CSP INC /MA/ 10-Q

Item 1. Financial Statements CSP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except par value) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ September 30, ​ 2020 2019 ​ ​ ​ (Unaudited) ​ ​ ​ ASSETS ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 19,976 ​ $ 18,099 Accounts receivable, net of allowances of $191 and $138 ​ 10,856 ​ 15,114 Investment in lease, net-current portion ​ 416 ​ 367 Inventories ​ 6,412 ​ 7,818 Refundable income taxes ​ 647 ​ 487 Other current assets ​ 3,226 ​ 4,649 Total current assets ​ 41,533 ​ 46,534 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Property, equipment and improvements, net ​ 1,205 ​ 1,273 Operating lease right-of-use assets ​ ​ 2,180 ​ ​ — Intangibles, net ​ 30 ​ 37 Investment in lease, net-less current portion ​ 103 ​ 417 Long-term receivable ​ ​ 5,146 ​ 5,328 Deferred income taxes ​ — ​ 1,946 Cash surrender value of life insurance ​ 3,916 ​ 3,718 Other assets ​ 148 ​ 116 Total assets ​ $ 54,261 ​ $ 59,369 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ Current liabilities: ​ ​ Accounts payable and accrued expenses ​ $ 9,721 ​ $ 16,175 Line of credit ​ ​ 1,113 ​ ​ 2,459 Notes payable - current portion ​ ​ 1,679 ​ ​ 317 Deferred revenue ​ 1,267 ​ 741 Pension and retirement plans ​ 336 ​ 335 Total current liabilities ​ 14,116 ​ 20,027 Pension and retirement plans ​ 6,941 ​ 6,904 Notes payable - noncurrent portion ​ ​ 2,919 ​ ​ 684 Operating lease liabilities - noncurrent portion ​ ​ 1,562 ​ ​ — Income taxes payable ​ — ​ 694 Other noncurrent liabilities ​ 254 ​ 632 Total liabilities ​ 25,792 ​ 28,941 ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ Common stock, $.01 par value per share; authorized, 7,500 shares; issued and outstanding 4,253 and 4,154 shares, respectively ​ 43 ​ 42 Additional paid-in capital ​ 16,562 ​ 15,733 Retained earnings ​ 24,455 ​ 27,246 Accumulated other comprehensive loss ​ (12,591) ​ (12,593) Total shareholders’ equity ​ 28,469 ​ 30,428 Total liabilities and shareholders’ equity ​ $ 54,261 ​ $ 59,369 ​ See accompanying notes to unaudited consolidated financial statements. ​ 3 Table of Contents CSP INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except for per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the nine months ended ​ ​ ​ June 30, ​ June 30, ​ June 30, ​ June 30, ​ ​ 2020 2019 2020 2019 ​ Sales: ​ ​ ​ ​ ​ Product ​ $ 10,294 ​ $ 18,076 ​ $ 35,812 ​ $ 47,390 ​ Services ​ 3,238 ​ 3,494 ​ 10,387 ​ 9,510 ​ Total sales ​ 13,532 ​ 21,570 ​ 46,199 ​ 56,900 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales: ​ ​ ​ ​ ​ Product ​ 8,361 ​ 15,407 ​ 29,924 ​ 39,990 ​ Services ​ 947 ​ 1,324 ​ 3,537 ​ 3,976 ​ Total cost of sales ​ 9,308 ​ 16,731 ​ 33,461 ​ 43,966 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ 4,224 ​ 4,839 ​ 12,738 ​ 12,934 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ ​ Engineering and development ​ 693 ​ 583 ​ 2,081 ​ 2,109 ​ Selling, general and administrative ​ 3,924 ​ 4,111 ​ 11,595 ​ 11,436 ​ Total operating expenses ​ 4,617 ​ 4,694 ​ 13,676 ​ 13,545 ​ Operating income (loss) ​ (393) ​ 145 ​ (938) ​ (611) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ ​ Foreign exchange gain (loss) ​ 113 ​ 8 ​ 257 ​ (22) ​ Interest expense ​ (56) ​ (26) ​ (168) ​ (74) ​ Interest income ​ 133 ​ 79 ​ 469 ​ 200 ​ Other income, (expense) net ​ 3 ​ — ​ 7 ​ 4 ​ Total other income (expense) ​ 193 ​ 61 ​ 565 ​ 108 ​ Income (loss) before income taxes ​ ​ (200) ​ 206 ​ ​ (373) ​ (503) ​ Income tax expense (benefit) ​ ​ 10 ​ (326) ​ ​ 1,109 ​ (466) ​ Net income (loss) ​ $ (210) ​ $ 532 ​ $ (1,482) ​ $ (37) ​ Net income (loss) attributable to common stockholders ​ $ (210) ​ $ 509 ​ $ (1,482) ​ $ (37) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share – basic ​ $ (0.05) ​ $ 0.13 ​ $ (0.37) ​ $ (0.01) ​ Weighted average shares outstanding – basic ​ 4,048 ​ 4,051 ​ 4,015 ​ 3,913 ​ Net income (loss) per share – diluted ​ $ (0.05) ​ $ 0.12 ​ $ (0.37) ​ $ (0.01) ​ Weighted average shares outstanding – diluted ​ 4,048 ​ 4,142 ​ 4,015 ​ 3,913 ​ ​ See accompanying notes to unaudited consolidated financial statements. ​ 4 Table of Contents CSP INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the nine months ended ​ ​ ​ June 30, ​ June 30, ​ June 30, ​ June 30, ​ ​ 2020 2019 2020 2019 ​ Net income (loss) ​ $ (210) $ 532 ​ $ (1,482) $ (37) ​ Other comprehensive income (loss): ​ ​ ​ ​ ​ Foreign currency translation gain (loss) adjustments ​ (22) ​ (220) ​ 2 ​ (218) ​ Other comprehensive gain (loss) ​ (22) ​ (220) ​ 2 ​ (218) ​ Total comprehensive income (loss) ​ $ (232) $ 312 ​ $ (1,480) $ (255) ​ ​ See accompanying notes to unaudited consolidated financial statements. ​ 5 Table of Contents CSP INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY For the three and nine months ended June 30, 2020 and 2019: (Amounts in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ Total ​ ​ ​ ​ ​ ​ ​ Paid-in ​ Retained ​ comprehensive ​ Shareholders’ For the Three Months Ended June 30, 2020: Shares Amount Capital Earnings loss Equity Balance as of March 31, 2020 4,254 ​ $ 43 ​ $ 16,300 ​ $ 24,668 ​ $ (12,569) ​ $ 28,442 Net loss — ​ — ​ — ​ (210) ​ — ​ (210) Other comprehensive loss — ​ — ​ — ​ — ​ (22) ​ (22) Stock-based compensation — ​ — ​ 262 ​ — ​ — ​ 262 Purchase of common stock (1) ​ — ​ — ​ (3) ​ — ​ (3) Balance as of June 30, 2020 4,253 ​ $ 43 ​ $ 16,562 ​ $ 24,455 ​ $ (12,591) ​ $ 28,469 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ Total ​ ​ ​ ​ ​ ​ ​ Paid-in ​ Retained ​ comprehensive ​ Shareholders’ For the Three Months Ended June 30, 2019: Shares Amount Capital Earnings loss Equity Balance as of March 31, 2019 4,137 ​ $ 42 ​ $ 15,165 ​ $ 28,291 ​ $ (10,823) ​ $ 32,675 Net income — ​ — ​ — ​ 532 ​ — ​ 532 Other comprehensive loss — ​ — ​ — ​ — ​ (220) ​ (220) Stock-based compensation — ​ — ​ 202 ​ — ​ — ​ 202 Restricted stock cancellation (3) ​ — ​ — ​ — ​ — ​ — Restricted stock issuance 2 ​ — ​ — ​ — ​ — ​ — Cash dividends paid on common stock ($0.15 per share) — ​ — ​ — ​ (620) ​ — ​ (620) Balance as of June 30, 2019 4,136 ​ $ 42 ​ $ 15,367 ​ $ 28,203 ​ $ (11,043) ​ $ 32,569 ​ ​ See accompanying notes to unaudited consolidated financial statements. ​ ​ 6 Table of Contents CSP INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY For the three and nine months ended June 30, 2020 and 2019: (Amounts in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ Total ​ ​ ​ ​ ​ ​ ​ Paid-in ​ Retained ​ comprehensive ​ Shareholders’ For the nine months ended June 30, 2020: Shares Amount Capital Earnings loss Equity Balance as of September 30, 2019 4,154 ​ $ 42 ​ $ 15,733 ​ $ 27,246 ​ $ (12,593) ​ $ 30,428 Net loss — ​ — ​ — ​ (1,482) ​ — ​ (1,482) Other comprehensive gain — ​ — ​ — ​ — ​ 2 ​ 2 Exercise of stock options — ​ — ​ 2 ​ — ​ — ​ 2 Stock-based compensation — ​ — ​ 717 ​ — ​ — ​ 717 Restricted stock issuance 97 ​ 1 ​ — ​ — ​ — ​ 1 Issuance of shares under employee stock purchase plan 9 ​ — ​ 110 ​ — ​ — ​ 110 Purchase of common stock ​ (7) ​ ​ — ​ ​ — ​ ​ (46) ​ ​ — ​ ​ (46) Cash dividends paid on common stock ($0.30 per share) — ​ — ​ — ​ (1,263) ​ — ​ (1,263) Balance as of June 30, 2020 4,253 ​ $ 43 ​ $ 16,562 ​ $ 24,455 ​ $ (12,591) ​ $ 28,469 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ Total ​ ​ ​ ​ ​ ​ ​ Paid-in ​ Retained ​ comprehensive ​ Shareholders’ For the nine months ended June 30, 2019: Shares Amount Capital Earnings loss Equity Balance as of September 30, 2018 4,017 ​ $ 40 ​ $ 14,661 ​ $ 29,926 ​ $ (10,825) ​ $ 33,802 Adoption of ASU 2014-09* ​ — ​ ​ — ​ ​ — ​ ​ 158 ​ ​ — ​ ​ 158 Net loss — ​ — ​ — ​ (37) ​ — ​ (37) Other comprehensive loss — ​ — ​ — ​ — ​ (218) ​ (218) Exercise of stock options 1 ​ 1 ​ 3 ​ — ​ — ​ 4 Stock-based compensation — ​ — ​ 586 ​ — ​ — ​ 586 Restricted stock cancellation ​ (3) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Restricted stock issuance 108 ​ 1 ​ — ​ — ​ — ​ 1 Issuance of shares under employee stock purchase plan 13 ​ — ​ 117 ​ — ​ — ​ 117 Cash dividends paid on common stock ($0.45 per share) — ​ — ​ — ​ (1,844) ​ — ​ (1,844) Balance as of June 30, 2019 4,136 ​ $ 42 ​ $ 15,367 ​ $ 28,203 ​ $ (11,043) ​ $ 32,569 * As of October 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ​ See accompanying notes to unaudited consolidated financial statements. ​ ​ 7 Table of Contents ​ CSP INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the nine months ended ​ ​ June 30, ​ June 30, ​ 2020 2019 Operating activities ​ ​ Net loss ​ $ (1,482) ​ $ (37) ​ ​ ​ ​ ​ ​ ​ Adjustments to reconcile net loss to net cash provided by (used in) operating activities: ​ ​ Depreciation ​ 345 ​ 300 Amortization of intangibles ​ 7 ​ 9 Loss on sale of fixed assets, net ​ ​ 9 ​ ​ — Foreign exchange (gain) loss ​ (257) ​ 22 Non-cash changes in accounts receivable ​ 53 ​ 17 Non-cash changes in inventories ​ 342 ​ 368 Non-cash lease expense ​ ​ 486 ​ ​ — Stock-based compensation expense on stock options and restricted stock awards ​ 717 ​ 588 Deferred income taxes ​ 1,946 ​ (135) Increase in cash surrender value of life insurance ​ (21) ​ (103) Changes in operating assets and liabilities: ​ ​ Decrease (increase) in accounts receivable ​ 4,228 ​ (3,576) Decrease in life insurance receivable ​ — ​ 256 Decrease (increase) in inventories ​ 1,064 ​ (2,683) Increase in refundable income taxes ​ (160) ​ (377) Increase in operating right-of-use assets ​ ​ (2,666) ​ ​ — Decrease (increase) in other assets ​ ​ 1,360 ​ ​ (2,153) Decrease in investment in lease ​ 265 ​ 113 Decrease (increase) in long-term receivable ​ ​ 182 ​ ​ (956) (Decrease) increase in accounts payable and accrued expenses ​ (6,911) ​ 4,300 Increase in operating lease liabilities ​ ​ 2,240 ​ ​ — Increase (decrease) in deferred revenue ​ 525 ​ (195) Increase (decrease) in pension and retirement plans liabilities ​ 26 ​ (552) Decrease in income taxes payable ​ (694) ​ (13) (Decrease) increase in other long-term liabilities ​ (379) ​ 242 Net cash provided by (used in) operating activities ​ 1,225 ​ (4,565) ​ ​ ​ ​ ​ ​ ​ Investing activities ​ ​ Life insurance premiums paid ​ (144) ​ (144) Purchases of property, equipment and improvements ​ (285) ​ (590) Net cash used in investing activities ​ (429) ​ (734) ​ ​ ​ ​ ​ ​ ​ Financing activities ​ ​ Dividends paid ​ (1,263) ​ (1,844) Net payments under line-of-credit agreement ​ ​ (1,346) ​ ​ (773) Proceeds from debt ​ ​ 4,219 ​ ​ — Repayments on debt ​ ​ (623) ​ ​ — Principal payments on finance leases ​ (248) ​ (206) Purchase of common stock ​ ​ (46) ​ ​ — Proceeds from issuance of shares under equity compensation plans ​ 112 ​ 120 Net cash provided by (used in) financing activities ​ 805 ​ (2,703) Effects of exchange rate on cash ​ 276 ​ (312) Net increase (decrease) in cash and cash equivalents ​ 1,877 ​ (8,314) Cash and cash equivalents beginning of period ​ ​ 18,099 ​ 25,107 Cash and cash equivalents at end of period ​ $ 19,976 ​ $ 16,793 ​ ​ ​ ​ ​ ​ ​ Supplementary cash flow information: ​ ​ Cash paid for income taxes ​ $ 16 ​ $ 47 Cash paid for interest ​ $ 189 ​ $ 68 ​ ​ ​ ​ ​ ​ ​ Supplementary non-cash financing and investing activities: ​ ​ ​ ​ ​ ​ Obtaining a right-of-use asset in exchange for a lease liability ​ $ 216 ​ $ — Non-cash purchases of property and equipment ​ $ — ​ $ 15 ​ See accompanying notes to unaudited consolidated financial statements. ​ ​ 8 Table of Contents CSP INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2020 AND 2019 Organization and Business CSP Inc. ("CSPi" or "CSPI" or "the Company" or "we" or "our") was incorporated in 1968 and is based in Lowell, Massachusetts. CSPi and its subsidiaries develop and market IT integration solutions, advanced security products, managed IT services, purpose built network adapters, and high-performance cluster computer systems to meet the diverse requirements of its commercial and defense customers worldwide. The Company operates in two segments, its Technology Solutions (“TS”) segment and High Performance Products (“HPP”) segment. 1. Basis of Presentation The accompanying consolidated financial statements have been prepared by the Company, without audit, and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All adjustments were of a normal recurring nature. Certain information and footnote disclosures normally included in the annual consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States, have been omitted. Accordingly, the Company believes that although the disclosures are adequate to make the information presented not misleading, the unaudited consolidated financial statements should be read in conjunction with the footnotes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019. ​ ​ 2. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are related to reserves for bad debt, reserves for inventory obsolescence, the impairment assessment of intangible assets, right-of-use assets and lease liabilities, and the calculation of standalone selling price for revenue recognition, the calculation of liabilities related to deferred compensation and retirement plans and the calculation of income tax liabilities. Actual results may differ from those estimates under different assumptions or conditions. ​ ​ 3. Recent Accounting Pronouncements Accounting standards adopted in fiscal year 2020 In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , an amendment of the FASB Accounting Standards Codification. This ASU requires lessees to recognize a right-of-use asset and lease liability for most lease arrangements, which excludes leases that meet the definition of a short-term lease. The Company adopted this standard on October 1, 2019 using a modified retrospective transition method with an adjustment to the assets and liabilities on the Consolidated Balance Sheet with no adjustment to any prior period. Additionally, prior comparative periods were not restated. A package of three practical expedients that is applicable to all leases as lessee or lessor was adopted. This includes not reassessing whether any expired or existing contracts contain leases, not reassessing lease classification for any expired or existing leases, and not reassessing initial direct cost for any existing lease under ASC Topic 840. The Company also elected the practical expedient as a lessee to not separate lease and non-lease components for operating leases. The statement of operations for three and nine months ended June 30, 2020 was not materially affected. However, there was a material impact on the Company’s consolidated balance sheet as of June 30, 2020 due to the recognition of right-of-use assets and lease liabilities for operating leases, which is shown in the following table: 9 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As reported ​ ASC 842 ​ As of ​ September 30, 2019 Adjustment October 1, 2019 ​ ​ (In thousands) Assets: ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ $ — ​ $ 2,448 ​ $ 2,448 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable and accrued expenses ​ ​ 16,175 ​ ​ 665 ​ ​ 16,840 Operating lease liabilities - noncurrent portion ​ ​ — ​ ​ 1,783 ​ ​ 1,783 ​ In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which allow a reclassification from accumulated other comprehensive income (loss) (“AOCI”) to retained earnings for stranded tax effects resulting from the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts at the date of enactment of the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”). The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Beginning October 1, 2019, the Company adopted the ASU and it did not have a material impact on our consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting , an amendment of the FASB Accounting Standards Codification. Under this ASU companies will no longer be required to value non-employee awards differently from employee awards, but the accounting remains different for attribution and a contractual term election for valuing nonemployee equity share options. Equity-classified awards to nonemployees will now be measured at the grant date using fair value of the equity instruments the company is obligated to issue and recognition is associated with the probable outcome. Awards are subsequently measured using stock compensation guidance unless they are modified after the nonemployee stops providing goods or services. Existing disclosure requirements within the stock compensation guidance also apply to nonemployee awards. For public entities, the new