Financial Performance - Total sales for fiscal year 2024 were 64.647 million in fiscal year 2023[41] - Total sales for the year ended September 30, 2024, were 64.6 million in the previous year[103] - Gross profit for the same period was 21.9 million, reflecting a gross margin decline[103] - The company reported a net loss of 5.2 million in the prior year[103] - Operating loss for the year was 1.9 million in the previous year[103] - Cash and cash equivalents increased to 25.2 million a year earlier[101] - Total current assets rose to 50.4 million in the previous year[101] - The company’s total liabilities increased to 19.8 million year-over-year[101] Revenue Segmentation - The Technology Solutions (TS) segment generated 4.154 million, accounting for 8%[41] - For the fiscal year ended September 30, 2024, foreign-based revenue represented 3% of total revenue, consistent with the previous year[134] - The company derived below 1% of total revenue in fiscal year 2024 and 5% in fiscal year 2023 from the Department of Defense (DoD) as a subcontractor, indicating a reliance on government contracts[167] Product Development and Innovation - The ARIA Zero Trust PROTECT™ product was introduced in July 2023 and is already generating revenue from initial contracts[38] - The company plans to continue investing in the development of new cybersecurity software applications, focusing on enhancing the ARIA product set[111] - The company is focused on enhancing current products and developing new commercial products to respond to technological developments[132] - The company has made significant investments in ARIA cyber security products and services, which may not achieve expected returns[131] Market and Competitive Landscape - The markets for the company's products are highly competitive, with many competitors being larger and having greater access to capital[137] - The company has established strong relationships with major IT OEMs, which is considered a key competitive advantage in the market[55] - The company faces risks related to international operations, including regulatory complexities and potential adverse tax consequences[134] Operational Challenges - The company has experienced challenges with product defects and bugs, which could adversely affect its reputation and financial results[133] - The company acknowledges the potential for delays in product development and the impact of such delays on revenue[132] - The company experienced fluctuations in operating results due to large dollar sales to a small number of customers, making it difficult to predict future orders[150] - The company must continue to invest in research and development (R&D) to meet customer needs, as insufficient investment could adversely affect product attractiveness and business performance[149] Internal Controls and Compliance - As of September 30, 2024, the company identified material weaknesses in its internal control over financial reporting, concluding that these controls were ineffective[185] - The company is required to comply with the Sarbanes-Oxley Act of 2002, which mandates effective internal controls to produce reliable financial reports[186] - Failure to maintain effective internal controls could result in inaccurate financial statements, adversely affecting the business and investor confidence[187] Risk Management - The company has implemented a comprehensive cybersecurity risk management strategy to address significant risks posed by cybersecurity threats[213] - An annual information security risk assessment is conducted to identify vulnerabilities and implement appropriate controls[214] - The company has established robust incident reporting policies and procedures to ensure timely recognition and reporting of incidents[215] - A formal enterprise risk management matrix tracks the company's material risks and associated mitigation strategies, submitted quarterly to the Audit Committee[216] Employee and Labor Relations - As of September 30, 2024, the company had approximately 111 full-time equivalent employees, with no labor union representation and no work stoppages in the last three fiscal years[153] Economic and Regulatory Environment - Changes in federal government budgetary priorities could directly impact the company's financial performance, potentially leading to reduced purchases under contracts[169] - The ongoing military conflict between Russia and Ukraine has negatively impacted the global economy, potentially affecting the company's business through supply disruptions and changes in consumer demand[182] - The company faces risks related to U.S. Federal government contracts, including potential suspension or debarment from government business[191] - The company is subject to legal and regulatory risks that could materially affect its business and financial condition if new laws or regulations are implemented or existing ones are changed[184]
CSP (CSPI) - 2024 Q4 - Annual Report