,755,000) $(19,577,000)
Add: loss (income) from discontinued operations
 (net of $0 tax)                                    2,738,000    (5,189,000)
                                                 ------------  ------------
Loss from continuing operations                    (9,017,000)  (24,766,000)

Adjustments to reconcile loss from continuing
 operations to net cash used in operating
 activities:
  Depreciation and amortization                        95,000        22,000
  Non-cash interest expense                         5,255,000     2,779,000
  (Gain) loss from changes in fair value of
   derivative liability                            (4,481,000)   16,470,000
  Common stock and warrants issued to pay
   operating expenses                                 139,000             -
  Non-cash stock-based compensation                   300,000       330,000
Changes in assets and liabilities:
  (Increase) in accounts receivable                  (127,000)            -
  (Increase) in prepaid expenses and other
   assets                                             (60,000)      (97,000)
  Increase in accounts payable and accrued
   expenses                                           504,000       935,000
  (Decrease) in Executive Salary Continuation
   Plan liability                                      (7,000)      (29,000)
  Increase in deferred revenue                         67,000             -
                                                 ------------  ------------
Net cash used in operating activities              (7,332,000)   (4,356,000)
                                                 ------------  ------------
Cash flows from investing activities:
  Property and equipment expenditures                 (45,000)      (60,000)
  Proceeds from sale of Thermal Imaging Business    1,200,000             -
  Net cash paid related to acquisition of Bivio      (569,000)            -
                                                 ------------  ------------
Net cash provided(used) in investing activities       586,000       (60,000)
                                                 ------------  ------------
Cash flows from financing activities:
  Proceeds from issuances of debt                   7,380,000             -
  Proceeds from revolving credit line                       -     5,000,000
  Proceeds from options and warrants exercised        103,000       197,000
  Debt issuance costs paid                                  -      (143,000)
  Principal payments of notes payable and
   settlement agreements                               (9,000)   (2,497,000)
  Principal payments of capital leases                 (8,000)       (6,000)
                                                 ------------  ------------
Net cash provided by financing activities           7,466,000     2,551,000
                                                 ------------  ------------
Cash flows from discontinued operations:
  Net cash used in operating activities            (1,965,000)   (1,854,000)
  Net cash used in investing activities                (8,000)    8,165,000
                                                 ------------  ------------
Net cash provided (used) in discontinued
 operations                                        (1,973,000)    6,311,000
                                                 ------------  ------------

                                                 ------------  ------------
Effect of foreign currency translation               (163,000)            -
                                                 ------------  ------------
Net increase (decrease) in cash and cash
 equivalents                                       (1,416,000)    4,446,000
  Cash and cash equivalents at beginning of
   period                                           1,738,000     2,735,000
                                                 ------------  ------------
  Cash and cash equivalents at end of period     $    322,000  $  7,181,000
                                                 ============  ============

Non-cash investing and financing activities:
  Non-cash conversion of preferred stock to
   common stock                                  $     60,000  $    250,000
                                                 ============  ============
  Conversion of Subordinated Secured Convertible
   Promissory Notes and accrued interest to
   common stock                                  $     30,000  $          -
                                                 ============  ============
  Non-cash conversion of 2012 Notes to 2013
   Notes                                         $  5,571,000  $          -
                                                 ============  ============
  Common stock issued to pay accrued interest
   and board fees                                $    963,000  $    482,000
                                                 ============  ============
  Issuance of warrants to acquire Bivio Software
   assets                                        $     85,000  $          -
                                                 ============  ============
  Senior subordinated secured promissory notes
   issued to settle accrued interest             $    291,000  $          -
                                                 ============  ============
  Issuance of warrants in connection with the
   Forbearance agreements                        $    721,000  $          -
                                                 ============  ============
Supplemental cash flow information:
  Cash paid for interest                         $    303,000  $    267,000
                                                 ============  ============
  Cash paid for income taxes                     $      3,000  $      3,000
                                                 ============  ============

(1) In March 2013, the Company ceased operations of its Government Business,
    and in January 2012 the Company ceased operations of its thermal imaging
    products business (the "Thermal Imaging Business"). In accordance with
    the provisions of the Presentation of Financial Statements Topic 205 of
    the ASC, the assets and liabilities related to the Government Business
    are now presented as discontinued operations for all periods presented
    in the consolidated financial statements.



                                  ISC8 Inc.
              UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS

The following non-GAAP adjustments are based upon the Company's unaudited 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.

                           13 Weeks Ended              26 Weeks Ended
                     --------------------------  --------------------------
                       March 31,     April 1,      March 31,     April 1,
                         2013          2012          2013          2012
                     ------------  ------------  ------------  ------------
GAAP net loss from
 continuing
 operations
 attributable to
 ISC8                $ (8,400,000) $(18,227,000) $ (9,017,000) $(24,766,000)
Non-GAAP
 adjustments:
  Non-cash interest
   expense              3,581,000     1,314,000     5,255,000     2,779,000
  (Gain)loss from
   changes in fair
   value of
   derivative
   liability              466,000    14,160,000    (4,481,000)   16,470,000
  Stock-based
   compensation           171,000       164,000       300,000       330,000
  Depreciation and
   amortization            48,000        12,000        95,000        22,000

                     ------------  ------------  ------------  ------------
Non GAAP net loss
 from continuing
 operations
 attributable to
 ISC8                $ (4,134,000) $ (2,577,000) $ (7,848,000) $ (5,165,000)
                     ============  ============  ============  ============