General	6 Months Ended
Mar. 31, 2014
Accounting Policies [Abstract]
Note 1 - General	The information contained in the following Notes to Condensed Consolidated Financial Statements is derived from that which appears in the accompanying unaudited condensed consolidated financial statements for ISC8 Inc. (“ISC8”), and its subsidiaries (together with ISC8, the “Company”), and do not include certain financial presentations normally required under accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, the unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2013 (“Fiscal 2013”), filed with the SEC on December 24, 2013, including the risk factors contained therein, as updated in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the interim periods presented are not necessarily indicative of the results expected for the entire year. The consolidated financial information for the three month periods ended March 31, 2014 and 2013 included herein is unaudited but includes all normal recurring adjustments which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at March 31, 2014, and the results of its operations and its cash flows for the three month periods ended March 31, 2014 as compared to the same period ended March 31, 2013. The accompanying September 30, 2013 balance sheet was derived from the audited fiscal 2013 financial statements. Recent Developments New Location Established as ISC8 Malaysia. On October 28, 2013, the Company announced the opening of a new office in Kuala Lumpur, Malaysia in support of the projected growth of business within South East Asia (“ISC8 Malaysia”). ISC8 Malaysia, a wholly owned subsidiary of the Company, will serve as a regional hub in South East Asia. Creation of Series D Convertible Preferred. On October 30, 2013, the Company filed the Certificate of Designations of Rights, Preferences, Privileges and Limitations of the Series D Convertible Preferred Stock (the "Certificate of Designations") with the Delaware Secretary of State to designate 4,000 shares of the Company's preferred stock as Series D Convertible Preferred Stock ("Series D Preferred"). The Series D Preferred votes alongside shares of the Company's common stock, par value $0.01 per share (“Common Stock”), on an as converted basis, and ranks junior to the Company's Series B Convertible Cumulative Preferred Stock, but is senior to all other classes of the Company's preferred stock. Each share of Series D Preferred has a stated value of $10,000 (the "Stated Value"), and is currently convertible, at the option of the holder, into that number of shares of Common Stock equal to the Stated Value divided by the Conversion Price set forth in the Certificate of Designations (the "Conversion Shares"). Series D Preferred Financing. On October 31, 2013, the Company accepted subscription agreements from certain accredited investors (the "Investors") to purchase shares of Series D Preferred (the "Series D Offering") for $10,000 per share. As additional consideration, each Investor received one-year warrants to purchase 59,523 shares of Common Stock for $0.084 per share ("Warrant Shares") for every share of Series D Preferred purchased (the "Series D Warrants"). Through March 31, 2014, investors have purchased 477 shares of Series D Preferred, resulting in gross proceeds of approximately $4.77 million. Cancellation of Debt. In connection with the offer and sale of the Series D Preferred, certain holders of the Company's outstanding senior convertible debt agreed to exchange such debt, in the aggregate total of approximately $23.1 million in principal and accrued interest, for shares of Series D Preferred and Series D Warrants on substantially similar terms to the Series D Offering (the “Senior Note Conversion”). The Senior Note Conversion resulted in the issuance of approximately 2,300 shares of Series D Preferred and Series D Warrants to purchase approximately 137.2 million shares of Common Stock. Furthermore, certain holders of the Company’s junior subordinated convertible debt agreed to exchange an aggregate total of approximately $14.5 million in principal and accrued interest for approximately 101.4 million shares of Restricted Stock Units (“RSU”) that vests in the event the trading price of the Company’s Common Stock reaches $0.143 (the “Junior Note Conversion”). Amendments to Articles of Incorporation or Bylaws. On October 31, 2013, the Company amended Article III, Section 2 of the Company's Bylaws to decrease the fixed number of directors from ten to seven (the "Bylaw Amendment"). On June 5, 2014, the Company further amended Article III, Section 2 of the Company’s Bylaws to decrease the fixed number of directors from seven to three, and decrease the size of the Company’s Board of Directors to no less than three, but no more than seven directors. Modification of PFG Loan Agreement. On November 1, 2013, the Company substantially modified its Loan Agreement with Partners for Growth III, L.P. (“PFG”) to provide, among other things, for a one-year extension of the maturity date under the Loan Agreement to December 31, 2014 (the “PFG Loan Modification”). In return, the Company made a $2.0 million repayment on the loan, deposited $500,000 with PFG as collateral for the loan, and, in the event the Company consummates a debt or equity financing, the Company agreed to pay to PFG 25% of the proceeds from such financing (“Financing Guarantee Fund”). PFG and the Company also modified the Guaranty Agreement executed in connection with the Loan Agreement in order to: (i) release Costa Brava Partnership III, LP (“Costa Brava”) from its guarantee of the Company's debt to PFG, (ii) reduce the maximum guarantee amount to $1.0 million, and (iii) affirm the obligations of the Griffin Fund LP, one of the Company’s related party investors (“Griffin”), under the Guaranty Agreement. On February 7, 2014, the Company and PFG made