Thank you, Leo. And hello, everyone, and thank you for joining us to review CSPi's fiscal fourth quarter and full year ended September 30, 2020.

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'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 was identified in Federal Securities Laws. The words may, will, expect, believe, anticipate, project, plan, intent, 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 a number of uncertainties, risks and other influences, many of which are beyond the company's control that may influence the accuracy of the statements and the protection 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 report on Form 10-Q filed with the Securities and Exchange Commission. Forward-looking statements are based on the information available at the time those statements are made in management's good faith belief as of the time with respect to the future events.

All forward-looking statements are qualified in their entirety by these 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 the call over Victor Dellovo, Chief Executive Officer.

Victor, please go ahead.

Thanks, Michael, and good morning, everyone. We hope you and your families have not been impacted by ongoing COVID-19 pandemic.

Despite the impact of the COVID-19 on your operations and our customers operations, since March, we have remained focused on executing our key objectives to ensure CSPi is positioned for long-term success. I would like to devote most of my prepared remarks to reviewing our progress on reaching these objectives and the adjustments we have made in our new fiscal year.

One objective since the pandemic hit and begun impacting our ability to aggressively pursue our marketing plans has been to maintain a full workforce. We have used government programs to help achieve this objective, as we consider an essential element to CSPI's maximizing its long-term marketing opportunities.

We've adjusted our operations and continue to do so as a situation's merit to ensure our employees are working in a safe environment. But those working remotely, we have given them the tools to continue to operate at a 100% efficiency.

The broader objective of transforming CSPi to cybersecurity wireless and managed service company is progressing and yielding encouraging results. As we continue to expand our managed service customers in the launch of our UCAS and ARIA offerings, we are delivering on gross margin improvements.

Total revenue for the fiscal fourth quarter was $16.1 million, and for the full year we reported $62.3 million. These are not the levels that we had expected when we entered the fiscal 2020, as a year-over-year declines in both periods continue to impact by COVID-19 pandemic.

Further, the focus on higher margin products and services allowed us to report robust gross margin improvements of 8% and 5% in Q4 and full year, respectively. In fact, this is the fourth quarter we have reported year-over-year gross margin improvement, demonstrating our effectiveness despite the lower revenue figures.

Further, I want to emphasize, as we continue to transition this process to cybersecurity wireless and managed service market’s company, and continue to work for even greater gross margins in 2021, the pandemic continues to expose the weakness and limitations of the network infrastructures, as remote workers environments are leading to increase instances of threat and ransomware. In fact, according to some published reports, spear phishing attacks reached a near seven-fold increase since the pandemic began.

I believe the new and positive prospective cause we are having with customer demonstrates the seriousness of this issue and it's creating opportunities for CSPI. We are hopeful that the companies are setting aside budgets in 2021 to resolve it.

While COVID-19 may have brought some of these security issues to the forefront, the underlying weakness and vulnerabilities were already there, and its why we elected to devote resources in entering this market segment. Because we have highly experienced team in less than two years, we were able to develop our offering internally.

I believe the numerous industry awards and accolades validate strength and breadth of our offering and support of our view that ARIA and Unified-Communications-as-a-Service are positioned to address today's critical network issues. For the quarter, our Technology Solutions or TS revenue was $12.5 million, and for the full year was $55.9 million.

We received orders from larger customers and we would expect the pace to pick up once COVID-19-related impacts lessens, so small and medium-sized customers have the budget to proceed with new purchases. As you know, this is a transactional business and we still need to be out in front of our customers.

Our managed service practice continues to expand as we sign new cloud-based customers and UCAS customers, including in the educational area which is seeking to enhance the systems during this current climate. By continuing to address our customer's needs, especially during these challenging times, we are demonstrating our value to them daily.

Bottom line, the professionalism, commitment and dedication of our team is why we continue to grow our customer base. Separately, the cruise ship industry remains one of the industries greatly impacted by the pandemic.

And when we spoke last in August, the Cruise Line International Association had announced that its ocean going cruise line members had voluntary extended the suspension of the cruise line operations from the U.S. ports till mid-September 2020.

However, given the severity of the impact and not surprisingly they pushed it back to March 2021. Further, Europe is experiencing a sharp rise in cases and new measures are being imposed by several European countries [indiscernible], thus, the already limited restart of the cruise in the Mediterranean and other regions.

Although the travel restrictions have hampered our ability to gain access to the ships, our teams have had regular scheduled communication with the operators. We have reassigned the team members to work on other projects that require assistance with the goal to keep them engaged and ready to proceed at a moment's notice.

