SideChannel (SDCH) Q2 FY 2026 revenue declines as losses deepen and cash drops
Rhea-AI Filing Summary
SideChannel, Inc. reported weaker results for its FY 2026 second quarter ended March 31, 2026. Revenue was $1.576 million, down from $1.894 million in the prior-year quarter, while gross margin improved to 53.5% from 49.7%. Operating expenses rose to $1.291 million from $1.002 million, driving an operating loss of $448 thousand and a net loss of $444 thousand, compared with a net loss of $54 thousand a year earlier. For the first six months, revenue was $3.350 million versus $3.802 million and net loss widened to $840 thousand from $249 thousand. Cash and cash equivalents fell to $311 thousand as of March 31, 2026, from $1.065 million at September 30, 2025. Management highlighted higher marketing and partnership spending, improving trailing twelve-month revenue retention to 66.8% and supporting margin gains, and plans to grow recurring revenue from its Enclave cybersecurity platform.
Positive
- None.
Negative
- Revenue and losses worsened: Q2 FY 2026 revenue fell to $1.576 million from $1.894 million, and net loss widened sharply to $444 thousand from $54 thousand, with similar deterioration year to date.
- Cash position weakened: Cash, cash equivalents, and short-term investments declined by $854 thousand from September 30, 2025, to $311 thousand at March 31, 2026, while stockholders’ equity fell to $1.414 million.
Insights
SideChannel shows revenue decline, margin gains, and tighter cash.
SideChannel delivered Q2 FY 2026 revenue of $1.576 million, down 16.8% from the prior-year quarter, while gross margin improved to 53.5% from 49.7%. Operating expenses rose nearly 28.8%, producing a larger net loss of $444 thousand.
For the six months ended March 31, 2026, revenue declined 11.9% to $3.350 million and net loss expanded to $840 thousand. Cash, cash equivalents, and short-term investments dropped from $1.165 million to $311 thousand, while total assets fell to $2.620 million.
Management emphasized investments in selling and marketing and its Enclave platform, noting trailing twelve-month revenue retention improved to 66.8% from 63.6%. Subsequent filings for periods after March 31, 2026 will clarify whether higher margin and retention offset revenue pressure and rising expenses.
8-K Event Classification
Key Figures
Key Terms
gross margin financial
trailing twelve-month revenue retention financial
reverse stock split financial
operating loss financial
microsegmentation technical
zero trust technical
Earnings Snapshot
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02. Results of Operations and Financial Condition
On May 12, 2026, SideChannel, Inc. (the “Company”) issued a press release announcing its financial results for the three and six months ended March 31, 2026. A copy of the press release is furnished with this Current Report on Form 8-K as Exhibit 99.1.
The information included in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The information contained in any website is not a part of this Current Report on Form 8-K. The information set forth under this Item 7.01 shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 9.01 Financial Statements and Exhibits
(a) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press Release issued by the registrant on May 12, 2026. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SideChannel, Inc. | ||
| Date: May 12, 2026 | By: | /s/ Brian Haugli |
| Name: | Brian Haugli | |
| Title: | Chief Executive Officer | |
Exhibit 99.1
SideChannel Reports FY 2026 Second Quarter Results
Financial results conference call on Tuesday, May 12 @ 4:30 P.M. ET
WORCESTER, MA / ACCESSWIRE / MAY 12, 2026 / SideChannel, Inc. (OTCQB:SDCH) (“SideChannel” or the “Company”), a leading provider of cybersecurity services and technology to emerging to enterprise companies, today announced its financial results for the second quarter of the fiscal year ending September 30, 2026 (“FY 2026”).
FY 2026 Second Quarter Highlights
| ● | Revenue of $1.6 million, representing $318 thousand, or 16.8%, less than fiscal year ended September 30, 2025 (“FY 2025”) second quarter revenue of $1.9 million. | |
| ● | Gross margin of 53.5%, 380 basis points higher than 49.7% gross margin for FY 2025. | |
| ● | Operating expenses increased $289 thousand, or 28.8%, compared to FY 2025. | |
| ● | Net loss of $444 thousand, or $0.10 per share, versus net loss of $54 thousand, or $0.01 per share, in FY 2025. | |
| ● | Trailing twelve-month revenue retention of 66.8% as of March 31, 2026, compared to 63.6% as of September 30, 2025. | |
| ● | Cash, cash equivalents, and short-term investments decreased by $854 thousand from September 30, 2025, to an ending balance of $311 thousand at March 31, 2026. |
Summary of FY 2026 Year to Date Results (Six Months Ended March 31, 2026)
| ● | Revenue of $3.4 million; $452 thousand or 11.9% less than FY 2025. | |
| ● | Gross margin of 52.3%; 460 basis points higher than 47.7% gross margin for FY 2025. | |
| ● | Operating expenses increased $518 thousand, or 24.9%, compared to FY 2025. | |
| ● | Net loss of $840 thousand or $0.19 per share versus a net loss of $249 thousand or $0.06 per share in FY 2025. |
SideChannel will host a conference call on May 12, 2026, at 4:30 P.M. Eastern Time to discuss its FY 2026 second quarter results and provide an update on the Company’s initiatives.
Management Comments
Commenting on the results for the quarter ended March 31, 2026, Brian Haugli, SideChannel’s President, Chief Executive Officer and Chairman of the Board, said, “Our second quarter operating expense increase reflects targeted investment in selling and marketing. These are the inputs required to scale a platform business. We remain focused on managing operating cash carefully as we scale our Enclave platform alongside our fractional vCISO and security services practice.”
Mr. Haugli continued, “The marketing and partnership investments we have made are translating into measurable progress on retention and margin. Trailing twelve-month revenue retention improved to 66.8% from 63.6% at fiscal year-end, and gross margin expanded 380 basis points to 53.5%. Our priority through the balance of fiscal 2026 is to convert Enclave pipeline into recurring revenue while maintaining the operating discipline that supported this quarter’s margin expansion.”
CALL INFORMATION
| Date: | Tuesday May 12, 2026, at 4:30 P.M. Eastern Time |
| Dial In: | Toll Free: 888-506-0062 |
| International: 973-528-0011 | |
| Participant Access Code: 709348 |
A webcast of the call will also be available: https://www.webcaster5.com/Webcast/Page/2071/53379
Participants may register in advance for the call using the webcast link.
The call will include management remarks and a live question and answer session. Questions may be submitted prior to the meeting using ir@sidechannel.com.
The Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, is expected to be filed today with the Securities and Exchange Commission and will be available at https://investors.sidechannel.com/sec-filings.
Financial tables follow.
SIDECHANNEL, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | $ | 1,576 | $ | 1,894 | $ | 3,350 | $ | 3,802 | ||||||||
| Cost of revenues | 733 | 953 | 1,598 | 1,987 | ||||||||||||
| Gross profit | 843 | 941 | 1,752 | 1,815 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 724 | 655 | 1,400 | 1,315 | ||||||||||||
| Selling and marketing | 388 | 227 | 846 | 494 | ||||||||||||
| Research and development | 179 | 120 | 354 | 273 | ||||||||||||
| Total operating expenses | 1,291 | 1,002 | 2,600 | 2,082 | ||||||||||||
| Operating loss | (448 | ) | (61 | ) | (848 | ) | (267 | ) | ||||||||
| Other income, net | 6 | 9 | 13 | 22 | ||||||||||||
| Net loss before income tax expense | (442 | ) | (52 | ) | (835 | ) | (245 | ) | ||||||||
| Income tax expense | 2 | 2 | 5 | 4 | ||||||||||||
| Net loss | $ | (444 | ) | $ | (54 | ) | $ | (840 | ) | $ | (249 | ) | ||||
| Net loss per common share – basic and diluted | $ | (0.10 | ) | $ | (0.01 | ) | $ | (0.19 | ) | $ | (0.06 | ) | ||||
| Weighted average common shares outstanding – basic and diluted | 4,497,378 | 4,382,878 | 4,471,765 | 4,364,524 | ||||||||||||
The Company’s weighted average common shares outstanding and net loss per common share – basic and diluted for the three and six months ended March 31, 2025, have been retroactively restated for the 52:1 reverse stock split that became effective on January 22, 2026.
SIDECHANNEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
| March
31, 2026 | September
30, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 311 | $ | 1,065 | ||||
| Short-term investments | - | 100 | ||||||
| Accounts receivable, net | 548 | 553 | ||||||
| Prepaid expenses and other current assets | 396 | 374 | ||||||
| Total current assets | 1,255 | 2,092 | ||||||
| Fixed assets | 9 | 17 | ||||||
| Goodwill | 1,356 | 1,356 | ||||||
| Total assets | $ | 2,620 | $ | 3,465 | ||||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 331 | $ | 515 | ||||
| Deferred revenue | 864 | 801 | ||||||
| Income taxes payable | 11 | 6 | ||||||
| Total current liabilities | 1,206 | 1,322 | ||||||
| Total liabilities | 1,206 | 1,322 | ||||||
| Commitments and contingencies | ||||||||
| Common stock, $0.001 par value, 681,000,000 shares authorized; 4,572,757 and 4,446,713 shares issued and outstanding as of March 31, 2026, and September 30, 2025 | 5 | 4 | ||||||
| Additional paid-in capital | 22,984 | 22,874 | ||||||
| Accumulated deficit | (21,575 | ) | (20,735 | ) | ||||
| Total stockholders’ equity | 1,414 | 2,143 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,620 | $ | 3,465 | ||||
About SideChannel
Our mission is to make cybersecurity simple and accessible for mid-market and emerging companies, a market that we believe is currently underserved. We believe that our cybersecurity product and service offerings provide cybersecurity and privacy risk management solutions for our customers. We anticipate that our target customers will continue to need cost-effective security solutions. We continue to expand our catalogue of services and solutions to address the cybersecurity needs of our customers, including virtual Chief Information Security Officer (“vCISO”), cyber program strategy, zero trust, third-party risk management, compliance readiness, cloud security services, privacy, threat intelligence, managed end-point security solutions, and cybersecurity awareness.
We are marketing and selling Enclave, a proprietary software product that simplifies important cybersecurity tasks to achieve “microsegmentation.” By combining zero trust network access with certificate management and machine identity, Enclave seamlessly creates a unified security architecture that eliminates traditional network vulnerabilities. This integration enables IT teams to enforce precise access policies based on verified machine identities. Certificate-based identities allow a simplified management for any certificate-based communication, while the zero trust framework continuously validates every connection attempt. This powerful combination delivers robust security without the typical management overhead, allowing organizations to implement sophisticated microsegmentation strategies with remarkable simplicity and minimal resource requirements. Learn more at sidechannel.com.
Investors and shareholders are encouraged to receive 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
Investor Contact
Ryan Polk
ir@sidechannel.com
Forward-Looking Statements
This press release may contain forward-looking statements, including information about management’s view of SideChannel’s future expectations, plans and prospects. In particular, when used in the preceding discussion, the words “believes”, “hopes”, “expects”, “intends”, “plans”, “anticipates”, “potential”, “could”, “should” or “may”, and similar conditional expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, among others, statements relating to future sales, earnings, cash flows, results of operations, uses of cash and other measures of financial performance.
Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that may cause SideChannel’s actual results and financial condition to differ materially from those expressed or implied in the forward-looking statements. These risk factors include, but are not limited to: that we have incurred net losses since inception, our need for additional funding, the substantial doubt about our ability to continue as a going concern, and the terms of any future funding we raise; our ability to grow revenues from our Enclave product; our dependence on current management and our ability to attract and retain qualified employees; competition for our products; our ability to develop and successfully introduce new products, improve current products and innovate; unpredictability in our operating results; our ability to retain existing licensees and add new licensees; our ability to manage our growth; our ability to protect our intellectual property (IP), enforce our IP rights and defend against claims that we infringed on the IP of others; the risk associated with the concentration of our cash in financial institutions at levels above the amount protected by FDIC insurance; and other risk factors included from time to time in documents we file with the Securities and Exchange Commission, including, but not limited to, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These reports are available at www.sec.gov.
Other unknown or unpredictable factors also could have material adverse effects that could cause actual results to differ materially from those projected or represented in the forward-looking statements. Further, factors that we do not presently deem material as of the date of this release may become material in the future. The forward-looking statements included in this press release are made only as of the date hereof. SideChannel cannot guarantee future results, levels of activity, performance, or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, SideChannel undertakes no obligation to update these forward-looking statements after the date of this release, except as required by law, nor any obligation to update or correct information prepared by third parties.