standard is effective for annual periods beginning after December 15, 2018, including interim periods within that fiscal year. Beginning October 1, 2019, the Company adopted the ASU and it did not have a material impact on our consolidated financial statements. New accounting standards not adopted as of June 30, 2020 In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) , an amendment of the FASB Accounting Standards Codification. This ASU will change how entities account for credit losses for most financial assets and certain other instruments. For trade receivables, loans and held-to-maturity debt securities entities will be required to estimate lifetime expected credit losses. For available-for-sale debt securities entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset. Additionally, there will be a significant increase in the amount of disclosures by year of origination for certain financing receivables. For public entities, the new standard is effective for annual periods beginning after December 15, 2019, including interim periods within that annual period. The Company is evaluating the effect that ASU 2016-13 will have on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) , Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans, an amendment of the FASB Accounting Standards Codification. Under this ASU existing disclosures not considered cost beneficial are removed, disclosures identified as relevant are added, and there is added clarification regarding specific existing disclosures. For public entities, the new standard is effective for annual periods beginning after December 15, 2020. The Company is evaluating the effect that ASU 2018-14 will have on its consolidated financial statements and related disclosures. 10 Table of Contents 4. Revenue We derive revenue from the sale of integrated hardware and software, third-party service contracts, professional services, managed services, financing of hardware and software, and other services. We recognize revenue from hardware upon transfer of control, which is at a point in time typically upon shipment when title transfers. Revenue from software is recognized at a point in time when the license is granted. We recognize revenue from third-party service contracts as either gross sales or net sales depending on whether the Company is acting as a principal party to the transaction or simply acting as an agent or broker based on control and timing. The Company is a principal if it controls the good or service before that good or service is transferred to the customer. We record revenue as gross when the Company is a principal party to the arrangement and net of cost when we are acting as a broker or agent. Under gross sales recognition, the entire selling price is recorded in revenue and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenue resulting in net sales equal to the gross profit on the transaction. Third-party service contracts are sold in different combinations with hardware, software, and services. We have determined the third-party services contracts are a single performance obligation in each sale. When the Company is an agent, revenue is typically recorded at a point in time. When the Company is the principal, revenue is recognized over the contract term. Professional services generally include implementation, installation, and training services. Professional services are considered a series of distinct services that form one performance obligation and revenue is recognized over time as services are performed. Revenue generated from managed services is recognized over the term of the contract. Certain managed services contracts include financing of hardware and software. Revenues from arrangements which include financing are allocated considering relative standalone selling prices of lease and non-lease components within the agreement. The lease component includes hardware, which is subject to ASC 842, Leases . The non-lease components are subject to ASC 606, Revenue from Contracts with Customers . Other services generally include revenue generated through our royalty, extended warranty, multicomputer repair, and maintenance contracts. Royalty revenue is sales-based and recognized on date of subsequent sale of the product, which occurs on the date of customer shipment. Revenue from extended warranty contracts is recognized evenly over the period of the warranty. Multicomputer repair services revenue is recognized upon control transfer when the customer takes possession of the computer at time of shipping. Revenue generated from maintenance services is recognized evenly over the term of the contract. Variable consideration is immaterial. The right of return risk lies with the original manufacturer of the product. Managed service contracts contain the right to refund if canceled within 30 days of inception. Any products with a standard warranty are treated as a warranty obligation under ASC 460, Guarantees. The following policies are applicable to our major categories of segment revenue transactions: TS Segment Revenue TS Segment revenue is derived from the sale of hardware, software, professional services, third-party service contracts, maintenance contracts, managed services, and financing of hardware and software. Financing revenue pertaining to the portion of an arrangement containing a lease is recognized in accordance with ASC 842. Financing revenue related to the lease is recorded in revenue as equipment leasing is part of the Company’s operations. Third-party service contracts are evaluated to determine whether such service revenue should be recorded as gross or net sales and whether over time or at point in time. 11 Table of Contents HPP Segment Revenue HPP segment revenue is derived from the sale of integrated hardware and software, maintenance, and other services through the Multicomputer and Myricom product lines. Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products’ functionality, and post contract maintenance and support. Post contract maintenance and support is considered immaterial in the context of the contract and therefore is not a separate performance obligation. See disaggregated revenues below by products/services and geography. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Technology Solutions Segment ​ ​ ​ ​ High ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ United ​ ​ ​ ​ ​ ​ ​ Consolidated For the three months ended June 30, Segment Kingdom U.S. Total Total ​ ​ (Amounts in thousands) 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 780 ​ $ 75 ​ $ 9,420 ​ $ 9,495 ​ $ 10,275 Service ​ ​ 803 ​ ​ 132 ​ ​ 2,303 ​ ​ 2,435 ​ ​ 3,238 Finance * ​ ​ — ​ ​ — ​ ​ 19 ​ ​ 19 ​ ​ 19 Total sales ​ $ 1,583 ​ $ 207 ​ $ 11,742 ​ $ 11,949 ​ $ 13,532 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Technology Solutions Segment ​ ​ ​ ​ High ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ United ​ ​ ​ ​ ​ ​ ​ Consolidated For the three months ended June 30, Segment Kingdom U.S. Total Total ​ ​ (Amounts in thousands) 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 1,592 ​ $ 720 ​ $ 15,731 ​ $ 16,451 ​ $ 18,043 Service ​ ​ 548 ​ ​ 109 ​ ​ 2,837 ​ ​ 2,946 ​ ​ 3,494 Finance * ​ ​ — ​ ​ — ​ ​ 33 ​ ​ 33 ​ ​ 33 Total sales ​ $ 2,140 ​ $ 829 ​ $ 18,601 ​ $ 19,430 ​ $ 21,570 ​ ​ 12 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Technology Solutions Segment ​ ​ ​ ​ High ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ United ​ ​ ​ ​ ​ ​ ​ Consolidated For the nine months ended June 30, Segment Kingdom U.S. Total Total ​ ​ (Amounts in thousands) 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 2,469 ​ $ 812 ​ $ 32,463 ​ $ 33,275 ​ $ 35,744 Service ​ ​ 1,630 ​ ​ 342 ​ ​ 8,415 ​ ​ 8,757 ​ ​ 10,387 Finance * ​ ​ — ​ ​ — ​ ​ 68 ​ ​ 68 ​ ​ 68 Total sales ​ $ 4,099 ​ $ 1,154 ​ $ 40,946 ​ $ 42,100 ​ $ 46,199 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Technology Solutions Segment ​ ​ ​ ​ High ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ United ​ ​ ​ ​ ​ ​ ​ Consolidated For the nine months ended June 30, Segment Kingdom U.S. Total Total ​ ​ (Amounts in thousands) 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 4,700 ​ $ 4,340 ​ $ 38,244 ​ $ 42,584 ​ $ 47,284 