SideChannel, Inc. (SDCH) Q3 2023 Earnings Call Transcript

SideChannel, Inc. (OTCQB:SDCH) Q3 2023 Earnings Conference Call August 9, 2023 4:30 PM ET

Company Participants

Brian Haugli – Chief Executive Officer

Ryan Polk – Chief Financial Officer

Conference Call Participants

Rodney Barnes – Paulson Investments

Operator

Greetings. Welcome to the SideChannel Incorporated Third Quarter Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Mr. Brian Haugli. You may begin.

Brian Haugli

Thank you. Good afternoon, everyone. Brian Haugli, CEO of SideChannel, I’m joined by our CFO, Ryan Polk and welcome everybody to our Q3 call. I’m going to go over a number of highlights of the company and then Ryan will dig into some financial aspects and highlights, obviously the Q was released this morning before the bell. And then we will also go into a Q&A, so we have some, I believe pre-submitted and then we can obviously take calls – sorry, we can take questions during this. So, I will begin, make sure I’ll set my phone. Set, good.

So overall another good quarter for SideChannel, I believe we are in the – still in the right space at the right time, focusing on the right types of clients and the right types of – with the right types of solutions. When I kind of – I’d like to have discussions you know internally with the team from kind of the top down, so I’ll take that same approach with everyone here.

Really starting in the industry as a whole, looking at the macroeconomic factors of what we’re seeing across the US and the globe, we are seeing clients becoming a little bit more budget aware, and being more budget conscious. This is actually advantageous to SideChannel, because we are focusing our capabilities towards budget aware, budget conscious clients, specifically obviously the midmarket and emerging companies.

So we’re seeing some benefits out of this, obviously. But you know, to be honest, we are seeing clients make some decisions about the security posture, that is factored into sales and marketing. Although I think our numbers are showing and our approach are showing that you know we’re able to overcome that. The industry as a whole is also changing and dumping a lot more regulation. And I’ll touch on two of these areas a little bit later, that are definitely benefiting the work that we’re able to do, and what makes us attractive to clients.

Digging into the organization itself, you know, looking and starting with sales. We’ve grown the team to six members of the sales team. We’ve moved around, I think we’ve structured the organization – that part of the organization correctly for where we are right now as a company in its growth trajectory. We’ve been able to bring on a new Account Manager and this person’s role, name’s Matt, is able to focus on expansion inside of current clients.

So it’s not just enough to be able to land new clients, we want to be able to bring them more capabilities, more services, obviously, then increasing our revenue. So with a new focus on account management within client base, you know we’re looking forward to a lot of really good things from a sales team on a go-forward basis.

Our Sales Development Reps or SDRs, who are folks who are outbound, really outbound-focused, they’re calling, they’re on social, they’re doing outreach to prospective clients and setting up and – they’re setting up leads and those leads are turning into discussions, demos, proofs-of-concept and then eventually, sales.

Our close rate is still very high. We’re very proud of and very excited about the fact that when we are getting in front of clients, our close rate, our ability to actually become or getting in front of leads, our ability to make them a client is still very high for us and we’ve been holding those numbers all along. And I feel like that’s just an indicator to what we’re actually providing to the market. And that’s what the market is looking for. So we have the right products and services at the right time that the market is looking for those types of things.

We’ve also started the sale of our Enclave product. We have landed two clients of our Enclave microsegmentation and Zero Trust product. We’ve been able to do this actually through a channel partner. And I think this is an indicator that the MSPs, the Managed Service Providers out there and eventually as we move over to Managed Security Service Providers out there, see the value that they can bring to their client base with our product and we’re – we’ve been – we’re very excited about that. I want to give a lot of kudos to the sales team for their ability to make that happen to bring that through the entire sales cycle.

Moving over to marketing, the campaigns that we’ve got are still working. They are increasing, they are a variety, we go across social and email. And there’s a lot of great impact. There’s a lot of good interest in our message. And that’s obviously bringing in leads, potential clients and clients, and then, ultimately, revenue to SideChannel itself.

