SideChannel, Inc. SEC 10-Q Report
SideChannel, Inc., a company specializing in cybersecurity solutions, has released its Form 10-Q report for the third quarter. The report provides a comprehensive overview of the company's financial performance and operational strategies, highlighting both improvements and ongoing initiatives in the cybersecurity sector.
Financial Highlights
Revenues: $1.9 million, a decrease of $33 thousand or 1.7% compared to the same quarter last year, primarily due to the loss of clients with higher than average contract value.
Gross Profit: $941 thousand, with a gross margin of 49.7%, an increase from 45.0% in the prior year quarter, driven by lower bonus expenses and positive gross margin from Enclave sales.
Operating Loss: $(61) thousand, a significant improvement from $(260) thousand in the prior year quarter, reflecting reduced general and administrative expenses.
Net Loss: $(54) thousand, compared to $(253) thousand in the prior year quarter, indicating improved financial performance.
Net Loss Per Common Share – Basic and Diluted: $(0.00), consistent with the prior year quarter.
Business Highlights
Revenue Segments: The company reports revenue in two main categories: vCISO Services and Cybersecurity Software and Services. vCISO Services involve outsourcing fractional Chief Information Security Officers to clients, typically on a subscription basis. Cybersecurity Software and Services include licensing revenue from software contracts and commissions from third-party service provider partnerships, as well as sales of the proprietary software, Enclave.
Product Offering: The company markets and sells Enclave, a proprietary software product designed to simplify cybersecurity tasks through microsegmentation. Enclave combines zero trust network access with certificate management and machine identity to create a unified security architecture.
Operational Strategy: The company's growth strategy focuses on increasing the adoption of Enclave, securing new vCISO Services clients, and adding new Cybersecurity Software and Services offerings.
Future Outlook: The company anticipates continued demand for cost-effective security solutions among mid-market and emerging companies. It plans to expand its catalogue of services to address the evolving cybersecurity needs of its customers.
Sales and Marketing: There has been an increase in sales and marketing expenses due to an increase in employees and compensation, reflecting the company's efforts to expand its market presence.
Research and Development: The company has maintained a focus on research and development, with expenses reflecting personnel costs aimed at enhancing its cybersecurity offerings.
Client Engagement: Most vCISO Services agreements are structured as monthly subscriptions, with some clients opting for prepaid blocks of hours or time and materials engagements. Rates for these services range from $350 to $450 per hour.
Operational Performance: The company has experienced a shift in revenue from vCISO Services to Cybersecurity Software and Services, indicating a transition in client demand and service delivery.
SEC Filing: SideChannel, Inc. [ SDCH ] - 10-Q - May. 07, 2025