CSP INC /MA/ 10-K

Item 9A. Controls and Procedures Evaluation of Controls and Procedures Disclosure Controls and Procedures. The Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of September 30, 2023. Our Chief Executive Officer, our Chief Financial Officer and other members of our senior management team supervised and participated in this evaluation. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s ("SEC") rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2023, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective. Management’s Report on Internal Control over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rule 13a-15(f) under the Exchange Act, internal control over financial reporting is a process designed by or under the supervision of a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. It includes those policies and procedures that: ● pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of a company; and ● 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. 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. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 29 Table of Contents This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2023 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. Changes in 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 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B. 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. Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections Not applicable PART III Item 10. Directors, Executive Officers and Corporate Governance 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 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. Item 11. Executive Compensation We incorporate the information required by this item by reference to the sections captioned “Compensation of Executive Officers” and “Compensation of Non-Employee Directors” 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. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Securities Authorized for Issuance Under Equity Compensation Plans. The equity compensation plans approved by our stockholders consist of the CSP Inc. 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. The non-vested common stock has a four-year vesting period for key employees, officers including the Chief Executive Officer. There is a one-year vesting period for the non-employee directors. The 30 Table of Contents 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 ​ ​ Number of securities to be ​ Weighted-average ​ remaining available for future ​ ​ issued upon exercise ​ exercise price of ​ issuance under equity ​ ​ of outstanding options, ​ outstanding options, ​ compensation plans (excluding ​ ​ warrants and rights ​ warrants and rights ​ securities reflected in column (a)) ​ Plan Category ​ (a) ​ (b) ​ (c) ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity plans approved by security holders 295,076 (1) ​ $ — (2) ​ 514,939 (3) ​ (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. Item 13. Certain Relationships and Related Transactions and Director Independence We incorporate the information required by this item by reference to the section captioned “Corporate Governance” 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. Item 14. Principal Accountant Fees and Services We incorporate the information required by this item by reference to the sections captioned “Fees for Professional Services” and “Pre-approval Policies and Procedures” 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. PART IV Item 15. Exhibits and Financial Statement Schedules (a) (1) Financial statements filed as part of this report: Consolidated Balance Sheets as of September 30, 2023 and 2022 Consolidated Statements of Operations for the years ended September 30, 2023 and 2022 Consolidated Statements of Comprehensive Income for the years ended September 30, 2023 and 2022 Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2023 and 2022 Consolidated Statements of Cash Flows for the years ended September 30, 2023 and 2022 Notes to Consolidated Financial Statements 31 Table of Contents (2) Financial statement schedules All other financial statements and schedules not listed have been omitted since the required information is included in the consolidated financial statements or the notes thereto included in Item 8, or is not applicable, material or required. (3) Exhibits ​ ​ ​ ​ ​ ​ Incorporated by Reference Exhibit No. Description Filed with this Form 10-K ​ Form Filing Date Exhibit No. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3.1 ​ Articles of Organization and amendments thereto ​ ​ ​ 10-K ​ December 26, 2007 ​ 3.1 3.2 ​ By-laws, as amended December 13, 2012 ​ ​ ​ 10-K ​ December 20, 2012 ​ 3.2 4.1 ​ Description of Securities ​ ​ ​ 10-K ​ December 28, 2022 ​ 4.1 10.1 ​ Form of Employee Invention and Non-Disclosure Agreement ​ ​ ​ 10-K ​ November 22, 1996 ​ 10.3 10.2 ​ CSPI Supplemental Retirement Income Plan ​ ​ ​ 10-K ​ December 29, 2008 ​ 10.2 10.3* ​ 2014 Variable Compensation (Executive Bonus) and Base Programs dated November 12, 2013 ​ ​ ​ 10-K ​ December 23, 2014 ​ 10.10 10.4* ​ Death Benefit and Retirement Benefit Agreement between the Company and Victor Dellovo dated September 13, 2013 ​ ​ ​ 10-K ​ December 24, 2013 ​ 10.11 10.5* ​ Form of Change of Control Agreement with Gary W. Levine dated January 11, 2008 ​ ​ ​ 10-K ​ December 23, 2010 ​ 10.11 10.6* ​ 2014 Employee Stock Purchase Plan ​ ​ ​ DEF 14A ​ January 6, 2014 ​ A 10.7* ​ 2015 Stock Incentive Plan ​ ​ ​ DEF 14RA ​ January 25, 2019 ​ A 10.8 ​ 2015 Lowell, MA Lease ​ ​ ​ 10-K ​ December 24, 2015 ​ 10.21 10.9 ​ 2015 Deerfield Beach, FL Lease ​ ​ ​ 10-K ​ December 24, 2015 ​ 10.20 10.10* ​ Executive Retention and Service Agreement with Victor Dellovo, dated September 4, 2012 ​ ​ ​ 10-Q ​ February 14, 2018 ​ 10.1 10.11* ​ Forms of Employee Restricted Stock Award Agreement ​ ​ ​ 10-Q ​ February 14, 2018 ​ 10.2 10.12 ​ Share Purchase and Assignment Agreement ​ ​ ​ 8-K ​ June 27, 2018 ​ 2.1 21.1 ​ Subsidiaries ​ X ​ ​ ​ ​ ​ ​ 23.1 ​ Consent of RSM LLP, Independent Registered Public Accounting Firm ​ X ​ ​ ​ ​ ​ ​ 31.1 ​ Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ​ X ​ ​ ​ ​ ​ ​ 31.2 ​ Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ​ X ​ ​ ​ ​ ​ ​ 32.1 ​ Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ​ X ​ ​ ​ ​ ​ ​ 97.1 ​ Policy relating to recovery of erroneously awarded compensation ​ X ​ ​ ​ ​ ​ ​ 101.INS ​ XBRL Instance ​ ​ ​ ​ ​ ​ ​ ​ 101.SCH ​ XBRL Taxonomy Schema ​ ​ ​ ​ ​ ​ ​ ​ 101.CAL ​ XBRL Taxonomy Extension Calculation ​ ​ ​ ​ ​ ​ ​ ​ 101.DEF ​ XBRL Taxonomy Extension Definition ​ ​ ​ ​ ​ ​ ​ ​ 32 Table of Contents 101.LAB ​ XBRL Taxonomy Extension Labels ​ ​ ​ ​ ​ ​ ​ ​ 101.PRE ​ XBRL Taxonomy Extension Presentation ​ ​ ​ ​ ​ ​ ​ ​ * Management contract or compensatory plan. Item 16. Form 10-K Summary None. ​ 33 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ CSP INC. ​ ​ ​ ​ By: /s/ Victor Dellovo ​ ​ Victor Dellovo Chief Executive Officer and President ​ Date: December 13, 2023 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Title Date ​ ​ ​ ​ ​ /s/ Victor Dellovo ​ Chief Executive Officer, President and Director ​ December 13, 2023 Victor Dellovo ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Gary W. Levine ​ Chief Financial Officer (Principal Financial Officer) ​ December 13, 2023 Gary W. Levine ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Mike Newbanks ​ Vice President of Finance (Chief Accounting Officer) ​ December 13, 2023 Mike Newbanks ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ C. Shelton James ​ Director ​ December 13, 2023 C. Shelton James ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Raymond Charles Blackmon ​ Director ​ December 13, 2023 Raymond Charles Blackmon ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Marilyn T. Smith ​ Director ​ December 13, 2023 Marilyn T. Smith ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Izzy Azeri ​ Director ​ December 13, 2023 Izzy Azeri ​ ​ ​ ​ ​ ​ ​ 34 Table of Contents ​ Report of Independent Registered Public Accounting Firm ​ Shareholders and the Board of Directors CSP Inc. and Subsidiaries Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheets of CSP Inc. and its subsidiaries (the Company) as of September 30, 2023 and 2022, 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, 2023 and 2022, 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. Basis for Opinion ​ These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. 