So you know, we’re still strong on social, if you’re not following us, I definitely recommend all of you to subscribe to what we’re doing on both LinkedIn, Twitter, but also, we’re putting out a tremendous amount of content on YouTube, both educational and informative, on just what’s going on in the industry, what’s going on within cybersecurity as a risk, but also what we’re doing with our products and our services directly. So you’ll continue to see that.

I know there’s number people here from some of the – from the online channels. And you know, I welcome you all, also want to just, you know, we do respond and hear what you’re saying, we’re listening to you both as investors and as clients, what you’re seeing in the world, and we want to be able to factor that into, you know, our go-forward and our go-to-market.

When looking at our ops, our operations internally, it’s really focused on excellence and still focused on excellence. We’ve moved David Chasteen into the Chief Operating Officer role. And he’s just excelling at that. And you know, that focus now for all of operations and delivery, to have a COO in place, who can guide and oversee and lead that part of the organization for delivery to that our client base.

And that’s very important for us, because that not only shows our clients that we’re serious about delivery to them, but also shows our team and our staff that we’re serious about our ability to keep them informed, keep them educated and trained, keep them as part of the SideChannel mission. And then also, you know, be able to deliver a very high quality capability set of services and products to those clients.

So we’re very excited about how that shaping up, it’s leading to a standardization across our client base, which you know, will eventually reduce costs for us, it’ll increase our ability to really execute within new clients, when we get similar clients to our current ones, we’ll be able to really scale what we’re doing with those new clients because of our standardization.

And we’re able to expand our other services. We’re seeing an increase as you can kind of read from the 10-Q. I’ll let Ryan hit the real highlights. But, you know, we’re able to position more of our other services, not just Virtual CISO and vCISO into our current client base, and provide a very robust capability that allows them to address their cybersecurity posture. And it’s appreciated by clients, obviously, because they’re expanding their spend with us, but they’re lowering their risk in actually a much more financially feasible and cost effective way.

And then we’re also increasing our ability to sell products, not only our own products, but others. While we don’t want to be necessarily in a VAR or Value-Added Reseller category, we are in a position where we can defensively sell our other products that we know addressed the controls to meet the gaps, identified their clients and again, better their posture and lower their risk.

So two things I want to touch on before I was – really hand over to Ryan is kind of forward-looking, both with Enclave and kind of the regulatory environments that we’re seeing change that I – SideChannel is going to be in a position to benefit from first with Enclave obviously, we had our first sales, which is phenomenal. And you know, it’s always gratifying to see customers, paying customers see the value of something that you’ve put an idea from you know conception into creation and then implementation.

But we didn’t stop there. What you’re going to see over the next couple of months is the customer feedback and the industry feedback that we’ve gotten on Enclave. You’re going to see the features and the capabilities that we’re able to now start debuting and bringing out. We’ve listened to our clients, we’ve listened to our customers. And we’ve heard what they would also like to see in a product like this, and we’ve built those capabilities.

So, our focus around asset identification, asset management, our ability to do data flow mapping inside of an environment, our ability to identify vulnerabilities on endpoint devices and assets. These are all really key controls within any cybersecurity program that’s being built. And yet, they are traditionally not focused on. And it’s because they’re difficult to do, I’m not going to lie, as a former CISO, these are generally difficult controls to put in place. And that’s why we focused on them.

You know, we wanted to go after what was hard. And we knew that it was – it ends up being a priority for clients to be able to do these things yet, knowing that they don’t address them, causes them pain later. So, our ability to release these new features over the next couple of months, you’ll see in August and September, the new feature releases is just going to make this product so much more attractive to our current client base, but also to new clients, because of how we’re approaching, addressing the cyber risks with the Enclave product.

And then, I think looking at the regulatory environment, there’s two components that have come out recently, that we’re going to be able to capitalize on. And the first one is the Department of Defense’s new CMMC requirements. We’ve been kind of waiting, the industry as a whole has been waiting very patiently for the DoD to finally kind of put their stamp of approval on and finalize the CMMC requirements.