further modification to the Loan Agreement by reducing the Financing Guarantee Fund payment from 25% of 10% and required the Company to make a $70,000 monthly payment toward the principal balance of the loan effective April 1, 2014 and a back end fee of 15% on any capital raise. See Note 3 under the heading Revolving Credit Facility. Increase of Authorized Number of Common Shares. On January 16, 2014, the Company filed with the Delaware Secretary of State an amendment to its Certificate of Incorporation to the increase of the total number of authorized shares of capital stock from 801,000,000 to 2,001,000,000, of which 2,000,000,000 will be available for issuance as Common Stock (the “Amendment”). Amendment to 2011 Omnibus Incentive Plan and Option Exchange Program. On January 16, 2014, the Company implemented an amendment to its 2011 Omnibus Incentive Plan (the “2011 Plan”) to increase the number of shares of Common Stock issuable under the 2011 Plan to 446,500,000 (the “Plan Amendment”). In October 2013, in anticipation of stockholder approval of the Plan Amendment, the Company commenced an option exchange program (the “Option Exchange Program”) wherein holders of stock options previously issued under the Company’s equity compensation plans could, at the option of the holder, exchange outstanding options for new options to purchase shares of Common Stock for $0.042 per share. To date, the Company has canceled outstanding stock options to purchase 28.6 million shares of Common Stock, and issued new options under the 2011 Plan to purchase approximately 146.9 million shares of Common Stock for $0.042 per share. Issuance of Senior Subordinated Secured Convertible Bridge Notes. On February 6, 2014, the Company’s Board of Directors approved the issuance of senior subordinated secured convertible bridge notes in the aggregate principal amount of up to $3.5 million (the “2014 First Bridge Notes”), of which, $1.5 million may be issued in exchange for the cancellation of certain outstanding senior notes. The 2014 First Bridge Notes mature on July 31, 2014. As of March 31, 2014, the Company has issued 2014 First Bridge Notes in the aggregate principal amount of $0.6 million. See Note 5 for further information regarding the 2014 First Bridge Notes. On February 28, 2014, the Company’s Board of Directors approved the issuance of senior subordinated secured convertible bridge notes in the aggregate principal amount of up to $6.0 million (the “2014 Second Bridge Notes”), of which, $1.5 million may be issued in exchange for the cancellation of certain outstanding senior notes. The 2014 Second Bridge Notes mature on July 31, 2014. As of June 5, 2014, the Company has issued 2014 Second Bridge Notes in the aggregate principal amount of $3.0 million. See Note 5 and Note 11 for further information regarding the 2014 Second Bridge Notes. Forbearance Agreement. As of March 31, 2014, $0.9 million of the outstanding Senior Subordinated Convertible Notes (as defined below in Note 3-Senior Subordinated Secured Convertible Promissory Notes) had matured. The Company entered into a Forbearance Agreement with the respective holders of these Notes to extend the maturity date to July 31, 2014. See Note 11 for further information regarding the Forbearance Agreement, and other information regarding the Senior Subordinated Secured Convertible Notes. Summary of Significant Accounting Policies There have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, 2014. For a comprehensive description of the Company’s significant accounting policies, see Note 1 to the Company’s Consolidated Financial Statements included in the Company’s 2013 Annual Report on Form 10-K, filed with the SEC on December 24, 2013. Consolidation. The consolidated financial statements include the accounts of ISC8 and its subsidiaries, Novalog, Inc. (“Novalog”), MicroSensors, Inc. (“MSI”), RedHawk Vision Systems, Inc. (“RedHawk”) iNetWorks Corporation (“iNetWorks”), ISC8 Europe Limited (“ISC8 Europe”) and ISC8 Malaysia SDN.BMD (“ISC8 Malaysia”). Of the Company’s subsidiaries, only ISC8 Europe and ISC8 Malaysia presently have operating activities and assets, separate employees and facilities. All significant intercompany transactions and balances have been eliminated in the consolidation. None of the Company’s subsidiaries accounted for more than 10% of the Company’s total assets at March 31, 2014 or March 31, 2013. Reclassifications. Certain amounts in the consolidated financial statements have been reclassified in order to conform to the current year presentation. Reportable Segments. The Company is presently managing its continuing operations as a single business segment. The Company is continuing to evaluate the current and potential business derived from sales of its products and, in the future, may present its consolidated statement of operations in more than one segment if the Company segregates the management of various product lines in response to business and market conditions. Use of Estimates. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management prepares estimates for a number of factors, including derivative liability, stock-based compensation, warrants valuation, revenue recognition, valuation of goodwill and other intangible assets, allowance for doubtful accounts and notes receivable, and deferred tax assets and liabilities. The Company believes its estimates of derivative liabilities, and warrants valuation to be the most sensitive estimates impacting financial position and results of operations in the near term. Subsequent Events. Management has evaluated events subsequent to March 31, 2014 through the date of this Quarterly Report on Form 10-Q for transactions and other events that may require adjustment of and/or disclosure in such financial statements. See Note 11 for a discussion of events occurring subsequent to March 31, 2014.

