What changed in this filing

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Item 1. Financial Statements

2021-08-12 compared with 2021-05-13 · 163 added, 156 removed, 502 unchanged (39% of the section changed)

46 unchanged sentences

For the three months ended

For the six months ended

For the nine months ended

Cost of sales:

10 unchanged sentences

Gain on forgiveness of debt

Other income (expense)

Total other income (expense)

Other income (expense), net

Total other income (expense), net

(Loss) income before income taxes

Income tax expense

Net (loss) income

Net (loss) income attributable to common stockholders

Net (loss) income per share – basic

Net loss attributable to common shareholders

Net loss per share – basic

Weighted average shares outstanding – basic

Net (loss) income per share – diluted

Net loss per share – diluted

Weighted average shares outstanding – diluted

4 unchanged sentences

For the three months ended

For the six months ended

Net (loss) income

For the nine months ended

Foreign currency translation gain (loss) adjustments

3 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

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

For the three months ended June 30, 2021 and 2020:

(Amounts in thousands, except per share data)

1 unchanged sentence

Shareholders’

For the Three Months Ended March 31, 2020:

Balance as of December 31, 2019

For the Three Months Ended June 30, 2020:

Balance as of March 31, 2020

Other comprehensive loss

1 unchanged sentence

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

Balance as of June 30, 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

For the Three Months Ended June 30, 2021:

Balance as of March 31, 2021

Other comprehensive income

Stock-based compensation

Restricted stock cancellation

Balance as of June 30, 2021

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

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

For the nine months ended June 30, 2021 and 2020:

(Amounts in thousands, except per share data)

1 unchanged sentence

Shareholders’

For the six months ended March 31, 2020:

For the nine months ended June 30, 2020:

Balance as of September 30, 2019

Other comprehensive gain

Other comprehensive income

Exercise of stock options

4 unchanged sentences

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

Balance as of March 31, 2020

Balance as of June 30, 2020

comprehensive

Shareholders’

For the six months ended March 31, 2021:

For the nine months ended June 30, 2021:

Balance as of September 30, 2020

Other comprehensive gain

Other comprehensive income

Stock-based compensation

Restricted stock cancellation

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Balance as of March 31, 2021

Balance as of June 30, 2021

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

For the six months ended

For the nine months ended

Operating activities

Net income (loss)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Amortization of intangibles

Loss on sale of fixed assets, net

Foreign exchange loss (gain)

Foreign exchange loss

Non-cash changes in accounts receivable

11 unchanged sentences

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

Increase in other assets

(Increase) decrease in other assets

Decrease in investment in lease

3 unchanged sentences

Increase in deferred revenue

Increase in pension and retirement plans liabilities

(Decrease) Increase in pension and retirement plans liabilities

Decrease in income taxes payable

Increase (decrease) in other long-term liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Investing activities

Life insurance premiums paid

Proceeds from sales of property, equipment, and improvements

Purchases of property, equipment and improvements

8 unchanged sentences

Proceeds from issuance of shares under equity compensation plans

Net cash used in financing activities

Net cash (used in) provided by financing activities

Effects of exchange rate on cash

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents beginning of period

Cash and cash equivalents at end of period

Cash and cash equivalents end of period

Supplementary cash flow information:

3 unchanged sentences

Gain on forgiveness of debt

Obtaining a right-of-use asset in exchange for a lease liability

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2021

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2021

Organization and Business

15 unchanged sentences

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

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

The revised numbers for the three and nine months ended June 30, 2020 are reflected in this Form 10-Q.

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

Specifically, financial statement line items Sales - Product, Sales - Services, and Cost of sales – product.

Specifically, financial statement line items Sales - Product, Sales - Services, Cost of sales – Product, and Cost of sales - Services.

Net income (loss) and gross profit did not change.

Notes affected include Note 4, “Revenue” and Note 15, “Segment Information.”