If anybody’s not familiar with CMMC, the high level is this. There’s 300 – there’s over 300,000 defense industrial-based contractors out there in the United States. And what is that? Those are all the organizations manufacturing and non-manufacturing that support the Department of Defense. And the Department of Defense has built a new regulation, that going forward in order to work with the DoD, to be able to have a contract with the DoD, to be able to gain any revenue from the DoD, you will need to meet the CMMC regulation.

We are positioned to be able to build the programs for those clients and help them meet those regulations. This is going to be an area that is going to significantly pick up, because many organizations in the mid-market space and emerging tech, which I can tell you the Defense Department loves emerging tech. They do not have the in-house capabilities to be able to address what’s needed and we feel very confident in our ability to build those programs.

I can say that because it’s evidenced by the fact that we actually we build today for our clients, their programs, and we build CMMC-ready programs for our clients. So that’s one aspect that, you know, we’re looking forward to and we see as a growing market for SideChannel to be part of as a solution provider.

The other one is the SEC. If anybody isn’t following, I mean, this is all investors on the call. So maybe you’ve seen this, but if you haven’t, the SEC just laid out their brand new final rule on cybersecurity requirements around disclosures for publicly-traded companies. There’s around 8,500 to 9,000 publicly-traded companies underneath SEC registered guidance. They have mandated now, that by the end of this year, companies will need to start disclosing their cybersecurity posture across a variety of different aspects.

Things like you know, does your Board have oversight on cyber? Does management have oversight? Do – what do they do around cybersecurity who has experience in cybersecurity? What are your processes to be able to address cyber risks, your ability to protect, detect and respond to risks that manifests into actual incidents? And then obviously, reporting within four days any material risk or any material incident to the SEC, we’re in a position to be able to build those programs for those clients.

And again, when you look at the Fortune 500 and only two-thirds have a CISO. Really what does that say for the other almost 8,000 companies about where their security leadership, who’s making security decisions, who’s really at the helm and SideChannel is in a position to be able to be that leader and be that driver for security program, which leads to us bringing in other new capabilities, selling new products, positioning more of our services.

So while the economic you know factors that we’re seeing kind of across, you know, companies is leading to them tightening their belts. The regulations are working in our favor, and we are in a very good position to be able to capitalize on the fact that those regulations are now in place. And honestly, they’re going to impact more mid-market small business and emerging companies than they’re actually going to impact the larger companies, again, you got to remember, enterprises have the resources to be able to have these programs in place, but the mid-market and – emerging companies traditionally do not.

And I can evidence that by the five years that we’ve been running this company, we really know the mid-market. And this is exactly what we see day in, day out. So, regulations like this mandating that these controls now be put in place is going to cause these companies to go searching for providers. And we are very well positioned to be that provider to those clients.

So with that, I will turn it over to Ryan, who will highlight aspects of our financial, then we’ll go into some Q&A. Ryan?

Ryan Polk

Thank you, Brian. Another good revenue quarter for SideChannel revenue, $1.8 million in the quarter, which is just a little over a 37% higher than the same quarter last year. Sequentially, we grew by 8% or just over a little over – little over $100,000 [inaudible] $33,000.

Our margin improved over the second quarter of 2023 and our margin improved significantly over the prior year. This year in the third quarter, we reported gross margin of 49.9%, which is 4.3% higher than the prior quarter, second quarter of 2023 and which was 5.9% higher than the third quarter of 2022.

Net loss for the quarter was 7 – just about $700,000, little less than $0.01 a share. That includes $214,000 in a non-recurring non-cash business combination related expense for the shares that were issued on May 4th, 2023, as part of our consolidation or business combination between SideChannel or CipherLoc, which closed on July 1, 2022.