General

6 Months Ended

Mar. 31, 2014

The information contained in the following Notes to Condensed Consolidated Financial Statements is derived from that which appears in the accompanying unaudited condensed consolidated financial statements for ISC8 Inc. (“ISC8”), and its subsidiaries (together with ISC8, the “Company”), and do not include certain financial presentations normally required under accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, the unaudited condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2013 (“Fiscal 2013”), filed with the SEC on December 24, 2013, including the risk factors contained therein, as updated in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the interim periods presented are not necessarily indicative of the results expected for the entire year.

The consolidated financial information for the three month periods ended March 31, 2014 and 2013 included herein is unaudited but includes all normal recurring adjustments which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at March 31, 2014, and the results of its operations and its cash flows for the three month periods ended March 31, 2014 as compared to the same period ended March 31, 2013.

The accompanying September 30, 2013 balance sheet was derived from the audited fiscal 2013 financial statements.

Recent Developments

New Location Established as ISC8 Malaysia. On October 28, 2013, the Company announced the opening of a new office in Kuala Lumpur, Malaysia in support of the projected growth of business within South East Asia (“ISC8 Malaysia”). ISC8 Malaysia, a wholly owned subsidiary of the Company, will serve as a regional hub in South East Asia.

Creation of Series D Convertible Preferred. On October 30, 2013, the Company filed the Certificate of Designations of Rights, Preferences, Privileges and Limitations of the Series D Convertible Preferred Stock (the "Certificate of Designations") with the Delaware Secretary of State to designate 4,000 shares of the Company's preferred stock as Series D Convertible Preferred Stock ("Series D Preferred"). The Series D Preferred votes alongside shares of the Company's common stock, par value $0.01 per share (“Common Stock”), on an as converted basis, and ranks junior to the Company's Series B Convertible Cumulative Preferred Stock, but is senior to all other classes of the Company's preferred stock. Each share of Series D Preferred has a stated value of $10,000 (the "Stated Value"), and is currently convertible, at the option of the holder, into that number of shares of Common Stock equal to the Stated Value divided by the Conversion Price set forth in the Certificate of Designations (the "Conversion Shares").