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. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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 35 Table of Contents 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. ​ 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. Auditing management’s assumptions and conclusions involved a high degree of auditor judgment. ​ Our audit procedures related to these contracts included the following, among others: ​ ● We evaluated management’s significant accounting policies related to these third-party contracts for consistency with accounting standards. ● For a selection of contracts, we performed the following procedures: o Inspected the customer invoice and purchase order to determine whether the sale represented a valid and enforceable transaction with a customer. o Compared the cost per the Company’s records to the cost per the vendor invoice. 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. Coral Gables, Florida December 13, 2023 ​ ​ 36 Table of Contents CSP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except par value) ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2023 2022 ​ ​ ​ ​ ​ ​ ASSETS ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 25,217 ​ $ 23,982 Accounts receivable, net of allowances of $ 100 and $ 88 ​ 20,126 ​ 22,993 Investment in lease, net-current portion ​ 8 ​ 17 Inventories ​ 2,542 ​ 4,372 Refundable income taxes ​ — ​ 1,050 Other current assets ​ 2,471 ​ 7,043 Total current assets ​ 50,364 ​ 59,457 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Property, equipment and improvements, net ​ 525 ​ 647 Operating lease right-of-use assets ​ ​ 966 ​ ​ 1,160 Intangibles, net ​ 46 ​ 10 Investment in lease, net-less current portion ​ 7 ​ 3 Long-term receivable ​ ​ 4,224 ​ 7,412 Deferred income taxes, net ​ 2,346 ​ — Cash surrender value of life insurance ​ 5,356 ​ 5,163 Pension benefits assets ​ ​ 1,958 ​ ​ 1,099 Other assets ​ 112 ​ 111 Total assets ​ $ 65,904 ​ $ 75,062 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ Current liabilities: ​ ​ Accounts payable and accrued expenses ​ $ 10,785 ​ $ 22,463 Line of credit ​ ​ 1,515 ​ ​ 3,124 Notes payable - current portion ​ ​ 449 ​ ​ 427 Deferred revenue ​ 1,898 ​ 4,058 Pension and retirement plans ​ 98 ​ 110 Income taxes payable ​ 914 ​ — Total current liabilities ​ 15,659 ​ 30,182 Pension and retirement plans ​ 1,251 ​ 1,337 Notes payable - noncurrent portion ​ ​ — ​ ​ 449 Operating lease liabilities - noncurrent portion ​ ​ 482 ​ ​ 623 Income taxes payable ​ 513 ​ 462 Other noncurrent liabilities ​ 1,851 ​ 3,046 Total liabilities ​ 19,756 ​ 36,099 ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ Common stock, $ .01 par value per share; authorized, 7,500 shares; issued and outstanding 4,728 and 4,554 shares, respectively ​ 48 ​ 46 Additional paid-in capital ​ 20,883 ​ 19,476 Retained earnings ​ 31,311 ​ 26,769 Accumulated other comprehensive loss ​ ( 6,094 ) ​ ( 7,328 ) Total shareholders’ equity ​ 46,148 ​ 38,963 Total liabilities and shareholders’ equity ​ $ 65,904 ​ $ 75,062 ​ See accompanying notes to consolidated financial statements. 