What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-12-13 compared with 2022-12-08 · 209 added, 265 removed, 1042 unchanged (31% of the section changed)

15 unchanged sentences

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on its financial statements.

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2022.

In making its assessment of internal control, management used the criteria described in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission.

As a result of its assessment, management has concluded that the Company’s internal control over financial reporting was effective as of September 30, 2022.

Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission (“2013 Framework”).

Based on our evaluation under the COSO 2013 Framework, our management concluded that our internal control over financial reporting was effective as of September 30, 2023.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

5 unchanged sentences

Other Information

During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdiction that Prevent Inspections

7 unchanged sentences

The equity compensation plans approved by our stockholders consist of the CSP Inc.

1997 Incentive Stock Option Plan, the 2003 Stock Incentive Plan, the 2007 Stock Incentive Plan, the 2014 Employee Stock Purchase Plan (the "ESPP") and the 2015 Stock Incentive Plan.

2014 Employee Stock Purchase Plan (the "ESPP") and the 2015 Stock Incentive Plan.

In fiscal 2023 and 2022, the Company granted to certain key employees, certain officers including its Chief Executive Officer and non-employee directors’ shares of non-vested common stock instead of stock options.

1 unchanged sentence

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

The following

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

following table sets forth information as of September 30, 2023 regarding the total number of securities outstanding under these equity compensation plans.

Number of securities

remaining available for future

Number of securities to be

Weighted-average

remaining available for future

issued upon exercise

exercise price of

issuance under equity

issued upon exercise of

grant date fair value

of outstanding options,

outstanding options,

compensation plans (excluding

outstanding restricted stock awards

restricted stock awards

warrants and rights

securities reflected in column (a))

Plan Category

Equity compensation plans approved by security holders

(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.

Equity plans approved by security holders

(1) Includes only non-vested restricted stock awards issued under the 2015 Stock Incentive Plan.

(2) There are only non-vested restricted awards outstanding, which do not require the holder to give any consideration for the awards.

(3) Includes 245,404 shares under the 2015 Stock Incentive Plan and 269,535 shares under the 2014 Employee Stock Purchase Plan.

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 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2023.

24 unchanged sentences

December 29, 2008

2007 Stock Incentive Plan

March 30, 2007

2014 Variable Compensation (Executive Bonus) and Base Programs dated November 12, 2013

19 unchanged sentences

June 27, 2018

Note, dated as of April 17, 2021, by, and between Paragon Bank and CSP, Inc.

April 23, 2021

Note, dated as of April 17, 2021, by, and between Paragon Bank and Modcomp, Inc.

April 23, 2021

Consent of RSM LLP, Independent Registered Public Accounting Firm

2 unchanged sentences

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Policy relating to recovery of erroneously awarded compensation

XBRL Instance

35 unchanged sentences

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors of CSP Inc.

Shareholders and the Board of Directors

and Subsidiaries

17 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was 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 the critical audit matter 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 a separate opinion 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 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.

6 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:

● 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

o For third-party service contracts, we assessed the terms in the customer purchase order, customer invoice and vendor invoice and evaluated the Company’s determination of principal versus agent presentation.

For those contracts where the Company is acting as an agent or broker, we:

• Compared the description of the transaction per the customer invoice to management’s summary file of gross vs.

net transactions.

• Evaluated the accuracy of the summary file through inspection of customer and vendor 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.

Miami, Florida

Coral Gables, Florida

December 13, 2023

16 unchanged sentences

Long-term receivable

Deferred income taxes, net

Cash surrender value of life insurance

7 unchanged sentences

Pension and retirement plans

Income taxes payable

Total current liabilities

26 unchanged sentences

Total operating expenses

Operating loss

Operating income (loss)

Other income (expense):

Foreign exchange gain (loss)

Foreign exchange (loss) gain

Interest expense

Interest income

Gain on forgiveness of debt

Other (expense) income, net

Total other income (expense), net

Employee Retention Tax Credit, net of costs to collect

Other income (expense), net

Total other income, net

Income before income taxes

Income tax expense

Net income from continuing operations

Discontinued operations:

Gain from sale of discontinued operations

Net income attributable to common shareholders

Continued and discontinued operations:

Net income from continuing operations attributable to common shareholders

Net income from discontinued operations attributable to common shareholders

Income tax (benefit) expense

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

Weighted average common shares outstanding – diluted

See accompanying notes to consolidated financial statements.

