What changed in this filing

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Item 9A. Controls and Procedures

2022-12-08 compared with 2021-12-08 · 226 added, 240 removed, 1081 unchanged (30% of the section changed)

22 unchanged sentences

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2022 was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that call for the Company to provide only management’s report in this Annual Report on Form 10-K.

Remediation of Previously Identified Material Weakness

As reported in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, management identified a material weaknesses in internal control over financial reporting in connection with internal controls over the revenue recognition process, specifically the failure to properly identify whether the Company was to be considered the principal or the agent in certain transactions, which determines whether revenue is recorded gross or net.

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 acting as an agent or broker based on control and timing of the goods/services.

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.

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.

We redesigned the control that failed, which was implemented the first month of fiscal year 2021.

The redesigned control involves review by multiple employees in different departments of every item sold.

As a result of the implementation of these processes and testing these processes for the entire year of fiscal year 2021, management has determined that the remediation actions discussed above were effectively designed and demonstrated effective operation for a sufficient period of time to enable the Company to conclude that the previously identified material weakness in internal control over financial reporting has been remediated as of September 30, 2021.

Changes in Internal Control over Financial Reporting.

Except as discussed above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with management’s evaluation during our fiscal year 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with management’s evaluation during our fiscal year 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other Information

2 unchanged sentences

Directors, Executive Officers and Corporate Governance

Governance” in our Schedule 14A Proxy Statement for our 2022 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2021.

We incorporate the information required by this item by reference to the sections captioned “Nominees for Election”, “Our Board of Directors”, “Our Executive Officers”, “Delinquent Section 16(a) reports” and “Corporate Governance” in our Schedule 14A Proxy Statement for our 2023 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2022.

Executive Compensation

7 unchanged sentences

There is a one-year vesting period for the non-employee directors.

The following table sets forth information as of September 30, 2021 regarding the total number of securities outstanding under these equity compensation plans.

The following

table sets forth information as of September 30, 2022 regarding the total number of securities outstanding under these equity compensation plans.

Number of securities

4 unchanged sentences

issued upon exercise of

exercise price of outstanding

grant date fair value

compensation plans (excluding

outstanding restricted stock awards

outstanding restricted stock awards,

securities reflected in column

restricted stock awards

securities reflected in column (a)

Plan Category

options, warrants and rights

Equity compensation plans approved by security holders

(1) Includes 197,063 non-vested shares issued and 500 stock options issued.

(1) Does not include purchase rights under the ESPP, as the purchase price and number of shares to be purchased under the ESPP are not determined until the end of the relevant purchase period.

(3) Includes 140,215 shares available for future issuance under the stock incentive and stock option plans and 31,792 under the ESPP.

We incorporate additional information required by this Item by reference to the section captioned “Security Ownership of Certain Beneficial Owners and Management” in our Schedule 14A Proxy Statement for our 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2022.

7 unchanged sentences

Consolidated Statements of Operations for the years ended September 30, 2022 and 2021

Consolidated Statements of Comprehensive Loss for the years ended September 30, 2021 and 2020

Consolidated Statements of Comprehensive Income for the years ended September 30, 2022 and 2021

Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2022 and 2021

82 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of CSP Inc.

Shareholders and the Board of Directors of CSP Inc.

and Subsidiaries

1 unchanged sentence

We have audited the accompanying consolidated balance sheets of CSP Inc.

and its subsidiaries (the Company) as of September 30, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

and its subsidiaries (the Company) as of September 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2022 and 2021, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

5 unchanged sentences

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

6 unchanged sentences

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition - Gross vs net presentation

The Company recognizes 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.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Gross Versus Net Presentation

As described in Note 1 to the financial statements, the Company recognizes 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.

The Company records revenue as gross when the Company is a principal party to the arrangement and net of cost when they are acting as a broker or agent.

The Company has concluded that it is

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.

The Company has concluded that it is 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.

We identified the Company’s accounting for revenue from third-party service contracts described above to be a critical audit matter due to the significant judgments used by management related to the evaluation of the principal versus agent considerations.

5 unchanged sentences

o Compared the cost per the Company’s records to the cost per the vendor invoice

o Assessed the terms in the customer agreement and evaluated the Company’s determination of principal versus agent presentation by:

● Comparing the description of the transaction per the invoice to management’s summary file of gross vs net transactions

● Evaluated the accuracy of the summary file through inspection of customer invoice, purchase orders, information on vendor website accessed through third-party search engines and inquiries with management

o Assessed the terms in the customer agreement and evaluated the Company’s determination of principal versus agent presentation:

● Compared the description of the transaction per the invoice to management’s summary file of gross vs net transactions

● Evaluated the accuracy of the summary file through inspection of customer invoices, purchase orders, and information on vendor websites accessed through third-party search engines and through inquiries with management

/s/ RSM US LLP

We have served as the Company's auditor since 2007.

