Q4 2023 CSP Inc Earnings Call
Presentation
Operator
Good morning, and welcome to CSPi's fourth quarter fiscal Year 2023 conference call. (Operator Instructions) Please note, this conference is being recorded.
I will now turn the conference over to your host, Michael Polyviou, IR ate EVC group. Sir, the floor is yours.
Hello, everyone, and thank you for joining us to review CSPi's fiscal 2023 fourth quarter results, which ended Septmeber 30, 2023. With me on the call today is Victor Dellovo, CSPi's Chief Executive Officer; and Gary Levine, CSPi's Chief Financial Officer. After Victor and Gary conclude their opening remarks, we will 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, protect, plan, intend, estimate and 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 events 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 statements and projections upon which the segment and statements are based.
Factors that may affect the company's results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly reports on Form 10-Q filed with the Securities Exchange Commission.
Forward-looking 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 forward-looking statements are qualified in their entirety by this cautionary statement, and 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 thereof.
With that, I'll turn it over to Victor Dellovo, Chief Executive Officer. Vic, please go ahead.
Thanks Michael, and good morning, everyone. Probably this morning, we announced our fiscal 2023 full year results, I'm pleased to report we achieved revenue growth of 19% compared to fiscal 2022. I believe our strong performance is due to several factors, including the sustained contribution of the technology solution business, our ability to successfully convert a sizable portion of our backlog to revenue and our proactive decision to leverage our strong balance sheet to finance large custom orders.
Furthermore, we reported gross margin percentage of 34% and grew EPS well over 100% from prior year. Our significant accomplishments that raises our confidence level that we can continue executing our strategy of trends, transitioning the business to higher margin products and services.
Moreover, we are continuing to experience positive momentum to kick off 2024, as we already achieved significant achievements in the technology solution in high-performance product businesses. First let me address the backlog issue, and then I will provide an overview of the TS business and then spend a few minutes highlighting some of our recent and exciting developments within the HPP business.
As many of you already know, we entered fiscal 2023 with a level of uncertainty due to well-documented supply chain issues that impacted global economies. Specific to CSPI the inability to receive key components from suppliers kept us from shipping orders to our new customers, raising our backlog to near record levels and tempering our revenue opportunities.
However, as the supply chain issue began to ease up during the year, we started receiving some of these key components. We're able to ship finished goods and reduced the backlog to a more normalized pre-pandemic level of approximately $7.6 million.
I applaud the team's ability to remain engaged with the customers throughout this period. I believe our clients' loyalty demonstrates the value we bring to them because they recognize that the products and solutions are the most effective cost efficient answers to their critical.
Our performance throughout the fiscal 2023 was driven by continued performance of our technology solutions or TS business, which grew compared to fiscal 2022. Success continues to be driven by our customers' increased use of implementation installation and training capability regarding the UK has it turned a corner in the second half of fiscal 2023 and is now a profitable business.
We believe we'll continue to see positive developments within UCaaS as we move forward to fiscal 2024.
Now turning to our high performance products. In HPP. business, we recorded total revenue of $6.9 million for the fiscal year compared to $3.8 million in fiscal 2022. The results were within our expectations.
However, the level of optimism within the business is high and increasingly growing following the recent launch of AZT protect.
AZT's advancement allows us to offer our customers a giant leap forward in the evolution of cyber security solutions AZT's performance surpasses what's available in the market today, and it's a new generation of endpoint applications, cyber security protection designed for both critical operational technology and IT and Brian unique pain solution protects a line organizations endpoints from a full spectrum of cyber-attacks and in tools and techniques, including most advanced zero-day attacks now wear ransomware supply chain vulnerabilities.
Even those threats are completely unknown security by deploying artificial intelligence capabilities, AZT heart attacks before damage occurs and sharing seamless operations without disruption or downtime. It lowers the risks code base of security vulnerabilities exploits on endpoint devices applications to near zero without the need of constant patching update developed internally.
We knew AZT was going to be a game changer for the ACP business. So the team has significantly targeted several high profile conferences and seminars to raise awareness of AZT, including 18 Annual APA cyber security conference, which was held in Houston earlier this month for oil and natural gas industry.
The Rockwell Automation conference, which was also held last month in Boston, was the world's premier industry, industrial automation and digital transformation events the ICS cyber security conference, which was held in Atlanta in October is the largest longest running event series focused on industrial cyber security.