For the three months ended March 31, 2020

For the six months ended March 31, 2020

For the three months ended June 30, 2020

For the nine months ended June 30, 2020

Cost of sales:

15 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 March 31, 2021

New accounting standards not adopted as of June 30, 2021

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

18 unchanged sentences

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.

Revenue from extended warranty contracts is recognized ratably over the warranty period.

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.

5 unchanged sentences

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.

Financing revenue related to the lease is recorded in revenue as equipment leasing is part of our 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.

5 unchanged sentences

Technology Solutions Segment

For the three months ended March 31,

For the three months ended June 30,

(Amounts in thousands)

Technology Solutions Segment

For the three months ended March 31,

For the three months ended June 30,

(Amounts in thousands)

Technology Solutions Segment

For the six months ended March 31,

For the nine months ended June 30

(Amounts in thousands)

Technology Solutions Segment

For the six months ended March 31,

For the nine months ended June 30

(Amounts in thousands)

2 unchanged sentences

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.

Only the hours that depict our performance toward satisfying a performance obligation are used to measure progress.

An estimate of hours for each professional service agreement is made at the beginning of each contract based on prior experience and monitored throughout the performance of the services.

This method is most appropriate as it depicts the measure of progress towards satisfaction of the performance obligation.

A financing component exists when at contract inception the period between the transfer of a promised good and/or service to the customer differs from when the customer pays for the good and/or service.

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.

As a practical expedient, we have 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.

Certain contracts contain a financing component including managed services contracts with financing of hardware and software.

5 unchanged sentences

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.

These estimates are periodically reviewed by project managers, engineers, and other staff involved to ensure estimates remain 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.

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 for a third party.

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.

We recognize revenue from third-party service contracts as either gross sales or net sales depending on whether we are acting as a principal party to the transaction or simply acting as an agent or broker based on control and timing.

We are a principal if we control the good or service before that good or service is transferred to the customer.

We record revenue as gross when we are a principal party to the arrangement and net of cost when we are acting as a broker or agent for a third party.

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 sales.

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.

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.

When we are an agent, revenue is typically recorded at a point in time.

When we are the principal, revenue is recognized over the contract term.

We have concluded we are the agent in sales of third-party maintenance, software or hardware support, and certain security software that is sold with integral third-party delivered software maintenance that include critical updates.

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

When we have performed work but do not have an unconditional right to payment, a contract asset is recorded.

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

Current contract assets were $ 1.7 million and $ 1.0 million as of June 30, 2021 and September 30, 2020, respectively.

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

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

There were no noncurrent contract assets as of June 30, 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 $1.4 million and $0.9 million as of March 31, 2021 and September 30, 2020, respectively.

There was a large increase during the nine months ended June 30, 2021 due to a noncancelable contract for managed services in the TS segment.

Contract liabilities arise when payment is received before we transfer a good or service to the customer.

Current contract liabilities were $ 1.4 million and $ 0.9 million as of June 30, 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 $0.1 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.

The long-term portion of contract liabilities were $ 0.6 million and $ 0.2 million as of June 30, 2021 and September 30, 2020, respectively.

These noncurrent liabilities are recorded in other noncurrent liabilities on the consolidated balance sheets.

Revenue recognized for the nine months ended that was included in contract liabilities as of September 30, 2020 was $ 0.5 million.

Contract Costs

Incremental costs of obtaining a contract involving customer transactions where the revenue and the related transfer of goods and services are equal to or 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.

For a period greater than one year, incremental contract costs are capitalized if we expect to recover these costs.

The costs are amortized over the contract term and expected renewal periods.

1 unchanged sentence

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 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.

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

The portion of current capitalized costs were $ 204 thousand and $ 130 thousand as of June 30, 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.

The amount of incremental costs amortized for the three months ended June 30, 2021 and 2020 were $ 89 thousand and $ 84 thousand, respectively.

The amount of incremental costs amortized for the nine months ended June 30, 2021 and 2020 were $ 260 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 and six months ended March 31, 2021.

