Q4 2021 Intrusion Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the infusion, Inc. Fourth quarter and full year 2021 conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time. Please press star followed by the number one on your telephone keypad.
If you would like to withdraw your question again press Star one.
Thank you David friend, you May begin your conference.
Thank you operator, and good afternoon, everyone. Thank you for joining us to discuss intrusions fourth quarter and full year 2021 results.
With me on today's call are Tony Scott, Chief Executive Officer, and Franklin Burke, Chief Financial Officer.
Call is being webcast and will be archived on the Investor Relations section of our website.
We're fortunate to call over to Tony I'd like to note that today's discussion will contain forward looking statements are based on the business environment as we currently see it and as such does include certain risks and uncertainties. Please.
Please refer to our SEC filings for more information on the specific risk factors that could cause our actual results to differ materially from the projections described in todays conference call.
Any forward looking statements that we make on this call are based on information that we believe as of today and we undertake no obligation to update these statements as a result of new information or future events.
In addition to U S. GAAP reporting we report certain financial measures that you're looking for.
For them to generally accepted accounting principles.
During the call we may use non-GAAP measures. If we believe are useful to investors or we believe it will help investors better understand our performance or business trends.
With that I'd like to turn the call over to Tony.
Good afternoon, everyone and thank you for joining us today.
I'm pleased to update you on our recent performance and our progress with respect to our previously announced strategy.
In January 2022, we outlined our strategic priorities and medium term plan for shield.
We enjoyed the opportunity to highlight shields unique cyber security offering and demonstrate how we are driving the business forward.
Well there is still much work to be done I am pleased to say that we are making tremendous progress on our stated initiatives.
First we took swift and direct action in the fourth quarter to realign our sales and marketing resources as.
While ensuring our ability to participate in the growing demand for cyber security threat protection. These.
These actions were necessary to stabilize expenses and to right size the organization.
Second we are in active and fruitful conversations with several strategic and Premier channel partners that can help expand shields exposure generate revenue and can be a force multiplier for intrusions sales and marketing.
Additionally, we have realigned our messaging and marketing to highlight our intrusion shield products complement existing cyber security solutions that an organization may already have in place.
And third as you saw in our 8-K and press release, we improved our financial flexibility by entering a $10 million unsecured notes offering with street, a real capital in the first quarter of 2022.
As a reminder, we aimed to raise a total of 15 to 20 million in the year.
The proceeds of our fundraising combined with our existing financial tools will enable us to invest in shield and ensure that it's the best position solution to address modern cyber security challenges, including zero day attacks.
As a result of these actions intrusion is a more stable efficient and disciplined enterprise that possesses the ability and agility to respond appropriately to rising demand and customer needs.
While preserving financial Prudence and accountability.
We remain focused on driving operational excellence, developing innovative new products and generating value for our customers and our shareholders.
Before I turn the call over to Franklin to discuss our financial performance in more detail I'd like to take a moment to provide a high level overview of our progress with shield and our expectations for our legacy consulting business.
<unk> adoption continues to gain traction and we expect it will continue to become a greater portion of our revenue moving forward.
Additionally, we are engaged in an increasing number of customer pilots and proof of concept installations, working with and through our channel partners.
While we are encouraged by the positive early feedback we are receiving its still too early to quantify the impact. These trials will have on our full 2022 results.
Still we are setting a solid foundation for the company to build upon in 2022 and beyond as we create a solid base of annually recurring revenue.
Further when I introduced myself to everyone. In January I mentioned that we are working on several new innovative shield products that we plan to unveil in the second half of the year.
These offerings include our cloud based product.
Yield endpoint product and a high availability high throughput option that will be hardware based.
I am pleased to say that the development of these new products remains on track and on schedule.
We still expect to roll out these products in the second half of 2022 with some having demo capability in the coming quarter.
Finally, let me turn to our consulting business.
Well that business was limited by a continuing resolution otherwise known as the CR from the government sector in 2021, which restricted funding for new projects. This business still performed well in the year and remains a healthy part of our business.
We continue to invest and as the CR has now ended and there is a full budget, we expect an increase in revenue for our consulting business.