Boston, Massachusetts

Miami, Florida

December 8, 2022

16 unchanged sentences

Long-term receivable

Deferred income taxes

Cash surrender value of life insurance

Pension benefits assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

25 unchanged sentences

(Amounts in thousands, except for per share data)

For the year ended

September 30,

8 unchanged sentences

Other income (expense):

Foreign exchange loss

Foreign exchange gain (loss)

Interest expense

1 unchanged sentence

Gain on forgiveness of debt

Other income (expense), net

Other (expense) income, net

Total other income (expense), net

Income (loss) before income taxes

Income before income taxes

Income tax expense

Net income (loss) from continuing operations

Net income from continuing operations

Discontinued operations:

Gain from sale of discontinued operations

Net income (loss)

Net income (loss) attributable to common shareholders

Net income attributable to common shareholders

Continued and discontinued operations:

Net income (loss) from continuing operations attributable to common shareholders

Net income from continuing operations attributable to common shareholders

Net income from discontinued operations attributable to common shareholders

Net income (loss) attributable to common shareholders

Net income (loss) per share from continuing operations - basic

Net income per share from sale of discontinued operations - basic

Net income (loss) per share – basic

Weighted average shares outstanding – basic

Net income (loss) per share from continuing operations - diluted

Net income per share from sale of discontinued operations - diluted

Net income (loss) per share – diluted

Weighted average shares outstanding continuing operations – diluted

Weighted average shares outstanding discontinued operations – diluted

Weighted average shares outstanding net income - diluted

Net income attributable to common shareholders

Net income per common share from continuing operations - basic

Net income per common share from sale of discontinued operations - basic

Net income per common share – basic

Weighted average common shares outstanding – basic

Net income per common share from continuing operations - diluted

Net income per common share from sale of discontinued operations - diluted

Net income per common share – diluted

Weighted average common shares outstanding continuing operations – diluted

Weighted average common shares outstanding discontinued operations – diluted

Weighted average common shares outstanding net income - diluted

See accompanying notes to consolidated financial statements.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

For the Year Ended

September 30,

Net income (loss)

Other comprehensive income (loss):

Unrealized actuarial gain on minimum pension liability, net of tax effect

Foreign currency translation gain adjustments

Foreign currency translation (loss) gain adjustments, net

Other comprehensive income

Total comprehensive income (loss)

Total comprehensive income

See accompanying notes to consolidated financial statements.

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Years Ended September 30, 2022 and 2021:

2 unchanged sentences

Shareholders’

For the year ended September 30, 2020:

Year ended September 30, 2022:

Balance as of September 30, 2021

Other comprehensive income

Exercise of stock options

Stock-based compensation

Restricted stock cancellation

Restricted stock issuance

5 unchanged sentences

Shareholders’

For the year ended September 30, 2021:

Year ended September 30, 2021:

Balance as of September 30, 2020

9 unchanged sentences

(Amounts in thousands)

For the year ended

September 30,

1 unchanged sentence

Operating activities

Net income (loss) from continuing operations

Net income from continuing operations

Net income from discontinued operations

Net income (loss)

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

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

Amortization of intangibles

Loss on sale of fixed assets, net

Foreign exchange loss

Foreign exchange (gain) loss

Provision for losses on accounts receivable

4 unchanged sentences

Increase in cash surrender value of life insurance

Non-cash other

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

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

Decrease in inventories

Increase in refundable income taxes

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

(Increase) decrease in other assets

Increase in accounts receivable

(Increase) decrease in inventories

Decrease (increase) in refundable income taxes

(Increase) decrease in operating lease right-of-use assets

Increase in other assets

Decrease in investment in lease

(Increase) decrease in long-term receivable

Increase (decrease) in accounts payable and accrued expenses

(Decrease) increase in operating lease liabilities

Decrease (increase) in long-term receivable

Increase in accounts payable and accrued expenses

(Decrease) increase in interest payable

Decrease in operating lease liabilities

Increase in deferred revenue

1 unchanged sentence

Decrease in income taxes payable

Increase (decrease) in other long-term liabilities

(Decrease) increase in other long-term liabilities

Net cash provided by operating activities

1 unchanged sentence

Life insurance premiums paid

Proceeds from corporate life insurance owned policy

Proceeds from sales of property, equipment, and improvements

Purchases of property, equipment and improvements

Net cash used in investing activities

Net cash provided by (used in) investing activities

Financing activities

Dividends paid

Net payments under line-of-credit agreement

Proceeds from debt

Repayments on debt

Net borrowing (payments) under line-of-credit agreement

Repayments on notes payable

Principal payments on finance leases

1 unchanged sentence

Proceeds from issuance of shares under equity compensation plans

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

Effects of exchange rate on cash

Net increase in cash and cash equivalents

Cash and cash equivalents beginning of period

Cash and cash equivalents end of period

Cash and cash equivalents beginning of year

Cash and cash equivalents end of year

Supplementary cash flow information:

Cash paid for income taxes

Cash (received) paid for income taxes

Cash paid for interest

19 unchanged sentences

The accompanying audited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the Securities and Exchange Commission.

For additional information, these Consolidated Financial Statements should be read in conjunction with CSPI’s notes to the Consolidated Financial Statements for the years ended September 30, 2021 and 2020.

