What changed in this filing

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Item 1. Financial Statements

2021-05-13 compared with 2021-02-11 · 227 added, 96 removed, 431 unchanged (43% of the section changed)

46 unchanged sentences

For the three months ended

For the six months ended

Cost of sales:

6 unchanged sentences

Other income (expense):

Foreign exchange loss

Foreign exchange (loss) gain

Interest expense

Interest income

Gain on extinguishment of debt

Gain on forgiveness of debt

Other income (expense)

Total other income (expense)

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Net income (loss) attributable to common stockholders

Net income (loss) per share – basic

(Loss) income before income taxes

Income tax expense

Net (loss) income

Net (loss) income attributable to common stockholders

Net (loss) income per share – basic

Weighted average shares outstanding – basic

Net income (loss) per share – diluted

Net (loss) income per share – diluted

Weighted average shares outstanding – diluted

4 unchanged sentences

For the three months ended

Net income (loss)

Foreign currency translation gain adjustments

Total comprehensive income (loss)

For the six months ended

Net (loss) income

Foreign currency translation gain (loss) adjustments

Total comprehensive (loss) income

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the three months ended December 31, 2020 and 2019:

For the three and six months ended March 31, 2021 and 2020:

(Amounts in thousands, except per share data)

1 unchanged sentence

Shareholders’

For the Three Months Ended December 31, 2019:

For the Three Months Ended March 31, 2020:

Balance as of December 31, 2019

Other comprehensive loss

Purchase of common stock

Stock-based compensation

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Cash paid on common stock ($0.15 per share)

Balance as of March 31, 2020

comprehensive

Shareholders’

For the Three Months Ended March 31, 2021:

Balance as of December 31, 2020

Other comprehensive gain

Stock-based compensation

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Balance as of March 31, 2021

See accompanying notes to unaudited consolidated financial statements.

AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the three and six months ended March 31, 2021 and 2020:

(Amounts in thousands, except per share data)

comprehensive

Shareholders’

For the six months ended March 31, 2020:

Balance as of September 30, 2019

2 unchanged sentences

Stock-based compensation

Cash declared on common stock ($0.15 per share)

Balance as of December 31, 2019

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Purchase of common stock

Cash dividends paid on common stock ($0.30 per share)

Balance as of March 31, 2020

comprehensive

Shareholders’

For the Three Months Ended December 31, 2020:

For the six months ended March 31, 2021:

Balance as of September 30, 2020

1 unchanged sentence

Stock-based compensation

Balance as of December 31, 2020

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Balance as of March 31, 2021

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

For the three months ended

For the six months ended

Operating activities

3 unchanged sentences

Loss on sale of fixed assets, net

Foreign exchange loss

Foreign exchange loss (gain)

Non-cash changes in accounts receivable

5 unchanged sentences

Non-cash other

Adjustment for financing activities recognized in net income - Gain on extinguishment of debt

Adjustment for financing activities recognized in net income - Gain on forgiveness of debt

Changes in operating assets and liabilities:

Decrease in accounts receivable

(Increase) decrease in inventories

Decrease (increase) in refundable income taxes

(Increase) decrease in accounts receivable

Decrease in inventories

Increase in refundable income taxes

Decrease (increase) in operating lease right-of-use assets

Decrease in other assets

Increase in other assets

Decrease in investment in lease

Decrease in long-term receivable

(Increase) decrease in long-term receivable

Increase (decrease) in accounts payable and accrued expenses

2 unchanged sentences

Increase in pension and retirement plans liabilities

Decrease in other long-term liabilities

Decrease in income taxes payable

Increase (decrease) in other long-term liabilities

Net cash provided by (used in) operating activities

4 unchanged sentences

Financing activities

Dividends paid

Net payments under line-of-credit agreement

2 unchanged sentences

Principal payments on finance leases

Purchase of common stock

Proceeds from issuance of shares under equity compensation plans

7 unchanged sentences

Cash paid for interest

Non-cash accrual of dividend payable

Supplementary non-cash financing activities:

Gain on extinguishment of debt

Gain on forgiveness of debt

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2020

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2021

Organization and Business

7 unchanged sentences

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.