There was no impairment related to incremental costs capitalized during the three and nine months ended June 30, 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 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.

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

The portion of noncurrent capitalized costs were $ 13 thousand and $ 22 thousand as of June 30, 2021 and September 30, 2020, respectively.

The amount of fulfillment costs amortized for three and nine months ended June 30, 2021 were $ 3 thousand and $ 9 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.

The amount of fulfillment costs amortized for three and nine months ended June 30, 2020 were $ 3 thousand and $ 9 thousand, respectively.

These costs amortized were recorded in cost of sales.

3 unchanged sentences

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.

Most of our contracts are less than one year.

There are certain contracts that 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.

We 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.

The Company has certain contracts that have an original term of more than one year.

We have 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 March 31, 2021 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 June 30, 2021 is set forth in the table below:

(Amounts in thousands)

2 unchanged sentences

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.

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 (“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.

1 unchanged sentence

For the three months ended

For the six months ended

For the nine months ended

(Amounts in thousands except per share data)

Net income (loss)

net income (loss) attributable to nonvested common stock

Net income (loss) attributable to common stockholders

net loss attributable to nonvested common stock

Net loss attributable to common shareholders

Weighted average total shares outstanding – basic

3 unchanged sentences

Weighted average common shares outstanding – diluted

Net income (loss) per share – basic

Net income (loss) per share – diluted

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.

Net loss per share – basic

Net loss per share – diluted

Non-vested restricted stock awards of 208,000 and 209,000 shares were excluded from the diluted loss per share calculation for the three and nine months ended June 30, 2021, respectively.

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.

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

2 unchanged sentences

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 $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 $ 4.6 million and $ 8.1 million as of June 30, 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.

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.

These agreements included approximately $ 9.0 million of payments to be received over the next 4 years from the effective date of the agreement.

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

These agreements included approximately $ 5.2 million of payments to be received over the next 2 years from the effective date of the agreement.

It was determined we were acting as the agent in the transactions and recorded net revenue of approximately $ 0.4 million during the third 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 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 accounts have no past amounts due as of June 30, 2021 or September 30, 2020.

There was no activity in the allowance for credit losses of these receivables for the nine months ended June 30, 2021 and June 30, 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 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.

The amount of interest income earned from sales whose payment terms exceed one year for the three months ended June 30, 2021 and 2020 was $ 169 thousand and $ 120 thousand, respectively.

The amount of interest income earned from sales whose payment terms exceed one year for the nine months ended June 30, 2021 and 2020 was $ 387 thousand and $ 349 thousand, respectively.

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

6 unchanged sentences

(Amounts in thousands)

2021 (3 months)

Total payments

8 unchanged sentences

Information related to both lessee and lessor

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

The components of lease costs for the three months ended June 30, 2021 and 2020 are as follows:

Three months ended

1 unchanged sentence

Consolidated Statements of Operations Location

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

(Amounts in thousands)

1 unchanged sentence

Interest on lease liabilities

Selling, general, and administrative

Interest expense

Operating Lease:

6 unchanged sentences

Total lease costs, net of sublease interest income

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

Six months ended

The components of lease costs for nine months ended June 30, 2021 and 2020 are as follows:

Nine months ended

Consolidated Statements of Operations Location

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

(Amounts in thousands)

1 unchanged sentence

Interest on lease liabilities

Selling, general, and administrative

Interest expense

Operating Lease:

6 unchanged sentences

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:

Supplemental cash flow information related to leases for three months ended June 30, 2021 and 2020 is below:

Three months ended

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 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

Supplemental cash flow information related to leases for nine months ended June 30, 2021 and 2020 is below:

Nine months ended

June 30, 2021

June 30, 2020

(Amounts in thousands)

11 unchanged sentences

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.

division of the TS segment entered into another 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, “Accounts and Long-Term Receivable” 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:

2 unchanged sentences

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

Interest expense related to these agreements for the three months ended June 30, 2021 was $ 92 thousand.