Principles of Consolidation

4 unchanged sentences

The financial information for entities outside the United States is measured using the local currency as the functional currency.

Assets and liabilities of the Company’s foreign operations are translated into U.S.

In consolidation, foreign transactions are remeasured into the functional currency, British Pounds, of our U.K.

This non-cash remeasurement is included in foreign exchange gain or loss on the income statement.

After this remeasurement, assets and liabilities of the Company’s foreign operations are translated into U.S.

dollars at the exchange rates in effect at the balance sheet date.

9 unchanged sentences

The Company reviews its long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Management assesses the recoverability of the long-lived assets (other than goodwill) by comparing the estimated undiscounted cash flows associated with the related asset or group of assets against their respective carrying amounts.

The amount of impairment, if any, is calculated based on the excess of the carrying amount over the fair value of those

Management assesses the recoverability of the long-lived assets (other than goodwill and intangibles) by comparing the estimated undiscounted cash flows associated with the related asset or group of assets against their respective carrying

The amount of impairment, if any, is calculated based on the excess of the carrying amount over the fair value of those assets.

Intangible assets that are not subject to amortization are also required to be tested annually, or more frequently if events or circumstances indicate that the asset may be impaired.

We did not have intangible assets with indefinite lives at any time during the two years ended September 30, 2021.

We did not have intangible assets with indefinite lives or goodwill at any time during the two years ended September 30, 2022.

Intangible assets subject to amortization are amortized on a straight-line basis over their estimated useful lives, generally three to ten year s, and are carried at net book value.

2 unchanged sentences

If the fair value of an intangible asset subject to amortization is determined to be less than its carrying value, then an impairment charge is recorded to write down that asset to its fair value.

There was no impairment as of September 30, 2021.

There was no impairment for the year ended September 30, 2022 and 2021.

Leases as Lessee

53 unchanged sentences

As of September 30, 2022, and September 30, 2021, the Company maintained inventory reserves of $ 0.8 million and $ 2.3 million, respectively.

The decrease is from disposing of inventory that was fully reserved.

Property, Equipment and Improvements

14 unchanged sentences

The funded status of pension and other postretirement benefit plans is recognized on the consolidated balance sheet.

Gains and losses, prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive loss, net of tax, until they

are amortized as a component of net periodic pension/postretirement benefits expense.

Additionally, plan assets and obligations are measured as of our fiscal year-end balance sheet date (September 30).

33 unchanged sentences

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 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.

2 unchanged sentences

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.

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.

Professional services generally include implementation, installation, and training services.

23 unchanged sentences

Post contract maintenance and support is considered immaterial in the context of the contract and therefore is not a separate performance obligation.

Multicomputer revenue is derived from the sale of hardware, software, extended warranties, royalties, and repair services.

See disaggregated revenues below by products/services and geography.

Technology Solutions Segment

For the year ended September 30

Year ended September 30,

(Amounts in thousands)

Technology Solutions Segment

For the year ended September 30

Year ended September 30,

(Amounts in thousands)

10 unchanged sentences

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

The long-term portion of contract liabilities were $ 0.4 million and $ 0.2 million as of September 30, 2021 and 2020, respectively.

There were no long-term contract liabilities as of September 30, 2022.

The long-term portion of contract liabilities was $ 0.4 million as of September 30, 2021.

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

4 unchanged sentences

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

The period of

amortization is generally three to six years .

The period of amortization is generally three to six years .

Incremental costs are related to commissions in the TS portion of the business.

1 unchanged sentence

The portion of current capitalized costs were $ 128 thousand and $ 137 thousand as of September 30, 2022 and 2021, 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.

There were 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 year ended September 30, 2022 and 2021 were $ 366 thousand and $ 442 thousand, respectively.

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

There was no impairment related to incremental costs capitalized during the year ended September 30, 2021.

There was no impairment related to incremental costs capitalized for the years ended September 30, 2022 and 2021, respectively.

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.

2 unchanged sentences

The portion of current capitalized costs were $ 9 thousand as of September 30, 2022 and $ 13 thousand as of September 30, 2021.

The portion of noncurrent capitalized costs were $ 9 thousand and $ 22 thousand as of September 30, 2021 and September 30, 2020, respectively.

There were no noncurrent capitalized costs as of September 30, 2022.

The portion of noncurrent capitalized costs was $ 9 thousand as of September 30, 2021.

The amount of fulfillment costs amortized year ended September 30, 2022 and 2021 were $ 13 thousand and $ 13 thousand, respectively.

These costs amortized were recorded in cost of sales.

There was no impairment related to fulfillment costs capitalized.

There was no impairment related to fulfillment costs capitalized for the years ended September 30, 2022 and 2021, respectively.

Projects are typically billed upon completion or at certain milestones.

19 unchanged sentences

Engineering and development expenses include payroll, employee benefits, stock-based compensation and other headcount-related expenses associated with product development.

Engineering and development expenses also

include third-party development and programming costs.

Engineering and development expenses also include third-party development and programming costs.

We consider technological feasibility for our software products to be reached upon the release of the software, accordingly, no internal software development costs have been capitalized.