The accompanying interim 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.

5 unchanged sentences

However, management has revised the first three quarters of fiscal year 2020.

The first quarter revised numbers are reflected in this Form 10-Q.

The revised numbers for the three and six months ended March 31, 2020 are reflected in this Form 10-Q.

The only financial statement affected was the Consolidated Statement of Operations.

2 unchanged sentences

Notes affected include Note 4 Revenue and Note 15 Segment Information.

For the three months ended December 31, 2019

For the three months ended March 31, 2020

For the six months ended March 31, 2020

Cost of sales:

4 unchanged sentences

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.

2 unchanged sentences

Accounting standards adopted in fiscal year 2021

In August 2018, the FASB issued Accounting Standards Update (“ASU”) No.

In August 2018, the FASB issued Accounting Standard Update (“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.

3 unchanged sentences

The disclosures will be expanded for the year ended September 30, 2021 as this standard does not affect interim disclosures.

New accounting standards not adopted as of December 31, 2020

New accounting standards not adopted as of March 31, 2021

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) , an amendment of the FASB Accounting Standards Codification.

14 unchanged sentences

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 .

component includes hardware, which is subject to ASC 842, Leases .

The non-lease components are subject to ASC 606, Revenue from Contracts with Customers .

20 unchanged sentences

Technology Solutions Segment

For the three months ended December 31,

For the three months ended March 31,

(Amounts in thousands)

Technology Solutions Segment

For the three months ended December 31,

For the three months ended March 31,

(Amounts in thousands)

Technology Solutions Segment

For the six months ended March 31,

(Amounts in thousands)

Technology Solutions Segment

For the six months ended March 31,

(Amounts in thousands)

* Finance revenue is related to equipment leasing and is not subject to the guidance on revenue from contracts with customers (ASC 606).

27 unchanged sentences

When the Company has the right to bill a customer, accounts receivable is recorded as an unconditional right exists.

Current contract assets were $0.8 million and $1.0 million as of December 31, 2020 and September 30, 2020, respectively.

Current contract assets were $2.0 million and $1.0 million as of March 31, 2021 and September 30, 2020, respectively.

The current portion is recorded in other current assets on the consolidated balance sheets.

There were no non-current contract assets as of December 31, 2020 and September 30, 2020.

There were no noncurrent contract assets as of March 31, 2021 and September 30, 2020.

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 $1.2 million and $0.9 million as of December 31, 2020 and September 30, 2020, respectively.

Current contract liabilities were $1.4 million and $0.9 million as of March 31, 2021 and September 30, 2020, respectively.

The current portion of contract liabilities is recorded in deferred revenue on the consolidated balance sheets.

The long-term portion of contract liabilities were $0.2 million and $0.2 million as of December 31, 2020 and September 30, 2020, respectively.

These non-current liabilities are recorded in other noncurrent liabilities.

Revenue recognized for the year ended December 31, 2020 that was included in contract liabilities as of the beginning of the period was $0.3 million.

The long-term portion of contract liabilities were $0.1 million and $0.2 million as of March 31, 2021 and September 30,

2020, respectively.

These noncurrent liabilities are recorded in other noncurrent liabilities.

Revenue recognized for the six months ended that was included in contract liabilities as of the beginning of the period was $0.5 million.

Contract Costs

4 unchanged sentences

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 December 31, 2020 and September 30, 2020.

The portion of current capitalized costs were $104 thousand and $130 thousand as of December 31, 2020 and September 30, 2020, 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 months ended December 31, 2020 and 2019 were $87 thousand and $78 thousand, respectively.

Current capitalized contract costs are within the other current assets on the consolidated balance sheets as of March 31, 2021 and September 30, 2020.