Our trailing 12-month revenue reached $6.1 million for June – for the 12 months ended June 30, 2023. Our revenue retention was 70.8% for that same 12-month period ending June 30, 2023. We ended the quarter with just over $1.4 million in cash, and cash used in operations during the quarter was $432,000, which is a significant reduction from the same quarter – from the prior quarter. And operating expenses really were flat. If you looked at the reported numbers in our 10-Q compared to the second quarter. But when you remove the non-recurring, non-cash business combination expenses, we’re actually showing a decrease it’s over $200,000.

We announced last quarter in this call and in our press release around this call, that we had initiated almost $900,000 of annualized cost reductions. And so the reduction or operating expenses that we’re reporting in this quarter reflects the announcement that we made last quarter about the annualized – the annualized operating expense reductions. In other words, we expect the reduction that you’re seeing in our operating expenses to persist in future quarters.

We also mentioned the – one quarter ago, that we expected full year revenue to range between $6.3 million and $6.5 million, we’re not changing or altering that projection. We said the gross margin would be somewhere in the range of 50% to 52%. Again, we’re holding on that projection. And that’s for the full fiscal year.

And we also noted that we expected operating losses to be lower in the second half of the year compared to the first and you’re seeing that with these results after we have to adjust for the non-recurring, non-cash business related – business combination related costs. So we have the growth in revenue continuing, we have an increase in margin continuing and we have a reduction in operating expenses. And we – that’s why we are confident that we can say that at this point in time, we do not believe that any further cash is needed to fund the operations of the company.

So, Brian I’ve summarized the financial results and I’ll I think pass it back to you and to Jenny for the Q&A.

Brian Haugli

Great. Thanks, Ryan.

Question-and-Answer Session

Operator

Thank you very much. We are now opening the floor for questions. [Operator Instructions] Thank you. Your first question is coming from Rodney Barnes, Paulson Investments. Rodney, your line is live. Rodney, your line is live. I don’t know if you’re muted.

Rodney Barnes

Sorry, I did have myself muted. Can you hear me now?

Ryan Polk

Yeah, we can.

Brian Haugli

Yes.

Rodney Barnes

Okay, great.

Brian Haugli

Hey, Rodney.

Rodney Barnes

Well, congratulations on getting a couple of Enclave orders and our customers. Can you give us just a little more thought process on that? I mean you got two different clients out there. How many seats did that involve? What kind of revenues are you talking about? Are you serious those two clients to give us some perspective on what this thing could be? And let’s talk a little bit about the size of that opportunity, because I know there’s a massive market out there of people that could use this product. So it might take this as a good time to kind of give us an update on that sector of what you’re doing, if you would?

Ryan Polk

Rodney, Brian will give you the deep broader, final answer. But I’ll give you most of the answer to the question you’re looking for. I do want to highlight that the Enclave customers that Brian mentioned, did not – we did not have revenue with those customers in our – in the June 30 quarter. The revenue from those customers is going to appear in our fourth quarter, which in September 30. Sorry, Brian just want to make that point clear to everyone before we guide into the meat of Rodney’s question.

Brian Haugli

No, that’s great. So I don’t have the actual license counts at the end. But I – we’d characterize both of the clients as small, under 200 seats each. And that’s because the MSP, the Managed Service Provider, that actually approached us, saw the value out of the Enclave tool and then want to bring it to his client base predominantly works with small businesses. So you know, this is not – these are not enterprise sales. Again, we’ve been focused on the mid-market and emerging companies. So, the license counts are characterized kind of by that size, because that’s who the – that MSSP, say that MSP is servicing.

Rodney Barnes

What is that – a safe take versus like a 200 seats counts, what number is what’s your get when you start getting revenues? And how much do you charge per seat?

Brian Haugli

So I’d actually go online, so we’re transparent about our pricing, our pricing models, and our pricing is all publicly available on the website. I’d have to bring that up and do the math. But you know I unfortunately don’t have the per seat license off. We also have three versions licenses for the product itself. But yeah, our pricing is available online. We are very transparent about that, again, because that’s how the mid-market likes to you know purchase. They want to know pricing and demos on the first calls.