37 Table of Contents CSP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except for per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ September 30, ​ September 30, ​ ​ 2023 2022 ​ Sales: ​ ​ ​ Product ​ $ 47,149 ​ $ 36,688 ​ Services ​ 17,498 ​ 17,673 ​ Total sales ​ 64,647 ​ 54,361 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales: ​ ​ ​ Product ​ 35,524 ​ 28,977 ​ Services ​ 7,203 ​ 6,557 ​ Total cost of sales ​ 42,727 ​ 35,534 ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ 21,920 ​ 18,827 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ Engineering and development ​ 3,140 ​ 3,084 ​ Selling, general and administrative ​ 16,910 ​ 15,783 ​ Total operating expenses ​ 20,050 ​ 18,867 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income (loss) ​ 1,870 ​ ( 40 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ Foreign exchange (loss) gain ​ ( 581 ) ​ 1,692 ​ Interest expense ​ ( 262 ) ​ ( 360 ) ​ Interest income ​ 1,460 ​ 650 ​ Employee Retention Tax Credit, net of costs to collect ​ ​ 2,136 ​ ​ — ​ Other income (expense), net ​ 112 ​ ( 3 ) ​ Total other income, net ​ 2,865 ​ 1,979 ​ Income before income taxes ​ ​ 4,735 ​ 1,939 ​ Income tax (benefit) expense ​ ​ ( 469 ) ​ 50 ​ Net income ​ $ 5,204 ​ $ 1,889 ​ Net income attributable to common shareholders ​ $ 4,884 ​ $ 1,789 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per common share - basic ​ $ 1.11 ​ $ 0.42 ​ Weighted average common shares outstanding – basic ​ 4,381 ​ 4,261 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per common share - diluted ​ $ 1.09 ​ $ 0.42 ​ Weighted average common shares outstanding – diluted ​ ​ 4,471 ​ ​ 4,278 ​ ​ See accompanying notes to consolidated financial statements. 38 Table of Contents CSP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ September 30, ​ September 30, ​ ​ 2023 2022 ​ Net income ​ $ 5,204 $ 1,889 ​ Other comprehensive income (loss): ​ ​ ​ Unrealized actuarial gain on minimum pension liability, net of tax effect ​ 272 ​ 3,861 ​ Foreign currency translation gain (loss) adjustments, net ​ 962 ​ ( 1,741 ) ​ Other comprehensive income ​ 1,234 ​ 2,120 ​ Total comprehensive income ​ $ 6,438 $ 4,009 ​ ​ See accompanying notes to consolidated financial statements. 39 Table of Contents CSP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY For the Years Ended September 30, 2023 and 2022: (Amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ Total ​ ​ ​ ​ ​ ​ ​ Paid-in ​ Retained ​ comprehensive ​ Shareholders’ Year ended September 30, 2023: Shares Amount Capital Earnings loss Equity Balance as of September 30, 2022 4,554 ​ $ 46 ​ $ 19,476 ​ $ 26,769 ​ $ ( 7,328 ) ​ $ 38,963 Net income — ​ — ​ — ​ 5,204 ​ — ​ 5,204 Other comprehensive income — ​ ​ — ​ ​ — ​ ​ — ​ 1,234 ​ 1,234 Stock-based compensation — ​ ​ — ​ ​ 1,127 ​ ​ — ​ — ​ 1,127 Restricted stock issuance 143 ​ ​ 2 ​ ​ — ​ ​ — ​ — ​ 2 Issuance of shares under employee stock purchase plan 32 ​ ​ — ​ ​ 280 ​ ​ — ​ — ​ 280 Purchase of common stock ​ ( 1 ) ​ ​ — ​ ​ — ​ ​ ( 6 ) ​ ​ — ​ ​ ( 6 ) Cash dividends paid on common stock ($ 0.14 per share) — ​ ​ — ​ ​ — ​ ​ ( 656 ) ​ — ​ ( 656 ) Balance as of September 30, 2023 4,728 ​ $ 48 ​ $ 20,883 ​ $ 31,311 ​ $ ( 6,094 ) ​ $ 46,148 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ Total ​ ​ ​ ​ ​ ​ ​ Paid-in ​ Retained ​ comprehensive ​ Shareholders’ Year ended September 30, 2022: Shares Amount Capital Earnings loss Equity Balance as of September 30, 2021 4,394 ​ $ 45 ​ $ 18,258 ​ $ 25,191 ​ $ ( 9,448 ) ​ $ 34,046 Net income — ​ — ​ — ​ 1,889 ​ — ​ 1,889 Other comprehensive income — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,120 ​ 2,120 Stock-based compensation — ​ ​ — ​ ​ 979 ​ ​ — ​ ​ — ​ 979 Restricted stock cancellation ​ — ​ ​ ( 1 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1 ) Restricted stock issuance 151 ​ ​ 2 ​ ​ — ​ ​ — ​ ​ — ​ 2 Issuance of shares under employee stock purchase plan 31 ​ ​ — ​ ​ 239 ​ ​ — ​ ​ — ​ 239 Purchase of common stock ​ ( 22 ) ​ ​ — ​ ​ — ​ ​ ( 174 ) ​ ​ — ​ ​ ( 174 ) Cash dividends paid on common stock ($ 0.03 per share) — ​ ​ — ​ ​ — ​ ​ ( 137 ) ​ ​ — ​ ( 137 ) Balance as of September 30, 2022 4,554 ​ $ 46 ​ $ 19,476 ​ $ 26,769 ​ $ ( 7,328 ) ​ $ 38,963 ​ See accompanying notes to consolidated financial statements. 