The combination of an increasing number of proof of concept demos.
And of the continuing resolution establish a strong foundation for the business and could result in upside to our 2022 results.
In summary, we recognize that we still have work to do along our plan for developing our organization raising needed capital developing an enhanced product offering and delivering sustainable results. However, I am pleased by all the progress we have made so far we realigned.
Our sales and marketing resources developed relationships with several strategic and Premier channel partners and improved our financial flexibility by entering into a 10 million financing agreement with St. A road capital.
Shield continues to accelerate with a growing number of prototypes and demos and we expect healthy growth in our consulting business in 2022.
The cyber security landscape is changing rapidly with zero day attacks being more prevalent.
And shield is uniquely suited to help enterprises adapt to the changing environment and see the previously unseen threats to their networks.
Going forward, we will continue to refine our messaging, while utilizing value added channel partners and our executive led direct sales model to drive shield's growth.
I am excited about what intrusion will do in 2022.
I look forward to updating you on our progress with that I'd like to turn the call over to Franklin to discuss the financials in more detail Franklin over to you.
Okay.
Thanks, Tony revenue for the fourth quarter of 2021 was $1 6 million, which is in line with our fourth quarter 2020 results.
Full year revenue of $7 3 million increased 10% year over year the increase in our full year revenue was primarily due to the shield revenue that we received in 2021.
As a reminder, we introduced yield in 2021, and we are pleased with the early progress we are making with that product during the fourth quarter shield accounted for 12% of our revenue which is relatively in line with the third quarter of 2021 as Tony mentioned, we are pleased with the traction we're seeing on shield and we expect the revenue contribution to continue to improve.
Moving forward.
Gross margin for the fourth quarter was 65% an improvement from 58%.
For the fourth quarter of 2020.
The full year gross margin was 64% expanded from 59% in 2020.
The improvement in gross margin is primarily due to the increasing shield sales.
We expect gross margins to continue at healthy levels and possibly improve further as shield adoption continues.
Fourth quarter operating expenses were $4 9 million, which is in line with our fourth quarter 2020 results.
As a reminder, the fourth quarter of 2020 operating expenses included a $1 1 million noncash write off for <unk> and our prior office lease.
Operating expenses for the full year for $24 2 million up 132% from 2020.
The increase in operating expenses was largely driven by the higher sales and marketing costs.
While our sales and marketing expenses for Unaligned with our shield adoption rate. So the first part of 2021, we quickly corrected those issues and Recalibrated our go to market strategy.
Operating expenses for the fourth quarter were at the lowest levels in all of 2021, and we expect operating expenses to remain stable following our swift action to right size, our sales and marketing resources.
Additionally, we expect head count trends to be steady for the near future.
Net loss for the fourth quarter was $3 9 million or <unk> 20 per share compared to a net loss of $3 9 million or <unk> 23 per share for the fourth quarter of 2020.
The full year net loss.
Was $18 8 million per $1 <unk> per share compared to a net loss of $6 5 million or 45 per share in 2020.
Turning to the balance sheet as of December 31, 2021, we had cash and cash equivalents of $4 1 million.
Down from $16 7 million in the prior year.
As of December 31, 2021, working capital was $2 1 million down from $16 2 million in the prior year.
As Tony just highlighted last week, we closed on a financing where we sold a 7% unsecured notes under securities purchase agreement with the street and well capital. The aggregate principal amount of this note was $5 4 million and we received $5 million less certain reimbursed expenses.
<unk> also received an option to sell a second 7% unsecured notes on similar terms as the first.
Our option to sell the second note is subject to certain conditions, including that within 180 days of issuance, we obtained stockholder approval under NASDAQ rules for the issuance of more than $19, 99% of our outstanding common stock in connection with potential redemptions.
Of the notes.
Each note has an 18 month maturity and six months. After a note has been issue and <unk> can submit a redemption notice for up to $500 per node, which we can choose to satisfy subject to certain exceptions and limitations in cash common stock or a combination.
Above.
This financing enables us to meet our operational needs, while prudently investing in our new shield products.