6 unchanged sentences

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

Foreign currency translation (loss) gain adjustments, net

Foreign currency translation gain (loss) adjustments, net

Other comprehensive income

11 unchanged sentences

Stock-based compensation

Restricted stock cancellation

Restricted stock issuance

12 unchanged sentences

Issuance of shares under employee stock purchase plan

Purchase of common stock

Cash dividends paid on common stock ($ 0.03 per share)

Balance as of September 30, 2022

6 unchanged sentences

Operating activities

Net income from continuing operations

Net income from discontinued operations

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

Amortization of intangibles

Foreign exchange (gain) loss

Provision for losses on accounts receivable

Loss on disposal of fixed assets, net

Foreign exchange loss (gain)

Provision for losses (recoveries) on accounts receivable

Provision for obsolete inventory

2 unchanged sentences

Deferred income taxes

Increase in cash surrender value of life insurance

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

Decrease in cash surrender value of life insurance

Changes in operating assets and liabilities:

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 (increase) in accounts receivable

Decrease (increase) in inventories

Decrease in refundable income taxes

Increase in operating lease right-of-use assets

Decrease (increase) in other assets

Decrease in investment in lease

Decrease (increase) in long-term receivable

Increase in accounts payable and accrued expenses

(Decrease) increase in interest payable

Decrease in long-term receivable

(Decrease) increase in accounts payable and accrued expenses

Decrease in interest payable

Decrease in operating lease liabilities

Increase in deferred revenue

(Decrease) increase in deferred revenue

Decrease in pension and retirement plans liabilities

Decrease in income taxes payable

(Decrease) increase in other long-term liabilities

Increase (decrease) in income taxes payable

Decrease in other long-term liabilities

Net cash provided by operating activities

1 unchanged sentence

Life insurance premiums paid

Purchase of held-to-maturity investments

Proceeds from maturities of held-to-maturity investments

Proceeds from corporate life insurance owned policy

Proceeds from sales of property, equipment, and improvements

Additions of intangible assets

Purchases of property, equipment and improvements

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Financing activities

Dividends paid

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

Net borrowing under line-of-credit agreement

Repayments on notes payable

2 unchanged sentences

Proceeds from issuance of shares under equity compensation plans

Net cash provided by (used in) financing activities

Effects of exchange rate on cash

Net cash (used in) provided by financing activities

Effects of exchange rate on cash, net

Net increase in cash and cash equivalents

2 unchanged sentences

Supplementary cash flow information:

Cash (received) paid for income taxes

Cash paid (received) for income taxes

Cash paid for interest

Supplementary non-cash financing activities:

Gain on forgiveness of debt

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

31 unchanged sentences

For purposes of the consolidated statements of cash flows, highly liquid investments with original maturities of three months or less at the time of acquisition are considered cash equivalents.

Employee Retention Tax Credit

The Coronavirus Aid, Relief, and Economic Security Act provided an employee retention credit (“ERC”) which is a refundable tax credit against certain employment taxes.

The Consolidated Appropriations Act, 2021 extended and expanded the availability of the employee retention credit through December 31, 2021 including amending the employee retention credit to be equal to 70 % of qualified wages paid to employees during the 2021 calendar year.

The TS-US division and HPP segment qualified for the ERC beginning in March 2021 for qualified wages through September 2021 and filed a cash refund claim during the fiscal year ended September 30, 2023.

An amount of $ 2.8 million, net of costs, was received in the fourth quarter of fiscal year 2023.