The portion of current capitalized costs were $106 thousand and $130 thousand as of March 31, 2021 and September 30, 2020, respectively.

There are no noncurrent 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 months ended March 31, 2021 and 2020 were $84 thousand and $84 thousand, respectively.

The amount of incremental costs amortized for the six months ended March 31, 2021 and 2020 were $171 thousand and $162 thousand, respectively.

This is recorded in selling, general, and administrative expenses.

There was no impairment related to incremental costs capitalized during the three ended December 31, 2020.

There was no impairment related to incremental costs capitalized during the three and six months ended March 31, 2021.

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.

1 unchanged sentence

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 $13 thousand as of December 31, 2020 and September 30, 2020, respectively.

The portion of noncurrent capitalized costs as of December 31, 2020 and September 30, 2020 were $18 thousand and $22 thousand, respectively.

The amount of fulfillment costs amortized for three months ended December 31, 2020 and 2019 were $3 thousand and $3 thousand, respectively.

The portion of current capitalized costs were $13 thousand as of March 31, 2021 and $13 thousand as of September 30, 2020.

The portion of noncurrent capitalized costs were $16 thousand and $22 thousand as of March 31, 2021 and September 30, 2020, respectively.

The amount of fulfillment costs amortized for three and six months ended March 31, 2021 were $3 thousand and $6 thousand, respectively.

These costs amortized were recorded in cost of sales.

The amount of fulfillment costs amortized for three and six months ended March 31, 2020 were $3 thousand and $6 thousand, respectively.

These costs amortized were recorded in cost of sales.

There was no impairment related to fulfillment costs capitalized.

3 unchanged sentences

Most of the Company’s contracts are less than one year.

There are certain contracts that do contain a financing component.

There are certain contracts that contain a financing component.

See Note 6 to the consolidated financial statements for additional information.

5 unchanged sentences

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 December 31, 2020 is set forth in the table below:

For these contracts the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2021 is set forth in the table below:

(Amounts in thousands)

6 unchanged sentences

For the three months ended

For the six months ended

(Amounts in thousands except per share data)

1 unchanged sentence

net income (loss) attributable to nonvested common stock

Net loss attributable to common stockholders

Net income (loss) attributable to common stockholders

Weighted average total shares outstanding – basic

5 unchanged sentences

Net income (loss) per share – diluted

Non-vested restricted stock awards of 190,000 shares were excluded from the diluted loss per share calculation for the three months ended December 31, 2019 because there was a net loss for this period and their inclusion would have been anti-dilutive.

Non-vested restricted stock awards of 218,000 shares were excluded from the diluted loss per share calculation for the three months ended March 31, 2021.

Non-vested restricted stock awards of 204,000 and 197,000 shares were excluded from the diluted loss per share calculation for the three and six months ended March 31, 2020, respectively.

These awards were excluded because there was a net loss for these periods and their inclusion would have been anti-dilutive.

Accounts and Long-Term Receivable

1 unchanged sentence

This financing is separate from agreements with a leasing component, see Note 8 Leases for financing through leases.

These receivables are included in Accounts Receivable and Long-Term Receivable in the amount of $2.4

million and $3.4 million as of December 31, 2020.

These receivables are included in Accounts Receivable and Long-Term Receivable in the amount of $6.0 million and $7.7 million as of March 31, 2021.

These receivables are included in Accounts Receivable and Long-Term Receivable in the amount of $2.3 million and $3.5 million as of September 30, 2020, respectively.

The receivables with a payment term exceeding one year carry an average weighted interest rate of 6.2%, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement.

There were two new agreements effective in the second quarter of fiscal year 2021 causing an increase in accounts and long-term receivable.

These agreements included approximately $9.0 million of payments to be received over the next 4 years from March 31, 2021.

It was determined we were acting as the agent in the transactions and recorded net revenue of approximately $0.5 million during the second quarter of fiscal year 2021.