15 unchanged sentences

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.

Basic and diluted earnings per share computations for the Company’s reported net income (loss) attributable to common stockholders are as follows:

For the year ended

Basic and diluted earnings per share computations for the Company’s reported net income attributable to common stockholders are as follows:

September 30,

Net income (loss) from continuing operations

Net income from continuing operations

Net income from sale of discontinued operations

Net income (loss)

net income attributable to nonvested common stock

Net income (loss) attributable to common shareholders

Net income (loss) attributable to common shareholders from continuing operations

Net income attributable to common shareholders

Net income attributable to common shareholders from continuing operations

Net income attributable to common shareholders from discontinued operations

Net income (loss) attributable to common shareholders

Weighted average total shares outstanding – basic

Net income attributable to common shareholders

Weighted average total common shares outstanding – basic

weighted average non–vested shares outstanding

2 unchanged sentences

Weighted average common shares outstanding – diluted

Net income (loss) from continuing operations per share - basic

Net income from discontinued operations per share - basic

Net income (loss) per share - basic

Net income (loss) from continuing operations per share - diluted

Net income from discontinued operations per share - diluted

Net income (loss) per share - diluted

Net income from continuing operations per common share - basic

Net income from discontinued operations per common share - basic

Net income per common share - basic

Net income from continuing operations per common share - diluted

Net income from discontinued operations per common share - diluted

Net income per common share - diluted

All anti-dilutive securities, including stock options, are excluded from the diluted income per share computation.

Non-vested restricted stock awards of 170,600 shares were excluded from net income per share for the year ended September 30, 2022, because their inclusion would have been anti-dilutive.

Non-vested restricted stock awards of 201,000 shares and stock options of 1,000 shares were excluded from net loss per share for the year ended September 30, 2020, because their inclusion would have been anti-dilutive.

Non-vested restricted stock awards of 136,000 shares were excluded from net income per share for the year ended September 30, 2021, because their inclusion would have been anti-dilutive.

Use of Estimates

5 unchanged sentences

The fair value of nonvested restricted share awards is equal to the quoted market price of our common stock as quoted on the Nasdaq Global Market on the date of grant.

The fair value of the

portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations.

The fair value of the portion of the award

that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations.

Because stock-based compensation expense recognized in the consolidated statements of operations for the fiscal years ended September 30, 2022 and 2021 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

5 unchanged sentences

The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

We had one customer who totaled approximately $ 15.8 million, or 52 %, and approximately $ 16.2 million, or 62 %, of total consolidated accounts receivable as of September 30, 2022 and September 30, 2021, respectively.

We believe that the Company is not exposed to any significant credit risk with respect to the accounts receivable with this customer as of September 30, 2022.

No other customers accounted for 10% or more of total consolidated accounts receivable as of September 30, 2022

Subsequent Events

1 unchanged sentence

The Company has evaluated subsequent events through the date of this filing.

Accounting standards adopted in fiscal year 2021

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.

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 financial statements issued for fiscal years ending after December 15, 2020.

The Company adopted the ASU in fiscal year 2021 and it did not have a material impact on our consolidated financial statements.

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

New accounting standards not adopted as of September 30, 2022

20 unchanged sentences

The receivables with a payment term exceeding one year carry an average weighted interest rate of 4.7 % as of September 30, 2022, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement.

There is no t an allowance for credit losses nor impairments for accounts and long-term receivables with a contractual maturity of over one year .

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 had no past amounts due as of September 30, 2022 or 2021, respectively.

There was no activity in the allowance for credit losses of these receivables for the years ended September 30, 2021 or 2020, respectively.

There was no activity in the allowance for credit losses of these receivables for the years ended September 30, 2022 and 2021, respectively.

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

4 unchanged sentences

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

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 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.

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.

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

These agreements included approximately $ 2.5 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 $ 0.2 million during the fourth quarter of fiscal year 2021.

There was one new agreement effective in the first quarter of fiscal year 2022 causing an increase in Accounts and Long-term receivable.

This agreement included approximately $ 0.5 million of payments to be received over the next 2 years from the effective date of the agreement.

The revenue for this transaction was recorded net during the first quarter of fiscal year 2022.

There was one new agreement effective in the third quarter of fiscal year 2022 causing an increase in Accounts and Long-term receivable.

This agreement included approximately $ 0.8 million of payments to be received over the next 3 years from the effective date of the agreement.

The revenue for this transaction was recorded net during the third quarter of fiscal year 2022.

There was one new agreement effective in the fourth quarter of fiscal year 2022 causing an increase in Accounts and Long-term receivable.

This agreement included approximately $ 12.8 million of payments to be received over the next 2 years from the effective date of the agreement.

The revenue for this transaction was recorded net during the fourth quarter of fiscal year 2022.

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.

16 unchanged sentences

Several components used in our HPP segment products are obtained from sole-source suppliers.

We are dependent on key vendors such as Xilinx, NXP, and BCRM for a variety of processors for certain products and Wind River Systems, Inc.

for VxWorks operating system software.