Additionally, our ATM facility remains in place and we will utilize it opportunistically to finance, our operating activities invest in shale as well as potential loan repayments.
Before turning the call over to the operator for Q&A I'd like to Echo summit Tony's earlier remarks.
Despite a challenging 2021, we still delivered double digit top line growth and healthy gross margin expansion.
Driven by our shield products growth.
We acted swiftly to realign our sales and marketing resources and our go to market strategy and our expenses declined to manageable levels as a result.
We are encouraged by the interest in our shield products and the ending of the continuing resolution is a tailwind for our consulting business.
2020 will be an exciting year of shell and look forward to updating you on our progress.
With that we can go to Q&A.
Operator.
At this time I would like to remind everyone in order to ask a question. Please press star followed by the number one on your telephone keypad.
Your first question comes from that Cummins with B Riley Securities. Your line is open.
Yes, hi, good afternoon, Tony and Franklin Thanks for the update and thanks for taking my questions. Tony. The first one can you give us a little more insight into some of the feedback you've received from your ongoing pilot programs that you have for shield I think in the press release, you mentioned that you have 18 pilots proof of concepts going on right now.
Yes, I'd be happy to.
So.
Let me do a little bit of context setting for it so.
In the in the part.
Part of Q4 and early in Q1, we've been focusing on really strengthening the relationship with our channel partners and resellers in particular.
And in particular those that have been.
Putting resources in place going through training understanding how to.
So we've used the product et cetera.
So.
That activity is.
Born fruit and.
And this has led to these.
Pilots that we mentioned in proof of concepts and the feedback has been great.
We've learned.
A number of things from our customers.
Or how they wanted to use that.
Product and the value that they see in it sorry.
We're encouraged by that feedback and of course.
Every customer has special things that they wanted to see.
And we're taking that into account and we will.
With those requests into our engineering pipeline, but so far.
Pleased with the reception that we're getting.
Understood that's helpful and in terms of your new.
Marketing and messaging for shield.
I know, it's still pretty early in terms of the change in approach and how youre marketing this to both people and partners, but is there any insight you can share in terms of maybe the feedback you've received since you've had this change in messaging and kind of how thats opened up your conversations with both potential customers or a strategic re.
<unk> chips.
Yes.
Again, just to bring everybody into the same conversation.
When I came on board and talk to both people internally.
Some of our external.
Customers and people, we had relationships with.
I was getting very mixed messages about.
She'll did what it was good for.
And.
There was no bad answers there, but it was confusing I think to the marketplace.
And in some cases people thought we were trying to replace.
And intrusion detection and prevention device in other cases people thought we were a firewall and we were trying to replace.
Whatever firewall technology, they had in place and so on and so on our new messaging, which I think is very accurate in terms of where we provide added value is that we help make all of the other solutions that you may already have in <unk>.
<unk> work better we help you.
Do you see things that you are not probably currently seeing and no things about traffic in your network, you, probably don't know or see today.
And indeed, that's what we're seeing with our with our customers. They are quite intrigued by the traffic that they now have visibility of that slipping by before so as a part of that new sales approach, we're not going in and saying, we're a better firewall or better.
I'd EPS or whatever.
We're we're saying Hey, let US show you how we can make.
All the other stuff that you have even better.
And that seems to resonate and even at intrusion we use.
<unk>.
Technology in combination with <unk>.
Other technologies as well so we're not unlike.
I think most of their organizations.
Understood. That's helpful. And then final question for me is really around.
Your consulting business nice to see that stabilize in a pretty tough environment in 2021, but can you just talk about maybe some of the growth opportunities you see ahead here.
Half the resolution done and out of the way with an official budget in place and is there opportunities to be able to embed shield into some of that existing consulting business.
Maybe some of the cross selling opportunities you can see with that product.
Yes, I think.
Those that are familiar with our.
Consulting business know that were primarily <unk>.
Focused.
And we spent the last.
Ever since I joined in November in particular, but in January and February beginning to focus on the civilian side of the federal government.
Actually strong relationships because of prior roles.
And also.
We have a great opportunity to engage with state.