The receivables with a payment term exceeding one year carry an

average weighted interest rate of 4.8%, 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 December 31, 2020 or September 30, 2020.

There was no activity in the allowance for credit losses of these receivables for the three months ended December 31, 2020 and December 31, 2019, respectively.

All accounts have no past amounts due as of March 31, 2021 or September 30, 2020.

There was no activity in the allowance for credit losses of these receivables for the six months ended March 31, 2021 and March 31, 2020, respectively.

All these agreements are looked at as one portfolio in determining credit losses.

2 unchanged sentences

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 months ended December 31, 2020 and 2019 was $92 thousand and $116 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.

The amount of interest income earned from sales whose payment terms exceed one year for the three months ended March 31, 2021 and 2020 was $126 thousand and $114 thousand, respectively.

The amount of interest income earned from sales whose payment terms exceed one year for the six months ended March 31, 2021 and 2020 was $218 thousand and $230 thousand, respectively.

Interest income from these agreements is recorded in Other income (expense), net on the Consolidated Statements of Operations.

Receivables whose payment terms exceed one year are placed on non-accrual 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.

If a payment is received for a receivable on non-accrual 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.

12 unchanged sentences

Information related to both lessee and lessor

The components of lease costs for the three months ended December 31, 2020 and 2019 are as follows:

The components of lease costs for the three months ended March 31, 2021 and 2020 are as follows:

Three months ended

1 unchanged sentence

Consolidated Statements of Operations Location

December 31, 2020

December 31, 2019

March 31, 2021

March 31, 2020

(Amounts in thousands)

10 unchanged sentences

Total lease costs, net of sublease interest income

Supplemental cash flow information related to leases for the three months ended December 31, 2020 and 2019 are below:

The components of lease costs for six months ended March 31, 2021 and 2020 are as follows:

Six months ended

Consolidated Statements of Operations Location

March 31, 2021

March 31, 2020

(Amounts in thousands)

Finance Lease:

Interest on lease liabilities

Selling, general, and administrative

Operating Lease:

Operating lease cost

Selling, general, and administrative

Short-term lease cost

Selling, general, and administrative

Total lease costs

Less sublease interest income

Total lease costs, net of sublease interest income

Supplemental cash flow information related to leases for three months ended March 31, 2021 and 2020 is below:

Three months ended

December 31, 2020

December 31, 2019

March 31, 2021

March 31, 2020

(Amounts in thousands)

7 unchanged sentences

Cash received from subleases

Supplemental cash flow information related to leases for six months ended March 31, 2021 and 2020 is below:

Six months ended

March 31, 2021

March 31, 2020

(Amounts in thousands)

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Operating cash flows from short-term leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Lease assets obtained in exchange for new lease liabilities

Operating leases

Cash received from subleases

Accounts payable and other noncurrent liabilities

In February 2021, the Company’s US.

division of the TS segment entered into an agreement with a vendor to pay approximately $1.5 million including interest for goods and services through fiscal year 2025 in 5 payments related to a multi-year agreement with a customer.

In February 2021, the Company’s US.

division of the TS segment entered into an agreement with a vendor to pay approximately $7.2 million including interest for goods and services through fiscal year 2025 in 6 payments through fiscal year 2025 related to a multi-year agreement with a customer.

See Note 6 for further information related to the multi-year agreements above.

There was not an interest rate stated and therefore interest was imputed under ASC 835 Interest as the payments in the exchange represented two elements:

principal and interest.

The imputed interest rate for both agreements was determined to be 5.0%.

The rate was determined primarily based on the rate the Company could obtain by financing from other sources at the date of the transaction.

The amounts owed for these agreements are in within accounts payable and other noncurrent liabilities because they are owed to a vendor rather than banks or financial institutions for borrowings.

See Note 10 Notes Payable and Line of Credit for amounts due to banks and other financial institutions for borrowings.

