vCISO
5 days ago
Trickle Research
3QF24 Earnings Update - SideChannel, Inc. (SDCH)
Dear Trickle Subscriber/Reader:
We have published an earnings update for SideChannel, Inc. The update is available through your login on our site: www.trickleresearch.com . If you have a problem with your login, please let me know and I will help you.
Here is an excerpt from the update:
In our view, management has done yeoman’s work driving down the expenses of the business to preserve cash and avoid added dilution. ... the fact that they have managed to continue to grow revenues and commercialize Enclave in the face of driving down expenses is impressive. ...we remain constructive on what we view as management’s considerable experience and knowledge of the cybersecurity space, as well as its ability to manage the business. As such we reiterate our allocation of 5 as well as our 12-24 month price target of $.23 as we think the next 12 months should provide improving positive visibility.
Thank you for your continued support of my platform. -dl
vCISO
2 weeks ago
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Investor Relations Newsletter
for Current and Prospective Shareholders of SDCH
Continued Growth
SideChannel Inc. is showing signs of positive momentum and growth as highlighted during their Q3 2024 earnings call.
Key points from the call include:
1. Client Growth and Market Position: SideChannel has seen growth in both their existing and new client base, with clients continuing to view them as trusted advisors. The company is well-positioned in the market, particularly with their vCISO services, which are becoming increasingly popular among small and cloud-enabled companies.
2. Financial Performance: SideChannel has achieved positive cash flow for two consecutive quarters, a significant milestone for the company. The CFO, Ryan Polk, noted the success in reducing the gap between net loss and non-cash expenses, which was only $58,000 for the first nine months of FY 2024, down from $1.4 million a year ago.
3. Deferred Revenue: The company has experienced growth in deferred revenue, largely driven by an increase in selling third-party software and services with annual licenses. However, this has introduced some seasonality to their cash flow, which may result in lower cash balances in the next two quarters.
4. Strategic Focus on Enclave: The company is optimistic about the potential of its proprietary software, Enclave, which is positioned as a key component of zero-trust strategies. There is growing interest and proof-of-concept engagements with clients, indicating a promising future for this product.
5. Operational Efficiency: SideChannel has made significant operational improvements, cutting costs while still managing to grow revenue. These efforts have transformed the company into a positive cash flow entity, which is a major turnaround from its pre-July 2022 state.
6. Long-term Progress: The company has successfully navigated a challenging post-merger environment, evolving from a situation where it might have only survived a few more months without raising capital, to now being a sustainable and growing business.
Overall, SideChannel is progressing well, with strong client retention, strategic product positioning, and improved financial health, setting the stage for future growth.
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SideChannel, Inc., 146 Main St, Suite 406, Worcester, MA 01608, US, (OTCQB: SDCH)
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BrianHaugli
3 weeks ago
Thank you for the support and the questions. Let me address each as I can. No worries on missing the call, it's available online at the link in the press release.
Does SideChannel have any additional software products under development to release in the near future that may be accretive to revenue growth besides Enclave and third party reselling?
We are continuing to build on the Enclave Platform. Today we have the following modules and capabilities available:
1. Asset Intelligence - Maintaining an up-to-date asset inventory in network security
Benefits:
Ensures visibility of all network assets.
Helps in compliance with security standards and regulations.
Facilitates risk management by identifying unauthorized or unmanaged assets.
2. Vulnerability Discovery - Identifying and assessing vulnerabilities within the network
Benefits:
- Proactive identification of security weaknesses.
- Enables informed decision-making for security investments and actions.
- Reduces the risk of cyber attacks exploiting known vulnerabilities.
3. Microsegmentation - Enhances network security through micro-segmentation
Benefits:
- Reduces the attack surface by limiting lateral movement within the network.
- Provides granular control over network traffic and user access.
- Enhances overall network security posture through segmentation.
4. Secure Web Gateway - A critical defense mechanism in network security
Benefits:
- Shields against diverse web-based threats including malware, phishing, and other cyber attacks.
- Enforces organizational internet usage policies, ensuring regulatory and internal compliance.
- Offers enhanced visibility and control over user web activity, bolstering overall network security.
We are now building a new capability that is emerging as a need in the market. That's "machine identity management". We released a blog post on that which covers the topic in more depth. BLOG LINK: https://sidechannel.com/blog/the-importance-of-machine-identity-management/
Do you anticipate that Enclave is large enough and expanding in capabilities that along with the excellent vCISO professional services give the company opportunity for rapid revenue growth and potential uplisting in the next 2 years without significant acquisition and/or dilution?
Yes, I believe we do and there is a large enough market for what Enclave addresses. The POCs and clients we're winning today are a testament to that. These will show up in our filings as we release them. We are taking a tempered approach to uplisting. We believe that timing is everything and not to uplist for the sake of uplisting.