State and local entities as well so.
We think.
There's a great.
Potential for upside for that.
No.
Legacy sort of consulting business.
We're going to continue to invest in that and I think one of the values. There is that particularly on the federal side. They see a lot of things before anybody else does so.
It's a great source of.
For us of understanding where the where the puck is headed if you will.
Great. Thanks for that feedback I appreciate you, taking my questions and best of luck with the rest of the quarter.
I appreciate it.
Your next question comes from the line of Scott <unk> with H C. Wainwright. Your line is open.
Hi, good afternoon guys.
I'm curious.
Yes.
Global environment, whether you guys are getting more incoming calls given heightened tensions.
With a hotbed in Russia.
Well, let me answer it this way anytime there are world events that.
People's attention, whether it's the.
The hacking of a major institution or anything related to cyber and it tends to increase.
The number of calls we get an interest in how.
How we might be able to help so.
The current situation is no different and we have noticed a significant increase in.
Yes.
People wondering if.
Something that.
Intrusion can do can help them so.
You hate to you hate to.
In some ways be the beneficiary of.
Some of these world events, but nevertheless.
It is absolutely a factor.
Yes.
Helpful. Tony and then in terms of educating your channel partners on the shield product.
Give us a little color on that process and timeline.
When those relationships really start to.
Accelerate.
Al.
Well in the case of these resellers.
That we've been very focused on the last.
Since since November and now during the quarter, we are engaging in sales training or making sure. They have all the support materials that they need we're making sure we have the support processes in place.
When they sell or they have customer.
<unk> or whatever.
They are well prepared to both to answer those questions and support their customers.
We've spent a lot of time, making sure that.
They are equipped with all the tools that they need to both sell and support.
Prospective customers.
In the active ones or are getting.
Units out into customers hands conducting proof of concepts.
And doing exactly what we hoped they would do.
And we will ramp that up even more.
In Q2, we just hired a new channel manager who has experience.
Building that kind of capability with cyber security products and.
We're really looking forward to what he can bring to the table in terms of accelerating.
US even faster in that space.
That's really helpful. And then last one for me just on the sequential decline in sales and marketing expense I am curious is that all.
Or is that.
Lower headcount and a change in how youre actually marketing.
Correct.
It was both.
We did a pretty significant reduction in head count in sales and marketing, but we also eliminated a bunch of expense that frankly were just not generating results for us.
We had.
A theory of the case about how to go to market that just wasn't working very well.
So we cut out all of the expense and head count.
Related to those things that weren't working in and we've kept the things.
Our working and we're working in and we're going to amplify those as previously outlined so.
So the answer is it was both.
Alright, I appreciate the additional color guys. Thanks again.
Thanks.
Your next question comes from Ed Woo <unk> capital Your line is open.
Yes, thanks for taking my question.
Covid cases seems to be coming down a business return to normal have you noticed any significant improvement in your sales cycle.
I don't I don't think we.
Noticed any significant changes at this particular point I do know that we're getting invited to more.
In person kinds of things than we were obviously during the height of Covid.
To be more events.
Being scheduled and people are sort of coming out of whatever cave they've been living in for the last couple of years. So I think that will translate into.
Good things for us but.
In terms of the cycle itself I think it's probably a little too early to tell.
What I do know, though is with heightened awareness around cyber security.
As events take place.
People are have a renewed sense of urgency I would say in terms of.
Improving their cyber security posture, and I think in the long run that bodes well for.
A shortening of sales cycles.
If anything.
Great and as you do your restructuring our sales and marketing you don't really see any move towards resellers.
Noticed any changes in your implementation and sales cycles.
Yeah.
Again, probably a little too early to tell but I will say in Q1, we saw a.
Pretty significant increase.
Both interest and.
As I was saying before motivation on the part of end customers to engage in.
And see whether intrusion technology can help them or not so.
The jury is probably still out on that but.
I am encouraged by what I see in Q1.
Great well, thank you and wish you guys. Good luck. Thank you I appreciate it.
The next question comes from the line of Russell Cleveland with Renn Capital. Your line is open.
