To OTC Journal Members:
 

Special Announcement

Our previously announced new profile, planned for release this weekend, could be delayed for one week. There are two reasons: When we announced the timing of the release, we did not realize it was a holiday weekend with the market closed on Monday. In addition, the stock we plan to feature is trading at an all time high. In this market, there is no reason to buy any stock at an all time high, so we have decided to wait a week to launch the feature in the hopes the stock will pull back. More in the weekend edition.
 

Irvine Sensors (NASDAQ: IRSN)- Stock Begins Rebound Phase on Earnings Release

Oversold Irvine Sensors began a rebound phase yesterday as December quarterly financial results were released, and investors realized the stock was trading at bargain basement levels. After reviewing the results, buyers jumped in, driving the stock up 15% during Tuesday's trading session.

The simple support/resistance lines in the chart depicted in red suggest the stock is entitled to bounce back into the $1.70 range, but could trade higher if management hosts an upbeat conference call on Thursday. Other possible positives for the stock price could be new defense related contracts, new chip stacking contracts, or a resolution to the Iraqi situation.

For the December quarter, Irvine Sensors announced revenues of $5.2 million, a 108% increase over the $2.5 million in revenues booked in the same quarter the previous year. Net loss for the 2003 first fiscal quarter was $693,700, a reduction of approximately $1.5 million or 69% from the $2.2 million loss in the December quarter one year ago.

More importantly, actual cash losses from operations were trimmed to a mere $177,500 for the quarter (about $.023 per share), suggesting that a slight increase in future revenues could take the company to cash flow positive.

While revenues continue at 20 year record high levels, the stock is trading at the lowest levels in 10 years, and we believe it is still very undervalued.

The December quarter is seasonally the weakest for the Irvine Sensors. The company booked $6.6 million in revenues in the September quarter, also an all time company record.

Based on results through the six month period, one can easily assume the company will achieve somewhere in the $23 to $26 million range in annual revenues. In addition, the company has nearly achieved break even, so shareholders can reasonably expect minimal losses.

We believe at its current rate, the stock is entitled to trade at a conservative one time sales, equating to a market capitalization of about $24 million. Properly reflected in the stock, this would put the shares at $3.20, 213% above yesterday's closing price.
 

Conference Call Thursday at 4:15 EST, 1:15 Pacific

For the first time in several years, Irvine Sensors has elected to host a conference call just after the market closes tomorrow. This is a milestone, as it demonstrates the company is starting the process of opening the lines of communication with shareholders, money managers, and the rest of the investment community. After a couple of very tough years, investors can assume management is confident about the future.

We strongly recommend you take the time to listen to the conference call. It will be web cast over the internet, and a replay will be available after the call is complete. Simply click here to visit the web page from which you can hear the call. Alternatively, visit the company's home page at www.irvine-sensors.com and click on the link available there.

We continue to believe this stock represents an exciting opportunity for the speculative end of your portfolio. The company is experiencing the best revenue stream in its 20 year history as a public company. More importantly, their proprietary and patented chip stacking technology is now powering high tech military and home land security related applications. 

Since last May, Irvine Sensors has been the "prime contractor" for the Defense Advanced Research Projects Agency (DARPA) for the Department of Defense. Northrup Gurmman, Sarnoff Corp, and Arete Associates are sub contractors.

Irvine Sensors disclosed the development contract would eventually equate to $9.6 million in revenues, and field testing was scheduled to be completed by May of 2003.

If this development contract converts to a long term order for field deployment, watch for Irvine Sensors stock to blow off the charts. In either case, it is definitely worth an investment of your time to listen to a conference call. It they hit with the Department of Defense, investors could make susbstanatial returns coming off an anemic $11.25 million market capitalization.

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MarketByte LLC has been paid a fee of $25,000 by Irvine Sensors for coverage through December 31, 2003. As part of the agreement, one of the prinicipals of MarketByte LLC has been pledged 75,000 options, with an exercise price equal to the closing price of Irvine Sensor's stock on March 4, 2003, contingent upon stockholder approval of the option plan to be voted on at the annual meeting of March 4, 2003. 

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