Rodney Barnes

Yeah, I’m just –

Ryan Polk

Yeah, Rodney, I think we’ve been – internally we’ve been thinking and expecting that initial Enclave adoption is going to come and sort of dribs and drabs, because it’s a new technology. And it’s putting a pretty significant piece of software at the endpoint inside of a company’s network.

So, you would expect because it’s new, and because of how deep it’s penetrating into the networks of companies, that there’s going to be the need, an appropriate need for people to really investigate, check this out, get familiar with it. And that’s what we’re experiencing. And that’s what we’re seeing with this first – these first two clients.

So, we think we’re future appropriate. We think we’re price point appropriate. There’s a need in the market for what we’re doing. And we’re – we think these initial reactions or adoptions of the technology are in line with our expectations for people to sort of, let’s say, to use a common expression, try-before-you-buy type approach.

Rodney Barnes

I will –

Ryan Polk

Rodney – yeah, Rodney, we haven’t really given any projections about what we think Enclave is going to do. So we don’t want to talk any numbers in that regard. But you know, I think it’s – I think because we get some more, as it becomes a more material component to our financials, we will definitely begin to call that number out, you will see that in future quarters, but right now, we just haven’t given any projections, and we’re going to be hesitant to do that.

Rodney Barnes

Well, I wasn’t looking for projections, I’m looking to try to size the opportunity that Enclave all –

Ryan Polk

Sure –

Rodney Barnes

Company to create value for the stockholders. And now we have some points on the board. I’m just trying to get a sense of what this could mean. And my understanding from, Brian, is, you know, there’s thousands of potential customers for this. So, I know we’re a long way from that, but I’m just trying to get a sense of how significant this is going to be to the company. And you know, let me jump out of the queue and I could have a couple more questions, but we can pursue this some more, I’m just trying to get a sense of now that you’ve done something what that’s going to mean, and I’ll jump out for a little bit.

Ryan Polk

Thanks, Rodney.

Rodney Barnes

Yep, thank you.

Brian Haugli

I actually do want to be able to answer. We are to pull this up. And thanks to Trent, who’s also our Head of Sales and sent this to me at the exact same time I was able to navigate to the website. We are selling the product per license for $7 per month to $15 per month – per license. So the pricing is right in that ballpark. And that is right in line with what we’re seeing the competition other similar products out there being priced at.

But, yeah, if you do navigate the sidechannel.com/enclave or you go to sidechannel.com and you click the top and you’ll actually notice, if you haven’t, we have a brand new website, and kudos to our marketing lead for getting this shaped out to really deliver, you know, the message of what we’re about to characterize today. If you click on Products at the top of the SideChannel page, you’ll see that drop down, you’ll see Enclave right there, and from there you can get to the pricing.

Ryan Polk

And Rodney – yeah, Rodney, Brian mentioned earlier – we mentioned earlier, that we got a couple new releases coming out that will announce the details of it in August and September. And, in each of those – these aren’t minor enhancements to the product, they’re actually sufficient – their enhancements that are sufficient enough for us to add to the pricing. So it becomes a more – it becomes a larger potential per seat price for us.

Rodney Barnes

One other quick thing, and then I’ll – let me jump out of queue. But this regulatory thing that you’ve talked about a little bit detail today that these companies are going to have to face at some point, and I know how companies can have mandates like this and they can just not care about them till the government calls them and says you got to do something about it. That sometimes takes years. But if they’re going to deal with these in a timely fashion, size of that market potential for us a little bit. Give us a thought about that what do you think that could be over time? How big of a deal is that for SideChannel?

Brian Haugli

Yeah. So, if I look at the numbers – the number I’ve been using are this. There’s roughly 8,500 to 9,000 publicly-traded companies that are considered SEC registrants. The SEC’s new disclosure rules that have just come out apply to all of them. So, there’s very few exceptions to the rule. So we’re basically talking about a market of 8,500 that roughly 9,000, let’s say 9,000 companies, the Fortune 500, right.

