CSP Inc.

Good morning and welcome to CSPI's third quarter fiscal year 2023 conference call. At this time all participants are on a listen only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Michael Polivio. Sir, the floor is yours.

Thank you, Ali. Hello, everyone, and thank you for joining us to review CFPI's fiscal 2023 third quarter results, which ended June 30, 2023. With me on the call today is Victor DeLobo, CSPI's Chief Executive Officer, and Gary Levine, CSPI's Chief Financial Officer. After Victor and Gary conclude their opening remarks, we'll then open the call for questions. Statements made by CSPI's management on today's call regarding the company's business that are not historical facts may be forward-looking statements as the term is identified in federal securities laws. The words may, will, expect, believe, anticipate, project, plan, intend, Estimates can continue, as well as similar expressions are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results. The company cautions you that these statements reflect current expectations about the company's future performance or event and are subject to several uncertainties, risks, and other influences, many of which are beyond the company's control that may influence the accuracy of the statements and projection upon which the segment and statements are based. Factors that may affect the company's results include, but they're not limited to the risks and uncertainties discussed in the risk factor section of the annual report on Form 10-K and the quarterly reports on Form 10-Q filed with the Securities Exchange Commission. Overlook of statements are based on the information available at the time those statements are made and management's good faith belief as of the time with respect to future events. All Overlook of Statements are qualified in their entirety by this cautionary statement that CSPI undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date they're up. With that, I'll turn it over to Victor DeLivo, Chief Executive Officer. Vic, please go ahead.

Thanks, Michael, and good morning, everyone. Today, we reported continued momentum for our business as revenue grew 33%. Our performance was driven by the continued outperformance of our technology solution business, and I believe the results reaffirm our strategy to dedicate significant resources to this segment over the past couple years. Our other product lines and business segments performed as expected during the quarter, and the business mix and tax treatment led to an increase in earnings. Gary is going to provide more details on the tax topic during his remarks. A major contributor to the momentum in the quarter was the continued conversion of the backlog to revenue, a good portion of which had been on the books for greater than 12 months as supply chain issues for the key components kept us from shipping completed orders to the customer. Our customers continue to remain loyal because our products and solutions are the most effective, cost-efficient answers to their critical needs, and we are extremely pleased to finally move this backlog to revenue. Our focus over the next few quarters to convert the remainder of this older backlog to revenue, and our team is constantly engaged with our customers to keep them abreast of the supply timelines and options. It is worth noting that throughout this prolonged supply chain issue, we have not lost a single order, which I believe reflects the importance of our products and our services to the business. Turning to some of the segment's results, our TSA business revenue totaled $16.4 million compared to $12.6 million in the year-ago fiscal third quarter. As evidenced by the dramatic year-over-year increase, this segment continues to be driven by our customers' increased use of our implementation, installation, and training capabilities. Our HVP revenue was approximately $1.3 million in line with our expectations and compared to $700,000 a year-ago fiscal third quarter. While the ARIA customer base continues to grow and the pipeline remains high, recent developments will positively impact ARIA solution and HPP segment overall in the upcoming quarters and years. Perhaps our biggest achievement during the fiscal third quarter was our newest product launch, ARIA Zero Trust Protect, which we are internally calling AZT. It has generated a lot of enthusiasm within the organization in the early Industry feedback gives us reason to be excited. It is something that we have been developing internally, as we often do, and we believe it will be a major growth driver for our high-performance product HPP business as we move into the fiscal 2024 and beyond. The advanced and patent AI-driven technology has garnered interest from leading customers and reaffirms our belief that gives us greater confidence that it will be a game-changer for CSPI. We have quite a few customers prior to the launch of ACT, and we envision it's going to accelerate adoption of the ARIA product lines and generate a reliable stream of monthly revenue for our company. As we move through the fiscal fourth quarter and expectations for fiscal 2024, we believe the success, reliability, and consistency of our TS business will be complemented by the HPP business, primarily as the as the buzz being generated from AZT Protect converts to orders, positioning us to significantly expand revenue and gross margins from this product line in fiscal 2024 and well beyond. We believe our ability to develop this product is unique and separates CSPI from other companies in the space, especially among larger players where we can identify a need and move on it quickly. With limited development dollars, other companies would need to evaluate, analyze the opportunity, even with unlimited funds, they may still lack the technical skills to develop something like AZT. So I'd like to spend a few moments describing why we are so excited about AZT. First, AZT's advancement allows us to offer our customers a giant leap forward in the evolution of cybersecurity solutions. AZT's performance surpasses anything available on the market today. It's a new generation of endpoint cybersecurity protection designed for critical operational technology environments. The unique patent solution protects all organization endpoints from the full spectrum of cybersecurity attacks and intrusion techniques, including the most advanced zero-day attacks, malware, ransomware, supply chain vulnerabilities, even those threats that are completely unknown to security teams. By deploying artificial intelligence capabilities, AZT, cost of tax before any damage occurs, ensuring seamless operations without disruptions or downtime. It lowers the risk of cybersecurity vulnerabilities, exploits on endpoint devices, applications to near zero without the need for constant patching updates. Our team believes AZT is an excellent solution for a wide range of industries, including utilities, logistics, manufacturing, pharmaceuticals, banking and finance, healthcare, and energy. We are currently ramping up our sales and marketing investments to address these and other markets as we actively negotiate transactions with bars and key international markets in order to maximize the global opportunity. During the fiscal third quarter, we entered into one of these such agreements in Australia. Rapid digital transformation is blurring the boundaries between IT and operational technology. OT networks have been traditionally air-gapped and kept isolated from the outside world. This is no longer the case. The cyber attacks on OT networks are most vulnerable and best prevented by AZT. The product represents CSPI's latest offering of differentiated value-enhanced solutions for the challenges faced by customers. As I mentioned before, we think it's going to be a significant growth driver for our To summarize, we have generated substantial growth during the first nine months of our fiscal year. The launch of AZT is underway. We are quite excited about the opportunities ahead. With that, I will now ask Gary to provide a brief overview of the fiscal third quarter financial performance.