Looking at other microcap or OTC cyber/IT companies... we have a great position and a legit business, with a strengthening balance sheet, zero debt, revenue generating with profitable operations, our own IP, and recognizable brand. I don't see that in $CISO, $HUBC, $TGCB, $ATDS, $IMCI, $INTZ, or $YCRM.
Do potential partners look at the fact that the company is an OTC penny stock as a negative to doing business--ie, possible fear they are are outsourcing an important service to a company that might go out of business?
No one sees our OTC listing as an issue. All value our brand and quality. Our references are stellar and we gain many new clients from existing clients referrals. As our sales team goes out, there isn't pushback that we're public. In fact, all see it as a positive since we show our solvency and commitment to deliver over time. We're not some fly-by Series A startup that could disappear when we don't raise the next round.
Thanks for the questions and looking forward to another great quarter!
Brian
BrianHaugli
3 weeks ago
Yes! SideChannel will host a conference call on August 7, 2024, at 4:30 P.M. Eastern Time to discuss its third quarter results and provide an update on the Company's initiatives.
THIRD QUARTER CALL INFORMATION
Date: Wednesday, August 7, 2024, at 4:30 P.M. Eastern Standard Time.
Dial In: Toll Free: 888-506-0062
International: 973-528-0011
Participant Access Code: 756675
A webcast of the call will also be available: https://www.webcaster4.com/Webcast/Page/2071/49679
Participants may register in advance for the call using the webcast link.
The conference call will include management remarks and a live question and answer session. The conference call host will provide participants with instructions for joining the queue to ask questions at the conclusion of management remarks. Questions may also be submitted prior to the meeting using ir@sidechannel.com.
vCISO
1 month ago
OTC DISCLOSURE & NEWS SERVICE
SideChannel Strengthens Leadership Team with Key Promotions and New Hires
Press Release | 07/25/2024
WORCESTER, MA / ACCESSWIRE / July 25, 2024 / SideChannel, Inc. (OTCQB:SDCH) ("SideChannel"), a leading provider of cybersecurity services and technology to emerging and middle market companies, today announced the promotion of Matt Klein to Chief Operating Officer (COO) and the addition of David Barton as the new Vice President of Product. These strategic moves are aimed at bolstering the company's growth and success by further strengthening its leadership team.
Matt Klein Promoted to COO
In his new role as COO, Matt Klein will be responsible for growing SideChannel's delivery and services team, ensuring the company continues to meet the increasing demand for its comprehensive cybersecurity solutions. Reporting directly to SideChannel's CEO Brian Haugli, Matt's leadership will be crucial in driving operational excellence and enhancing client satisfaction.
David Barton Joins as VP of Product
SideChannel is also pleased to welcome David Barton as the new Vice President of Product, also reporting to Haugli. David will focus on driving sales of SideChannel's Enclave solution, a zero-trust network microsegmentation software product. His expertise in product management and sales will be pivotal in expanding the market presence of Enclave and advancing SideChannel's position as a leader in the cybersecurity industry.
Haugli expressed his enthusiasm for the new appointments, stating, "We are thrilled to promote Matt Klein to COO and welcome David Barton to our team. Matt has been an invaluable asset to SideChannel, and his promotion is a testament to his dedication and exceptional leadership. We are equally excited to have David onboard. His extensive experience and vision for product growth will be instrumental as we continue to innovate and deliver top-tier cybersecurity solutions to our clients."
About SideChannel
SideChannel helps emerging and mid-market companies protect their assets. Founded in 2019, the Company delivers comprehensive cybersecurity plans through a series of actions branded SideChannel Complete.
SideChannel deploys a combination of skilled and experienced talent, and technological tools to offer layered defense strategies supported by battle-tested processes. SideChannel also offers Enclave; a network infrastructure platform that eases the journey from zero to zero-trust. Learn more at sidechannel.com.
Investors and shareholders are encouraged to receive to press releases and industry updates by subscribing to the investor email newsletter and following SideChannel on X and LinkedIn.
You may contact us at:
SideChannel
146 Main Street, Suite 405
Worcester, MA 01608
22rover
1 month ago
That’s an impressive ratio. You oversee a streamlined and efficient company, your costs are under control, and SideChannel is more productive than many / most of its competitors. I would say that a half million dollars per employee is about double the high-end of the range. Incidentally, Apple employees generate $2.4 million in revenue. Of course they’re the best of the best. I’ll take ~ $500K per employee, believe me.