Thanks, so much for the call two questions. The first one there seems to be a lot of confusion about this offering 10 million.
Wonder if you could go over the whole conversion price.
And that.
It was announced that it had a very big impact on the stock.
The second question is would you be able to.
To announce some of our partners.
And our channel partners that we are relying on so those two questions. If you would.
Sure. So let me start with kind of our theory of the case and then I'll have Franklin.
And on the specifics of the deal, but when I came in in November.
And I've done my due diligence there were a couple of things that stood out.
We actually formed are.
Strategy around the first one was it was clear to me that we were going to have to invest in.
Some new product offerings.
As previously announced.
Cloud.
Yes.
Endpoint and so on and I knew that it was going to take us.
A half a year thereabouts to get.
Get those products in a shape, where we could.
Demo and ultimately sell them.
And so when you do the math you pretty quickly figure out that they didn't have the money in the bank at that particular point.
To fund those activities and so a capital raise becomes a.
A necessity.
And so our strategy was.
Is playing out and we're right on plan with where I.
Thought we needed to be and where we had planned to be.
And so our strategy was raise enough capital to get through.
The cycle of the six month product development and realignment of resources.
We've talked before about fixing.
Messaging and marketing.
And our go to market strategy in all of those kinds of things.
So after making the announcement that we plan to raise capital.
<unk> approached by all sorts of different.
Folks with all kinds of different ways that we could.
Satisfy the capital needs.
The end of the day we.
Chose one that I think best satisfied our cost of capital.
And our immediate needs.
And our whole theory of the case is hinged on.
The new products that we've announced particularly the cloud product comes revenue comes in the form of annual recurring revenue.
I know from my previous experience.
Market values annual recurring revenue.
Sure.
Six to eight times.
More valuable debt.
Traditional revenue so.
If we have a product.
Generating a $1 million.
<unk>.
Enterprise value is six to seven times greater than.
A $1 billion of just ordinary income so.
Our whole strategy is based on products that will generate IRR.
That presumably moves the stock up into a place that it has not been yet.
And this vehicle that we've chosen give.
It gives us the best return.
When that happens so that's kind of the overall arching strategy and I'll, let Franklin cover the specifics of the deal.
Okay. Thanks, Tony Yes, Sir Mr. Cleveland happy to answer that question.
The first thing I would just kind of echo what Tony was saying is.
Our evaluation of this particular <unk>.
Vehicle was across several other opportunities and.
One of the main thoughts that we looked at was where are prices today versus where we we believe it should be and we truly believe it's it's lower than what our real valuation is today.
So that's a big big part of it this particular structure allows us to.
To help perform and show so our company performance increase our stock price and then if we choose transact at future stock prices, but to answer the specific questions.
I think to note structure one that we.
Executed and one that has a condition precedent that you've probably read about and they both have 7% coupons.
They both had an original issue discount of around 6%.
And.
They're both 18.
Notes with nothing that transpires no redemptions for the first six months after six months.
The note holder can redeem up to certain amounts per month.
And we can decide how we redeem that if we want to redeem it in cash we will.
If we want to redeem it in stock we can if we do it in stock there'll be a 15% discount on that on our future stock price or we can do a combination of both and as you know we still have our ATM product in place today, so that gives us a little bit more flexibility.
Okay. So you have a choice from mere side, you could either pay it off or.
Would be in line with the market at a 15% discount so.
I think that's where the confusion comes in so the discount is only 15%.
Off the market at that time.
Yes, Sir.
Correct.
Okay and then the second question I had was.
We talk about channel partners will be can we start.
Announcing these and who they are gives us credibility and so forth. So.
What's the answer there.
Yes, we will.
Now.
Channel partners.
Probably in conjunction with significant sales that they make.
I don't want to temper the airwaves with.
Announcements that arent significant or meaningful.
To us.
The company had the prior experience of announcing that it signed up a bunch of channel partners and in some cases.
Some more as active as the others.
And many of them didn't generate any revenue for us. So I don't want to make meaning are not meaningful announcements about channel partners, but.
As we do significant deals you will see us.