We are dependent Mellanox Technologies for our high-speed interconnect components.

We are dependent on key vendors such as ADP, NXP, and BCRM for a variety of processors for certain products.

We are dependent NVIDIA for our high-speed interconnect components and Marvel for Myricom components.

Despite our dependence on these sole-source suppliers, based on our current forecast and our projected sales obligations, we believe we have adequate inventory on hand and our current near-term requirements can be met in the existing supply chain.

15 unchanged sentences

The changes in the minimum pension liability are net of amortization of net loss of $ 91 thousand in 2022 and net loss of $ 235 thousand in 2021 included in net periodic pension cost.

The components of income (loss) before income tax and income tax expense are comprised of the following:

The components of income before income tax expense, income tax expense (benefit), and deferred income tax are comprised of the following:

For the Years Ended

1 unchanged sentence

(Amounts in thousands)

Income (loss) before income tax (benefit) expense 1

Income tax (benefit) expense:

Income (loss) before income tax expense 1

Income tax expense (benefit):

Total income tax expense

1 FY 2021 consists of $ 678 thousand from continuing operations and $ 465 thousand from discontinued operations totaling $ 1,143 thousand.

2 unchanged sentences

(Dollar amounts in thousands)

Computed “expected” tax expense (benefit)

Computed “expected” tax expense

Increases (reductions) in taxes resulting from:

8 unchanged sentences

Return to Provision Adjustments

Income tax (benefit) expense

Income tax expense

Significant components of the Company's net deferred tax assets and liabilities as of September 30, 2022 and 2021 are as follows:

8 unchanged sentences

Foreign net operating loss carryforwards

Depreciation and amortization

Gross deferred tax assets

1 unchanged sentence

Realizable deferred tax asset

Deferred tax liabilities:

Depreciation and amortization

Realizable deferred tax liabilities

Net deferred tax assets

The Company regularly assesses the need for a valuation allowance against its deferred tax assets.

2 unchanged sentences

This determination requires significant judgment, including assumptions about future taxable income that are based on historical and projected information and is performed on a jurisdiction-by-jurisdiction basis.

The valuation allowance against deferred tax assets increased by approximately $ 1.2 million during FY 2021, which was primarily due to the recording of a full valuation allowance against the U.S.

deferred tax assets during the year.

During the period ended September 30, 2021, management assessed the positive and negative evidence in the U.S.

The valuation allowance against deferred tax assets decreased by approximately $ 305 thousand during fiscal year 2022.

During the year ended September 30, 2022, management assessed the positive and negative evidence in the U.S.

operations and concluded that it is more likely than not that deferred tax assets as of September 30, 2022 will not be realized in light of recent results, the ongoing effects of the coronavirus (“COVID-19”) pandemic, and the resulting economic fallout.

2 unchanged sentences

To the extent that actual experience deviates from our assumptions, our projections would be affected and hence our assessment of realizability of our deferred tax assets may change.

As of September 30, 2021, and 2020, the Company had immaterial U.S.

net operating loss carryforwards for federal purposes.

Due to changes in federal tax law enacted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act during FY 2021, the Company is carrying back all of its available federal net operating losses to recover federal taxes paid in prior periods.

As a result, there is no federal net operating loss carryforwards as of September 30, 2021.

As of September 30, 2022 the Company had U.S.

net operating loss carryforwards for federal purposes of approximately $ 162 thousand.

There were no U.S.

net operating loss carryforwards for federal purposes as of September 30, 2021.

As of September 30, 2022, and 2021, the Company had U.S.

tax credit carryforwards for federal purposes of $ 753 and $ 0 thousand, respectively.

tax credit carryforwards begin to expire after the Company's FY 2038.

The FY 2021 federal R&D credit and all carried forward credits will be used to offset future tax liabilities.

tax credit carryforwards for federal purposes of $ 884 thousand and $ 753 thousand, respectively.

tax credit carryforwards begin to expire in the Company's fiscal year 2038.

The fiscal year 2022 federal R&D credit and all carried forward credits will be used to offset future tax liabilities.

As of September 30, 2022, and 2021, the Company had U.S.

net operating loss carryforwards for state purposes of approximately $ 3.4 million and $ 76 thousand, respectively, which are available to offset future taxable income through 2041.

As of September 30, 2021, the Company had state tax credit carryforwards of $ 1 million available to reduce future state tax expense, of which $ 50 thousand has unlimited carryover status and the remainder of the credits are available through FY 2035.

net operating loss carryforwards for state purposes of approximately $ 3.7 million and $ 3.4 million, respectively, which are available to offset future taxable income through fiscal year 2042.

As of September 30, 2022, the Company had state tax credit carryforwards of $ 1.1 million available to

reduce future state tax expense, of which $ 50 thousand has unlimited carryover status and the remainder of the credits are available through fiscal year 2035.

As of September 30, 2022, the Company had U.K.

net operating loss carryforwards of approximately $ 14.2 million that have an indefinite life with no expiration.

Subsequent to September 30, 2022 approximately 3.5 million U.S.

Dollars was transferred from the foreign subsidiary in the U.K.

to Modcomp, Inc.