So if we remove them kind of that first or even the first 1000, you’ve got at least 8,000 companies that are now sitting in a position that by December of this year need to start factoring into their disclosures on their 10-Qs, their Ks or anything else that they’re publicly filing underneath and to align to SEC regulations and rules. They are going to need to start disclosing what their cybersecurity posture looks like, what their processes are, what their leadership team is and their capabilities, what their board oversight looks like.

All of these things are not going to be as just as easy as writing the paragraph as a disclosure and saying, “Okay, we thought about it. We wrote a disclosure”. Each of these – all these companies are going to need a capability or a set of capabilities to back up the disclosure statement that they are going to state.

And what you’re actually going to see from SideChannel is, we’re going to eat our own dog food first. We’re going to write and publish our disclosures on how we have our cybersecurity and how we need these things, because we’re publicly-traded.

But looking at the rest of the market, I mean, on the OTC itself, you know, Ryan and I had some great conversations this week in New York, learning about the size of the OTC market. And there’s 2,000 companies right there that are all sitting, looking at this new disclosure requirement going, “I don’t know how we’re going to say, the right thing to make investors very comfortable, that we are doing the right thing about our cybersecurity posture”.

So, those 2,000 companies are going to be trying to really kind of work through and figure out what that is, we’re positioned to build those programs. That’s what we do for our clients today that are not publicly-traded. And we do that for our clients that are publicly-traded. But now there’s a requirement that is mandating that this gets put into place. So, the market I see is that 8,000, you know, about 8000 companies underneath SEC regulations that are going to have to build a program, define it and be able to disclose it.

Rodney Barnes

Well how do you build for this? What kind of a business model does this product have for you? Is it software? Is it a customer service thing where the CISO gets involved and helps them? Brian, how do you or how does this work?

Brian Haugli

Right and what SideChannel has been doing all along has been a combination of tech-enabled services and product. So our ability to step in with services and products are what’s going to be able to meet this demand. Again, cybersecurity spend, as we see it across the years, 60% of cyber spend is on services. 30% is on software. So we are positioned to be able to address that 90% of the spend in the market.

Rodney Barnes

Okay.

Brian Haugli

So this falls – you know, in my mind, Rodney, like this falls right in line with what we’re already doing, and successfully doing and demonstrating to the Street. You know, people want and we have what they want, which is a cybersecurity program, which is a mixture of products and services, you know, no one is buying – there is no silver bullet out there. That is one product that everyone’s buying, and it meets all the needs. It is a combination of people, process and technology to be able to put together a cohesive cybersecurity program, especially one that is going to have to stand up to SEC oversight.

Rodney Barnes

How are you going to market that to people? How does this story get out about you guys having this?

Brian Haugli

I think our ability to just go out to the publicly-traded companies also partnering with the boards, right. So, you know, our ability to work with OTC markets, and have direct access to those 2,000, you know, organizations that are listed on the OTCQB or the other ones. So, I mean, it’s – as far as like a, you know, go-to-market the list of who is applicable to is very, very public, right. If you have a stock ticker, you are somebody that we can talk to.

Ryan Polk

But there’s three – there’s three, let’s call them referral sources that we think, well, we don’t think, we know are endorsing what we’re doing. And those are SEC attorneys. Those are Investor Relations professionals. And so far in the conversations, we’ve been able to have, at least, the OTC markets. So, there’s that universe as we begin to engage with the principles inside of those different service areas directly. That will be a key source for us to market what we just talked about.

Rodney Barnes

Well, I can do more this offline with you, but that’s a good start on hearing about it, because we’ll see how quickly everybody responds to taken care of this new mandate. Hopefully, they’ll jump on and you guys will get some real momentum from that. But –

Ryan Polk

Yeah –

Rodney Barnes

Sounds like a great product. Brian, I know you talk about this regulatory thing for some time coming at us in a positive way. So it’s good to see this develop. And good luck with everything. Let me jump out of the queue then. Thank you.

Ryan Polk

Thanks, Rodney.

Brian Haugli

Thanks, Rodney.

Operator

Thank you very much. [Operator Instructions] Okay, we don’t appear to have any further questions jump into queue.