This preparedness on our part has proved to be pivotal during the fourth quarter, as we gain access to two ships at dry dock to perform upgrades. While the procedures and safety protocols were rigorous, as it was worth to ensure the well-being of our personnel.

Yes, it's a small step but also a positive signal, because we're moving in the right direction and there's light at the end of the tunnel. Remember, the cruise line operators have already purchased the equipment, so these ships are giving us a backlog that will need to be dealt with.

Turning to our Microsoft practice, it continues to perform well and we are receiving tremendous amounts of interest, so I believe the momentum will continue to generate strong results in 2021. During the quarter, we continue to gain positive traction with our UCAS offerings.

We added new customers and we are in the process of expanding sites with our current customers. As a reminder, the UCAS market is expected to grow from $15.8 billion in 2019 to $24.8 billion by 2024.

Despite our assets being limited because of the pandemic, we are continuing to increase the number of vital product demonstrations on a weekly basis. In fact, the new business pipeline is higher today, than compared to the fiscal third quarter.

Moving on to our high-performance product, or HPP division revenue for the quarter was $1.7 million, below our internal projections, as well as fee revenue related to the E2D program was pushed out. However, we do expect to recognize in the first-half of fiscal 2021.

We remain excited about ARIA in our award winning next generation cybersecurity platform that helps organizations protect themselves from harmful hidden attacks with our human intervention. We have a few installations both in the U.S.

and internationally, and we continue to be well-positioned within a leading cable company that has created other OEM opportunities for ARIA. While the current pandemic is delaying physical deployment, evaluation and decisions, we believe that there are indications that their posture could change in the next few months, as budgets for new projects once frozen because of COVID-19 could be freed up as early as January.

By raising our awareness at the vital trade shows and throughout the marketing campaigns, we have a solid lead flow. This is going to be meaningful revenue contributor for the company.

To summarize, I believe we have successfully adapted our operations since March to sustain our business and grow our prospects. We have a solid base of recurring revenue and diversified customer base, essential ingredients to manage through the current market.

Further, the interest in our products and services remain high, the pipeline continues to grow and is a leading indicator for future periods for exceptional performance. With that, I will now ask Gary to provide a brief overview on the fiscal fourth quarter and full year financial results.

Thanks, Victor. As Victor mentioned in his opening remarks, our fiscal fourth quarter and fiscal year revenue was $14.3 million and $61.8 million, respectively.

Our results also reflect the pursuit of higher margin business. We reported gross profit of $4.4 million and $17.2 million in the fourth quarter and fiscal year, respectively, resulting in gross profit margin improvement in both periods.

The Q4 gross margin was 31%, improved by approximately 8%, while the fiscal year gross margin is 27.8%, improved by 5%. Our engineering and development expenses for the fiscal fourth quarter was $717,000, compared to $691,000 in the year ago period.

For the full year, this was approximately $2.8 million, which is flat with the year ago expense level. Our SG&A expenses in Q4 was $4.2 million, approximately $400,000 decrease from the $4.6 million in last year's fiscal Q4, due to the decrease in variable compensation costs.

We reported a net income of $36,000 in the fourth quarter compared to a net loss of $334,000 in the year ago fourth quarter. The company's income tax benefit for the fourth quarter was $725,000.

The tax benefit was due to a partial valuation allowance against the U.S. deferred tax assets that are more likely to be partially realized, offset by current year federal research and development credits, and the benefit resulting from the carry back of the Federal net operating losses.

For the fiscal year, we reported a net loss of $1.1 million compared to a net loss of $371,000. The measures we implemented earlier, including the suspension of our quarterly dividend, stopping our stock buyback program and PPP loan proceeds have preserved our cash.

We ended the fiscal year with cash and short-term investments of $19.3 million, nearly identical to our cash at the end of Q3. The pandemic has been an immense impact throughout our economy, and the effects will continue into 2021.

Therefore, we will maintain similar cash preservation posture for the foreseeable future, allowing us the resource to execute our business plan and to be positioned to benefit from the investments we made over the past couple of years, and leverage our business development efforts. With that, I will turn it over to the operator to take your questions.

Good morning, guys. And Happy New Year to you, guys.

Same to you, Joe.

Thank you, Joe.

One quick thing you did say that, I guess there were no revenues from the E2D program in the fourth quarter. Is that correct?

There was some, Joe. We had some royalties in the fourth quarter.

Okay. And then you said you're expecting some in the first-half of the year too.

Is that the first half…?