(TS-US) to use in operations.

Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $ 6.1 million and $ 7.9 million as of September 30, 2022 and 2021, respectively.

The Company's is considering cash distribution of undistributed foreign earnings in the future and will continue to assess the potential impact of any future distributions on U.S.

The Company is considering cash distribution of undistributed foreign earnings in the future and will continue to assess the potential impact of any future distributions on U.S.

The state tax impact of a distribution of foreign earnings and profits would not be material.

34 unchanged sentences

Customer list

Amortization expense on these intangible assets was $ 9 thousand and $ 9 thousand for fiscal 2021 and 2020, respectively.

Amortization expense on these intangible assets was $ 9 thousand and $ 9 thousand for the year ended September 30, 2022 and 2021, respectively.

Annual amortization expense related to intangible assets for each of the following successive fiscal years is as follows:

7 unchanged sentences

Compensation and fringe benefits

Professional fees and shareholders’ reporting costs

Professional fees

Taxes, other than income

1 unchanged sentence

Operating lease liability

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 another agreement with a vendor to pay approximately $ 7.2 million including interest for goods and services through fiscal year 2025 in 6 payments related to a multi-year agreement with a customer.

In July 2021, the Company’s US.

division of the TS segment entered into another agreement with a vendor to pay approximately $ 0.5 million including interest for goods and services through fiscal year 2024 in 12 payments related to a multi-year agreement with a customer.

See Note 3 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:

Product warranty

The Company enters into certain multi-year agreements with vendors when also entering into some of the multi-year contracts the Company enters into with customers.

See Note 3 Accounts and Long-Term Receivable for further information related to the multi-year agreements with customers.

There was not an interest rate stated in the agreements 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 imputed interest rate for the 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.

Interest expense related to these agreements for the year ended September 30, 2021 was $ 190 thousand.

There was not interest expense in prior year due to these type of agreements starting 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.

Interest expense related to these agreements was $ 260 thousand and $ 190 thousand for the years ended September 30, 2022 and 2021, respectively.

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

See Note 12 Line of Credit and Note 13 Notes Payable for amounts due to banks and other financial institutions for borrowings.

1 unchanged sentence

September 30, 2022

September 30, 2021

(Amounts in thousands)

3 unchanged sentences

This is approximately 63 % 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 majority of this balance involves one large transaction that occurred in the fourth quarter of fiscal year 2022.

The Company had a total of approximately $ 7.8 million due (net of interest) to one of these vendors as of September 30, 2021.

This is approximately 41 % 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.

1 unchanged sentence

The following table specifies where the right-of-use assets and lease liabilities are within the Consolidated Balance Sheets as of September 30, 2022 and 2021:

Consolidated Balance Sheets Location

Condensed Balance Sheets Location

September 30, 2022

19 unchanged sentences

The components of lease costs for the year ended September 30, 2022 and 2021 are as follows:

Consolidated Statements of Operations Location

Condensed Consolidated Statements of Operations Location

September 30, 2022

43 unchanged sentences

(Amounts in thousands)

Balance at the beginning of the period

Balance at the beginning of the year

Accruals for warranties for products sold in the period

Fulfillment of warranty obligations

Balance at the end of the period

Balance at the end of the year

These amounts are within Accounts payable and accrued expenses on the Consolidated Balance Sheets.

Line of Credit

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

As of September 30, 2022 and September 30, 2021, the Company maintained an inventory line of credit with a borrowing capacity of $ 15.0 million.

It may be used by the TS or HPP segment in the U.S.

2 unchanged sentences

The prime rate was 6.25 % as of September 30, 2022.

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:

There is no expiration date or minimum principal payment.

However, 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 September 30, 2022 and September 30, 2021, Company borrowings, all from the TS segment, under the inventory line of credit were $ 3.1 million and $ 0.9 million, respectively, and the Company was in compliance with all covenants.

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

There is no unused commitment fee.

As of September 30, 2022 and September 30, 2021, this line of credit also included availability of a limited cash withdrawal option of up to $ 1.0 million.

As of September 30, 2022 and 2021, there were no cash withdrawals outstanding.

2 unchanged sentences

See Note 3 Accounts and Long-Term Receivable for the disclosure related to the receivables.

This was fully repaid in fiscal year 2022.

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.

This is the only note payable outstanding as of September 30, 2022.

On April 17, 2021, CSP, Inc.

8 unchanged sentences

In November 2021 the SBA Loans were formally forgiven.

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 year ended September 30, 2021 and 2020 was $ 87 thousand and $ 131 thousand, respectively.

The $ 2.2 million gain is presented on the Consolidated Statement of Operations as Gain on forgiveness of debt for the year ended September 30, 2021.

Interest expense related to the notes for the years ended September 30, 2022 and 2021 was $ 50 thousand and $ 87 thousand, respectively.

Below are details of the notes payable.

14 unchanged sentences

The defined benefit plans in the U.K.

are closed to newly hired employees and have been for the two years ended September 30, 2021.

are frozen to newly hired employees and have been for the two years ended September 30, 2022.