Below are details of the agreements with the vendor that contain imputed interest:

March 31, 2021

(Amounts in thousands)

Accounts payable and accrued expenses

Other noncurrent liabilities

The Company had a total of approximately $8.1 million due to this vendor including the two aforementioned agreements and other payables.

This is approximately 53% of Accounts payable and other noncurrent liabilities.

The TS segment has many vendors it transacts with and does not have any specific agreement with this vendor that it must purchase certain products from the vendor.

Management believes other suppliers could provide similar products on comparable terms.

Notes Payable and Line of Credit

6 unchanged sentences

The SBA Loans have a two-year term and carry an annual fixed interest rate of 1%.

The SBA Loans provided 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 believed could materially affect Borrowers’ ability to pay the SBA

The Borrowers did not provide any collateral or guarantees for the SBA Loans and the Borrowers could prepay the principal of the SBA Loans at any time without penalty.

3 unchanged sentences

In November 2020 the SBA Loans were formally forgiven.

The $2.2 million gain is displayed on the Consolidated Statement of Operations in the line item “Gain on extinguishment of debt.”

Interest expense related to the notes for the three months ended December 31, 2020 and 2019 was $23 thousand and $30 thousand, respectively.

The $2.2 million gain is displayed on the Consolidated Statement of Operations in the line item “Gain on forgiveness of debt.”

Interest expense related to the notes for the three months ended March 31, 2021 and 2020 was $23 thousand and $31 thousand, respectively.

Interest expense related to the notes for the six months ended March 31, 2021 and 2020 was $46 thousand and $63 thousand, respectively.

Below are details of the notes payable.

December 31, 2020

March 31, 2021

September 30, 2020

4 unchanged sentences

Notes payable - noncurrent portion

As of December 31, 2020 and September 30, 2020, the Company maintained an inventory line of credit with a borrowing capacity of $15.0 million.

As of March 31, 2021 and September 30, 2020, the Company maintained an inventory line of credit with a borrowing capacity of $15.0 million.

It may be used by the TS and HPP segments in the U.S.

3 unchanged sentences

(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 December 31, 2020 and September 30, 2020, Company borrowings, all from the TS segment, under the inventory line of credit were $0.8 million and $1.6 million, respectively, and the Company was in compliance with all financial covenants.

As of December 31, 2020 and September 30, 2020 this line of credit also includes availability of a limited cash withdrawal of up to $1.0 million and $1.5 million, respectively.

As of December 31, 2020 and September 30, 2020 there were no cash withdrawals outstanding.

As of March 31, 2021 and September 30, 2020, Company borrowings, all from the TS segment, under the inventory line of credit were $1.2 million and $1.6 million, respectively, and the Company was in compliance with all financial covenants.

As of March 31, 2021 and September 30, 2020 this line of credit also includes availability of a limited cash withdrawal of up to $1.0 million and $1.0 million, respectively.

As of March 31, 2021 and September 30, 2020 there were no cash withdrawals outstanding.

Pension and Retirement Plans

13 unchanged sentences

plans are as follows:

Three Months Ended December 31,

Three Months Ended March 31,

(Amounts in thousands)

8 unchanged sentences

Net periodic cost

Six Months Ended March 31,

(Amounts in thousands)

Interest cost

Expected return on plan assets

Amortization of past service costs

Amortization of net gain (loss)

Net periodic benefit cost

Post Retirement:

Interest cost

Amortization of net loss

Net periodic cost

The fair value of the assets held by the U.K.

1 unchanged sentence

Fair Values as of

December 31, 2020

March 31, 2021

September 30, 2020

5 unchanged sentences

Total plan assets

An income tax provision of $110 thousand was recorded for the three months ended December 31, 2020 compared to an income tax benefit of $70 thousand in the same period of 2019.