On the Company’s Consolidated Statements of Operations in Total other income, net the financial statement line item Employee retention tax credit, net of costs to collect for fiscal year ended September 30, 2023 of $ 2.1 million represents the amount we were qualified to receive.

There are no other amounts that will be received related to this credit.

There is $ 0.6 million on the Consolidated Balance Sheets in the financial statement line item Accounts payable and accrued expenses, which will be paid back to the IRS in fiscal year 2024.

We accounted for the ERC as a gain contingency in accordance with ASC 450-30 Gain Contingencies.

Under this standard, the ERC was recognized only after the contingency was resolved and deemed realizable.

Research and Development Expense

3 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 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.

1 unchanged sentence

We did not have intangible assets with indefinite lives or goodwill at any time during the two years ended September 30, 2023.

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.

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

The remaining useful lives of intangible assets are evaluated on an annual basis.

1 unchanged sentence

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 for the year ended September 30, 2022 and 2021.

There was no impairment for the years ended September 30, 2023 and 2022.

Leases as Lessee

46 unchanged sentences

In the Company’s sublessor agreements, the payments allocated to the lease component cannot be terminated.

There were no new agreements where the Company was a lessor for the year ended September 30, 2022.

See Note 9 Leases for additional information.

6 unchanged sentences

The components of property, equipment and improvements are stated at cost.

The Company provides for depreciation by use of the straight-line method over the estimated useful lives of the related assets ( three to seven year s).

The Company provides for depreciation by use of the straight-line method over the estimated useful lives of the related assets ( three to seven years ).

Leasehold improvements are amortized by use of the straight-line method over the lesser of the estimated useful life of the asset or the lease term.

10 unchanged sentences

Pension and Retirement Plans

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

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

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.

24 unchanged sentences

In the TS segment, we focus on value added reseller ("VAR") integrated solutions including third party hardware, software and technical computer-related consulting and managed services.

In the HPP segment, we design, manufacture and deliver products and services to customers that require specialized cyber security services, networking and signal processing products.

The operations and assets of our TS segment are located in the United States and the United Kingdom.

In the HPP segment, we design, manufacture and deliver products and services to customers that require specialized cyber security services, networking and signal processing

The operations and assets of our TS segment are located in the United States and the United Kingdom, which are the two divisions that make up the TS segment.

The operations and assets of our HPP segment are located in the United States.

3 unchanged sentences

Revenue from software is recognized at a point in time when the license is granted.

We recognize revenue from third-party service contracts as either gross sales or net sales depending on whether we are acting as a principal party to the transaction or 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.

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

We are the 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 the 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.

3 unchanged sentences

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

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.

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 includes critical updates.

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

24 unchanged sentences

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

ARIA revenue is derived from sale of hardware, software, and managed services.

See disaggregated revenues below by products/services and geography.

16 unchanged sentences

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

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.

There were no long-term contract liabilities as of September 30, 2023 and 2022, respectively.

Revenue recognized for the year ended September 30, 2023 that was included in contract liabilities as of September 30, 2022 was $ 3.2 million.

14 unchanged sentences

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 $ 9 thousand as of September 30, 2022 and $ 13 thousand as of September 30, 2021.

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.

There were no current capitalized costs as of September 30, 2023 and $ 9 thousand as of September 30, 2022, respectively.

There were no noncurrent capitalized costs as of September 30, 2023 and 2022, respectively.

The amount of fulfillment costs amortized year ended September 30, 2023 and 2022 were $ 9 thousand and $ 13 thousand, respectively.

19 unchanged sentences

Estimated warranty costs are based upon prior actual warranty costs for substantially similar products.

See Note 11 Product Warranties for balances as of September 30, 2022 and 2021.

Engineering and Development Expenses

4 unchanged sentences

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in net income in the period that includes the enactment date.

We also reduce deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods.

9 unchanged sentences

Basic net income per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period.

Diluted net income 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 by the assumed weighted average number of common shares outstanding.

