COSTA MESA, Calif., Aug. 17, 2011 /PRNewswire/ -- Irvine Sensors Corporation (OTCBB: IRSN) today reported operating results for its third quarter and first three quarters of fiscal 2011, the 13 and 39 weeks ended July 3, 2011.

Total revenues for the 13 weeks ended July 3, 2011 were $2,974,200, an approximate 17% decrease from $3,576,100 in the 13 weeks ended June 27, 2010. Total revenues in the fiscal 2011 39-week period were $10,645,500, up 12% from $9,507,700 in the first three quarters of fiscal 2010. The revenue increase in the fiscal 2011 39-week period was primarily due to increased sales of Irvine Sensors' thermal imaging cores.

Net income attributable to the Company of $4,499,600 was recorded in the current fiscal year third quarter as compared to a net loss attributable to the Company of $2,625,400 in the third quarter of fiscal 2010, largely as a result of a nearly $7.7 million non-cash gain in the 13-week period ended July 3, 2011 from change in fair value of derivative liability related to debt instruments issued by the Company in the current fiscal year. The accrued derivative liability is subject to elimination if the convertible debt instruments are ultimately converted to common stock pursuant to their terms. There can be no assurance, however, that the convertible debt instruments will be converted to common stock or that the resulting accrued derivative liability will be eliminated. Net loss attributable to the Company increased to $13,883,200 in the 39-week period ended July 3, 2011, from $7,761,700 in the 39-week period ended June 27, 2010, with approximately $5.4 million of the increase due to increased interest expense of which approximately $3.9 million was non-cash.

Working capital, which improved substantially in the first quarter and second quarters of fiscal 2011 as a result of equity and debt financings, continued to improve in the third quarter of fiscal 2011 as Irvine Sensors issued an additional $4.25 million of long-term debt. During the 13-week period ended July 3, 2011, the Company paid in full short-term debt of approximately $1.5 million when due.

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 $2,124,100 in the 13-week period ended July 3, 2011 compared to non-GAAP net loss of $1,975,600 in the 13-week period ended June 27, 2010. Similarly, non-GAAP net loss was $7,541,900 in the 39-week period ended July 3, 2011 compared to non-GAAP net loss of $6,421,000 in the 39-week period ended June 27, 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– Irvine Sensors reports net income (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 income (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. 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."

Irvine Sensors believes that the presentation of non-GAAP net income (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 income (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 income (loss) to evaluate the Company's operating performance because management believes that the exclusion of the non-cash items described above, including 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. Irvine Sensors 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.

Irvine Sensors Corporation ([ www.irvine-sensors.com ]), headquartered in Costa Mesa, California, is a technology company engaged in the design, development, manufacture and sale of security products, software, vision systems and miniaturized electronic products and higher level systems incorporating such products for defense, information technology and physical security for government and commercial applications. Irvine Sensors also conducts research and development related to high density electronics, miniaturized sensors, optical interconnection technology, high speed network security, image processing and low-power analog and mixed-signal integrated circuits for diverse systems applications.

IRVINE SENSORS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	13 Weeks Ended		39 Weeks Ended
	July 3, 2011	June 27, 2010	July 3, 2011	June 27, 2010
Total revenues	$ 2,974,200	$ 3,576,100	$ 10,645,500	$ 9,507,700
Cost and expenses
Cost of revenues	2,360,100	2,900,800	9,484,500	7,513,000
General and administrative expense	1,951,800	1,565,100	6,009,700	4,693,100
Research and development expense	809,200	655,200	2,047,300	2,011,400
Total costs and expenses	5,121,100	5,121,100	17,541,500	14,217,500
Gain on sale or disposal of assets	-	100	-	12,600
Loss from operations	(2,146,900)	(1,544,900)	(6,896,000)	(4,697,200)
Interest expense	(1,054,200)	(636,500)	(6,236,800)	(882,600)
Provision for litigation judgment	-	-	-	(20,200)
Litigation settlement expense	-	(450,000)	-	(2,270,700)
Change in fair value of derivative liability	7,697,800	7,000	(742,700)	67,000
Other income (expense)	6,200	(1,000)	(4,400)	(1,300)
Income (loss) from operations before
provision for income taxes	4,502,900	(2,625,400)	(13,879,900)	(7,805,000)
Benefit (provision) for income taxes	(3,300)	-	(3,300)	43,300
Net income (loss)	4,499,600	(2,625,400)	(13,883,200)	(7,761,700)
Less net income (loss) attributable to noncontrolling interests in subsidiary	-	-	-	-
Net income (loss) attributable to Irvine Sensors Corporation	$ 4,499,600	$ (2,625,400)	$(13,883,200)	$ (7,761,700)
Basic net income (loss) attributable to Irvine Sensors Corporation per common share	$ 0.04	$ (0.15)	$ (0.17)	$ (0.66)
Weighted average number of common shares outstanding, basic	107,504,800	17,302,800	83,105,800	13,932,100
Diluted net income (loss) attributable to Irvine Sensors Corporation per common share	$ 0.02	$ (0.15)	$ (0.17)	$ (0.66)
Weighted average number of common shares and common share equivalents outstanding, diluted	260,723,100	17,302,800	83,105,800	13,932,100

