CSP Inc.

Good day, everyone, and welcome to the CSPI fiscal 2020 second quarter conference call. At this time, all participants are in a listen-only mode. Later, you'll have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your touchtone phone. You may withdraw yourself from the queue by pressing the pound key. Please note this call is being recorded. I will be standing by if you should need any assistance. and it's now my pleasure to turn the conference over to Mr. Michael Poliviu with the EVC Group. Please go ahead, sir.

Thank you, Tony. Hello, everyone, and thank you for joining us to review CSPI's fiscal second quarter ended March 31, 2020 financial and operating results. With me on the call today is Victor Dellovo, CSPI's Chief Executive Officer, and Gary Levine, CSPI's Chief Financial Officer. Before we begin, I'd like to remind you that during today's call, we will take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-looking under the Act. The company cautions that numerous factors could cause actual results to differ materially from forward-looking statements made by the company. Such risks include general economic conditions, market factors, competitive factors, and pricing pressures and others described in the company's filings with its Securities and Exchange Commission. Please refer to this section on forward-looking statements included in the company's filings with the SEC. After Victor and Gary conclude their opening remarks, we'll open the call for questions. And with that, I'll turn the call over to Victor Dellovo, Chief Executive Officer. Vic, please go ahead.

Thanks, Michael, and good morning, everyone. We appreciate your interest and support of CSPI. Before we begin, I want to acknowledge the impact of the coronavirus pandemic and express our heartfelt concern to those who have been affected. The safety of our employees, customers, partners is our foremost concern. We continue to take every precaution to ensure their well-being during this difficult time. To minimize the business disruption, we quickly adjusted our operations to comply with local, federal requirements, and currently over 90% of the team is working remotely. Importantly, we have been able to build our contact with customers as well as potential customers via remote methods. Despite the operating restrictions brought on by regulations and guidelines to contain COVID-19, we made solid progress during the quarter, doubled our sales in our service segment, and increased gross margins. Total revenue for the fiscal second quarter was $16.1 million compared to $16.4 million. However, notwithstanding COVID-19, I'm quite certain the Q2 revenue would have surpassed the year-ago level if business were permitted to operate normally. Nevertheless, our focus on higher margin products allowed us to report improved gross margins despite the lower year-over-year revenue. Despite the current business disruptions, I also wanted to reaffirm the progress we are continuing to experience, a growing interest in ARIA and unified communications as a service business. as we continue to transition to cybersecurity, wireless, and managed service company. We are currently conducting an average of five new product demonstrations a week, and I can say without hesitation that the interest in our new product lines and services is at the highest level. More importantly, we are engaging with all our prospects. It validates the strengths of our offerings, and as of today, we have numerous proof of concepts to perform with customers. However, performing The proof of concepts require the ability for CSPI's team to physically be on the customer premise. Therefore, the timing is too uncertain given the local state regulations. So while we hope the near-term revenue impact is short-lived and minimal, our longer-term prospects are positive for CSPI as the remote working environment has exposed an increased threat to global digital infrastructure. which is the mode many corporations are using today to conduct their business. For the quarter, our technology solution or TS revenue was 14.6 million. We entered the quarter with plenty of momentum. In the first two months of the quarter, we're going like gangbusters. However, the impact of COVID-19 pandemic caused a slowdown in our cruise line business and some professional service engagements. Although we finished much strong due to the receipt of a few large orders, it is too early to tell if Q3 will be affected. Our managed service practice, or MSP, is performing well, and we increased our number of customers in the quarter, and Q3 is off to a good start. We have not lost a single customer, which demonstrates our high customer satisfaction, which is something we are keenly focused on at CSPI. And to ensure we maintain our high customer satisfaction, We expanded our engineering team even in this economic climate as we view it vital to the overall performance and growth. Separately, the cruise ship industry is being severely impacted by the COVID-19 pandemic. with many operators looking to resume cruising during the summer months. Therefore, the revenue opportunities which we expected to incur this quarter have now been pushed to later in the year when travel restrictions have been lifted and our team can gain access to the ships. Our Microsoft practice had another stellar quarter and we continue to believe we will achieve a greater growth rate this year compared to a full year growth rate of 140% we achieved in 2019. I believe this is a combination of actions we have taken to strengthen our Office 365 business and increase the demand due to COVID-19. For those that are new to the story, UCAS is an all-in-one service for hard or soft phones, including 24x7 security and technical support. With redundant data centers located in Florida and Texas, this market segment is estimate to reach $79 billion in a few years. And based on the continued interest we are experiencing, it is quite evident that it is no longer a matter of if or when we will get our fair share of the revenue. Now I will move on to our high-performance product, or HPP division. Revenue for the quarter was $1.5 million and reflects the expected decline in Mericom, which was partially offset by slightly higher than expected multi-computer royalties. We continue to expect the legacy business to improve throughout the year, which includes anticipated royalties for foreign E2D military planes. Turning to our ARIA offering in Division, our award-winning next-generation cybersecurity platform gives us reason to be optimistic about the growth potential for our HPP business. We will recognize the Cybersecurity Excellence Award held in March. The annual competition honors individuals and companies that demonstrate excellence, innovation, and leadership in information security. DSPI's ARIA cybersecurity solution took home four awards in the following categories. First was encryption, which recognizes ARIA key management server's proven ability to automatically generate and distribute encryption keys to manage all managed lifecycle Lifecycle Requirements. The second was Network Detection and Response. For demonstrating that ARIA could successfully enable faster, better, and more comprehensive threat detection, investigate response in immediate network threat containment, all without impacting network or application performance. The third was GDRP Compliance. ARIA showed that they can validate any type of intrusion while it may be happening and immediately notify the appropriate team. This helps any company improve compliance with GDRP, PCI, or DSS and other regulations. And finally, the fourth was threat detection, intelligence and response, which recognizes the ARIA-SDS platform for its ability to orchestrate and protect any organization's environment by improving visibility into all network traffic. ARIA-SDS helps modern security teams find threats that may normally be missed. and using surgical precision stop them without disrupting valuable operations. Along with validating our decision to put the time, energy and resources in developing ARIA, the recognition by our peers will likely force prospective clients to slow down decisions they are having with someone else and looking in our directions. We are well prepared as we spent the better part of the past few months to build out the organizational infrastructure. and despite the COVID-19 pandemic, our staffing level is the same and the continuity within the team will benefit our customers. While we remain well positioned within a leading cable company, the development during the quarter positions us for even greater success in the future. For example, introduce the new ARIA Advanced Detection and Response, ADR application, which automatically detects and stops cyber attacks cybersecurity attacks without requiring high-trained security staff. Additionally, we integrated ARIA cybersecurity solutions with Juniper Networks. Juniper's secure analytics platform, providing deep network visibility as well as accelerated incident response needed to disrupt cybersecurity threats before extensive harm can be done. We also integrated ARIA cybersecurity solutions with Sumo Logic's continuous intelligence platform to provide security teams with cloud-native real-time security intelligence and insight to help stop network-borne threats, including those involved with IoT or Internet of Things devices, without interfering with the business operations. These and other integrations will increase our solutions impact as well as our market reach by leveraging access to these partners' customer base and prospects. In closing, I want to reiterate that our business was executing on all fronts prior to the COVID-19 pandemic. I want to thank CSPI's team for adjusting to this difficult period. They are doing a phenomenal job in their continued commitment during this most difficult of Times further strengthened CSPI. With that, I will now ask Gary to provide a brief overview on the fiscal second quarter financial performance. Gary?