Diluted net income 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 available to common shareholders 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.

2 unchanged sentences

September 30,

Net income from continuing operations

Net income from sale of discontinued operations

net income attributable to nonvested common stock

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 attributable to common shareholders

Weighted average total common shares outstanding – basic

Weighted average total shares outstanding – basic

weighted average non–vested shares outstanding

Weighted average number of common shares outstanding – basic

potential common shares from non–vested stock awards and the assumed exercise of stock options

potential common shares from non–vested stock awards

Weighted average common shares outstanding – 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 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.

Non-vested restricted stock awards of 54 thousand shares were excluded from net income per share for the year ended September 30, 2023 because their inclusion would have been anti-dilutive.

Non-vested restricted stock awards of 171 thousand shares were excluded from net income per share for the year ended September 30, 2022 because their inclusion would have been anti-dilutive.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results may differ from those estimates under different assumptions or conditions.

Stock-Based Compensation

We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including stock options and nonvested shares of restricted common stock based on estimated fair values of stock-based payment awards on the date of grant.

The Company uses the Black-Scholes option-pricing model to calculate the fair value of stock option grants.

We measure and recognize compensation expense for all stock-based payment awards made to employees and directors for nonvested shares of restricted common stock based on estimated fair values of stock-based payment awards on the date of grant.

The Company has no outstanding stock options issued as of September 30, 2023 and did not issue any for the years ended September 30, 2023 and 2022, respectively.

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.

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.

Stock-based compensation expense recognized for the fiscal years ended September 30, 2022 and 2021 consisted of options and restricted stock granted pursuant to the Company’s stock incentive and employee stock purchase plans of approximately $ 1.0 million and $ 1.0 million, respectively.

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.

Stock-based compensation expense recognized in the consolidated statements of operations for the fiscal years ended September 30, 2023 and 2022 is based on awards ultimately expected to vest and has been reduced for estimated forfeitures and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense recognized for the fiscal years ended September 30, 2023 and 2022 consisted of restricted stock granted pursuant to the Company’s stock incentive and employee stock purchase plans of approximately $ 1.1 million and $ 1.0 million, respectively.

Concentrations of Credit Risk

2 unchanged sentences

Generally, these deposits may be redeemed upon demand.

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.

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

We had one customer who totaled approximately $ 7.4 million, or 30 %, and approximately $ 15.8 million, or 52 %, of total consolidated accounts receivable as of September 30, 2023 and September 30, 2022, respectively.

13 unchanged sentences

The Company is evaluating the effect that ASU 2016-13 will have on its consolidated financial statements and related disclosures.

Discontinued Operations of TS Segment

CSPi sold all stock of Modcomp GmbH to Reply AG on July 31, 2018 for $ 14.4 million cash and a gain of $ 18.1 million.

This sale was recorded in fiscal year 2018.

An additional € 400 thousand was included in escrow as part of the Share Purchase and Assignment Agreement to potentially be received later as a purchase price adjustment in fiscal year 2021.

This amount was received in July 2021 and recorded as a gain from discontinued operations in the Consolidated Statements of Operations, which is consistent with the presentation for the original transaction.

No income taxes were provided as the transaction was a tax-free exchange in the U.K.

There are no other amounts that will be received as part of the agreement.

Accounts and Long-Term Receivable

14 unchanged sentences

There was one new agreement effective in the first quarter of fiscal year 2023 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.

This agreement included approximately $ 3.0 million in payments to be received over the next 2 years from the effective date of the agreement.

The revenue for this transaction was recorded as net revenue.

There were two new agreements effective in the third quarter of fiscal year 2023.

One agreement included approximately $ 3.1 million in payments to be received over the next 4 years from the effective date of the agreement.

The second agreement included approximately $ 0.7 million in payments to be received over the next four years from the effective date of the agreement.

The revenue for these transactions was recorded as net revenue.

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.

15 unchanged sentences

Finished goods

We evaluate inventory for obsolescence on at least a quarterly basis or more frequently if needed.