Brian Haugli

Yeah, we didn’t – Ryan I didn’t see any. But do we have – I didn’t see any pre-submitted or pre-written questions at all. So –

Rodney Barnes

Okay.

Operator

Okay. Let’s see if anyone else jumps in. [Operator Instructions] And, Rodney, were you trying to get back into queue there? Hope, we have a question from [Jacqueline Gerson] [ph] from who is a private investor. Jacqueline, your line is live.

Rodney Barnes

Yeah, hi. I did submit a question earlier. It was about the partnerships that we have with Darkbeam and I forget the other company. What exactly does that entail? Does – I mean, are we licensing Enclave to them and they sell it and we get a kickback? Or are we partnering with them as equal partner? I guess I’m not understanding what the partnership entails?

Brian Haugli

Thanks, Jacqueline. Great to hear from you. The Darkbeam relationship – partnership is, first, it’s a bilateral and bidirectional referral for source. So, where their product, which is a threat intelligence type capability is appropriate for our customers, we’re selling or actually we’re reselling their product to our customers.

And then, conversely, they have direct sales themselves, they’re a UK-based company. But they have direct sales themselves within the UK and the United States, where they’re able to turn around and refer SideChannel and our capabilities to those clients. Because the functionality and what we can bring to bear does not really overlap with what they do.

So, we’re able to partner and not step on each other’s toes. So there’s, you know, there’s a bidirectional you know revenue and referral going on with them. I think they’ve got a great product, they think we’ve got a great product and a great set of services. And I think what you’ll see across the industry is, you know, a lot of product companies don’t also have services arms. And I think that makes us very unique, because we were a services company first who’s now building product.

So our ability to step in and partner with these types of companies. And you know, Ryan and I are looking out for who the other partner – you know who these other companies are. And Trent, who’s our Head of Sales is in constant conversations with companies that want to partner with us because of our focus on the mid-market and emerging tech.

So, you know, our ability to position ourselves to those companies’ clients benefits us. And then our ability to resell those products to our clients benefits us. And that’s why we pursue these types of partnerships. But I’ll also say, you know, we don’t go after every single one, you know, not all these are great fits for the mid-market and small enterprise.

So, you know, we are very judicious in our selection of who these companies are that we are going to partner with, because, you know, there’s just a brand impact, but there’s also just an applicability that, you know, we don’t want to waste people our clients’ times with an enterprise solution that they’re ultimately not going to be able to afford or really use.

So we want to bring the right solutions to clients. And then, conversely, we want our partners to be able to best represent us in the right way and bring us to the right clients as well. We don’t want to waste you know, their clients’ times either. So hopefully that answers your question. And if you have a follow-up.

Rodney Barnes

Mostly – mostly yeah.

Operator

Okay. I think that’s the end of Jacqueline’s question here?

Rodney Barnes

Yes.

Operator

Okay. Thank you so much. We don’t think we have any further questions in the queue, gentlemen. I can hand back to you for any closing statements.

Brian Haugli

Well, thank you. Again, everybody, thank you for taking the time out of your day to listen to us and ask questions. You know, if you follow us online, sidechannel.com, follow us on LinkedIn and on YouTube, really just kind of looking forward to our – you know, we’re in Q4 right now for us and moving through the year.

We’re very excited. The whole team – the whole company is very into what we’re doing. We’ve got a great cohesive unit internally, we got a great internal culture, we have a lot of excitement that we’re doing, I get a lot of feedback from people who are my peers and just out in the industry that, you know, it’s a very quick, aha, yeah, no, I get why you guys exist, like people need that. And that’s just really reassuring to hear from the market and from others. And, you know, we’re just excited to keep you know building this company and delivering capabilities to the underserved middle-market. So, on behalf of Ryan Polk, our CFO and the rest of the Executive Leadership team at SideChannel, I just want to say, again, thank you all for being part of this and you know have an enjoyable day. Thank you.

Operator

Thank you very much. This does conclude today’s conference call and you can disconnect your phone lines at this time. Thank you for your participation.