In the U.S., the Company also provides defined contribution plans that cover most employees and supplementary retirement plans to certain employees and former employees who are now retired.

5 unchanged sentences

The Company also funds these supplemental plans’ obligations through whole life insurance policies on the officers.

A gain on a life insurance policy of $ 0.1 million occurred during the second quarter of fiscal year 2022.

The gain on this life insurance policy was not related to a current employee at time of expiration.

The Company received $ 322 thousand from the life insurance policy during Q3 of fiscal year 2022.

Additionally, during the fiscal third quarter management made the decision to pay back approximately $ 0.9 million of insurance policy loans.

Defined Benefit Plans

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 sheet.

Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheets.

The domestic supplemental retirement plans have life insurance policies which are not considered plan assets but were purchased by the Company as a vehicle to fund the costs of the plan.

9 unchanged sentences

Expected return on plan assets:

Rate of compensation increase:

The following table provides the weighted average actuarial assumptions used to determine net periodic benefit cost for years ended:

4 unchanged sentences

Expected return on plan assets:

Rate of compensation increase:

For domestic plans, the discount rate was determined by comparison against the FTSE pension liability index for AA rated corporate instruments.

10 unchanged sentences

Amortization of past service costs

Amortization of net gain (loss)

Amortization of net loss

Net periodic (benefit) cost

1 unchanged sentence

Interest cost

Amortization of net loss

Amortization of net (gain) loss

Net periodic cost

Increase (decrease) in minimum liability included in other comprehensive income (loss)

Decrease in minimum liability included in other comprehensive income

Post Retirement:

Increase in minimum liability included in other comprehensive income

Increase (decrease) in minimum liability included in comprehensive income (loss)

Decrease in minimum liability included in other comprehensive income

The following table presents an analysis of the changes in 2022 and 2021 of the benefit obligation, the plan assets and the funded status of the plans:

10 unchanged sentences

Fair value of plan assets at beginning of year

Actual gain on plan assets

Actual (loss) gain on plan assets

Company contributions

13 unchanged sentences

(Amounts in thousands)

Accrued benefit liability

Accrued benefit asset (liability)

Accumulated other comprehensive income

2 unchanged sentences

Accrued benefit liability

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Net amount recognized

Total pension and post retirement:

Accrued benefit liability

Accrued benefit asset (liability)

Accumulated other comprehensive income

8 unchanged sentences

(Amounts in thousands)

Non-current benefits assets

Current accrued benefit liability

3 unchanged sentences

The amount of net deferred loss expected to be recognized as a component of net periodic benefit cost for the year ending September 30, 2022, is approximately $ 191 thousand.

The large decrease in the accrued benefit liability from $ 6.8 million as of September 30, 2020 to $ 4.4 million as of September 30, 2021 was due to a large return on assets during fiscal year 2021 (see table above for ending balances as of September 30, 2021 and 2020).

Additionally, the assumed discount rate used for the calculation of the projected benefit obligation increased and the expected return on plan assets increased, which both cause the liability to decrease.

The assumed discount rate used for the calculation of the projected benefit obligation more than doubled causing a large decrease.

Additionally, the expected return on plan assets increased significantly, which cause the net pension liability to decrease.

Contributions

28 unchanged sentences

These investments primarily hold stocks or bonds, or a combination of stocks and bonds.

Level 2 investment represents a mutual fund, which a quoted market price is not available on an active market.

Significant observable inputs that reflect quoted prices for similar assets or liabilities in active markets are used.

This investment primarily holds stocks within developed global equity markets, excluding the UK.

Defined Contribution Plans

4 unchanged sentences

During 2019 an additional 300,000 shares of common stock were authorized to be reserved for issuance pursuant to the 2015 Plan.

During 2022 an additional 400,000 shares of common stock were authorized to be reserved for issuance pursuant to the 2015 Plan.

As of September 30, 2022, there were 388,576 shares available to be granted under the 2015 Plan.

2 unchanged sentences

Awards issued under any of the stock option plans are not affected by termination of the plan.

The Company issues stock options at their fair market value on the date of grant.

The Company issues stock options at their fair value on the date of grant.

Vesting of stock options granted pursuant to the Company’s stock incentive plans is determined by the Company’s compensation committee.

2 unchanged sentences

In fiscal years 2016 through 2022, the Company granted certain officers including its Chief Executive Officer and non-employee directors, and key employees shares of nonvested common stock instead of stock options.

The vesting periods for the officers’, the Chief Executive Officer’s and the non-employee directors’ nonvested stock awards are four years , three years and one year , respectively.

The vesting period for the key employees’ awards is four years or awards vest immediately.

The vesting period for the officers’ and the Chief Executive Officer’s restricted stock awards are four years .

The vesting for non-employee directors’ restricted stock awards is one year .

The vesting period for the key employees’ restricted stock awards is four years or immediately.

We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including employee stock options and awards of nonvested stock based on estimated fair values, as described in Note 1 Summary of Significant Accounting Policies .

13 unchanged sentences

The Black-Scholes model requires the use of a number of assumptions including volatility of the Company’s stock price, the weighted average risk-free interest rate and the weighted average expected life of the options, at the time of grant.