Our HPP segment has a multi-faceted approach in determining obsolescence including reviewing inventory by product line, program, and individual part.

In the TS segment, we seek to minimize obsolete inventory by having nearly all of our inventory purchased in conjunction with a sales agreement.

From time to time, we do purchase certain inventory in bulk to receive discounts, but only when we anticipate selling this inventory in the near-term.

The inventory we purchase at the TS segment is in high demand, especially in the current environment, and has a limited risk of obsolescence.

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

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.

We are dependent on NVIDIA for our high-speed interconnect 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.

COVID-19 has adversely affected the distribution channel leading to significantly longer lead times when ordering product.

Manufacturers are not producing as much product as prior to the pandemic due to disruptions, resulting in supply shortages.

Additionally, recent global shipping delays have exacerbated this problem.

The TS segment has many vendors it transacts with and supply shortages are pervasive with many of them.

The TS segment has many vendors it transacts with.

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

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

We are dependent on NVIDIA for our high-speed interconnect components.

Accumulated Other Comprehensive Loss

9 unchanged sentences

Balance as of September 30, 2023

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

The changes in the minimum pension liability are net of an amortization gain of $ 200 thousand in 2023 and a loss of $ 91 thousand in 2022 included in net periodic pension cost.

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

For the Years Ended

2 unchanged sentences

Income (loss) before income tax expense

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.

Income tax expense:

Total income tax (benefit) expense

The effective income tax rate differed from the statutory federal income tax rate due to the following:

5 unchanged sentences

Foreign rate differential

Exclusion of PPP Loan Forgiveness Income

Exclusion of the UK's Gain on Sale of Disc Ops Entity

Employee Retention Credit

Permanent differences

1 unchanged sentence

Research and development credit

Benefit of US Federal NOL carryback

Deferred Tax True Ups

FIN 48 Reserves

Return to Provision Adjustments

Income tax expense

Income tax (benefit) expense

Significant components of the Company's net deferred tax assets and liabilities as of September 30, 2023 and 2022 are as follows:

3 unchanged sentences

Deferred tax assets:

Capitalized research and development expenses

Other reserves and accruals

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Foreign net operating loss carryforwards

Lease Liability

Gross deferred tax assets

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Net deferred tax assets

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

In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized.

In assessing the realizability of deferred tax assets, we consider taxable income in prior carryback years, as permitted under the tax law, our forecasted taxable earnings, tax planning strategies, and the expected timing of the reversal of temporary differences.

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 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.

We continue to maintain a full valuation allowance against our U.K.

deferred tax assets as we have experienced cumulative losses and do not have any indication that the operation will be profitable in the future to an extent that will allow us to utilize much of our net operating loss carryforwards.

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, 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 $ 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.

The Company undertakes a review of its valuation allowance at each financial statement period, reviewing the positive and negative evidence to help determine whether it is more likely than not that the Company will realize the future tax benefits from its deferred tax balances.

In the fiscal year ended September 30, 2020, the Company established a partial valuation allowance against its deferred tax assets in light of results at the time, the COVID-19 pandemic, and the resulting economic fallout, and established a full valuation during the fiscal year ended September 30, 2021.

Since that time, the COVID-19 pandemic has ended, and the Company’s Technology Solutions business has grown its revenue and operating income in fiscal years 2023 and 2022.

As a result, the Company has determined that it is more likely than not that substantially all of its net deferred tax assets in the U.S.

jurisdiction will be utilized and associated valuation allowances should be reversed during the fiscal year ended September 30, 2023.

The valuation reversed during the period and resulted in a $ 1.8 million benefit.

The Company separately analyzed the realizability of its federal and state credits and determined $ 710 thousand (net of federal benefit) of state credits are expected to expire unutilized and kept a valuation allowance against these credits.

The Company will continue to maintain a valuation allowance against certain state tax credits in the U.S.

and a full valuation allowance against the net deferred tax assets in the U.K.

jurisdiction.

