SideChannel Revenue Drops 7% to $1.77M in Q1 FY2026 as Net Loss Doubles

SideChannel, Inc. reported revenue of $1.77 million for the three months ended December 31, 2025, a 7% decline from $1.91 million in the same quarter of fiscal 2025. The Delaware-incorporated company's net loss widened to $396,000 from $195,000 in the prior-year period. Read more earnings reports.

Operating losses deepened to $400,000 from $206,000 a year earlier as operating expenses jumped 21% to $1.31 million. The expense increase outpaced a modest 4% gain in gross profit, which rose to $909,000 from $874,000. Cost of revenue fell to $865,000 from $1.03 million, driving the gross margin improvement.

The company burned through $570,000 in cash from operations during the quarter, a sharp reversal from positive operating cash flow of $75,000 in the year-ago period. Cash and restricted cash totaled $495,000 as of December 31, 2025, down 56% from $1.12 million at the end of the prior fiscal year's first quarter.

Total assets declined to $2.98 million from $3.47 million at the end of the prior quarter. Accounts receivable increased to $686,000 from $553,000 over the same period. Goodwill remained flat at $1.36 million.

Stockholders' equity fell to $1.85 million from $2.14 million at September 30, 2025. The retained deficit grew to $21.13 million from $20.74 million. Total liabilities decreased to $1.13 million from $1.32 million, with all liabilities classified as current.

Loss per share was $0.09 on a basic and diluted basis, compared to $0.04 per share in the year-ago quarter. Weighted average shares outstanding rose to 4.45 million from 4.35 million. Research and development expenses increased to $175,000 from $153,000.