Series D Preferred Financing. On October 31, 2013, the Company accepted subscription agreements from certain accredited investors (the "Investors") to purchase shares of Series D Preferred (the "Series D Offering") for $10,000 per share. As additional consideration, each Investor received one-year warrants to purchase 59,523 shares of Common Stock for $0.084 per share ("Warrant Shares") for every share of Series D Preferred purchased (the "Series D Warrants"). Through March 31, 2014, investors have purchased 477 shares of Series D Preferred, resulting in gross proceeds of approximately $4.77 million.

Cancellation of Debt. In connection with the offer and sale of the Series D Preferred, certain holders of the Company's outstanding senior convertible debt agreed to exchange such debt, in the aggregate total of approximately $23.1 million in principal and accrued interest, for shares of Series D Preferred and Series D Warrants on substantially similar terms to the Series D Offering (the “Senior Note Conversion”). The Senior Note Conversion resulted in the issuance of approximately 2,300 shares of Series D Preferred and Series D Warrants to purchase approximately 137.2 million shares of Common Stock. Furthermore, certain holders of the Company’s junior subordinated convertible debt agreed to exchange an aggregate total of approximately $14.5 million in principal and accrued interest for approximately 101.4 million shares of Restricted Stock Units (“RSU”) that vests in the event the trading price of the Company’s Common Stock reaches $0.143 (the “Junior Note Conversion”).

Amendments to Articles of Incorporation or Bylaws. On October 31, 2013, the Company amended Article III, Section 2 of the Company's Bylaws to decrease the fixed number of directors from ten to seven (the "Bylaw Amendment"). On June 5, 2014, the Company further amended Article III, Section 2 of the Company’s Bylaws to decrease the fixed number of directors from seven to three, and decrease the size of the Company’s Board of Directors to no less than three, but no more than seven directors.

Modification of PFG Loan Agreement. On November 1, 2013, the Company substantially modified its Loan Agreement with Partners for Growth III, L.P. (“PFG”) to provide, among other things, for a one-year extension of the maturity date under the Loan Agreement to December 31, 2014 (the “PFG Loan Modification”). In return, the Company made a $2.0 million repayment on the loan, deposited $500,000 with PFG as collateral for the loan, and, in the event the Company consummates a debt or equity financing, the Company agreed to pay to PFG 25% of the proceeds from such financing (“Financing Guarantee Fund”). PFG and the Company also modified the Guaranty Agreement executed in connection with the Loan Agreement in order to: (i) release Costa Brava Partnership III, LP (“Costa Brava”) from its guarantee of the Company's debt to PFG, (ii) reduce the maximum guarantee amount to $1.0 million, and (iii) affirm the obligations of the Griffin Fund LP, one of the Company’s related party investors (“Griffin”), under the Guaranty Agreement.

On February 7, 2014, the Company and PFG made further modification to the Loan Agreement by reducing the Financing Guarantee Fund payment from 25% of 10% and required the Company to make a $70,000 monthly payment toward the principal balance of the loan effective April 1, 2014 and a back end fee of 15% on any capital raise. See Note 3 under the heading Revolving Credit Facility.

Increase of Authorized Number of Common Shares. On January 16, 2014, the Company filed with the Delaware Secretary of State an amendment to its Certificate of Incorporation to the increase of the total number of authorized shares of capital stock from 801,000,000 to 2,001,000,000, of which 2,000,000,000 will be available for issuance as Common Stock (the “Amendment”).

Amendment to 2011 Omnibus Incentive Plan and Option Exchange Program. On January 16, 2014, the Company implemented an amendment to its 2011 Omnibus Incentive Plan (the “2011 Plan”) to increase the number of shares of Common Stock issuable under the 2011 Plan to 446,500,000 (the “Plan Amendment”). In October 2013, in anticipation of stockholder approval of the Plan Amendment, the Company commenced an option exchange program (the “Option Exchange Program”) wherein holders of stock options previously issued under the Company’s equity compensation plans could, at the option of the holder, exchange outstanding options for new options to purchase shares of Common Stock for $0.042 per share. To date, the Company has canceled outstanding stock options to purchase 28.6 million shares of Common Stock, and issued new options under the 2011 Plan to purchase approximately 146.9 million shares of Common Stock for $0.042 per share.