Service ​ ​ 1,080 ​ ​ 274 ​ ​ 8,156 ​ ​ 8,430 ​ ​ 9,510 Finance * ​ ​ — ​ ​ — ​ ​ 106 ​ ​ 106 ​ ​ 106 Total sales ​ $ 5,780 ​ $ 4,614 ​ $ 46,506 ​ $ 51,120 ​ $ 56,900 * Finance revenue is related to equipment leasing and is not subject to the guidance on revenue from contracts with customers (ASC 606). Significant Judgments The input method using labor hours expended relative to the total expected hours is used to recognize revenue for professional services. Only the hours that depict the Company’s performance toward satisfying a performance obligation are used for progress. An estimate for professional services is made at the beginning of each contract based on prior experience and monitored throughout the services. This method is most appropriate as it depicts the measure of progress towards satisfaction of the performance obligation. When product and services are sold together, the allocation of the transaction price to each performance obligation is calculated using a budgeted cost-plus margin approach. Due to the complex nature of these contracts, there is significant judgment in allocating the transaction price. These estimates are periodically reviewed by project managers, engineers, and other staff involved to ensure estimates are appropriate. For items sold separately, including hardware, software, professional services, maintenance contracts, other services, and third-party service contracts, there is no allocation as there is one performance obligation. Contract Assets and Liabilities When the Company has performed work but does not have an unconditional right to payment, a contract asset is recorded. When the Company has the right to bill a customer, accounts receivable is recorded as an unconditional right exists. Current contract assets were $1.6 million and $0.6 million as of June 30, 2020 and September 30, 2019, respectively. The current portion is recorded in other current assets on the consolidated balance sheets. There were no non-current contract assets as of June 30, 2020 and September 30, 2019. The difference in the balances is due to regular timing differences between when work is performed and having an unconditional right to payment. Contract liabilities arise when payment is received before the Company transfers a good or service to the customer. Current contract liabilities were $1.3 million and $0.7 million as of June 30, 2020 and September 30, 2019, respectively. The current portion of contract liabilities is recorded in deferred revenue on the consolidated balance sheets. 13 Table of Contents The long-term portion of contract liabilities were $0.2 million and $0.3 million as of June 30, 2020 and September 30, 2019, respectively. These non-current liabilities are recorded in other noncurrent liabilities. Revenue recognized for the three and nine months ended June 30, 2020 that was included in contract liabilities as of the beginning of the period was $0.1 million and $0.4 million, respectively. Contract Costs Incremental costs of obtaining a contract involving customer transactions where the revenue and the related transfer of goods and services are less than a one-year period, are expensed as incurred, utilizing the practical expedient in ASC 340-40-25-4 . For a period greater than one year, incremental contract costs are capitalized if the Company expects to recover these costs. The costs are amortized over the contract term and expected renewal periods. The period of amortization is generally three to six years. Incremental costs are related to commissions in the TS portion of the business. Current capitalized contract costs are within the other current assets on the consolidated balance sheets as of June 30, 2020 and September 30, 2019. The portion of current capitalized costs were $82 thousand and $85 thousand as of June 30, 2020 and September 30, 2019, respectively. There are no non-current capitalized costs on the consolidated balance sheets as these commissions are paid annually even when the contract extends beyond a one-year period. The amount of incremental costs amortized for the three and nine months ended June 30, 2020 were $81 thousand and $243 thousand, respectively. The amount of incremental costs amortized for the three and nine months ended June 30, 2019 were $66 thousand and $174 thousand, respectively. This is recorded in selling, general, and administrative expenses. There was no impairment related to incremental costs capitalized during the three and nine months ended June 30, 2020. Costs to fulfill a contract are capitalized when the costs are related to a contract or anticipated contract, generate or enhance resources that will be used in satisfying performance obligations in the future, and costs are recoverable. Costs to fulfill a contract are related to the TS portion of the business and involve activities performed before managed services can be completed. Current capitalized fulfillment costs are in the other current assets and noncurrent costs are in other assets on the consolidated balance sheets. The portion of current capitalized costs were $13 thousand and $47 thousand as of June 30, 2020 and September 30, 2019, respectively. The portion of noncurrent capitalized costs were $25 thousand as of June 30, 2020 and there were not any as of September 30, 2019. The amount of fulfillment costs amortized for three and nine months ended June 30, 2020 were $3 thousand and $9 thousand, respectively. The amount of fulfillment costs amortized for three and nine months ended June 30, 2019 were $1 thousand and $9 thousand, respectively, and recorded in cost of sales. There was no impairment related to fulfillment costs capitalized. Other Projects are typically billed upon completion or at certain milestones. Product and services are typically billed when shipped or as services are being performed. Payment terms are typically 30 days to pay in full except in Europe where it could be up to 90 days. Most of the Company’s contracts are less than one year. As a practical expedient, the Company has elected not to adjust the amount of consideration for effects of a significant financing component when it is anticipated the promised good or service will be transferred and the subsequent payment will be one year or less. There are certain contracts that do contain a financing component. See Note 6 to the consolidated financial statements for additional information. The Company elected to use the optional exemption to not disclose the aggregate amount of the transaction price allocated to performance obligations that have an original expected duration of one year or less. This is due to a low amount of performance obligations, which are less than one year from being unsatisfied at each period end. Most of these contracts are related to product sales. ​ ​ ​ ​ 14 Table of Contents The Company has certain contracts that have an original term of more than one year. The royalty agreement is longer than one year, but not included in the table below as the royalties are sales-based. Managed service contracts are generally longer than one year. For these contracts the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2020 is set forth in the table below: ​ ​ ​ ​ ​ ​ (Amounts in thousands) Fiscal 2020 (remaining 3 months) ​ $ 387 Fiscal 2021 ​ ​ 1,319 Fiscal 2022 ​ ​ 582 Fiscal 2023 ​ ​ 191 Fiscal 2024 ​ ​ 30 ​ ​ $ 2,509 ​ ​ 5. Earnings Per Share of Common Stock Basic net income (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per common share reflects the maximum dilution that would have resulted from the assumed exercise and share repurchase related to dilutive stock options and is computed by dividing net income (loss) by the assumed weighted average number of common shares outstanding. We are required to present earnings per share, or EPS, utilizing the two class method because we had outstanding, non-vested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, which are considered participating securities. Basic and diluted earnings per share computations for the Company’s reported net loss attributable to common stockholders are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended ​ For the nine months ended ​ ​ ​ June 30, ​ June 30, ​ June 30, ​ June 30, ​ ​ 2020 2019 2020 2019 ​ ​ ​ (Amounts in thousands except per share data) ​ Net income (loss) $ (210) $ 532 ​ (1,482) ​ (37) Less: net income attributable to nonvested common stock ​ — ​ 23 ​ — ​ — Net income (loss) attributable to common stockholders ​ $ (210) $ 509 ​ $ (1,482) $ (37) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average total shares outstanding – basic ​ 4,048 4,244 ​ 4,015 3,913 ​ Less: weighted average non–vested shares outstanding ​ — 193 ​ — — ​ Weighted average number of common shares outstanding – basic ​ 4,048 4,051 ​ 4,015 3,913 ​ Potential common shares from non–vested stock awards and the assumed exercise of stock options ​ — 91 ​ — — ​ Weighted average common shares outstanding – diluted ​ 4,048 4,142 ​ 4,015 3,913 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share – basic ​ $ (0.05) $ 0.13 ​ $ (0.37) $ (0.01) ​ Net income (loss) per share – diluted ​ $ (0.05) $ 0.12 ​ $ (0.37) $ (0.01) ​ ​ Non-vested restricted stock awards of 205,000 and 200,000 shares were excluded from the diluted loss per share calculation for the three and nine months ended June 30, 2020, respectively. Non-vested restricted stock awards of 176,000 shares were excluded from the diluted loss per share calculation for the nine months ended June 30, 2019. These awards were excluded because there was a net loss for these periods and their inclusion would have been anti-dilutive. 15 Table of Contents 6 . Accounts and Long-Term Receivable Within accounts receivable and long-term receivable there are amounts due reflecting sales whose payment terms exceed one year. This financing is separate from agreements with a leasing component, see Note 8 for financing through leases. These receivables are included in Accounts Receivable and Long-Term Receivable in the amount of $2.3 million and $5.0 million as of June 30, 2020. These receivables are included in Accounts Receivable and Long-Term Receivable in the amount of $2.1 million and $5.0 million as of September 30, 2019, respectively. The receivables with a payment term exceeding one year carry an average weighted interest rate of 6.5%, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement. ​ There is not an allowance for credit losses nor impairments for accounts and long-term receivables with a contractual maturity of over one year. All accounts have no past amounts due as of June 30, 2020 or September 30, 2019. There was no activity in the allowance for credit losses of these receivables for the nine months ended June 30, 2020 and June 30, 2019, respectively. All these agreements are looked at as one portfolio in determining credit losses. There are various factors that are considered in extending a customer payment terms longer than one year including payment history, economic conditions, and capacity to pay. The credit quality of customers is monitored by payment activity. The unearned income represents a rate similar to market at the inception of the agreement. ​ The amount of interest income earned from sales whose payment terms exceed one year for the three and nine months ended June 30, 2020 was $120 thousand and $349 thousand, respectively. The amount of interest income earned from this type of agreement for the three and nine months ended June 30, 2019 was $11 thousand and $12 thousand, respectively. Interest income from these agreements is recorded in Other income, net on the Consolidated Statements of Operations. ​ Receivables whose payment terms exceed one year are placed on nonaccrual status, meaning interest income stops being recorded, when the customer has a past due amount in excess of 30 days or reasonable doubt exists in collecting all interest and principal. A payment due in excess of 30 days is considered delinquent. If a payment is received for a receivable on nonaccrual status the payment is first applied to interest and then principal. Recording interest income resumes once no reasonable doubt exists regarding collecting all interest and principal. ​ Contractual maturities of outstanding financing with an original contractual maturity over one year are as follows: ​ ​ ​ ​ ​ Fiscal year ending September 30: (Amounts in thousands) 2020 (remaining 3 months) ​ $ 1,526 2021 ​ ​ 2,678 2022 ​ ​ 2,300 2023 ​ ​ 1,423 Total payments ​ ​ 7,927 Less: unearned income ​ ​ 666 Total, net of unearned income ​ $ 7,261 ​ ​ 7 . Inventories Inventories consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ September 30, ​ 2020 2019 ​ ​ (Amounts in thousands) Raw materials ​ $ 902 ​ $ 671 Work-in-process ​ 430 ​ ​ 93 Finished goods ​ 5,080 ​ ​ 7,054 Total ​ $ 6,412 ​ $ 7,818 ​ ​ 16 Table of Contents 8 . Leases Lessee At the inception of an arrangement, the Company determines whether the arrangement contains a lease. This includes arrangements with goods and services to determine if there is an embedded lease. An arrangement containing a lease would allow the Company the right to control an implicitly or explicitly identified asset. If there is a lease in an arrangement, the classification is determined at inception of the arrangement. Certain leases may contain transfer of ownership or an option to purchase the underlying asset. The most relevant criterion for our lease classification is transfer of ownership, which if included in the arrangement makes the lease a finance lease rather than an operating lease. The discount rate used to assess classification is the incremental borrowing rate at the commencement date due to the implicit rate not being readily determinable. The incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The lease term includes periods where we are reasonably certain we will exercise the renewal option. The Company has elected not to apply Subtopic ASC 842-25 to short-term leases, which are defined as a lease that has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Therefore, there are no right-of-use assets or lease liabilities related to short-term leases in the Consolidated Balance Sheets and the lease payments are expensed on a straight-line basis over the lease term. Leases are typically not able to be terminated without penalty. None of our lease arrangements contain residual value guarantees, restrictions, or covenants. None of the Company’s current leases are with related parties. The office lease in Lowell, Massachusetts was renewed through February 2022. Additionally, the office lease in Deerfield Beach, FL was renewed through June 2025. The right-of-use asset and lease liability was adjusted for the Lowell lease. The Deerfield Beach lease renewal period was included in the right-of-use asset and lease liability upon adoption of ASC 842 on October 1, 2019 because it was reasonably certain this renewal period would be exercised by the Company. There are no lease arrangements that we have entered into as of June 30, 2020 that have not yet commenced. Operating leases The Company has operating leases for office space, data centers, and other information technology equipment under various leases. Operating lease right-of-use assets and liabilities are recognized at the commencement date using the present value of the fixed lease payments over the lease term. We do not have leases with variable consideration. The incremental borrowing rate is used in determining present value. Certain operating leases, primarily office space and IT equipment, have an option to extend the lease. Renewal periods related to certain lease agreements related to office buildings are included in the lease term for lease accounting. The Company has operating lease agreements with lease components (e.g. fixed payments including rent, real estate taxes, and insurance costs) as well as nonlease components (e.g. common-area maintenance, colocation services). The Company has elected to account for lease and nonlease components as one single lease component for all classes of assets. Lease expense is recognized on a straight-line basis over the lease term. Finance leases The Company has finance leases for information technology equipment and subleases all this equipment (see Lessor section below for details). All finance leases transfer ownership to the Company, which meets the criterion to be a finance lease. Due to our finance leases