40 Table of Contents CSP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ September 30, ​ September 30, ​ 2023 2022 Operating activities ​ ​ Net income ​ $ 5,204 ​ $ 1,889 ​ ​ ​ ​ ​ ​ ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ Depreciation ​ 343 ​ 350 Amortization of intangibles ​ 15 ​ 9 Loss on disposal of fixed assets, net ​ ​ 4 ​ ​ — Foreign exchange loss (gain) ​ 581 ​ ( 1,692 ) Provision for losses (recoveries) on accounts receivable ​ 26 ​ ( 50 ) Provision for obsolete inventory ​ 274 ​ 130 Amortization of lease right-of-use assets ​ ​ 573 ​ ​ 576 Stock-based compensation expense on stock options and restricted stock awards ​ 1,127 ​ 979 Deferred income taxes ​ ( 2,346 ) ​ — Decrease in cash surrender value of life insurance ​ ( 130 ) ​ ( 1,221 ) ​ ​ ​ ​ ​ ​ ​ Changes in operating assets and liabilities: ​ ​ Decrease (increase) in accounts receivable ​ 2,852 ​ ( 4,264 ) Decrease (increase) in inventories ​ 1,557 ​ ( 517 ) Decrease in refundable income taxes ​ 1,050 ​ 605 Increase in operating lease right-of-use assets ​ ​ ( 379 ) ​ ​ ( 377 ) Decrease (increase) in other assets ​ ​ 4,581 ​ ​ ( 2,491 ) Decrease in investment in lease ​ 5 ​ 63 Decrease in long-term receivable ​ ​ 3,188 ​ ​ 111 (Decrease) increase in accounts payable and accrued expenses ​ ( 11,596 ) ​ 8,714 Decrease in interest payable ​ ​ ( 50 ) ​ ​ ( 8 ) Decrease in operating lease liabilities ​ ​ ( 190 ) ​ ​ ( 330 ) (Decrease) increase in deferred revenue ​ ( 2,161 ) ​ 2,165 Decrease in pension and retirement plans liabilities ​ ( 391 ) ​ ( 167 ) Increase (decrease) in income taxes payable ​ 965 ​ ( 62 ) Decrease in other long-term liabilities ​ ( 1,195 ) ​ ( 1,737 ) Net cash provided by operating activities ​ 3,907 ​ 2,675 ​ ​ ​ ​ ​ ​ ​ Investing activities ​ ​ Life insurance premiums paid ​ ( 64 ) ​ ( 70 ) Purchase of held-to-maturity investments ​ ​ ( 3,533 ) ​ ​ — Proceeds from maturities of held-to-maturity investments ​ ​ 3,533 ​ ​ — Proceeds from corporate life insurance owned policy ​ ​ — ​ ​ 322 Proceeds from sales of property, equipment, and improvements ​ ​ — ​ ​ 2 Additions of intangible assets ​ ​ ( 51 ) ​ ​ — Purchases of property, equipment and improvements ​ ( 226 ) ​ ( 234 ) Net cash (used in) provided by investing activities ​ ( 341 ) ​ 20 ​ ​ ​ ​ ​ ​ ​ Financing activities ​ ​ Dividends paid ​ ( 656 ) ​ ( 137 ) Net borrowing under line-of-credit agreement ​ ​ ( 1,609 ) ​ ​ 2,183 Repayments on notes payable ​ ​ ( 406 ) ​ ​ ( 736 ) Principal payments on finance leases ​ ( 4 ) ​ ( 47 ) Purchase of common stock ​ ​ ( 6 ) ​ ​ ( 174 ) 41 Table of Contents Proceeds from issuance of shares under equity compensation plans ​ 280 ​ 239 Net cash (used in) provided by financing activities ​ ( 2,401 ) ​ 1,328 Effects of exchange rate on cash, net ​ 70 ​ ( 48 ) Net increase in cash and cash equivalents ​ 1,235 ​ 3,975 Cash and cash equivalents beginning of year ​ ​ 23,982 ​ 20,007 Cash and cash equivalents end of year ​ $ 25,217 ​ $ 23,982 ​ ​ ​ ​ ​ ​ ​ Supplementary cash flow information: ​ ​ Cash paid (received) for income taxes ​ $ 246 ​ $ ( 233 ) Cash paid for interest ​ $ 313 ​ $ 184 ​ ​ ​ ​ ​ ​ ​ Supplementary non-cash financing activities: ​ ​ ​ ​ ​ ​ Obtaining a right-of-use asset in exchange for a lease liability ​ $ 392 ​ $ 352 Customer financing for inventory sold (see Note 2 Accounts and Long-Term Receivable for details) ​ $ 6,032 ​ $ 1,232 Vendor financing for inventory purchased (see Note 8 Accounts payable and accrued expenses, and Other noncurrent liabilities for details) ​ $ 2,321 ​ $ — ​ See accompanying notes to consolidated financial statements. ​ ​ 42 Table of Contents ​ CSP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022 Organization and Business CSP Inc. ("CSPi" or "CSPI" or "the Company" or "we" or "our") was founded in 1968 and is based in Lowell, Massachusetts. To meet the diverse requirements of commercial and defense customers worldwide, CSPI and its subsidiaries develop and market IT integration solutions, advanced security products, managed IT services, purpose built network adapters, and high-performance cluster computer systems. The Company operates in two segments, its Technology Solutions ("TS") segment and its High Performance Products ("HPP") segment. 1. Summary of Significant Accounting Policies Basis of Presentation 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. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Foreign Currency Translation The U.S. Dollar is the reporting currency for all periods presented. The financial information for entities outside the United States is measured using the local currency as the functional currency. In consolidation, foreign transactions are remeasured into the functional currency, British Pounds, of our U.K. subsidiary. 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. Revenue and expenses are translated at average rates in effect during the period. The resulting translation adjustment is reflected as accumulated other comprehensive loss, a separate component of shareholders’ equity on the consolidated balance sheets. Currency transaction gains and losses are recorded as other income (expense) in the consolidated statements of operations. Cash Equivalents 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. 43 Table of Contents 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 For the years ended September 30, 2023 and 2022, our expenses for research and development were approximately $ 3.1 million and $ 3.1 million, respectively. Expenditures for research and development are expensed as they are incurred. Impairment of Long-Lived Assets 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 amounts. 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 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 years , and are carried at net book value. The remaining useful lives of intangible assets are evaluated on an annual basis. Intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. 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 years ended September 30, 2023 and 2022. Leases as Lessee At the inception of an arrangement, the Company determines whether the arrangement contains a lease. This includes arrangements with goods and services to determine if there is an embedded lease. An arrangement containing a lease would allow the Company the right to control an implicitly or explicitly identified asset. If there is a lease in an arrangement, the classification is determined at inception of the arrangement. Certain leases may contain transfer of ownership or an option to purchase the underlying asset. The most relevant criterion for our lease classification is transfer of ownership, which if included in the arrangement makes the lease a finance lease rather than an operating lease. The discount rate used to assess classification is the incremental borrowing rate at the commencement date due to the implicit rate not being readily determinable. The incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The lease term includes periods where we are reasonably certain we will exercise the renewal option. The Company has elected not to apply Subtopic ASC 842-25 to short-term leases, which are defined as a lease that has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Therefore, there are no right-of-use assets or lease liabilities related to short-term leases in the Consolidated Balance Sheets and the lease payments are expensed on a straight-line basis over the lease term. Leases are typically not able to be terminated without penalty. None of our lease arrangements contain residual value guarantees, restrictions, or covenants. None of the Company’s current leases are with related parties. There are no lease arrangements that we have entered into as of September 30, 2023 that have not yet commenced. See Note 9 Leases for additional information. 44 Table of Contents Operating leases The Company has operating leases for office space, data centers, and other information technology equipment under various leases. Operating lease right-of-use assets and liabilities are recognized at the commencement date using the present value of the fixed lease payments over the lease term. We do not have leases with variable consideration. The incremental borrowing rate is used in determining present value. Certain operating leases, primarily office space and IT equipment, have an option to extend the lease. Renewal periods related to certain lease agreements related to office buildings are included in the lease term for