I recently noticed SDCH has a partner program, where vCiSOs can partner with you, using the sidechannel platform. Is this a new rollout or is this something that’s been available for a while? I guess I always assumed your vCISOs were sidechannel employees, and not independent contractor/partners. Anyhow, whether it’s a new initiative or something that’s established, partnering provides a great opportunity to develop scale. If each vCiso generates close to a half million dollars, it doesn’t take much to get up to $20 million in revenue. How is partnering going? Anything new? Have you bolstered your sales team?
22rover
2 months ago
The James Hansen tenure is officially over. Talk about a quick exit!
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 18, 2024, James Hansen, a member of the Board of Directors (the “Board”) of SideChannel, Inc. (the “Company”) resigned from his position on the Board. The resignation was not a result of any disagreement on any matter relating to the Company’s operations, policies, or practices. Mr. Hansen’s resignation allows him to pursue and focus on expanding responsibilities at other companies.
Item 9.01 Financial Statements and Exhibits
vCISO
3 months ago
Note from Brian Haugli
CEO, SideChannel
SideChannel is thrilled to welcome David Menichello to the sales team as our VP of Partnerships. In this role, David will focus on expanding our growing channel and partner network, helping to bring SideChannel's vCISO services and Enclave to a larger market.
David joins us from Netrix, where he led the Security Advisory practice, including offensive security and vCISO programs. With 25 years of experience in Information Security and extensive global expertise in fintech, software, and services, David is poised to drive significant growth and innovation for SideChannel.
Note from Ryan Polk
CFO, SideChannel
We achieved our first quarter of positive cash flow from operations during our second quarter ended March 31, 2024. Our cash balance grew from $819,000 at December 31, 2023 to $851,000 at March 31, 2024.
Consistent revenue growth has been part of this story as have the significant reduction in operating expenses. Our revenue in the first six months of fiscal year 2024 was 16% higher than the first six months of fiscal year 2023. Our operating expenses were $835,000 lower through the first half of fiscal year 2024 compared to the same period in the prior year.
When we have had consecutive quarters with positive cash flow from operations, we will consider incremental investments in selling and marketing capabilities to grow our services business along with our Enclave install base.
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Upcoming Events
3rd Quarter Close - June 30, 2024
Financial Results Call - August 7, 2024 @ 4:30 PM ET
22rover
3 months ago
Agreed. Always interesting to read about developments.
After looking through the most recent Q and listening to the call, it dawned on me that SideCh is likely only a handful of new service side clients or a few software contracts away from reaching breakeven.
If I understand correctly, each service side client (vCiso) is good for ~ $200K (up to $300k) in revs (based on avg contract size).
I think the company lost $253K in the quarter. If that plays out over the next few quarters, they'll look to start putting cash in the bank. Add a govt software deal, which promises to be bigger than a service contract, and we’ll be in the black before long.
Brian/Ryan also expect gross margins to improve in the next couple of quarters. I think they need roughly $1.2M additional yearly revs to breakeven. IMO, that's both a modest increase in revenues, approximately 15% going forward, which is in line with the recent trend.
I'm positively thrilled with direction.
22rover
4 months ago
NT2 — that’s an interesting tidbit re the firm contacting you about potentially unloading your sidechannel stock. Maybe you could check your phone log and cross reference the number. We would be interested in which boutique outfit was making inquiries.
As we’ve discussed, there’s very little stock available below .18c imo.
Let’s say Sidechannel does $9 in yearly revs, remains debt free, becomes cash flow positive, expands margins, etc., then the stock will / should trade 3-5x revenues, putting it at .17-21 cents.
As an aside, can anyone share the NOLs situation with SDCH? It must be substantial (good thing).
22rover
4 months ago
The only call came from Richard Reiter, a shareholder who bought in during the second Paulson raise. According to an S-1 from April ‘21, Reiter owns about 350,000 shares, or about $20,000 worth of stock. Of course he may have bought (or sold) shares since 4/21.
Decided to go down the rabbit hole…
Other notables who took positions in the $10M April 2021 Paulson underwriting: Ken May 5.5M shares. While it’s a common name, how many *Ken Mays are there, taking down a cool $1M in a highly spec offering? His $1M investment is currently worth ~$300k
(*can’t absolutely confirm 100%, but a guy like May has many different accounts / brokers, so it wouldn’t be uncommon to use a boutique such as Paulson, who, like May, have a Memphis footprint. By the way, Ken, you might want to DCA here, provided you can locate 5.5M shares at these dirt cheap levels—it *may* take a while. Deep pockets. Might want to touch base with May, or overnight him a proposal.)
Cleto Escobedo III took down 300,000 shares in the 4/21 offering. For the uninitiated, that’s Cleto of Cleto & the Cleotones, Jimmy Kimmel’s band. Hopefully the famous saxophonist won’t be singing the blues for long.
Other well-heeled buyers include
Clayton A Struve
Oil Man, Lucius E Burch III / iv
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Stock_Barber
1 month ago
