COSTA MESA, Calif., Jan. 12 /PRNewswire-FirstCall/ -- Irvine Sensors Corporation (Nasdaq: IRSN) today reported operating results for fiscal 2008, the 52 weeks ended September 28, 2008. Optex Sytems, Inc. ("Optex"), Irvine Sensors' wholly owned subsidiary, has discontinued operations as a result of the October 2008 UCC sale of its assets and is classified as such in Irvine Sensors' results for fiscal 2008, fiscal 2007 and fiscal 2006.

Reflecting the exclusion of Optex's revenues, total revenues for fiscal 2008 were $16,677,000 compared to total revenues of $20,378,400 for fiscal 2007, an approximate 18% decrease. Despite this decrease, loss from continuing operations declined over 26% to $12,800,000 in fiscal 2008, from $17,442,400 in the prior fiscal year. The loss from discontinued operations, on the other hand, increased in fiscal 2008 to $8,758,900 as compared to $4,688,700 in fiscal 2007, largely due to the $7.6 million loss on disposal of discontinued operations recorded in fiscal 2008 as a result of the Optex Asset Sale. The combination of a lower loss from continuing operations and a higher loss from discontinued operations in fiscal 2008 produced a net loss of $21,558,900, nearly equivalent to the $22,131,000 net loss in fiscal 2007.

Irvine Sensors Corporation, headquartered in Costa Mesa, California, is a vision systems company engaged in the development and sale of miniaturized infrared and electro-optical cameras, image processors and stacked chip assemblies and 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 

                                              Fiscal Year Ended
                                September 28,   September 30,   October 1,
                                     2008           2007           2006
    Revenues:
      Contract research and
       development revenue        $14,157,900    $17,137,700   $16,503,700
      Product sales                 2,489,100      3,210,900     1,510,300
      Other revenue                    30,000         29,800        58,800
    Total revenues                 16,677,000     20,378,400    18,072,800
    Cost and expenses:
      Cost of contract research
       and development revenue     11,339,000     13,550,100    13,588,500
      Cost of product sales         1,885,600      2,490,300     1,468,900
      General and administrative
       expense                      8,932,400      9,208,800     8,169,200
      Research and development
       expense                      1,512,500      1,119,800       353,700
    Total costs and expenses       23,669,500     26,369,000    23,580,300
    Loss from operations           (6,992,500)    (5,990,600)   (5,507,500)
      Interest expense             (6,100,200)    (7,026,800)   (1,227,700)
      Loss on extinguishment of
       debt                                 -     (4,398,000)            -
      Settlement fee on debt default        -              -    (1,250,000)
      Change in fair value of
       derivative instrument                -              -      (317,800)
      Gain on disposal of assets      315,600          4,700         1,100
      Interest and other income         2,400          6,300         3,800
    Loss from continuing operations
     before minority interest and
     provision for income taxes   (12,774,700)   (17,404,400)   (8,298,100)
    Minority interest in loss
     of subsidiaries                      200            500           300
    Provision for income taxes        (25,500)       (38,500)      (36,300)
    Loss from continuing
     operations                   (12,800,000)   (17,442,400)   (8,334,100)
    Discontinued operations:
      Loss from operations of
       discontinued operations     (1,158,900)    (4,688,700)      (16,600)
      Loss on disposal of
       discontinued operations     (7,600,000)             -             -
    Loss from discontinued
     operations                    (8,758,900)    (4,688,700)      (16,600)
    Net loss                     $(21,558,900)  $(22,131,100)  $(8,350,700)
    Basic and diluted net loss
     per common share information:
      From continuing operations       $(4.35)        $(7.16)       $(4.25)
      From discontinued operations      (2.94)         (1.92)        (0.01)
    Basic and diluted net
     loss per common share             $(7.29)        $(9.08)       $(4.26)
    Weighted average number of
     common shares outstanding      2,980,100      2,436,400     1,959,600

IRVINE SENSORS CORPORATION

CONSOLIDATED BALANCE SHEETS

                                                September 28,  September 30,
                                                     2008          2007
     Assets
     Current assets:
      Cash and cash equivalents                    $638,600      $937,600
      Restricted cash                                41,700        39,600
      Accounts receivable, net of allowance
       for doubtful accounts of $15,000 and
       $15,000, respectively                        662,400     1,571,000
      Unbilled revenues on uncompleted
       contracts, net of allowance of $18,400
        and $0, respectively                      1,279,700     1,289,300
      Inventory, net                              1,126,900       898,900
      Prepaid expenses and other current
       assets                                        64,800        57,000
      Current assets of discontinued
       operations                                 7,494,700     8,678,000
        Total current assets                     11,308,800    13,471,400
     Property and equipment, net                  4,328,300     5,405,000
     Intangible assets, net                       1,005,500     1,183,900
     Deferred costs                                 260,100       587,200
     Deposits                                       101,000        65,800
     Non-current assets of discontinued
      operations                                  5,880,300    13,717,100
        Total assets                            $22,884,000   $34,430,400
     Liabilities and Stockholders' Equity
      (Deficit)
     Current liabilities:
      Accounts payable                           $4,047,100    $2,514,200
      Accrued expenses                            4,595,200     2,321,500
      Success fee payable to related party                -       500,000
      Accrued estimated loss on contracts           144,500       200,100
      Advance billings on uncompleted
       contracts                                     21,900       378,100
      Deferred revenue                              385,000       156,500
      Income taxes payable                           14,400        31,400
      Restructured debt, net of discounts        11,788,800             -
      Promissory note payable - related party       400,000       400,000
      Subordinated term loan - related party      2,000,000             -
      Capital lease obligations - current
       portion                                       29,100        40,300
      Current liabilities of discontinued
       operations                                 4,009,600     5,043,100
        Total current liabilities                27,435,600    11,585,200
     Restructured debt, net of discounts                  -    10,869,300
     Subordinated term loan - related party               -     2,000,000
     Deferred interest                                    -     1,241,200
     Executive Salary Continuation Plan
      liability                                   3,484,800     3,800,500
     Capital lease obligations, less current
      portion                                        11,200        45,000
     Minority interest in consolidated
      subsidiaries                                  411,600       411,900
        Total liabilities                        31,343,200    29,953,100
     Commitments and contingencies
     Stockholders' equity (deficit):
      Preferred stock, $0.01 par value,
       1,000,000 and 500,000 shares
       authorized, respectively; 126,000 and
       0 shares issued and outstanding,
       respectively                                   1,300             -
      Common stock, $0.01 par value,
       150,000,000 and 80,000,000 shares
       authorized, respectively; 3,557,200
       and 2,684,300 shares issued and
       outstanding, respectively                     35,600        26,800
      Common stock warrants; 717,900 and
       614,500 warrants outstanding,
       respectively                                       -             -
      Deferred stock-based compensation            (183,200)     (299,700)
      Common stock held by Rabbi Trust           (1,214,100)   (1,115,100)
      Deferred compensation liability             1,214,100     1,115,100
      Paid-in capital                           159,901,000   151,405,200
      Accumulated deficit                      (168,213,900) (146,655,000)
        Total stockholders' (deficit) equity     (8,459,200)    4,477,300
                                                $22,884,000   $34,430,400

SOURCE Irvine Sensors Corporation