The increase in tax expense is primarily related to the write down of a deferred tax asset as a result of the change in tax law, allowing for the immediate deduction of covered expenses incurred through the Paycheck Protection Program (“PPP”) loan with an associated change in the valuation allowance against deferred tax assets from the prior period, offset by the forgiveness of the PPP Loans for which the income is excluded for tax purposes.

This additional expense was recorded discretely during the quarter.

In the prior period, the Company established a deferred tax asset for these expenses that were expected to be deductible in a future period.

An income tax expense of $723 thousand was recorded for the three months ended March 31, 2021 compared to an income tax expense of $1.2 million in the same period of 2020.

An income tax expense of $833 thousand was recorded for the six months ended March 31, 2021 compared to income tax expense of $1.0 million in the same period of 2020.

The income tax expense for the three and six months ended March 31, 2021 is primarily driven by an increase in the valuation allowance against deferred tax assets in the period, offset by a benefit recorded for a change in tax law, allowing for the immediate deduction of covered expenses incurred through the Paycheck Protection Program.

The deferred tax asset change is a non-cash item.

The income tax expense for the six months ended March 31, 2020 reflected the recording of a valuation allowance against deferred tax assets during the second fiscal quarter, offset by the anticipated tax benefit from the carryback of net operating 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.

13 unchanged sentences

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 December 31, 2020 or September 30, 2020.

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 11 for pension plan assets) or non-recurring basis as of March 31, 2021 or September 30, 2020.

To estimate fair value of the financial instruments below, quoted market prices are used when available and classified within Level 1.

1 unchanged sentence

If the preceding information is unavailable, we use internally generated data to estimate fair value which is classified within Level 3.

As of December 31, 2020

As of March 31, 2021

As of September 30, 2020

6 unchanged sentences

Accounts and long-term receivable*

Accounts payable and accrued expenses and other long-term liabilities*

Notes payable

4 unchanged sentences

Fair value was estimated by discounting future cash flows based on the current rate with similar terms.

Accounts payable and accrued expenses and other long-term liabilities

Fair value was estimated by discounting future cash flows based on the current rate the Company could get in another transaction with similar terms based on historical information.

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 December 31, 2020 and September 30, 2020.

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 as of March 31, 2021 and September 30, 2020.

Segment Information

The following tables present certain operating segment information for three months ended December 31, 2020 and 2019.

The following tables present certain operating segment information for the three and six months ended March 31, 2021 and 2020.

Technology Solutions Segment

For the three months ended December 31,

For the three months ended March 31,

(Amounts in thousands)

5 unchanged sentences

Depreciation and amortization

Technology Solutions Segment

For the six months ended March 31,

(Amounts in thousands)

Income (loss) from operations

Capital expenditures

Depreciation and amortization

Income (loss) from operations

Capital expenditures

Depreciation and amortization

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).

1 unchanged sentence

All intercompany transactions have been eliminated.

The following table lists customers from which the Company derived revenues of 10% or more of total revenues for the three months ended December 31, 2020 and 2019.

For the three months ended December 31,

(Amounts in thousands)

Customer B totaled approximately $4.8 million, or 30%, and approximately $4.7 million, or 28%, of total consolidated accounts receivable and long-term receivable as of December 31, 2020 and September 30, 2020, respectively.

There were no other customers that were more than 10% of total consolidated accounts receivable and long-term receivable as of December 31, 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 December 31, 2020

The following table lists customers from which the Company derived revenues of 10% or more of total revenues for the three and six months ended March 31, 2021 and 2020.

For the three months ended March 31,

For the six months ended March 31,

(Amounts in millions)

Customer A totaled approximately $13.0 million, or 56%, and approximately $4.7 million, or 28%, of total consolidated accounts receivable and long-term receivable as of March 31, 2021 and September 30, 2020, respectively.

There were no other customers that were more than 10% of total consolidated accounts receivable and long-term receivable as of March 31, 2021.

We believe that the Company is not exposed to any significant credit risk with respect to the accounts receivable with any customers as of March 31, 2021

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements