Sidechannel Inc

scaling efficiently through channel partners and strategic alliances, and tight alignment between sales, marketing, and product. We are intentionally balancing growth with fiscal responsibility. Every investment we make is measured against long-term shareholder value. Looking ahead, we enter fiscal 2026 with a stronger commercial and government enclave pipeline, an expanded leadership team fully aligned to growth execution, a refined go-to-market strategy centered on zero trust, micro-segmentation, and VC-led cybersecurity programs, and a growing demand for practical alternatives to legacy perimeter security. We believe SideChannel is exceptionally well-positioned to benefit from the industry-wide shift towards zero trust and operationally practical cybersecurity. Enclave is no longer an emerging product inside the company. It is a primary growth engine. In closing, I want to emphasize this. Fiscal 2025 was a year of strategic positioning. Fiscal 2026 is a year of execution and expansion. We are confident in our market opportunity, our leadership team, our technology, and our ability to deliver increasing value for our customers and our shareholders. Thank you again for your continued trust in SideChannel. We look forward to updating you as we execute on our growth strategy in the year ahead. With that, we can go to any Q&A, John, that you see online.

Absolutely. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment. And we do have a question coming from the phone lines from Luke Wheatley, private investor. Please proceed.

Hey, Brian, with those warrants set to expire in early 2026, do you all have any plans with raising capital, raising any debt after those expire?

Luke, great to hear from you again. Good to hear. Good to see that you're still following us. I appreciate that. Right now, we are just really just kind of looking at April as a milestone and adjusting really after that. Right now, I'll tell you, there have been no discussions or plans for raising any capital or taking on any debt. We're still very happy of our balance sheet structure, maintaining zero debt. And I don't think we're in a position or want to take on debt as a, as a line to get any type of funding into the company. Same thing. I don't think we're looking at an equity raise either at this moment. But I will say, you know, just depending on kind of how things go in Q2, well, Q1 that we're in right now and Q2, that's going to feed into whether or not we determine if we want to do that. But like I said, nothing would happen before April, May of next year when those warrants expire, as you stated.

Got it. And then one more question. I think looking at the history of your all's business, what we've seen since the enclave growth strategy has been put in place, we've seen the VSO revenue kind of go down as much as the enclave has gone up. In the press release today, there was no real discernment between what percentage was vCISO revenue versus enclave. Could you give us a little indication of what percentage of revenue in Q4 was vCISO versus enclave revenue?

Yeah, Ryan, can you cover down on that?

Yep, happy to do that. Luke, we don't We didn't disclose and haven't disclosed revenue by quarter and by category. And, of course, as we prepared for our annual filing that we'll make in a couple weeks here in the Form 10-K, there won't be a Q4 results in there. So I can't give you those specific numbers in this call. We won't be disclosing that information. But I think we did give some overall information I think for the year in our Form 10-K, which will come out in a couple of weeks, you'll see information about the performance of the vCISO category versus the rest of our categories, and there'll be some more commentary in that document. So if you could hold on for a couple of weeks, you'll be able to read some of that. You'll be able to read the answer to your question in the MD&A. Understood. Thank you. You're welcome.

If there are any remaining questions coming from the phone lines, please indicate so by pressing star 1 on your touchtone phone. Once again, that's star 1 if you have a question or a comment.

John, we did get one question submitted to us via email. Could I read that now, please? Absolutely. So, Brian, I think this is a question that you will address. The question is, will Enclave possibly have any application for air, water, or land drones?

Yeah, so great question. You know, something that Nick and I, our CTO, have discussed and gone after. Those drones are what you would consider operational technology or IoT, right, Internet of Things, small form factor drones. low power consumption, like low or no communications capabilities, right? So, limited, you know, comms. Enclave plays very well here for a number of reasons. You know, I'm thinking predominantly from a military or DOD, U.S. DOD standpoint, first and foremost. I'm sure there are the commercial side as well. But I think, you know, when Nick and I think about enclave applicability, it's with the U S federal government and the DOD first. Um, so yes, there, there is applicability there. Enclave can be deployed to, um, these types of devices, um, whether it has an operating system, a standard operating system like windows, Linux or Mac, um, or a firmware based, um, uh, uh, operating type system, like a PLC or something that like a drone might be running on. We have different ways to deploy Enclave for that. And yeah, there definitely is applicability. I think the DoD customers that we're already currently working with, that's not their focus right now. They're predominantly focused in large-scale networks, research and defense, weapon systems. If they want to bridge that to drones, that's great. We would we can definitely accommodate. But, you know, from a commercial standpoint, I think that's a growing area. Obviously, you know, General Brown, who is on our board, a lot of insight from the U.S. Army, as he's retired from, but also in AUSA, where we've, you know, gone to those conferences and seen, you know, these commercial drone system trying to be sold into the DOD or the defense industrial base. So the applicability is there. I think it's interesting to see the adoption by the U.S. government. I think there's a lot that we've heard and learned about where the adoption is on that by the DOD versus maybe what most people think. So we're excited if we can get into that space. We're going through federal sales partners to sell into the federal government right now. It's not something we're going with direct, which is not a bad thing. It just actually cuts down on our costs on having a sales structure, and it gives us a wider and broader sales approach by going through partners who know that space a little bit more intimately. So yeah, I think 2026 will show whether or not that area is being adopted by and large, and then where we can fit in we will definitely go after that.

Any other questions online? John, there's no questions on the webcast.

We have no questions from the phone lines as well.

Okay. Well, let me just summarize. There's a couple of questions that we've seen from the boards. Hey, everybody. Good to I read everything you said. I haven't been on in a while, but good to kind of see. I'm just going to kind of summarize, I guess, a couple of them. I think there's some themes. So one of them, I guess, kind of summarized how critical is Enclave to the future growth compared to vCISO services, kind of the differentiation between our vCISO services group and our Enclave product group. My answer is Enclave is absolutely central to our long-term strategy. Our vCISO and advisory services remain important demand drivers. and trusted entry points, but Enclave is our primary growth engine for scale, margin expansion, and enterprise penetration. Our services businesses often open the door to Enclave adoption and Enclave deployments, in turn, deepen long-term customer relationships. This integrated model is proving to be a strong competitive advantage for us. So that's just kind of one summary question. I think I've summarized another one. Excuse me. Let me go down here, see the questions that were asked. Biggest risk kind of going into FY2026. It's funny, I had either standing one-on-ones with my leadership team on a weekly basis and, you know, today talking with our COO, Matt Klein, you know, what we're seeing in the market budgets with, Across customer bases, small, midsize, and enterprise, a lot of businesses are honestly trying to figure out how to just manage in this climate. And in the United States, a lot of businesses we're seeing are trying to figure out how to manage within this administration. With one year kind of under everybody's belt, it seems like everyone's figured that out, and we are seeing a change for folks to better adopt outsourced services. It's funny, on our services side, we do better with tighter budgets and when layoffs are happening. We're called in for that because lower cost alternative to full-time hires on services. Our product, Enclave, also multifaceted, multi-module, so it can do multiple different things that multiple tools would do. We can do inside of one platform. So there's some competitive advantages to what we're doing when the markets change, and then obviously our ability to hold on to those clients through market upswings, because the value that we're bringing our diversity in our approach with services, you'll see what we're doing with insider threat, what we've done with cloud security, obviously bringing on and deploying more things with Enclave as a product being kind of multifaceted. So it's interesting that the market forces and what we're seeing taking shape, our visibility into those. But really, what's the biggest risk going into FY2026? Our biggest risk is execution velocity, ensuring that increased market interest converts into closed revenue at scale. That's precisely why we invested in leadership across marketing and enterprise sales. The demand is real, and execution is now the primary focus. So that's how we're looking to address that big risk going into 2026. Um, I think that's kind of the big ones. If I summarized a number of the questions that came from folks, um, yeah, it looks like it's kind of scrolling through real quick. High level. Um, so yeah, we're looking forward to, uh, the releasing the 10 K, um, and closing out the year. And then, um, uh, you know, obviously we're already in Q1, so, you know, we're excited to close out Q1 and, kick into Q2 and calendar year 2026 and just, you know, keep moving along. So thank you, everybody, for being on the line and following the SideChannel story overall. And, you know, like I said, like I said any other time, you know, feel free to reach out. You can hit us via our investor relations page on SideChannel. Feel free to email us questions or comments. And we look forward to speaking with you Thank you.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Okay. Thanks, John. Thank you, gentlemen. All good?

Take care.