Yes, some rolled over. What we expected was some that has rolled into the first quarter.

Okay. So, you didn't get as much revenue as you thought in the fourth quarter, some rolled into the first quarter of the next year?

Right. Assuming go away here, right.

Okay. I assume you did see or I don't know whether you're aware that the evidently the Taiwanese -- we're receiving royalties on the foreign purchases.

Is that correct? That's basically where the revenues are coming from?

Correct.

And the Taiwanese, I see they contracted for four planes in the fourth quarter, in your fiscal fourth quarter. So that's coming down the road, little by little, one plane a year, whatever, but still added revenue sometime in the future?

Correct.

You did see that or you didn’t? I assume you did?

Well, the problem we have is we don't --

Now that’s far since the contracts being awarded.

Yes, we saw that.

Okay. I realized you don't know when you're going to get it, but at least it's out there, we know that.

Let me go back to the press release a week ago and the free three month offer that was on the solar winds platform that is strictly for solar winds customers and organizations, in other words, we're not offering a three months free for other customers, is that correct?

Right, that was just targeted to solar winds right at this point.

I know it's really early, because we just offered it last week. But have you got any kind of feedback or response on that offer?

I mean potential people or customers?

Not yet, Joe. And plus with the holidays and stuff everything is really, really slow like [Indiscernible].

Yes, I realized. The best week in world.

Yes.

To try to get people to get back to you on. And that's a fairly large base of people.

We're talking about 18,000 or that you had mentioned in the press release something 18,000 to 30,000, I've seen is figures on that.

Yes. That's right.

Are we -- do we have some sort of a -- how could I say it better, a hit list of who we can contact on that? Do we know, who several organizations that have that currently that are using it?

We don't, but we're talking to marketing companies to see if we can get that list of who has solar winds or we can just start calling and ask if they currently have it. That's sometimes it's just roll up your sleeves.

Usually that does bear on the database someplace. People might e-mails targeting certain customer basis.

So I just was curious, that is strictly for the -- the three months offer is strictly for the solar winds platform?

Yes, if someone else has an opportunity it's for something else and we can help them and it makes sense financially, I'll leave it open to some, because right now in these trying times of budgets are just being allocated, if we have to give them a little bit 90 days or so to get things rolling for a three-year contract, it will make sense in the long-term.

One of the interesting things in the press release, at least from my standpoint was the mention that, I guess Gary Southwell mentioned that, we often and we're talking about ARIA platform, often we placed legacy security information systems and other security tools. In other words, the ADR platform or the area platform, in some cases, customers or potential customers don't need all of what they have currently.

We can -- generally is that correct that by implementing ARIA, we can sometimes eliminate some of their oldest stuff older security tools?

Well, yes. Sometimes, it depending on what they have, or we could take sometimes three different manufacturers and cut it down to one.

So you have one management platform and one tool managing everything.

And I'm guessing in some cases, the costs of even maintaining the existing legacy systems can be substantial. And in the fact that we can not only really replace some of the older stuff.

So implementing area, it might not be -- we could be pretty competitive by eliminating even some of the older stuff.

Correct.

So that -- I mean, your return on investment or what areas is extraordinary and I'm a stumped on is why we're not getting a little more. I realized we had the whole pandemic thing, it's difficult.

But the traction that we should be getting and that should be substantial going forward. And more and more people I assume are aware of it now that it's been out there for what, six, eight months now, you're at least talking to customers about it.

Yes. We're doing the trade shows.

And right now it's name recognition. We got to get our name out there and get more and more eye balls [ph] and getting more and more wins.

Well, you mentioned at the beginning about the platform and continues to generate enthusiasm. So I'm assuming people are interested as the matter of whether or not they're spending the time or have the opportunity to let us in to help with the implementation.

Exactly.

Okay. And we did mention the R&D for there about $2.8 million for the year, approximately.

Right. Any resolution have you guys submitted the PPI loan to the government?

You did that paperwork for the PPI loan?

The one that we received. Yes, we did and we --

Yes, it was a $2.1 million. And I'm assuming you got no response from the government as of yet?

Yes, we have. We received response just before Christmas and it's been forgiven.

Okay. That might've been interesting to at least mention, because I think that we don't want to have it hanging out there, but it has been forgiven we got that information.

All right, great. Okay.

From Q1 we'll share more information in Q1.

Okay. Because it fell into Q1.

Correct.

Forgive me. Well, at least going forward that's a very positive I think.

All right, thanks. I'm going to step back and let somebody else to ask the question.

Thanks, Joe.