As of September 30, 2023, the Company did not have U.S.

net operating loss carryforwards for federal purposes or U.S.

tax credit carryforwards for federal purposes.

As of September 30, 2022, the Company had $ 162 thousand of U.S.

net operating loss carryforwards for federal purposes and $ 884 thousand of U.S.

tax credit carryforwards for federal purposes.

As of September 30, 2023, and 2022, the Company had U.S.

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.

net operating loss carryforwards for state purposes of approximately $ 12 thousand and $ 3.7 million, respectively, which are available to offset future taxable income through 2034.

As of September 30, 2023, the Company had state tax credit carryforwards of $ 1.1 million available to reduce future

state tax expense, of which $ 55 thousand has unlimited carryover status and the remainder of the credits are available through FY 2038.

As of September 30, 2023, the Company had U.K.

net operating loss carryforwards of approximately $ 15.5 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 $ 4.8 million and $ 6.1 million as of September 30, 2023 and 2022, respectively.

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These estimated tax liabilities include the provision for taxes that may become payable in the future.

As of September 30, 2022, the total amount of uncertain tax liabilities relates to state tax credit carryforwards and are all recorded net in deferred taxes.

As of September 30, 2023, the total amount of uncertain tax liabilities relates to federal and state tax credit carryforwards which are partially recorded net in deferred taxes and partially as a long term tax payable.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

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Additions for tax positions of current year

Additions for tax positions of prior years

(Subtractions) additions for tax positions of prior years

Balance, end of period

If the unrecognized tax benefits of $ 323 thousand as of September 30, 2023 are recognized, they would reduce our annual effective tax rate, subject to the valuation allowance.

The Company does not expect our unrecognized tax benefits to change significantly over the next 12 months.

We file income tax returns in the U.S.

federal jurisdiction and various state and foreign jurisdictions.

The Company has reviewed the tax positions taken on returns filed domestically and in its foreign jurisdictions for all open years, generally fiscal 2019 through 2022, and believes that tax adjustments in any audited year will not be material.

The Company has reviewed the tax positions taken on returns filed domestically and in its foreign jurisdictions for all open years, generally fiscal 2020 through 2023, and believes that any tax adjustments not currently reserved in any audited year will not be material.

Property, Equipment and Improvements, Net

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Operating lease liability

Employee Retention Tax Credit Payable

Product warranty

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principal and interest.

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

The average weighted imputed interest rate for the agreements was determined to be 5.5 %.

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

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This is approximately 26 % of Accounts payable and other noncurrent liabilities.

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 $ 16.1 million due (net of interest) to one of these vendors as of September 30, 2022.

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.

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.

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

Information related to both lessee and lessor

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

The following table specifies where the right-of-use assets, lease liabilities, and investment in lease are within the Consolidated Balance Sheets as of September 30, 2023 and 2022:

Condensed Balance Sheets Location

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Accounts payable and accrued expenses

Non-current finance lease liabilities

Other noncurrent liabilities

Total finance lease liabilities

The components of lease costs for the year ended September 30, 2023 and 2022 are as follows:

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Operating lease

Finance lease

Fiscal year ending September 30:

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

Operating cash flows from operating leases

Operating cash flows from short-term leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Operating cash flows paid for operating leases

Operating cash flows paid for short-term leases

Operating cash flows paid for finance leases

Financing cash flows paid for finance leases

Lease assets obtained in exchange for new lease liabilities

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Operating leases

Finance leases

Weighted-average discount rate

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Operating leases

Finance leases

Product Warranties

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Notes Payable

In September 2019, the Company borrowed $ 1.0 million with a 5.0 % rate of interest related to a multi-year agreement with a customer.

See Note 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, 2023.

On April 17, 2021, CSP, Inc.

and Modcomp, Inc., its wholly owned subsidiary (collectively, the “Borrowers”) each received a loan in the form of a promissory note from Paragon Bank (“Lender”) in the amounts of $ 827,000 and $ 1,353,600 , respectively (the “SBA Loans”) under the Paycheck Protection Program (“PPP”), which was established under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S.