The expected dividend yield is equal to the divided per share declared, divided by the closing share price on the date the

options were granted.

The expected dividend yield is equal to the dividend per share historically declared, divided by the closing share price on the date the options were granted.

All equity compensation awards granted for the years ended September 30, 2022 and September 30, 2021 were nonvested stock awards.

There were no stock options granted for the years ended September 30, 2022 and 2021.

As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, expense for grants beginning upon adoption on October 1, 2005 has been reduced for estimated forfeitures.

7 unchanged sentences

Outstanding at September 30, 2022

Exercisable at September 30, 2021

Vested and expected to vest at September 30, 2021

There were no stock options granted in the years ended September 30, 2021 and 2020.

No stock options were exercised during the year ended September 30, 2021.

The aggregate intrinsic value of stock options exercised during the year ended September 30, 2020 was $ 5 thousand.

The following table provides summary data of nonvested stock award activity:

10 unchanged sentences

In December 2013, the Board of Directors of the Company adopted the 2014 Employee Stock Purchase Plan covering up to 250,000 shares of Common Stock (the "ESPP"), which was ratified by a vote of the Company’s shareholders in February 2014.

Under the ESPP, the Company’s employees may purchase shares of common stock at a price per share that is currently 95 % of the lesser of the fair market value as of the beginning or end of semi-annual option periods.

Under the ESPP, the Company’s employees may purchase shares of common stock at a price per share that is currently 95 % of the lesser of the fair value as of the beginning or end of semi-annual option periods.

Pursuant to the ESPP, the Company issued 31,372 and 32,939 shares for the years ended September 30, 2022 and September 30, 2021, respectively.

As of September 30, 2022, 420 shares remain authorized to be issued under the Employee Stock Purchase Plan.

Repurchase of Common Stock

On February 8, 2011, the Board of Directors authorized the Company to purchase up to 250 thousand 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 6.4 thousand shares of its outstanding common stock on the open market during the fiscal year ended September 30, 2020.

There were no purchases during the fiscal year ended September 30, 2021.

As of September 30, 2021, 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.

As of May 14, 2020, we suspended our stock repurchase program until further economic clarity.

The Board of Directors approved the activation of the suspended stock repurchase program on December 29, 2021.

The Company repurchased 22,398 thousand shares of its outstanding common stock on the open market during fiscal year 2022.

As of September 30, 2022, 171,727 shares remain authorized to repurchase under the stock repurchase program.

Segment Information

1 unchanged sentence

Technology Solutions Segment

For the year ended September 30,

Year ended September 30,

(Amounts in thousands)

Income (loss) from operations

Operating (loss) income

Interest income

Interest expense

Capital expenditures

Depreciation and amortization

Income (loss) from operations

Operating (loss) income

Interest income

Interest expense

Capital expenditures

3 unchanged sentences

All intercompany transactions have been eliminated.

Over long-lived assets are located in North America.

Our long-lived assets are located in North America.

The following table details the Company’s sales by operating segment for fiscal years ended September 30, 2022 and 2021.

1 unchanged sentence

(Amounts in thousands)

Deferred tax assets by geographic location at years ended September 30, 2021 and 2020 were as follows:

September 30,

(Amounts in thousands)

North America

The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the years ended years ended September 30, 2022 and 2021.

For the year ended September 30,

Year ended September 30,

(in millions)

In addition, accounts receivable from Customer A totaled approximately $ 15.8 million, or 52 %, and approximately $ 16.2 million, or 62 %, of total consolidated accounts receivable as of September 30, 2022 and September 30, 2021, respectively.

19 unchanged sentences

Cash and cash equivalents

Consolidated Balance Sheets

Condensed Consolidated Balance Sheets

Accounts and long-term receivable*

1 unchanged sentence

Line of Credit

Consolidated Balance Sheets & Note 12

Notes payable

11 unchanged sentences

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 September 30, 2022, and 2021.

As of May 14, 2020, we have suspended our stock repurchase program until further economic clarity.

As of May 14, 2020, we suspended our stock repurchase program and the payment of quarterly cash dividends until further economic clarity.

The dividend was reinstated on August 10, 2022.

There were no dividends paid in fiscal year 2021.

For the year ended September 30, 2020, the Company paid cash dividends as follows:

For the fiscal year ended September 30, 2022 the Company paid cash dividends as follows:

Date Declared

Subsequent Events

We entered into a $ 12.8 million sales agreement with a financing component during the fourth quarter of fiscal 2022 in the TS-US division, which includes receiving three payments including interest with the final payment due in fiscal year 2024.

The revenue for this transaction was recorded net during the fourth quarter of fiscal year 2022.

Our cost for this agreement was originally going to be paid in full in the fiscal fourth quarter of 2022 as stated in our Form 10-Q for the period ended June 30, 2022 filed with the SEC on August 10, 2022.

However, our payment to the vendor was made in the first quarter of fiscal year 2023, which significantly decreased our cash balance.

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-K

Item 9A. Controls and Procedures