Irvine Sensors Releases FY08 Results

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

Irvine Sensors Corporation, Investor Relations, +1-714-444-8718,
investorrelations@irvine-sensors.com