SideChannel Inc (SDCH)

[vCISO]

SideChannel Strategy Validated by Revenue Growth of 30.9% Year-over-year in Second Quarter 2023
Financial results conference call on Tuesday, May 9 @ 4:00 p.m. EDT

WORCESTER, MA / ACCESSWIRE / May 9, 2023 / SideChannel, Inc. (OTCQB:SDCH) ("SideChannel"), a provider of cybersecurity services and technology to emerging and middle market companies, today announced its financial results for the three months and six months ended March 31, 2023.

Second Quarter 2023 Highlights

Revenue of $1.6 million up 30.9% versus the second quarter of 2022
Sequential quarter growth of 4.6%
Gross margin of 45.6%
Net loss of $0.9 million or $0.01 per share
Trailing twelve-month revenue reaches $5.7 million as of March 31, 2023
Revenue Retention was 83% for the twelve months ended March 31, 2023
New client contracts from October 1, 2022 through March 31, 2023 with $2.0 million of potential annual revenue
Cash of $1.9 million as of March 31, 2023; cash used in operations during the quarter of $0.7 million
Began implementing operating expense decreases of up to $0.9 million on an annualized basis
Management Comments

Commenting on the fiscal second quarter ended March 31, 2023, Brian Haugli, President and CEO of SideChannel, Inc., said, "We are delighted to see our strategy substantiated by our year-over-year revenue growth of 30.9% for the quarter and 38.5% for the year-to-date. We believe our new client pipeline remains strong as reflected by the new contracts with $2.0 million of potential annual revenue we secured during the first six months of this fiscal year. These new contracts will fuel our growth during the second half of the year. We anticipate gaining additional new clients during the next six months to set us up for further growth going into the next fiscal year."

"Cybersecurity Software and Services outpaced the growth of our vCISO Services, demonstrating the eagerness of emerging and mid-market companies to embrace our complete program. Cybersecurity Software and Services grew 59.3% and vCISO Services grew 16.2% for the quarter. Year-to-date, the growth rate for Cybersecurity Software and Services is 43.4% and the growth rate for vCISO Services is 35.7%. Our strategic focus remains on expanding our vCISO partnerships, while incorporating complementary products, cybersecurity solutions, and privacy services to empower our clients in their pursuit of cost-effective risk reduction."

Mr. Haugli concluded, "We made investments in growth since closing the business combination in July 2022, and we are seeing the benefits. We expect to experience continued revenue growth from these investments. Recently our team put a more focused emphasis on achieving net income and positive cash flow by improving gross margins and reducing non-customer facing operating expenses."

Financial Outlook for Fiscal 2023

The Company provided a financial outlook expected for fiscal year 2023 as follows:

Revenue ranging from $6.3 million to $6.5 million
Gross margin ranging from 50.0% to 52.0%
Operating losses to be lower in the second half of the year compared to the first half
Conference Call Information

A conference call discussing financial results for the quarter ended March 31, 2023 will follow this release today at 4:00 pm EDT.

Date: Tuesday, May 9, 2023 - 4:00 PM EDT

Dial: Toll Free: 877-545-0523

International: 973-528-0016

Participant Access Code: 551349

For those unable to participate in the live call, a replay will be available shortly after the call. Interested parties can access the replay by visiting the Company's website https://investors.sidechannel.com/events-presentations.

Second Quarter 2023 Review

The second quarter Form 10-Q is accessible in its entirety at https://investors.sidechannel.com/sec-filings.

In thousands, except shares and per share data
Three Months Ended
Change Change
3/31/2023 3/31/2022 $ % 12/31/2022 $ %
Revenue
$ 1,617 $ 1,235 $ 382 30.9% $ 1,546 $ 71 4.6%
Gross profit
737 628 109 17.4% 865 (128) -14.8%
Gross margin
45.6% 50.9% 56.0%
Operating expenses
1,595 270 1,325 490.1% 1,472 123 8.4%
Operating income (loss)
(858) 358 (1,216) (607) (251)
Net income (loss)
(856) 361 (1,217) (602) (254)
Net income (loss) per common share
$ (0.01) $ 0.01 $ (0.02) $ (0.00) $ (0.01)
Weighted average common shares outstanding - basic and diluted
148,928,663 62,016,618 148,733,860
As of
March 31, 2023
As of
September 30, 2022
Cash
$ 1,902 $ 3,030
Current Assets
3,261 4,142
Current Liabilities
1,382 1,161
Share Issuance for Revenue Milestone

SideChannel also announced the issuance of 62,016,618 shares of common stock associated with the business combination which occurred on July 1, 2022 comprised of 59,900,000 shares issued for exceeding $5.5 million of trailing twelve-month revenue and 2,116,618 shares of common stock for the closing working capital adjustment. After this issuance, the Company had 211,587,899 common stock shares outstanding as of May 4, 2023.

About SideChannel

SideChannel, founded in 2019, creates top-tier cybersecurity programs for mid-market companies to help protect their assets. SideChannel employs a combination of skilled and experienced talent, technology tools, and battle-tested processes to offer a complete program. SideChannel also offers Enclave; a network microsegmentation solution that simplifies securing a network in a zero-trust model. Learn more at sidechannel.com.

Interested investors and shareholders are encouraged to sign up for press releases and industry updates by registering for Email Alerts at and by following SideChannel on Twitter and LinkedIn.

SideChannel

146 Main Street
Suite 405
Worcester, MA 01608

Investor Contact

Ryan Polk
[e-mail]