Small Business Administration (“SBA”).

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

The SBA Loans provided for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, materially false or misleading representations to Lender or SBA, and adverse changes in the financial condition or business operations that Lender believed could materially affect Borrowers’ ability to pay the SBA Loans.

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

The Borrowers applied to the Lender for forgiveness of an amount due on the SBA Loans in an amount equal to the sum of certain costs during the 24 week period beginning on the date of the first disbursement of the SBA Loans.

The amount of SBA Loans forgiveness was calculated in accordance with the requirements of the PPP, including provisions of Section 1106 of the CARES Act.

We used the SBA Loans proceeds in accordance with the applicable SBA guidelines.

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 for the year ended September 30, 2021.

Interest expense related to the notes for the years ended September 30, 2023 and 2022 was $ 22 thousand and $ 50 thousand, respectively.

Below are details of the notes payable.

Fiscal year ending September 30:

(Amounts in thousands)

note discount

September 30, 2023

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In the U.K., the Company provides defined benefit pension plans for certain employees and former employees and defined contribution plans for the majority of the employees.

The defined benefit plans in the U.K.

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.

The defined benefit plan in the U.K.

is frozen to newly hired employees and has been for the two years ended September 30, 2023.

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

These supplementary retirement plans are also closed to newly hired employees and have been for the two years ended September 30, 2023.

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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

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

If the liabilities are below funding levels an asset is recorded.

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.

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and international plans are as follows:

Year ended September 30,

Years ended September 30,

(Amounts in thousands)

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Amortization of past service costs

Amortization of net loss

Amortization of net (gain) loss

Net periodic (benefit) cost

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Interest cost

Amortization of net (gain) loss

Net periodic cost

Amortization of net gain

Net periodic (benefit) cost

Decrease in minimum liability included in other comprehensive income

Post Retirement:

Decrease in minimum liability included in other comprehensive income

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

(Decrease) increase in minimum liability included in other comprehensive income

The following table presents an analysis of the changes in 2023 and 2022 of the benefit obligation, the plan assets and the funded status of the plans:

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Fair value of plan assets at beginning of year

Actual (loss) gain on plan assets

Actual gain (loss) on plan assets

Company contributions

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Accrued benefit liability

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss

Net amount recognized

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Accrued benefit asset (liability)

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Net amount recognized

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Total accumulated benefit obligation

Plans with projected benefit obligations in excess of plan assets are attributable to unfunded domestic supplemental retirement plans, and our U.K.

retirement plan.

Accrued benefit liability reported as:

Plans with projected benefit obligations in excess of plan assets are attributable to unfunded domestic supplemental retirement plans.

Accrued benefit assets and liabilities reported as:

September 30,

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As of September 30, 2023 and 2022, the amounts included in accumulated other comprehensive loss, consisted of deferred net losses totaling approximately $ 0.1 million and $ 0.4 million, respectively.

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 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.

The amount of net deferred gain expected to be recognized as a component of net periodic benefit cost for the year ending September 30, 2023, is approximately $ 207 thousand.

Contributions

The Company expects to contribute $ 0.2 million to its pension plans for fiscal 2023.

The Company expects to contribute $ 0.2 million to its pension plans in fiscal 2024.

Estimated Future Benefit Payments

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(Amounts in thousands)

At September 30, 2022, our pension plan in the U.K.

As of September 30, 2023, our pension plan in the U.K.

was the only plan with assets, holding investments of approximately $ 10.0 million.

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In 2015, the Company adopted the 2015 Stock Incentive Plan (the "2015 Plan") and authorized 300,000 shares of common stock to be reserved for issuance pursuant to the 2015 Plan.

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.

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

During fiscal year 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, 2023, there were 245,404 shares available to be granted under the 2015 Plan.