Interest expense related to the notes for the nine months ended June 30, 2021 was $ 121 thousand.

There was not interest expense in prior year due to these agreements being effective in the second quarter of fiscal year 2021.

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.

1 unchanged sentence

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

March 31, 2021

June 30, 2021

(Amounts in thousands)

1 unchanged sentence

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.

The Company had a total of approximately $ 6.8 million due to this vendor including the two aforementioned agreements and other payables as of June 30, 2021.

This is approximately 40 % 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.

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.

13 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 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.

The $ 2.2 million gain is presented on the Consolidated Statement of Operations as Gain on forgiveness of debt.

Interest expense related to the notes for the three months ended June 30, 2021 and 2020 was $ 21 thousand and $ 36 thousand, respectively.

Interest expense related to the notes for the nine months ended June 30, 2021 and 2020 was $ 67 thousand and $ 99 thousand, respectively.

Below are details of the notes payable.

March 31, 2021

June 30, 2021

September 30, 2020

4 unchanged sentences

Notes payable - noncurrent portion

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.

As of June 30, 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 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.

As of June 30, 2021 and September 30, 2020, Company borrowings, all from the TS segment, under the inventory line of credit were $ 1.7 million and $ 1.6 million, respectively, and the Company was in compliance with all financial covenants.

As of June 30,

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 June 30, 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 March 31,

Three Months Ended June 30,

(Amounts in thousands)

8 unchanged sentences

Net periodic cost

Six Months Ended March 31,

Nine Months Ended June 30,

(Amounts in thousands)

11 unchanged sentences

Fair Values as of

March 31, 2021

June 30, 2021

September 30, 2020

5 unchanged sentences

Total plan assets

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.

An income tax expense of $ 35 thousand was recorded for the three months ended June 30, 2021 compared to an income tax expense of $ 10 thousand in the same period of 2020.

An income tax expense of $ 868 thousand was recorded for the nine months ended June 30, 2021 compared to income tax expense of $ 1,109 thousand in the same period of 2020.

The income tax expense for the nine months ended June 30, 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 income tax expense for the year to date ended June 30, 2020 reflected the recording of a valuation allowance against deferred tax assets during the third 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 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 March 31, 2021

As of June 30, 2021

As of September 30, 2020

7 unchanged sentences

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

Line of Credit

Consolidated Balance Sheets & Note 10

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.

Line of credit

The fair value of our line of credit is based on borrowing rates currently available to a market participant for loans with similar terms or maturity.

The carrying amount of our outstanding revolving line of credit approximates fair value because

the base interest rate charged varies with market conditions and the credit spread is commensurate with current market spreads for issuers of similar risk.

No interest accrues under the inventory line of credit when advances are paid within 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 as of March 31, 2021 and September 30, 2020.

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.

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 June 30, 2021 and September 30, 2020.

Segment Information

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

The following tables present certain operating segment information for the three and nine months ended June 30, 2021 and 2020.

Technology Solutions Segment

For the three months ended March 31,

For the three months ended June 30,

(Amounts in thousands)

6 unchanged sentences

Technology Solutions Segment

For the six months ended March 31,

For the nine months ended June 30,

(Amounts in thousands)

6 unchanged sentences

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.

Non-operating expenses/income consists principally of investment income, interest income from transactions with payment terms exceeding one year (see Note 6, “Accounts and Long-Term Receivable” for details), and interest expense.

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 and six months ended March 31, 2021 and 2020.

For the three months ended March 31,

For the six months ended March 31,

The following table lists customers from which the Company derived revenues of 10% or more of total revenues for the three and nine months ended June 30, 2021 and 2020.

For the three months ended June 30,

For the nine months ended June 30,

(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

Customer B totaled approximately $ 12.4 million, or 51 %, and approximately $ 4.7 million, or 28 %, of total consolidated accounts receivable and long-term receivable as of June 30, 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 June 30, 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 June 30, 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