Good morning, gentlemen.

Good morning, Brett.

I've got a couple of questions. I'm kind of split like Joe is here a little bit between the financials and the press release.

The headline on the press release talked about record new business pipeline. I was wondering if you could just give a little color on what exactly that means.

Well, just the amount of events we're doing. We're talking to customers and we’re trying to quote that we already put out to the various prospects.

It's built the pipeline 3-4 x from where it was a few months back.

And is that like spread across the board? Or is it focused more on one area than another?

No, everything we do, we're focused on, as I mentioned in the past, was based on recurring revenue models, whether it's UCAS, MSP, cloud base or ARIA. So if you look at those four funnels, those that's where the increase across the board kind of came from.

And it varies percentage wise, but it's all been favorable across those recurring revenue funnels that we try to build up. We always have the products and services behind it, which is still a big piece of the business, which in a lot of cases we're trying to position everything.

We'll sell the product, we'll put -- service it, we’ll install it, maintain it, and then we'll try to get them as an MSP client and so we can manage it for them on a monthly basis. So, that's kind of the model that we're looking at.

And that can go across the board for UCAS, or could go for cloud, anything with Azure or whether it’s ARIA.

And is any area represented by a larger dollar amount than other areas or again it's kind of like evenly split?

No, the cloud base and the MSP is a little heavier right at this point, just because we've been doing it a little longer. UCAS is increasing and ARIA as you know, we're positioning it right now, as both they can buy it and manage it themselves, as I mentioned in the past, so we can fully manage it for them, of course, at a cost.

And that’s why I might swing to Gary a little bit here. The operating lease assets and liabilities, I'm assuming that relates to some of the either the managed service or the UCAS.

Maybe you could give some color on how that is split up and what it represents?

Well, there's a new pronouncement relative to putting leases up on the financials, so that there's obviously certain aspects with some of the longer-term contracts that we have, as well as just the standard leasing that we have to disclose now within the financial statements Brett.

Got it. So it's not necessarily something new, it's just change in reporting?

You're right, it's the reporting requirements under the accounting rules.

Got it. And is that split kind of evenly between some of these different lease activities that are going on?

Or is it dominated by certain area?

Some of the -- with the long-term commitments we've got on financing some of these sales, but also just with standard leasing obligations that we have that has to be recognized within the financial statements. And that's why you've got a long-term aspect to it in that.

Got it. Now switching back to that press release, I generated some questions from that.

So, what exactly does the use of the ARIA advanced detection response entail? Is it all software?

Or is it combination software and hardware?

Both, correct. If you want to install it and you don't want it to automatically fix it, then it can be software only.

But if you want to put taps in and put the appliance in line, then you can set rules to where as you see things happening inside, either the network in or out through the firewalls, then it could automatically based on the rules you set, it could automatically fix them and then you could look at the logs the next day. I talked about it on the last conference call that you look at the logs, and you can either reverse back if you don't want it, or you can let it go through and it would automatically fix it based on the rules you had set.

And is that based on like a signature of the activity that's going on? Or is it more like IP-based?

It's IP-based. It's taking all the data that's coming in, so we actually sell it per IP, we license it per IP.

So if someone has 600 IPs, then we would have to sell 600 licenses, and then it depends if it's redundant. And then if then the second aspect of it is if you want us to manage it and monitor a 24/7 or you'll do it in internally.

Alright. And inside the press release, indicated that ARIA ADR stops the activity associated with that SUNBURST detect.

And my first thought was, well, okay, how do you guys know that?

That's why we have our engineers internally that we tested this. The way -- it monitor -- how it exactly does, that's what the engineers figure out.

But the way we look at all the data and the changes the team is, like I said, very confident that it stops all the ransomware and everything else going through.

I mean has this been tested and proven out? Or is this theoretically it stops all the activity?

No, it's tested in labs, and we work with other companies that some of the big players too, in conjunction with their firewalls. You name the big players and we have tons of lab gear and software, and everything that goes across.

We're integrated partner. So we get a lot of feeds from these manufacturers, and we have to test a lot of this stuff.

No, we're not just saying it.

Got it. So this is proof of concept you guys have actually gone out and enabled to demonstrate that.

So more or less, it's just the traffic related. If you're knocking these people off the network, does that meant from user and whatever it is that they're using to get in and out.

One of the biggest things that we do and like I said, I had mentioned it prior is we're looking at East to West traffic inside the network. Everybody looks north to south, in and out the firewall coming from outside in.