Issuance of Senior Subordinated Secured Convertible Bridge Notes. On February 6, 2014, the Company’s Board of Directors approved the issuance of senior subordinated secured convertible bridge notes in the aggregate principal amount of up to $3.5 million (the “2014 First Bridge Notes”), of which, $1.5 million may be issued in exchange for the cancellation of certain outstanding senior notes. The 2014 First Bridge Notes mature on July 31, 2014. As of March 31, 2014, the Company has issued 2014 First Bridge Notes in the aggregate principal amount of $0.6 million. See Note 5 for further information regarding the 2014 First Bridge Notes.

On February 28, 2014, the Company’s Board of Directors approved the issuance of senior subordinated secured convertible bridge notes in the aggregate principal amount of up to $6.0 million (the “2014 Second Bridge Notes”), of which, $1.5 million may be issued in exchange for the cancellation of certain outstanding senior notes. The 2014 Second Bridge Notes mature on July 31, 2014. As of June 5, 2014, the Company has issued 2014 Second Bridge Notes in the aggregate principal amount of $3.0 million. See Note 5 and Note 11 for further information regarding the 2014 Second Bridge Notes.

Forbearance Agreement. As of March 31, 2014, $0.9 million of the outstanding Senior Subordinated Convertible Notes (as defined below in Note 3-Senior Subordinated Secured Convertible Promissory Notes) had matured. The Company entered into a Forbearance Agreement with the respective holders of these Notes to extend the maturity date to July 31, 2014. See Note 11 for further information regarding the Forbearance Agreement, and other information regarding the Senior Subordinated Secured Convertible Notes.

Summary of Significant Accounting Policies

There have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, 2014. For a comprehensive description of the Company’s significant accounting policies, see Note 1 to the Company’s Consolidated Financial Statements included in the Company’s 2013 Annual Report on Form 10-K, filed with the SEC on December 24, 2013.

Consolidation. The consolidated financial statements include the accounts of ISC8 and its subsidiaries, Novalog, Inc. (“Novalog”), MicroSensors, Inc. (“MSI”), RedHawk Vision Systems, Inc. (“RedHawk”) iNetWorks Corporation (“iNetWorks”), ISC8 Europe Limited (“ISC8 Europe”) and ISC8 Malaysia SDN.BMD (“ISC8 Malaysia”). Of the Company’s subsidiaries, only ISC8 Europe and ISC8 Malaysia presently have operating activities and assets, separate employees and facilities. All significant intercompany transactions and balances have been eliminated in the consolidation. None of the Company’s subsidiaries accounted for more than 10% of the Company’s total assets at March 31, 2014 or March 31, 2013.

Reclassifications. Certain amounts in the consolidated financial statements have been reclassified in order to conform to the current year presentation.

Reportable Segments. The Company is presently managing its continuing operations as a single business segment. The Company is continuing to evaluate the current and potential business derived from sales of its products and, in the future, may present its consolidated statement of operations in more than one segment if the Company segregates the management of various product lines in response to business and market conditions.

Use of Estimates. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management prepares estimates for a number of factors, including derivative liability, stock-based compensation, warrants valuation, revenue recognition, valuation of goodwill and other intangible assets, allowance for doubtful accounts and notes receivable, and deferred tax assets and liabilities. The Company believes its estimates of derivative liabilities, and warrants valuation to be the most sensitive estimates impacting financial position and results of operations in the near term.

Subsequent Events. Management has evaluated events subsequent to March 31, 2014 through the date of this Quarterly Report on Form 10-Q for transactions and other events that may require adjustment of and/or disclosure in such financial statements. See Note 11 for a discussion of events occurring subsequent to March 31, 2014.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

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