Since 2000 the conference has gathered ICF's cybersecurity stakeholders across various industries and attracts operational and control engineers, IT government vendors and academics. And then finally, the manual SEC US Summit, which was held in October in Chicago and you said, is the premier conference for cyber security and manufacturing, addressing sectors drive towards digital and automation and how imperative it is to balance it with security.
We know , this is a crowded field, so a visible on-site presence at these other events was critical and allowed the team to engage and communicate with key influencers, prospective clients, including Fortune 500 companies.
In-person feedback is quite positive in the comment we often hear from them is we see the need for something like AZT. Subsequent to the end of fiscal 2023, we received orders from a Fortune 500 chemical manufacturing to protect its critical production application from all forms of attack, enabling production lines to continue running without disruption.
We also received an order from Western intelligent agency to protect its critical intelligence gathering and analysis operations from cyber security attacks. This new contract builds on our cyber security, proven track record in proven security solutions for military and intelligence agencies around the world.
Additionally, we launched our AZT protect solution in Australia via partnership with Logitech, a leading local managed security service provider by adding AZT protect to its portfolio largest. They can offer a groundbreaking service, protecting critical applications and operational technology and IT environments such as manufacturing, mining and government.
To summarize, we gathered strong growth in our fiscal 2023 and positioned the Company for even greater success coming years. Although the TS business has been the growth driver over the past few years. The emergence of AZT offers offering has changed the dynamics and gives us two businesses that can grow side-by-side and provide consistent growth with significant upside potential.
With that, I will now ask Gary to provide a brief overview of the fiscal year's financial performance.
Thank you, Victor. For the fourth quarter ended September 30, we reported revenue of $15.3 million compared to $16.7 million in the year ago. Fiscal fourth quarter, we reported a significant revenue increase of 66% in last year's Q4 as we began to work down the record backlog.
So the compare comparability represented a high bar for Q4. Gross profit was $5.2 million for 33.8%, respectively, also lower compared to the year ago period. However, whereas the supply chain was responsible for some of the choppiness.
We achieved significant annual growth in fiscal 2023 compared to fiscal 2022 as we reported revenue of $6.4 million or 19% increase compared to $54.4 million in the fiscal year ago. As Victor mentioned, this performance is due to the continued success of converting some of the older backlog, allowing us to deliver product to our customers.
We reported gross profits of $21.9 million or 34% of sales compared to $18.8 million or 35% of sales in fiscal 2022. The slight decrease in gross margin compared to the year ago period was anticipated. And due to the business mix and the lower margin products that had been in backlog, we continue to believe our annual gross margin will expand as the vision as the business transitions to a higher margin product and services.
For the fourth quarter, our engineering and development expense was $700,000 down $150,000 from the year ago fiscal quarter with a reduction in outside contractors and not filling some open positions.
Our SG&A costs for the fourth quarter was $4.8 million similar to last year. For the full fiscal year, our engineering and development expense for the fiscal year was $3.1 million, relatively flat with comparison to the year ago period.
Our SG&A expenses in fiscal '23 were $16.9 million compared to $15.8 million in fiscal 2022 due to increased variable compensation for bonuses, sales commissions for sales, higher sales as well as payroll and initial costs associated with unveiling and launching of the AZT which includes conferences, participation and hiring several salespeople.
We reported net income of $5.2 million or $1.8 and $1.9 per diluted share for the fiscal year September 30, 2023, compared to net income of $1.9 million or $0.42 per diluted share for the fiscal year ended September 30, 2022.
During the last quarter of the fiscal year 2023, the company received an employment retention credit ERC of $2.1 million net of expenses. The ERC was not available in fiscal 2022.
We had a tax benefit of $0.5 million due to the release of the valuation allowance against our Company's deferred tax assets. Included in the net income has stock compensation, a noncash expense of $1.1 million. The company had cash and cash equivalents of $25.2 million as of September 30, 2023 compared to cash and cash equivalents of $24 million as of September 30, 2022.
Cash and cash equivalents are considerably higher compared to cash and cash equivalents of $13.8 million for the quarter ended June 30, 2023, as significant cash flows were generated through the payment of receivables, including payment from financing sales provided to customers prior to fiscal year 2023.
We believe this robust financial position allowed us to successfully implement this approach. It yielded positive results, and we will entertain certain options if it meets our strictest criteria.
I also want to highlight that the Board of Directors approved a quarterly dividend of $0.04 per share payable on January 9, 2024 to shareholders of record on the close of business on December 22, 2023.
With that, I will turn it over to the operator to take your questions.
Question and Answer Session
Operator
Thank you. (Operator Instructions)
Joseph Nerges, Segren Investments.
Good morning, guys. How are you today?
Good morning Joe.
Okay. See you must have shook up the market today because the market the stock is down like three points. So as announced in your press release in London, let me explain what I think is going on. You would see a big drop in the backlog people think that debt is that obviously your sales aren't there going forward.
That's the constant had in your press release you issued you said that you thought there was technology solutions, which questions the bulk of our sales right now is expecting a major contribution this year in '24. You're looking for good business with new customers and expanded existing customers is that is that what you're trying to convey that you expect expanding technical service, the Technology Solutions business segment?
Yes, that's correct, Joe. We budgeted for significant growth in 2024.
So in effect, the drop in the backlog from last year to this year is not really going to cause a problem as far as what you were expecting for '24, growth, at least in that segment of the unmanned division going forward, that will direct the backlog in effect. Now, granted it's down. What was it 20? I forget what was last year was $20 million or something like that that we had because of the we couldn't get the a lot of the orders through the chain, the supply chain and I'll say that that's number one.
So we're really not concerned the backlog may be low, but business is back to pre-pandemic pre pandemic levels. Basically, we were just trying to you know, talk about where the backlog was where it is because now it's not a factor any longer moving forwards.
It's pretty much business as usual for 95% of the products that we sell, and we're probably not going to be discussing it any further moving forward.
And the point, I guess I'm asking you the EBITDA, it's back to pre-pandemic levels. It has no effect on what to think what we think is going to be business. And 24, we think it is sufficient with the growth to grow the business in at least in TSS division?
Correct.
Okay. Second point on the question, AZT product, that that's that dynamic product and I don't think people realize how much and contribute to the future of this of this company.
You said you added salespeople and are responsible for bringing in new business. Are we talking about new business beyond the two press releases that were issued one on the chemical company, one on the intelligent Western intelligent agency business. Do we have all your questions beyond that?
What is the pipeline?
They're growing the pipeline right now, Joe.
Okay. So we have a lot in there. And when we're talking about the pipeline, are we talking about customers that are testing the product at their facilities.
Some of them are doing POCs are ready, still large Fortune 500 companies, the largest companies out there. So the sales cycle might be a little longer, but they're doing they're quite engaged, right from the beginning. A lot of them we met them at the show.
We talk to them and within a week or two they wanted to discuss on the product further. And some of them are already looking to set up a POC on either, casting. Proof of concept. But with the holidays, some of it's again pushed a little bit to the first quarter just because of Thanksgiving and Christmas, but they're quite engaged right from day one when we met them at the show.
Okay, great. Well, and that's understandable time of year. We're at right now in a talking about existing a question in the two press releases issued in Amit talked about the size of the contract, and I assume that and most of these people are going to be paying on a monthly basis. That's the type of and over a period a number of years to date contracted out, is that correctly you were talking about not upfront payment for your software, mostly monthly basis asthma.
Now there from the first CD. units that we put in there were just to buy them. All right. And then, you know, as we expand these companies are so large, Joe, that 170 locations. And it was whether we boil the ocean and tried to take all 770 down.
And that would take about a year to two years they said to get that processed or do we start seeding it in one or two of their locations and expand from there like one of the government agencies were already talking to several different locations.
Some of them had some money left over and they wanted to cut POs right away. So right now, it's about customer engagement on getting them tested by it, and evangelize when we need references moving forward.
So in both cases, they're rolling out the software in that way. You said one case, you take 170 plants? Well, you can write our own?
And unfortunately, unfortunately, we have to talk to all 170 plants because they all have severance separate budgets. So, we're going to knock one down at a time, but to get to get our product inside their environment saying it's running, it's working was one of the most important factors and we did it quickly, right, with less than 60 days from beginning to end.
So just going back and from an idea from a charge standpoint, I'm assuming we bill on the basis of how many items are being and how many devices are being protected or in the case, will you call end points, the more endpoints we protect the higher the bills.
Correct.
Okay. So as we roll it out little by little, they supposedly the bill increasing little by little, let's put it that way as the it's expanding within their divisions.
Yeah, some departments will have to purchase it outright and some of them will want to pay on a monthly basis or a yearly basis, most likely, right.
And they signed a three-year deal and paid it each and every year when it comes into the segments and the powder departments decide some cases, it's how the departments will make the decision, whether they want to buy or willing to lease basically?
Pretty much. Yes.
Okay. On the cash, I assume the cash a lot of the cash that we have is short-term treasury bills or how do we have that going very good. Is that you have a fair amount and you're rolling over short-term treasuries?
Yes, we roll them over and say that and spend some money market funds. But yes, we're rolling them over short term.
Okay. And Logitech, how are they doing on it now? And I realize that you just that PR on that that are kind of the Australian partner hadn't yet been able to run at the same, let's say, initial success that we're having.
As far as the interest in Australia.
Yes, the generating opportunities that we're working with them hand in hand now.
Okay. All right. That's all I've got right now. It sounds like it was great. It priced and across ADP product has changed a TPP dramatically from where I HDSL.
Yes, we're excited by all the feedback has been positive. No one said, oh, I don't see the value in this. I don't understand it. We're definitely changing. People's are the way they look at securing endpoints in the application. So it is the conversations that are happening frequently and they're getting.
And if I could just one more question that Australia is an example, but there should be there's just going to be additional countries out there that are demanding the same kind of reporting requirements that are being required by USA and Australia. So is there an opportunity now to establish how can I say, similar operations from managed security service price in these other countries like UK for example, of course, Germany?
Yes, of course, Joe is just the size of our organization. Kina prohibits us some, you know, moving as fast as we would like to write it out. It's as I said, you know, TS has been doing so well that it paid for all the development of this new product. But in the SPP is truly a startup organization, right with the new product that's that we believe is game-changing.
But AI it's just the size right now, but we're working as hard and as efficient as we possibly can to talk to as many people. And like I said, we've rolled it out and we did as many shows that we could get ourselves into on the feedback was really, really good.
And I like I said, we have 50 opportunities that we're working right now just from those couple of shows that we did, you know, over the last couple of months.
50 opportunities?
I would say, yes, over 50, yes, over 50%.
At what point do we how many people do we have in the UK? I know, we have a very, very small sales force over this. We still have a couple of people over there.
Yes, we do.
And yes, are they up to snuff from if you will, that they were new kind of technology solution type salespeople that are correct as opposed to the HPP. salespeople.
Correct. But they're familiar with the product and yes, they all we cross trained our salespeople on a ZT., so they're able to at least ask the right questions and then engage the engineers on the ZT. side when there's an opportunity in some of those opportunities that we're working right now came from the TS side.
Yes, I'm sure it will. Thanks a lot, guys. Just real exciting going forward. And I appreciate the time.
Operator
Mike Price, investor.
Good morning. Thanks for the time to ask some questions, but can you give us an idea of how big you think the market opportunity is for AZT?
Multi billion.
Okay. And that being said, it's nice that you're having conversations with 50 potential customers. But going back two quarters ago, you said that a problem CSPI. has is lack of name recognition. And last quarter after the introduction of AZT.
I asked the question of not having written name recognition is it not better and more efficient to partner with somebody that does have name recognition and your response was that you've only been in the market for 30 days. So but the question now is do potential customers more than 50?
No CSPI and potential competitors and potential partners is it not more efficient because a lot of times the best product doesn't even get seen in the market because it's not the fastest introduced to the market?
I agree with that and we are talking to and we have signed some of the largest security resellers and integrators in the market space. And we started working opportunities with them. We are we definitely, you know, we use as much marketing money with all the shows. And then we targeted the top 20, a 30 security-focused resellers integrators, and we started talking to all of them.
Some of them we met at the shows that while we were there, they saw the need and actually some of them reach out to us directly on a large opportunities they had in the healthcare industry are protecting Microsoft OS. systems and Android that we're working in conjunction with them so we are trying to get our name on and using the reputation from these large security resellers on the SaaS as possible, but they have a stringent, um, you know, they don't take on every single security partner.
So we have, I think, been fortunate that two of the largest ones already signed contracts with us to represent AZT and Aria
Okay. Last quarter I asked and I think Joe nerd just to ask also about using funds to buy shares. And prior to today, the stock had doubled. Did you buy any shares during the quarter?
No.
Okay. With what's happening today is not provided opportunity with $25 billion in cash and the stock's down 25% today, I mean, is this not in the thought process?
It is in the thought process We talked about it this morning, Gary, and I see him.
Okay. And the final question I have on prior to today. It's great since last conference call that the stock price has doubled. But what shows today is the small float in the illiquidity. I couldn't sell a measure measurable number of shares to take a profit in. Victor, you couldn't Then Joe merges certainly couldn't.
So the question is the market cap here is what $90 million and looking at somebody like a dray goes through. I assume as a competitor recently raised $200 million with a $1.7 billion valuation. It seems like a big discrepancy between the CSPI.
And somebody like that where CSPI supposedly has a revolutionary product and you think it's as good or better than anything out there. Can you address that and how we close the gap.
You know, we actually we saw as we talked to Dragados while they were at the show to, the thing is then that truly not a competitor. We will complement what they do. They have gaps and our product would actually complement with them.
So this would be we would love to talk to companies like that.
There's really no one out there that's doing exactly what we're doing on the application, the way we're doing it at the Bio core level.
Okay. So if you're not exactly like it. That seems that CSPI. and AZT. should have more value if in fact the market is aware of it with a multibillion dollar market opportunity this coming year.
What am I missing here?
You're not by like, the product was released in July and we're evangelizing and rolling out as fast as possible.
Okay.
Terry joined us has been doing it for years, you know, so they've been they've been at it a little longer than we have when it comes to this, this probably I don't know.
I know I appreciate I appreciate the fact that they've been doing it longer, but I'm talking about the discrepancy in the valuation. I'm sure it might take you a while to get in there, but you're valued at 90 million and there got a valuation of 1.7 billion. I mean that's a huge discrepancy. So okay well, it looks cheap to me here. It looks awfully cheap at 17.5.
I appreciate your time. Keep up the work.
Thank you. Have a great day.
Operator
Brett Davidson, who is a private investor. Your line is life.
Good morning. I'm going to wrap up on the AZT thing, so I can sell it. You can do it on a subscription model on how long does it take to roll this out. So you're signing contract tomorrow and what's involved in rolling this out to a customer?
What makes our product, which I've spoken in the past about is we can be rolled out very, very quickly. We've done 1,000 endpoints in less than an hour on this and a little tweaking after the fact, by the way we roll our product out is like a driver.
It goes on the system that expands, and then it goes and looks at all the applications you ask a few questions and then starts protecting immediately within that, you know that our timeframe you're up and running and there's a little tweaking that goes on, but very, very minor.
When we rolled out the last couple, you know, it was couple of hundred endpoints and it was done in less than 30 minutes. And we built it in conjunction with some customers' feedback. And that was the biggest thing, especially when we developed for the OT space that you can not have downtime in manufacturing facilities and at all.
And that's the difference with our product. You roll it out. It does not need a reboot and that's really, really big compared to all the other products that kind of do what we do. But not really you need a reboot takes a long time. It takes months to roll out and as is done very, very quickly and efficiently.
And that adds tremendous expense in a manufacturing environment on the asset diversity, where it will be a big advantage on gasoline.
That's a go into a lot of times. And with other products you would have to have those systems speak be taking down. And the way we roll it out the system does not have to be taken down. It could still be working in doing what it needs to do and in conjunction with us know on implementing our product inside that environment, no downtime.
So that ends up affecting the that's the value proposition here because on that kind of like a HIT expense and synthetic products.
So you know, if you're rolling this out on top. So let's say it's a business with 10 sites, Ami, I mean, is this something that the physical location matters that you're going to do one site at a time or does this depend on what their IT infrastructure, how that set up and you can literally just blanket 10 locations at once?
We can do 10 locations that once we can do 100 locations that want does not matter all we need is just, you know, access on what they wanted us to do it or we could walk through on the one rollout that we did with that government agency at that one location, we were not I'm able to come you don't have any access to that whatsoever. It's closed environment and we just walk them through it.
And now within less than an hour, they were up and running and they had never touch the product in their life.
Now when you say you walk them through it, was this --?
We weren't now just over the phone. We aren't we had no access to the site or do we have access to this system.
So you guys don't even have to be physically present up to walk them through. Correct it so then all of the time sucked up in this process is all going to be in the sales cycle on the sales cycle. So once you get the dotted line, you're ready to go.
So I mean the press releases the past few weeks have been great with 50 of these things in the cycle, I mean is, is this something we can anticipate on maybe a more frequent basis that these things are going to be rolling out announcing these new relationships and yet.
In the significant ones, I'm going to say, you know, we're evangelizing as much as we can, and we're trying to get people to see the announcements on, you know, some of these larger ones that we're working on. I'm definitely we'll be announcing those as soon as they hit.
Got it. And the last thing I just wanted to touch on. I know that the cruise ship thing was still wind and backup. Is that is there been any headway making getting that done? And those are jobs started fashion?
Yes, we started doing we started doing some cruise line work again, a little in a little different aspect. They're doing a knack solution. So we're starting to roll out at different locations for the network access control. So yes, that business started picking up again, and we had people in Japan this week on some boats. And so yes, it's not a they gave us a nice schedule in the past and that schedule hasn't and I'll come up.
It's more like, hey, I need you here in two weeks or three weeks. It's sporadic where the other ones were like. Here's the next 12 ships here the next 12 days. This is when we need you, it was easy to plan for and that's not happening. So we're doing business with them. It's just not as organized as it was once was.
And then maybe one more follow-up question. So the AZT think I saw that the Western intelligence and we're talking about manufacturing and you also mentioned health care. Are there any other areas that kind of jump out where this would be a really good fit.
It's really anywhere, right? Because when we first rolled out the announcement, it was we focused because we worked with I told you some large manufacturing companies so we focus on the OT space, zero downtime. When we rolled that out, we rolled it out into the Windows world there first, and then we rolled it out into the Linux world.
So we have both, you know, a different type operating systems that we can support in one of our key factors compared to anybody who thinks they play in a space that we go all the way back to XP in the early versions of Linux, right?
Most companies are only doing one or two versions back.
We're supporting all the way back and like I said, to X So that's definitely a game changer for us, especially in the IoT space because a lot of these manufacturers don't update or upgrade their systems because again, I mentioned zero downtime. And now the latest version that we're rolling out right now is for the IT environment. So where we allow us patching, we can schedule things. So we're rolling that out as we speak.
You probably see it, and I'm not saying it now, but you'll see an announcement that we're also rolling out a full IT product lines on a version of AZT., and that would be for like data centers and any sliver.
I got it. Yes. So that's going to be a significant number of points that you guys could hit?
Correct, correct, that we're talking to some financial institutions right now. We're also going to talk to our managed service customers that where we're supporting right now about, you know, potentially increasing their monthly spend by rolling out AZT. on their IT servers to protect their application at the core level.
And that's quite a few end points.
Yes, quite a few end points. Yes, we're going to talk to every one of our managed service customers. Some of them will say, yes or say, no just depends on budgets, but that's what's going on right now on one side, this conversation is happening as we speak with some of our larger MSP costs.
Well, thanks so much for the color and look forward the continued success there.
Thanks. Have a good one. Happy holidays.
Thank you.
Operator
(Operator Instructions) Ross Gilardi who is a private investor. Your line is line.
Hello, gentlemen. I have several questions. But first one is you have a revolutionary unique product in this AZT. You're a smaller unknown company and why not go partner with Dragados or even like a -- also one of the big cyber security companies that have the relationships on that can get this revolutionary product out there quicker, then you can on your own?
That's my first question.
I think I mentioned it earlier. We are talking to all types of E&O, the manufacturers, right, people who are in that space I can't mention who we're talking to now, but there's quite a few conversations going on with companies that are in the security space that we would complement. We would go side-by-side with we don't compete with and we would enhance the overall security performance and every potential environment. So yes, those conversations are going on right now.
Okay. And I assume if something happens, we're going to hear about it, correct.
You will hear about every exciting news that comes across the board. I hope you guys see that I'm trying to share all the information as it comes across as soon as possible.
I mean, if I if I may be brutally honest, and with all respect, you have done an excellent job, I think with press releases up until today. And I think why we're seeing the reaction in the stock right now is because you did a poor job of explaining the excitement that you have now on the call and the opportunity like the reseller contracts, the going into this can go into the networks of network endpoints.
Also the massive TAM you did a poor job on the press release on capturing all the excitement on AZT. So my question is the number one priority. Your job is execution and you're doing a great job with that without question. But you also have a responsibility to shareholders in the fact that you're a small company with a very small float. And as you know, nobody knows about this company, this story or this opportunity. I like to say you're at the Super Bowl and nobody knows that you're playing.
So, what is your strategy to enhance shareholder value since I don't know what the core press release today understand shareholders are suffering. So what's a massive opportunity like right now, the stock is that one-time sales plus cash. It's profitable. It pays a dividend. It has a great balance sheet and it has a really massive opportunity in front of it.
So how are you going to get the story and connect to Wall Street this massive opportunity. Number one; is I hope we are going to hear about every contract say, why didn't we hear about all these reseller contracts. And if you look in the news lately, you've got utilities being attacked water utilities, electric utilities, China attacks in the last 24 hours.
There's massive on highlights on operational technology, cyber security. You have a unique radical product. Nobody knows about it. So shareholders will software into that connection is made. So I want to know what you're going to do different going forward to get this storage connected, so to Wall Street for to enhance shareholder value because it's a great story, but nobody knows about it.
Yes, I think we talked about that this whole conversation, right? We're doing events. I'm talking to partners. We're talking to distribution lines where you know you and I as I have said, you know, the shareholders I think their expectations sometimes may be a little bit out of whack offline where they want a dividend. They wanted to be increase.
They want us to have earnings per share and they want us to self-fund the start-up, right? So, you know, at this stage of the game, we enhanced our marketing budget by 10 times that we normally did we hired salespeople that are industry leader salespeople that you know on frankly cost a lot, right? But we figured we'd get better quality.
We were able to get into the oil and gas, talk to the some of these large manufacturers, the Company's oil gas companies directly that they had relationships in the past and yet that's what we're doing right now. So we're using the largest resellers in the security space with those conversations.
But as I mentioned, these companies yet, as you know, their doors get knocked on constantly on small security companies are. I think there's over 6,000 small security companies out there wanting them to represent them. So we have to go through, 100 page form that we have to fill out why we're different is the whole the whole thing you know us, they don't want to pick up a product that the company is going to be out of business in a year or two because they're not funded correctly. There's a lot that goes into. It's not just by ringing the doorbell saying, would you want to buy some cookies I'm here.
So there's a lot that, my question more was your communication with the street in getting the story out that confusion. You're doing a great job there, like I'm talking about, why do you do in press releases? You've got some good new resellers. We don't know about that. You have 50 --
Yes, but these are hot off the presses, right? We had a call immediately before while these are literally being still drying on some of these things. So you'll see things rolling out, but we were having this press conference today, and I knew a lot of this would be coming out today and you'll see a lot of things coming out in the next two, three, four weeks and some hopefully some exciting news on some opportunities that are close to closing.
Okay. Yeah, and I think that's where you get on that taking on a strategic investor, even on what were the big name with it, it sounds like you're talking to those. I think that would be a great way as well to give you guys the name and the resources to rapidly expand on this because you have such a low cost structure, you're selling software. It's not going to take a lot of sales like it would for another company to drop a lot of EPS and the bottom line.
Last question. Obviously, it's small equity structure at some point in the future would you consider of forward stock split so funds and have the ability to buy more shares? And then maybe if not whatever the right time is to think about something is that something that you consider?
Yes. We've talked about at the Board level at every meeting what our options are. So yes, we would consider everything. And that's one of the things that we've talked about right now.
Yes. Okay. We're closing a great job on execution. And honestly, on the press release I'm going to today, I think you did a poor job of giving the agency opportunity in the press release today, but that's not fatal because what's more important is that the opportunities there and it's super exciting.
So I just hope the communication ARM is going to be, you know, very clear and consistent. I think since that communication is important, these small-cap companies want to run if you want to run it like a private company. Nobody's going to know you're at the Super Bowl, so great job on execution, and I hope we're going to hear a lot more on AZP. to really correct. The lack of excitement in the press release today, but you can't you correctly that in a lot of ways on the call we have now people have to get the story out to Wall Street commencement. So thank you very much.
Fair enough. Thanks for your feedback. Appreciate it.
Operator
John Coffey, who is an investor. Your line is life.
Hi. Thank you for taking my call, and I got to tell you I really enjoyed that last that back and forth with you and Paul, because those were some of my questions. I like to just tied to turn and talk on a more technical side. Now, as Paul mentioned, there's a lot of headline news out there with all the cyber-attacks, especially with China, Taiwan, Ukraine, Russia.
What interested me the most was the fact the way they're breaking through the firewall is having a harder time coming through. I'm speaking more technical now, but I think you guys are sitting in a potential sweet spot. If I understand this properly, AZT is deployed on the other side of the firewall, which listening all the time is employees and now being the lead target for producing the cyber threats, whether it's through a UBS or to a personal computer plugged into the network.
And I'm saying that because I noticed you were saying the word air gapped quite a lot. And to me, that means it's almost like it's a self-contained network without a direct link constantly to the Internet. I'm just hoping you can maybe explain more to the rest of the world because that's a view serious way of breaking in now and I believe that's how we've seen some certain nuclear reactions go down. If you could clarify that and give me a little more understanding. Thank you so much.
Okay. I'll do my best on the technical side. So that where we reside is on the in the servers right on the core of the servers, we are if we don't, it's a driver that gets installed. It's about 40 meg, very, very small users, one or 2% CPU utilization. And what happens is once that gets installed that expands and it looks at every single application.
Now we're talking to some customers right now that are testing it on literally over 1,000 systems of that are running 1,100 applications at one time. And we it goes out, it looks at all 1,100 applications. And then if that's if the person has looked at it and says, is there a viable application?
Yes, it is this is where we're at that point. It's not going to allow anything else besides what's installed to be executed and executed on that. So if someone tries to get in and you know, because the biggest thing is when the end users open up the executables.
Right. And then also I mean then there inside the system and then everything goes haywire at that point. So we're at the very beginning on the core in ITO, and that's where we start protecting. And that's where we're looking at all the applications and how we protect all those applications. And then after that, that's where you know, it's the perfect picture at that point and we stop everything immediately at that stage.
Okay. But my point is that fitting them in the video chip? Or is it just the software installed with the drug?
It's just a software, a song that drive rates above 40 meg of small.
Okay. Take that very, very happy with the business.
Yes.
And this is one last question. And so it would be a I attached to it is it's self learning. Does it retain, though does it learn? Or how does that happen?
Well, yes, it looks at it. And then it looks at what the customer's environment, what's correct for that customer. And that's a perfect model was and then everything else that is not there. That's when it stops, it, stops it. And then you know, we can write code against that that will allow certain things to come through after the fact, if we've seen it seems like this is the correct new environment and what it should look like.
If you're starting at a static Perfect World what's different from this model has been established. Thank you. That makes total sense. Thank you very much.
No problem Coffey.
Operator
Brett Davidson, investor.
I just wanted to hop on a soapbox here for a minute. I understand the sentiments of some of the other callers and everybody would love to see the shares share price just skyrocket, and this will become an overnight success and some but, you know, I think patience is probably pretty good idea at this point on it. I would love to see some just rapidly adapted.
And I think you guys are I get your nose to the grindstone trying to push this forward. But at the same time, I have realistic expectations that kind of it's not going to happen overnight. So I'll step back down and thanks again, and we'll talk to you next quarter.
Thanks, Brett.
Operator
Thank you. As we have reached the end of our question and answer session, I will now turn the call back over to Mr. de Lobo for any closing remarks.
Thank you. As always, I want to thank our shareholders for their continued interest and support our success throughout the fiscal '23 has given us momentum heading into fiscal 2024 as we're already off to a good start with recent AZT client engagements. CSPI. has always had a good reputation within the industry. The launch of AZT strengthens this view and I believe will allow us to engage and sit at the table with Fortune 500 companies.
Gary and I look forward to sharing our progress in fiscal 2024 first quarter in February and until then be well, stay safe and enjoy the holiday season. Thank you.
Thank you.
Operator
Thank you. Ladies and gentlemen, this does conclude today's conference, and you may disconnect your lines at this time, and we thank you for your participation.