We're looking across the traffic, so the way it analyzes it, when you have something that could be inside the network that shouldn't be there. That's why things get -- they put these little probes inside there, and then they start festering inside.

And there could be there for months and months a month gathering data. So the way we analyze that is east to west traffic and I think that's why, we're different than a lot of players out there.

And that's where the AI component comes in?

Correct.

So, yes. I guess I know, Joe had asked this, if there's anybody that's taken advantage of this.

And have you guys received like, any kind of feedback? Is that how this release has been received, or still too early?

Still too early.

All right. Well, that's all I got for now.

Thank you very much. And I'll see you guys soon.

Have a good one.

Have a good one.

Good morning, gentlemen.

Good morning.

My only question is really directed towards Victor at the moment. I want to congratulate you first on execution, you've done on moving forward on new products, but also on the phenomenally high margins that you're getting.

My question is, our company our investment firm has a screener for all the companies in the U.S. And CSPi was always in the top 10 as far as being undervalued.

And I know you're working within one of the primary as your ARIA products are proven and award winning. And I'm sure that the cybersecurity firms that you're working with, it's not going unnoticed that you have such high margin and a product that works.

Are there any discussions at all on further joint ventures or possible acquisition? Because obviously, the acquisition of CSPi would be accretive to any company that bought you.

Just wondered if you could discuss any of those things you might be looking at in the future?

Well, everything's always on the table, right, whether if someone comes to us to purchase us or if there's other things that I could see that would be accretive immediately. We do talk to other companies constantly.

And if something happen to make sense we would bring it to potential shareholders to vote on or whatever wouldn't be needed. But right now, we're just focused on building the product, trying to generate sales and then go from there.

But, everything's on the table both ways.

Well, again, I congratulate you. I think you've done a both -- your entire team has done a phenomenal job.

Thank you very much. I appreciate it.

Thanks, James.

Good morning, gentlemen. Happy New Year and congratulations also on these really encouraging results.

I'm a longtime holder of this stock. And I'm just kind of curious, given the strong transformation, is there any way you can explain to me for years CSPi outperformed a lot of the small cap indices, the microcap index.

And now the Russell is at all-time highs, the microcap index has rebounded. So I'm wondering if there's just any explanation you might have of why the stock given a strong fundamental transformation, the stock is so such an underperformer as of late?

Thanks again, and Merry Christmas, Happy New Year.

Merry Christmas. Happy New Year.

Well, that's kind of a difficult thing. There is such low volume in it.

And I think it's a thing that we're really trying to do is more to get out there to get CSPi now. And I think once we start getting more success with the high performance group, as well as the TS new products, I think the story will start to resonate more.

Obviously, we've got the strong margins and are pursuing those things. And I think we'll do more of the IR once the story starts to germinate.

Do you have any further comments, Victor?

No, you summed it up. I think, I believe it's undervalued too, where there's a lot of aspects of CSPi that we've been working on for years that are actually showing great profits.

You'll see it in the margins. One thing about the story from years past was the margins were always very low.

On the TS group, we have fixed that to where we get the recurring revenue model, we have products and services that all tie together, the messaging is unified now on both sides of the house, bringing the security products into play also. And now just getting that ARIA piece of it which like I said, it hasn't been long and the pandemic kind of I think, put the brakes on it a little bit, as fast as we like to get more and more success with that.

But I think the messaging, the strategy all makes sense. It's unified, and it all ties together.

And with that being said -- go ahead.

I think one quick follow up before I know my time is very limited. And it's great to hear Victor, you say that you think the stock is undervalued.

I think from a markets perspective, any regular and frequent insider purchases, however small, 1000 shares, 2000 shares I know as investor sends a real signal to the market that you guys are bullish on the future. And I will I will cease my mic and thank you once again.

Thank you. Question on the balance sheet, the notes payable of $2.5 million.

Is that all PPP?

Yes, by now.

Okay.

I was kind of curious on the ARIA software. What do you believe the total adjustable market size potential for that particular product would be?

I think in 2020 global cybersecurity was estimated to be about $167 billion spend? What do you think the ARIA market is?

It's in the billions, $20 billion to $30 billion of that could fit, because we hit a lot of silos of that overall market. So, conservatively $20 billion, $30 billion.

Okay. That sounds great.

Thank you. As always I want to thank our shareholders for their continuing interest and support.

We are excited about our long-term growth prospects and I believe therefore based on progress we made this year, we'll drive our revenue and profitability in the coming years. Gary and I look forward to sharing our fiscal first quarter results in February, until then stay safe and Happy New Year.

Thank you.