being subleases, there is no finance right-of-use assets. However, there is a net investment in lease in the Consolidated Balance Sheets. Lessor The Company is a lessor, but only as a sublessor. The process for identifying and classifying a lease is similar to the process described above in the lessee section. Additionally, the most relevant criteria to classification is transfer of ownership and present value of the total lease payments in relation to fair value of the underlying asset. The Company as a lessor has both sales-type and direct financing leases. The Company as a lessor does not have operating leases. All the 17 Table of Contents Company’s sublease agreements are bundled agreements containing managed services, software, and other services. The fixed payments under bundled agreements are allocated based on the relative standalone selling prices of the lease and non-lease deliverables are consistent with ASC 606. The allocation of the fixed payments may be calculated using a budgeted cost-plus margin approach if there are other services in addition to managed services. Due to the complex nature of these contracts, there is significant judgment in allocating the fixed payments. There is no variable consideration in these agreements. The discount rate used as a lessor pertaining to the lease component is the implicit rate. As sublessor, lease agreements contain an option to purchase the underlying asset or transfers ownership at the end of the lease. The leases typically do not have any residual value to the Company. In the Company’s sublessor agreements, the payments allocated to the lease component cannot be terminated. There were no new agreements where the Company was a lessor for the nine months ended June 30, 2020. Information related to both lessee and lessor The following table specifies where the right-of-use assets and lease liabilities are within the Consolidated Balance Sheets as of June 30, 2020 and October 1, 2019 (adoption date): ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated Balance Sheets Location June 30, 2020 October 1, 2019 ​ ​ ​ (Amounts in thousands) ​ (Amounts in thousands) Assets ​ ​ ​ ​ ​ ​ ​ Operating leases Operating lease right-of-use assets ​ $ 2,180 ​ $ 2,448 ​ ​ ​ ​ ​ ​ ​ ​ Lease receivable - current Investment in lease, net-current portion ​ $ 416 ​ $ 367 Lease receivable - noncurrent Investment in lease, net-less current portion ​ ​ 103 ​ ​ 417 Total lease receivable ​ ​ $ 519 ​ $ 784 ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ Current operating lease liabilities Accounts payable and accrued expenses ​ $ 678 ​ $ 746 Non-current operating lease liabilities Operating lease liabilities - noncurrent portion ​ ​ 1,562 ​ ​ 1,783 Total operating lease liabilities ​ ​ $ 2,240 ​ $ 2,529 ​ ​ ​ ​ ​ ​ ​ ​ Current finance lease liabilities Accounts payable and accrued expenses ​ $ 348 ​ $ 334 Non-current finance lease liabilities Other noncurrent liabilities ​ 63 ​ 324 Total finance lease liabilities ​ ​ $ 411 ​ $ 658 ​ The components of lease costs for three and nine months ended June 30, 2020 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Nine months ended Consolidated Statements of Operations Location Consolidated Statements of Operations Location ​ ​ June 30, 2020 June 30, 2020 ​ ​ ​ (Amounts in thousands) ​ (Amounts in thousands) Finance Lease: ​ ​ ​ ​ ​ ​ ​ Interest on lease liabilities Selling, general, and administrative ​ $ 5 ​ $ 24 Operating Lease: ​ ​ ​ ​ ​ Operating lease cost Selling, general, and administrative ​ 186 ​ 547 Short-term lease cost Selling, general, and administrative ​ ​ 3 ​ ​ 9 Total lease costs ​ ​ $ 194 ​ $ 580 Less sublease interest income Revenue ​ ​ (19) ​ ​ (68) Total lease costs, net of sublease interest income ​ ​ $ 175 ​ $ 512 ​ 18 Table of Contents Future lease payments under our non-cancellable leases and payments to be received as a sublessor as of June 30, 2020 are in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease ​ Finance lease ​ Sublease Fiscal year ending September 30: Costs ​ Costs ​ Payments received ​ (Amounts in thousands) 2020 (remaining 3 months) $ 193 ​ $ 91 ​ $ 118 2021 ​ 749 ​ ​ 285 ​ ​ 356 2022 ​ 613 ​ ​ 51 ​ ​ 67 2023 ​ 439 ​ ​ 5 ​ ​ 12 2024 240 ​ — ​ 3 Thereafter 182 ​ — ​ — Total $ 2,416 ​ $ 432 ​ $ 556 Less Imputed interest ​ (176) ​ ​ (21) ​ ​ (37) Total $ 2,240 ​ $ 411 ​ $ 519 ​ Supplemental cash flow information related to leases for the nine months ended June 30, 2020 is below: ​ ​ ​ ​ ​ ​ Three months ended Nine months ended ​ June 30, 2020 June 30, 2020 ​ (Amounts in thousands) (Amounts in thousands) Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ Operating cash flows from operating leases $ 182 $ 561 Operating cash flows from short-term leases ​ 10 ​ 29 Operating cash flows from finance leases ​ 6 ​ 25 Financing cash flows from finance leases ​ 91 ​ 248 Lease assets obtained in exchange for new lease liabilities ​ ​ ​ ​ Operating leases ​ 212 ​ 216 Cash received from subleases ​ 113 ​ 338 ​ Information as a lessee related to weighted averages of lease term and discount rate as of June 30, 2020 is below: ​ ​ ​ Weighted-average remaining lease term (years) June 30, 2020 Operating leases 3.7 Finance leases 1.3 ​ ​ Weighted-average discount rate June 30, 2020 Operating leases 4.0% Finance leases 6.4% ​ ​ 19 Table of Contents Below are ASC 840 disclosures as previously reported in our Form 10-K for the year ended September 30, 2019: Lessee Operating Leases The Company was obligated under non-cancelable operating leases with an initial term in excess of one year as follows: ​ ​ ​ ​ Fiscal year ending September 30: (Amounts in thousands) 2020 (full year) ​ $ 475 2021 ​ 173 2022 ​ ​ 58 2023 ​ 43 Total ​ $ 749 ​ Capital leases The Company was obligated under non-cancelable capital leases as follows: ​ ​ ​ ​ Fiscal year ending September 30: (Amounts in thousands) 2020 (full year) ​ $ 363 2021 ​ ​ 285 2022 ​ 51 2023 ​ 5 Minimum lease payments including interest ​ $ 704 Amount representing interest ​ (46) Minimum lease payments excluding interest ​ $ 658 ​ Lessor A summary of components for the Company’s investment in lease, net is as follows: ​ ​ ​ ​ September 30, 2019 ​ (Amounts in thousands) Investment in lease, gross $ 889 Unearned income (105) Total investment in lease, net $ 784 Current portion $ 367 Noncurrent portion $ 417 ​ The schedule of future minimum lease payments receivable is as follows: ​ ​ ​ ​ Fiscal year ending September 30: (Amounts in thousands) 2020 (full year) ​ $ 451 2021 ​ 356 2022 ​ ​ 67 2023 ​ ​ 12 2024 ​ 3 Minimum lease payments including interest ​ $ 889 Amount representing interest ​ (105) Minimum lease payments excluding interest ​ $ 784 ​ ​ ​ 20 Table of Contents 9 . Notes Payable and Line of Credit In September 2019, the Company borrowed $1.0 million with a 5.0% rate of interest related to a multi-year agreement with a customer. See Note 6 for the disclosure related to the receivables. ​ In October 2019, the Company borrowed $2.0 million with a 5.1% rate of interest related to a multi-year agreement with a customer. ​ On April 17, 2020, CSP, Inc. and Modcomp, Inc., its wholly owned subsidiary (collectively, the “Borrowers”) each received a loan in the form of a promissory note from Paragon Bank (“Lender”) in the amounts of $827,000 and $1,353,600, respectively (the “SBA Loans”) under the Paycheck Protection Program, which was established under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (“SBA”). The SBA Loans have a two-year term and carry an annual fixed interest rate of 1%. ​ The SBA Loans provide for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, materially false or misleading representations to Lender or SBA, and adverse changes in the financial condition or business operations that Lender believes may materially affect Borrowers’ ability to pay the SBA Loans. The Borrowers did not provide any collateral or guarantees for the SBA Loans and the Borrowers may prepay the principal of the SBA Loans at any time without penalty. ​ The Borrowers may apply to the Lender for forgiveness of an amount due on the SBA Loans in an amount equal to the sum of certain costs during the 8 or 24 week period beginning on the date of the first disbursement of the SBA Loans. The Company elected to use the 24 week period. However, based on guidance from the SBA the borrowers may submit a loan forgiveness application any time on or before the maturity date of the loan – including before the end of the covered period – if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness, which is our intention. The amount of SBA Loans forgiveness shall be calculated in accordance with the requirements of the Paycheck Protection Program, including provisions of Section 1106 of the CARES Act. We intend to use the SBA Loans proceeds in accordance with the applicable SBA guidelines. However, we can provide no assurances that we will be eligible for forgiveness of the SBA Loans, in whole or in part. ​ Interest expense related to the notes for the three and nine months ended June 30, 2020 was $36 thousand and $99 thousand, respectively. There was no interest expense related to a note for three and nine months ended June 30, 2019 as there were no outstanding notes payable as of this date. Below are details of the notes payable. ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ September 30, 2019 ​ (Amounts in thousands) Current $ 1,784 ​ $ 359 Less: notes discount ​ 105 ​ 42 Notes payable - current portion $ 1,679 ​ $ 317 ​ ​ ​ ​ ​ ​ Noncurrent ​ 3,016 ​ $ 718 Less: notes discount ​ 97 ​ 34 Notes payable - noncurrent portion $ 2,919 ​ $ 684 ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2020 and September 30, 2019, the Company maintained an inventory line of credit with a borrowing capacity of $15.0 and $20.0 million, respectively. It may be used by the TS and HPP segment in the U.S. to purchase inventory from approved vendors with payment terms which exceed those offered by the vendors. No interest accrues under the inventory line of credit when advances are paid within terms, however, late payments are subject to an interest charge of Prime plus 5%. The credit agreement for the inventory line of credit contains financial covenants which require the Company to maintain the following TS segment-specific financial ratios: (1) a minimum current ratio of 1.2, (2) tangible net worth of no less than $4.0 million, and (3) a maximum ratio of total liabilities to total net worth of less than 5.0:1. As of June 30, 2020 and September 30, 2019, Company borrowings, all from the TS segment, under the inventory line of credit were $1.1 million and $2.5 million, respectively, and the Company was in compliance with all covenants. As of June 30, 2020 and September 30, 2019 this line of credit also includes availability of a limited cash 21 Table of Contents withdrawal of up to $1.0 million and $1.5 million, respectively. As of June 30, 2020 and September 30, 2019 there were no cash withdrawals outstanding. The amount of the inventory line of credit and cash withdrawal was lowered in June of 2020 primarily due to lack of need for full use of the line. ​ ​ 10. Pension and Retirement Plans The Company’s operations have defined benefit and defined contribution plans in the U.K. and in the U.S. In the U.K., the Company provides defined benefit pension plans and defined contribution plans for some of its employees. In the U.S., the Company provides benefits through supplemental retirement plans to certain former employees. The U.S. supplemental retirement plans have life insurance policies which are not plan assets but were purchased by the Company as a vehicle to fund the costs of the plan. The Company also provides for officer death benefits through post-retirement plans to certain officers of the Company in the U.S. All the Company’s defined benefit plans are closed to newly hired employees and have been since September 2009. The Company funds its pension plans in amounts sufficient to meet the requirements set forth in applicable employee benefits laws and local tax laws. Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheets. The Company’s pension plan in the U.K. is the only plan with plan assets. The plan assets consist of an investment in a commingled fund which in turn comprises a diversified mix of assets including corporate equity securities, government securities and corporate debt securities. The components of net periodic benefit costs related to the U.S. and U.K. plans are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ ​ 2020 ​ 2019 ​ U.K. U.S. Total U.K. U.S. Total ​ ​ (Amounts in thousands) Pension: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest cost ​ $ 64 ​ $ 3 ​ $ 67 ​ $ 91 ​ $ 6 ​ $ 97 Expected return on plan assets ​ (72) ​ — ​ (72) ​ (76) ​ — ​ (76) Amortization of past service costs ​ ​ 2 ​ ​ — ​ ​ 2 ​ ​ — ​ ​ — ​ ​ — Amortization of net gain (loss) ​ 46 ​ — ​ 46 ​ 37 ​ (1) ​ 36 Net periodic benefit cost ​ $ 40 ​ $ 3 ​ $ 43 ​ $ 52 ​ $ 5 ​ $ 57 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Post Retirement: ​ ​ ​ ​ ​ ​ Service cost ​ $ — ​ $ 10 ​ $ 10 ​ $ — ​ $ 14 ​ $ 14 Interest cost ​ — ​ 12 ​ 12 ​ — ​ 9 ​ 9 Amortization of net gain (loss) ​ — ​ 4 ​ 4 ​ — ​ (4) ​ (4) Net periodic cost ​ $ — ​ $ 26 ​ $ 26 ​ $ — ​ $ 19 ​ $ 19 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 22 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended June 30, ​ ​ 2020 ​ 2019 ​ U.K. U.S. Total U.K. U.S. Total ​ ​ (Amounts in thousands) Pension: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest cost ​ $ 196 ​ $ 11 ​ $ 207 ​ $ 274 ​ $ 18 ​ $ 292 Expected return on plan assets ​ (220) ​ — ​ (220) ​ (231) ​ — ​ (231) Amortization of past service costs ​ ​ 6 ​ ​ — ​ ​ 6 ​ ​ — ​ ​ — ​ ​ — Amortization of net gain (loss) ​ 142 ​ 2 ​ 144 ​ 113 ​ (3) ​ 110 Net periodic benefit cost ​ $ 124 ​ $ 13 ​ $ 137 ​ $ 156 ​ $ 15 ​ $ 171 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Post Retirement: ​ ​ ​ ​ ​ ​ Service cost ​ $ — ​ $ 29 ​ $ 29 ​ $ — ​ $ 31 ​ $ 31 Interest cost ​ — ​ 35 ​ 35 ​ — ​ 35 ​ 35 Amortization of net gain (loss) ​ — ​ 16 ​ 16 ​ — ​ (13) ​ (13) Net periodic cost ​ $ — ​ $ 80 ​ $ 80 ​ $ — ​ $ 53 ​ $ 53 ​ The fair value of the assets held by the U.K. pension plan by asset category are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Values as of ​ ​ June 30, 2020 ​ September 30, 2019 ​ ​ Fair Value Measurements Using Inputs Considered as ​ Fair Value Measurements Using Inputs Considered as Asset Category Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 ​ ​ (Amounts in thousands) Cash on deposit ​ $ 121 ​ $ 121 ​ $ — ​ $ — ​ $ 279 ​ $ 279 ​ $ — ​ $ — Pooled funds ​ 8,855 ​ 8,855 ​ — ​ ​ — ​ 7,959 ​ 7,959 ​ — ​ ​ — Total plan assets ​ $ 8,976 ​ $ 8,976 ​ $ — ​ $ — ​ $ 8,238 ​ $ 8,238 ​ $ — ​ $ — ​ ​ 11. Income Taxes ​ An income tax expense of $10 thousand was recorded for the three months ended June 30, 2020 compared to an income tax benefit of $326 thousand in the same period of 2019. The income tax expense for the nine months ended June 30, 2020 was $1.1 million and the income tax benefit for the same period of the prior year was $466 thousand. The year to date income tax expense reflects the recording of a valuation allowance against deferred tax assets during the second quarter, as the Company has concluded that it is more likely than not that a portion of its deferred tax assets will not be realized in light of recent results, the COVID-19 pandemic, and the resulting economic fallout. The year to date income tax expense is net of federal tax benefits anticipated from the carryback of current and prior period federal net operating losses, as allowed under the recently enacted CARES Act, to recover federal taxes paid in prior periods. The 2019 year to date income tax benefit reflected the benefit of prior year losses. ​ The provisions above are estimates, and accordingly, changes to these estimates will be recorded in subsequent periods as more information and guidance becomes available. ​ 12. Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ September 30, ​ 2020 2019 ​ ​ (Amounts in thousands) Cumulative effect of foreign currency translation ​ $ (5,109) ​ $ (5,111) Cumulative unrealized loss on pension liability ​ (7,482) ​ (7,482) Accumulated other comprehensive loss ​ $ (12,591) ​ $ (12,593) ​ ​ ​ ​ ​ ​ 23 Table of Contents ​ 13. Repurchase of Common Stock On November 13, 2007, the Board of Directors authorized the Company to purchase 250 thousand shares of its outstanding common stock. On February 3, 2009, the Board of Directors authorized the Company to purchase up to 350 thousand additional shares of the Company's outstanding common stock at market price. ​ On February 8, 2011, the Board of Directors authorized the Company to purchase up to 250 thousand additional shares of the Company's outstanding common stock at market price. The plan does not expire. Pursuant to the aforementioned authorization, the Company repurchased 400 and 6 thousand shares of its outstanding common stock on the open market during the three and nine months ended June 30, 2020. As of June 30, 2020, approximately 194 thousand shares remain authorized to repurchase under the stock repurchase program. ​ As of May 14, 2020, we have suspended our stock repurchase program until further economic clarity. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 14. Dividends On December 10, 2019, the Company’s board of directors declared a cash dividend of $0.15 per share which was paid on January 15, 2020 to shareholders of record as of December 31, 2019, the record date. On February 12, 2020, the Company’s board of directors declared a cash dividend of $0.15 per share which was paid on March 13, 2020 to shareholders of record as of February 28, 2020, the record date. As of May 14, 2020, the Company has suspended dividends until further economic clarity. 15. Fair Value of Financial Assets and Liabilities Under the fair value standards fair value is based on the exit price and defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement should reflect all the assumptions that market participants would use in pricing an asset or liability. A fair value hierarchy is established in the authoritative guidance outlined in three levels ranking from Level 1 to Level 3 with Level 1 being the highest priority. ​ Level 1: observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets ​ Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly ​ Level 3: unobservable inputs (e.g., a reporting entity’s or other entity’s own data) ​ The Company had no assets or liabilities measured at fair value on a recurring (except our pension plan assets and whole life insurance policies, see Note 10) or non-recurring basis as of June 30, 2020 or September 30, 2019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 24 Table of Contents To estimate fair value of the financial instruments below, quoted market prices are used when available and classified within Level 1. If this data is not available, we use observable market-based inputs to estimate fair value, which are classified within Level 2. If the preceding information is unavailable, we use internally generated data to estimate fair value which is classified within Level 3. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2020 ​ ​ As of September 30, 2019 ​ ​ ​ ​ ​ ​ Carrying Amount ​ ​ Fair Value ​ ​ Carrying Amount ​ ​ Fair Value ​ Fair Value Level ​ Reference ​ ​ (Amounts in thousands) ​ ​ ​ ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents $ 19,976 ​ $ 19,976 ​ $ 18,099 ​ $ 18,099 ​ 1 ​ Consolidated Balance Sheets Accounts & long-term receivable* ​ 7,261 ​ ​ 7,261 ​ ​ 7,087 ​ ​ 7,087 ​ 3 ​ Note 6 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Notes payable ​ 4,598 ​ ​ 4,598 ​ ​ 1,001 ​ ​ 1,001 ​ 2 ​ Note 9 ​ *Original maturity over one year ​ Cash and cash equivalents Carrying amount approximated fair value. ​ Accounts and long-term receivable with original maturity over one year Fair value was estimated by discounting future cash flows based on the current rate with similar terms. ​ Notes Payable Fair value was estimated based on quoted market prices. ​ Fair value of accounts receivable with an original maturity of one year or less and accounts payable was not materially different from their carrying values at June 30, 2020 and September 30, 2019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 25 Table of Contents 16. Segment Information The following tables present certain operating segment information for the three and nine months ended June 30, 2020 and 2019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Technology Solutions Segment ​ ​ ​ ​ ​ High ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ United ​ ​ ​ ​ ​ ​ ​ Consolidated For the three months ended June 30, Segment Kingdom U.S. Total Total ​ ​ (Amounts in thousands) 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 780 ​ $ 75 ​ $ 9,439 ​ $ 9,514 ​ $ 10,294 Service ​ 803 ​ 132 ​ 2,303 ​ 2,435 ​ 3,238 Total sales ​ $ 1,583 ​ $ 207 ​ $ 11,742 ​ $ 11,949 ​ $ 13,532 Income (loss) from operations ​ $ (765) ​ $ 32 ​ $ 340 ​ $ 372 ​ $ (393) Total assets ​ $ 9,046 ​ $ 10,729 ​ $ 34,486 ​ $ 45,215 ​ $ 54,261 Capital expenditures ​ — ​ — ​ 45 ​ 45 ​ 45 Depreciation and amortization ​ 50 ​ — ​ 63 ​ 63 ​ 113 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ Product ​ $ 1,592 ​ $ 720 ​ $ 15,764 ​ $ 16,484 ​ $ 18,076 Service ​ 548 ​ 109 ​ 2,837 ​ 2,946 ​ 3,494 Total sales ​ $ 2,140 ​ $ 829 ​ $ 18,601 ​ $ 19,430 ​ $ 21,570 Income (loss) from operations ​ $ (484) ​ $ (25) ​ $ 654 ​ $ 629 ​ $ 145 Total assets ​ $ 12,287 ​ $ 12,540 ​ $ 31,665 ​ $ 44,205 ​ $ 56,492 Capital expenditures ​ 39 ​ — ​ 283 ​ 283 ​ 322 Depreciation and amortization ​ 58 ​ — ​ 45 ​ 45 ​ 103 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Technology Solutions Segment ​ ​ ​ ​ ​ High ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ United ​ ​ ​ ​ ​ ​ ​ Consolidated For the nine months ended June 30, Segment Kingdom U.S. Total Total ​ ​ (Amounts in thousands) 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 2,469 ​ $ 812 ​ $ 32,531 ​ $ 33,343 ​ $ 35,812 Service ​ 1,630 ​ 342 ​ 8,415 ​ 8,757 ​ 10,387 Total sales ​ $ 4,099 ​ $ 1,154 ​ $ 40,946 ​ $ 42,100 ​ $ 46,199 Income (loss) from operations ​ $ (3,052) ​ $ (15) ​ $ 2,129 ​ $ 2,114 ​ $ (938) Total assets ​ $ 9,046 ​ $ 10,729 ​ $ 34,486 ​ $ 45,215 ​ $ 54,261 Capital expenditures ​ 63 ​ — ​ 222 ​ 222 ​ 285 Depreciation and amortization ​ 165 ​ 3 ​ 184 ​ 187 ​ 352 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ Product ​ $ 4,700 ​ $ 4,340 ​ $ 38,350 ​ $ 42,690 ​ $ 47,390 Service ​ 1,080 ​ 274 ​ 8,156 ​ 8,430 ​ 9,510 Total sales ​ $ 5,780 ​ $ 4,614 ​ $ 46,506 ​ $ 51,120 ​ $ 56,900 Income (loss) from operations ​ $ (2,404) ​ $ 107 ​ $ 1,686 ​ $ 1,793 ​ $ (611) Total assets ​ $ 12,287 ​ $ 12,540 ​ $ 31,665 ​ $ 44,205 ​ $ 56,492 Capital expenditures ​ 279 ​ — ​ 311 ​ 311 ​ 590 Depreciation and amortization ​ 166 ​ 3 ​ 140 ​ 143 ​ 309 26 Table of Contents Income (loss) from operations consists of sales less cost of sales, engineering and development expenses, and selling, general and administrative expenses but is not affected by either other income/expense or by income taxes expense (benefit). Non-operating expenses/income consists principally of investment income, interest income from transactions with payment terms exceeding one year (see Note 6 for details), and interest expense. All intercompany transactions have been eliminated. The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the three and nine months ended June 30, 2020 and 2019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, ​ For the nine months ended June 30, ​ ​ ​ 2020 ​ 2019 ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer ​ % of Total ​ Customer ​ % of Total ​ Customer ​ % of Total ​ Customer ​ % of Total ​ ​ Revenues Revenues Revenues Revenues Revenues Revenues Revenues Revenues ​ ​ (Dollar amounts in millions) ​ Customer A ​ $ 0.8 ​ 6 % $ 3.8 ​ 18 % $ 4.0 ​ 9 % $ 6.8 ​ 12 % Customer B ​ $ 3.2 ​ 23 % $ 3.0 ​ 14 % $ 7.0 ​ 15 % $ 5.0 ​ 9 % Customer C ​ $ 1.6 ​ 12 % $ 1.9 ​ 9 % $ 2.3 ​ 5 % $ 3.4 ​ 6 % ​ Customer B totaled approximately $6.3 million, or 39%, and approximately $7.4 million, or 36%, of total consolidated accounts receivable and long-term receivable as of June 30, 2020 and September 30, 2019, respectively. There were no other customers that were more than 10% of total consolidated accounts receivable and long-term receivable as of June 30, 2020. We believe that the Company is not exposed to any significant credit risk with respect to the accounts receivable with any customers as of June 30, 2020. ​ ​ ​ ​