Worcester cybersecurity firm issues warning over financial future

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Faced with declining revenue and rising expenses, management of Worcester-based cybersecurity firm SideChannel said it has substantial doubt about the company’s ability to meet its obligations over the next 12 months.
SideChannel released its second quarter financial results on Tuesday, showing revenue had declined in the first half of fiscal 2026 to $3.4 million, down 11.9% from the first half of 2025. Operating expenses climbed 24.9% in that same period, leading to a net loss of $840,000.
The company’s financial stress led to a going concern warning in SideChannel’s quarterly filing with the Securities and Exchange Commission. A going concern warning is required when management determines there is substantial doubt a company can meet its obligations for at least the next 12 months under accounting standards overseen by the Financial Accounting Standards Board and enforced through SEC reporting.
SideChannel did not respond to a WBJ request for comment. The company’s filing said it will need to pursue additional sources of capital and evaluate potential changes to its product offerings in order to right itself.
The company’s operating expenses increased 28.8% during the second quarter when compared to last year.

The company appointed its first chief marketing officer in October and named a former IBM director with marketing experience to its board in December. The company announced in March it was increasing its use of AI in order to attempt to increase productivity without adding more employees.
SideChannel’s virtual chief information security officer service is intended to allow access to experienced security executives for mid-market companies, with a price usually ranging from $3,000 to $12,000 per month, according to the company’s website.
Revenue from vCISO services decreased by 29.2% year‑over‑year in SideChannel’s first quarter of fiscal 2026, a drop the company attributed to the loss of clients with higher than average contract value, according to its first quarter filing.
Following its 2022 merger with Austin-based encryption company Cipherloc Corp., SideChannel saw operating losses in 2023, 2024, and 2025, according to filings. That acquisition cost SideChannel a total of $11.9 million.
SideChannel trades on the OTCQB Venture Market under the ticker symbol SDCH. Its stock price was $2 as of Tuesday, down 33.8% this year.

The company had 23 employees as of December, according to its profile on OTCmarkets.com.
Eric Casey is the managing editor at Worcester Business Journal, who primarily covers the real estate and banking & finance industries.