Mentioned them in and be public about it and that also is true for.
It may be sort of buried in what we've been saying, but we're also in discussions with some strategic.
Partners think Oems.
And large technology companies and.
As as material things occur.
With those kinds of partners, we'll also announce those.
Thank you so much I appreciate it youre.
Youre welcome.
Thank you.
Yes.
Your next question comes from the line of Walter Schenker with <unk> Partners. Your line is open.
Carol Speaker.
Hi, Tony.
Hi, how are you Hello, good yes.
Unrelated questions.
Since you are still selling and marketing a product based on a box.
You have 18 people evaluating.
The product at this point, you said could you give us some sense as to the range.
And broad terms as to the size of those 18, they range from 50 seats to 1000 seats potentially.
Obviously someone may layer into the product.
<unk>.
Just some sense as to the types of how big the businesses are that are evaluating this.
It's a pretty broad range.
Okay.
We have to sort of put some of this in context. Some of these poc's are for organizations that currently have one box but.
Their actual deployment would involve.
If they do the appliance.
Multiple boxes and that could be one or 10 or 25, depending on what their bandwidth needs are.
We when we get the cloud product.
In the second half of the year.
Then that's a different model in terms of.
How it would get installed and bandwidth.
Could service so today with the appliance.
Limited to some degree in terms of the bandwidth we want to service when we get to the cloud product.
The bandwidth issue more or less goes away so it's hard to characterize.
The actual deployment is.
In each of these cases really what they're interested in.
<unk>.
What can you see that is going on in my network that I am not seeing today or I don't know about.
In either of the cloud product or the appliance product.
Shows that kind of information and demonstrates value to the customers. So.
It could be that some of these.
Current POC and so on we will say I like what you do but I want to have the cloud.
Product or.
Some may say this is so valuable right now I'll go.
Thats occurred in implementation and it's just too early for us to.
Quantify.
Either way.
And at this point you are still marketing under the original plan, which is a monthly charge per seat.
Yes for the 18 that Youre talking to the cloud may be marketed differently, but at this point, yes, that's the model.
And then on it totally.
Glenn I Shouldnt cut you us well I was going to say we also have then we'd previously announced.
Hi, reliability fail over high throughput hardware solution and a number of the customers.
They are also interested in that as well so.
So I don't as I've said before I don't think hardware.
Goes away completely in the new World I think they are.
And even based on my own experience there is a lot of different needs. If you have a.
A large an expansive network and I see some customers that are going to probably want a combination of hardware and also the cloud solution because they're in a hybrid.
Sort of world with their technology.
We're not going to abandon artware at all but we're going to give customers the option of.
Using artware or cloud or both.
Depending on what's appropriate for there.
Specific environment.
Okay, and then just on a totally unrelated area.
You have now have the access to $5 million potential access to $10 million, you've indicated you'd like to get to $15 million to $20 million of capital.
Yes, I know.
You and I discussed, but you've discussed with other people in the company has discussed with other people I believe all shareholders would like to see.
Equity.
Commitment.
You and possibly other members of management and other people, who you've dealt with over time, you didnt indicate the possibility or the <unk>.
Desire at some point at some point for that to happen could you just address.
How we get you to have a bigger stake in the company.
Sure. It's a great question and one that I get asked pretty.
Pretty often these days.
So here's the situation.
We have a portfolio that a bit locked up at the moment.
I'm doing some things to unlock that and I will make an investment.
At a point in the future as soon as I get some flexibility in what I can do with my personal portfolio and I'm excited about doing that.
And you'll see an announcement when that happens so.
But I'll also point out I am personally subsidizing by.
Existence yet.
Intrusion as well so every every month I'm, making a contribution.
I can be here.
Due to the savings that we're anticipating doing and I'm happy to continue doing that as well until we can get this rocket ship really launched.
Okay. Thank you and good luck Tony thank.
Thank you.
Your next question comes from the line of Ross Taylor with <unk> Partners. Your line is open.
Yes. Thank you for the chance to ask the question when I listen to describe the financing. It strikes me as it makes sense. If you believe that you are within six months to a year of a major revenue ramp that's going to push you to where you actually become a free cash flow generating business is that of <unk>.