IRVINE SENSORS CORPORATION 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. Irvine Sensors 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		39 Weeks Ended
	July 3, 2011	June 27, 2010	July 3, 2011	June 27, 2010
GAAP net income (loss) attributable to Irvine Sensors Corporation	$ 4,499,600	$ (2,625,400)	$ (13,883,200)	$ (7,761,700)
Plus:
Change in fair value of derivative liability	(7,697,800)	(7,000)	742,700	(67,000)
Non-cash interest expense	538,400	328,100	3,937,400	343,900
Stock-based compensation	261,100	14,200	838,600	60,900
Depreciation and amortization	274,600	314,500	822,600	1,002,900
Non-GAAP Net loss attributable to Irvine Sensors Corporation	$ (2,124,100)	$ (1,975,600)	$ (7,541,900)	$ (6,421,000)

IRVINE SENSORS CORPORATION CONSOLIDATED BALANCE SHEETS

	July 3, 2011 (Unaudited)	October 3, 2010
Assets
Current assets:
Cash and cash equivalents	$ 2,983,900	$ 281,600
Accounts receivable, net of allowance for doubtful accounts of $13,600 and $15,000, respectively	1,170,800	382,100
Proceeds receivable, subordinated secured convertible promissory notes financing	2,000,000	-
Unbilled revenues on uncompleted contracts	609,800	630,300
Inventory, net	1,179,400	1,715,800
Prepaid expenses and other current assets	192,100	182,300
Total current assets	8,136,000	3,192,100
Property and equipment, net (including construction in process of $716,100 and $35,000, respectively)	2,735,700	2,730,000
Intangible assets, net	10,900	12,400
Deferred financing costs	1,101,100	302,900
Deposits	184,000	87,400
Total assets	$ 12,167,700	$ 6,324,800
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable	$ 891,700	$ 4,724,100
Accrued expenses	1,406,400	4,097,700
Accrued estimated loss on contracts	-	29,000
Advance billings on uncompleted contracts	387,800	321,800
Advances against accounts receivable	-	99,700
Deferred revenue	690,300	1,515,400
Restructured debt, net of debt discounts	-	163,100
Secured promissory note, current portion	1,878,300	402,500
Debentures, net of debt discounts	-	1,935,200
Settlement agreements obligations, current portion	827,200	-
Capital lease obligations, current portion	13,400	-
Total current liabilities	6,095,100	13,288,500
Secured promissory note, less current portion	460,800	2,097,500
Senior subordinated secured promissory notes	4,133,900	-
Subordinated secured convertible promissory notes, net of discounts	3,986,500	-
Settlement agreement obligations, less current portion	21,500	-
Derivative liability	13,745,000	4,000
Executive Salary Continuation Plan liability	968,000	1,030,700
Capital lease obligations, less current portion	83,700	-
Total liabilities	29,494,500	16,420,700
Commitments and contingencies
Stockholders' deficit:
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);
liquidation preferenceof $0 and $333,300, respectively;
Series B – 1,800 and 1,900 shares issued and outstanding, respectively (1);
liquidation preferenceof $1,785,600 and $1,892,700, respectively
Series C – and 37,500 shares issued and outstanding, respectively (1);
liquidation preferenceof $0 and $1,125,000, respectively
Common stock, $0.01 par value, 500,000,000 and 150,000,000 shares authorized, respectively;
113,542,500 and 33,535,400 shares issued and outstanding, respectively (1)	1,135,400	335,400
Prepaid stock-based compensation	(114,200)	-
Common stock held by Rabbi Trust	(1,020,700)	(1,169,600)
Deferred compensation liability	1,020,700	1,169,600
Paid-in capital	171,006,200	165,039,200
Accumulated deficit	(189,678,600)	(175,795,400)
Irvine Sensors Corporation stockholders' deficit	(17,651,200)	(10,420,300)
Noncontrolling interest	324,400	324,400
Total stockholders' deficit	(17,326,800)	(10,095,900)
Total liabilities and stockholders' deficit	$ 12,167,700	$ 6,324,800

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

SOURCE Irvine Sensors Corporation

[ Back to top ]

RELATED LINKS
[ http://www.irvine-sensors.com ]

N@N

Irvine Sensors Releases Third Quarter Results

Irvine Sensors Releases Third Quarter Results

Change in Derivative Liability Contributes to ~$4.5M Quarterly Profit