Under all of the stock incentive plans, both incentive stock options and non-qualified stock options may be granted to officers, key employees and other persons providing services to the Company.

All of the Company’s stock incentive plans have a ten-year life.

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 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.

Generally, options granted to employees vest over four years and expire ten years from the date of grant.

Options granted to non-employee directors have historically included cliff vesting after six months from the date of grant and expire three years from the date of grant.

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

Under the 2015 Plan, incentive and non-qualified stock options and restricted stock awards may be granted to officers, key employees and other persons providing services to the Company.

The 2015 Plan has a ten-year life.

Awards issued under the 2015 Plan are not affected by termination of the plan.

The Company had no awarded stock options outstanding as of September 30, 2023 nor did it issue any for the two years ended September 30, 2023.

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

Vesting of restricted stock awards granted pursuant to the 2015 Plan is determined by the Company’s compensation committee.

In fiscal years 2019 through 2023, the Company granted certain officers including its Chief Executive Officer and non-employee directors, and key employees shares of nonvested common stock.

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

The vesting period for the key employees’ restricted stock awards is typically 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 .

Stock-based compensation expense incurred and recognized for the years ended September 30, 2022 and 2021 related to stock options and nonvested stock granted to employees and non-employee directors under the Company’s stock incentive and employee stock purchase plans totaled approximately $ 979 thousand and $ 981 thousand, respectively.

Stock-based compensation expense incurred and recognized for the years ended September 30, 2023 and 2022 related to nonvested stock granted to employees and non-employee directors under the Company’s stock incentive and employee stock purchase plans totaled approximately $ 1.1 million and $ 1.0 million, respectively.

The classification of the cost of stock-based compensation, in the consolidated statements of operations, is consistent with the nature of the services being rendered in exchange for the share-based payment.

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The Company measures the fair value of nonvested stock awards based upon the market price of its common stock as of the date of grant.

The Company used the Black-Scholes option-pricing model to value stock options.

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 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.

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

All equity compensation awards granted for the years ended September 30, 2023 and September 30, 2022 were restricted stock awards.

As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, expense for grants have been reduced for estimated forfeitures.

The forfeiture rates for the years ended September 30, 2023 and 2022 were based on actual forfeitures.

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Employee Stock Purchase Plan

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.

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

An additional 300,000 shares of common stock were approved by stockholders in fiscal year 2023.

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.

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The plan does not expire.

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.

The Company repurchased 600 shares of its outstanding common stock on the open market during fiscal year 2023.

As of September 30, 2023, 171,127 shares remain authorized to repurchase under the stock repurchase program.

5 unchanged sentences

Operating (loss) income

Interest income

Interest expense

Interest income

Capital expenditures

1 unchanged sentence

Operating (loss) income

Interest income

Interest expense

Interest income

Capital expenditures

Depreciation and amortization

Profit (loss) from operations is sales less cost of sales, engineering and development, selling, general and administrative expenses but is not affected by either non-operating charges/income or by income taxes.

Non-operating charges/income consists principally of investment income and interest expense.

Operating (loss) income from operations is sales less cost of sales, engineering and development, selling, general and administrative expenses but is not affected by either non-operating charges/income or by income taxes.

Non-operating charges/income consists principally of foreign exchange gain (loss), investment income, and interest expense.

In fiscal year 2023 the Employee Retention Tax Credit was the largest non-operating income item, which did not occur in fiscal year 2022.

All intercompany transactions have been eliminated.

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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 at September 30, 2022, and 2021.

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.

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 September 30, 2023, and 2022.

For the fiscal year ended September 30, 2023 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.

Related Party Transactions

Gary Southwell, Vice President and General Manager of High Performance Products segment, is a minority shareholder in one of our vendors.

He has no operational responsibilities.

There were $ 316 thousand and $ 156 thousand of purchases from this vendor for the fiscal year ended September 30, 2023 and 2022, respectively.

There were no amounts due to the vendor as of September 30, 2023 or 2022.

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