With assumption to make.
I think.
It has to be.
Taken in its safe if you take it in the context of annual recurring revenue being the.
<unk>.
Force multiplier, if you will on the on the stock price.
So so in that sense.
We believe that the current stock price way undervalues.
The company in <unk>.
Counting on the fact that.
In the second half of the year, we can demonstrate that with.
Annual recurring revenue.
Yes.
That foretells for the future.
In terms of actual cash flows.
There's any number of scenarios that it's a little too early to predict.
Our success with.
With the products, we would probably increase our R&D expense, we could consider doing acquisitions, we could consider any number of things and.
All of those have impacts on on cash flow. So little too early at this point to forecast that but our plan is to be responsible with the resources that we have and do what's prudent and always focus on.
Enterprise value for our shareholders.
Now do you foresee any of the channel or strategic partners.
That you are looking at working with.
And who are looking at utilizing shield.
Providing capital upfront in any way.
That could be a scenario.
With the with the Big strategic partners.
To make this successful there is always going to need to be some investment on their part.
And some investment on our part to <unk>.
<unk>.
This solution to market jointly.
And part of that Formula it could be.
Our capital investment.
We're not.
Requiring that at this particular point, but we're not.
Ruling it out either and it's been a part of the discussion.
Obviously, given where the stock prices getting a strategic industrial look probably send an exceptionally powerful message.
I agree.
Right.
I look at this company and really see it as what I'll call a late stage venture cap, but unlike many late stage venture caps you have the product you have another product consulting that has the potential to that.
To return to where it was prior to Covid, which was generating.
North of $10 million, a year in revenues, which would be a meaningful increase.
And as a result, this strikes me as.
You would be able to find strategic investors.
Youre not looking for a lot of money Youre really looking at starting this $10 million to $15 million $20 million you are saying its right Jamie as this would be I mean, it's almost might be too small a deal, but it's a very lucrative deal it sounds.
What kind of response have you gotten when you've approached strategics.
They've been very enthusiastic and then.
The Devil is always in the details so.
We're now into the details and figuring out how to work together.
What makes sense.
And those kinds of things, but I agree with you we.
We're.
We are optimistic in terms of where we can go in and.
I'm not going to be little it we've got work to do and we're all going to be working real hard to make sure.
We get there there is a renewed energy and focus in the company that I am very pleased with.
Morale is high and we're.
We're ready to take the hill so.
I'm pretty excited about that.
Speaking of taking the hill.
We call that announced you are hiring.
Also announced that.
The company had a shield.
The system in place at least one with the Pentagon.
Do you have.
Okay.
Can you tell us what that system is doing there and who it's being used by.
I'm afraid that's not something we can discuss.
Yes.
And this kind of a forum unfortunately.
Okay, but its safe to say that.
As an outsider looking in and with <unk>.
<unk> involved in cyber security and the Pentagon and it would strike me as this product is actually being utilized.
That's being utilized by the Pentagon says that you've passed a pretty strenuous testing cargo.
Yes, I wish I could comment on this.
I would guess.
Hi, guys.
I'm sorry, there's a lot of inability to comment says a lot because it just sitting in the background being tested it probably isn't a big deal and you would be able to comment on that.
Thank you very much for that now I will pass it onto the next question alright. Thanks for your questions Youre welcome. Thank you.
There are no further questions at this time I will turn the call back to Tony Scott for closing remarks.
Well I'd like to just conclude the call today by saying that.
Really appreciate the support.
That I feel from our investors and many of you have called in.
And offered your insight and sharing your.
Thoughts on the company and things that we could do going forward and I'm grateful for that.
As I said in my remarks, I think the team is energized and we're ready to do.
Scale to new Heights, we're looking.
Looking forward to what we can do together as a team.
In the next few months.
And show the World.
What we've been working on so I appreciate all the support.
Keep the cards and letters coming as they used to say.
And I'll look forward to talking to you.
In the near future. Thanks, so much.
This concludes today's conference call. Thank you for joining you may now disconnect.
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