lease accounting. The Company has operating lease agreements with lease components (e.g. fixed payments including rent, real estate taxes, and insurance costs) as well as nonlease components (e.g. common-area maintenance, colocation services). The Company has elected to account for lease and nonlease components as one single lease component for all classes of assets. Lease expense is recognized on a straight-line basis over the lease term. Finance leases The Company has finance leases for information technology equipment and subleases all this equipment (see Lessor section below for details). All finance leases transfer ownership to the Company, which meets the criterion to be a finance lease. Due to our finance leases being subleases, there are no finance right-of-use assets because instead there is a net investment in lease in the Consolidated Balance Sheets. Leases as Lessor The Company is a lessor, but only as a sublessor. The process for identifying and classifying a lease is similar to the process described above in the lessee section. Additionally, the most relevant criteria to classification is transfer of ownership and present value of the total lease payments in relation to fair value of the underlying asset. The Company as a lessor has both sales-type and direct financing leases. The Company as a lessor does not have operating leases. All the Company’s sublease agreements are bundled agreements containing managed services, software, and other services. The fixed payments under bundled agreements are allocated based on the relative standalone selling prices of the lease and non-lease deliverables are consistent with ASC 606. The allocation of the fixed payments may be calculated using a budgeted cost-plus margin approach if there are other services in addition to managed services. Due to the complex nature of these contracts, there is significant judgment in allocating the fixed payments. There is no variable consideration in these agreements. The discount rate used as a lessor pertaining to the lease component is the implicit rate. As sublessor, lease agreements contain an option to purchase the underlying asset or transfers ownership at the end of the lease. The leases typically do not have any residual value to the Company. In the Company’s sublessor agreements, the payments allocated to the lease component cannot be terminated. See Note 9 Leases for additional information. Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined using the first-in, first-out method. The recoverability of inventories is based upon the types and levels of inventories held, forecasted demand, pricing, competition and changes in technology. We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. As of September 30, 2023, and September 30, 2022, the Company maintained inventory reserves of $ 1.0 million and $ 0.8 million, respectively. Property, Equipment and Improvements 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 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. Repairs and maintenance costs are expensed as incurred. 45 Table of Contents Trade Accounts Receivable, Long Term Receivable, and Allowance for Doubtful Accounts Trade accounts receivable are stated at amounts that have been billed to customers less an allowance for doubtful accounts. Allowances for doubtful accounts are recorded for the estimated losses resulting from the inability of our customers to make required payments. The estimates for the allowance for doubtful accounts are based on the length of time the receivables are past due, current business environment, and our historical experience. If the financial condition of our customers were to deteriorate, resulting in impairment of their ability to make payments, additional allowances may be required. Accounts receivable are charged off against the reserve when management has determined they are uncollectible. Within trade accounts receivable and long-term receivable are financing agreements with an original payment term of greater than one year. Interest income earned on these receivables is recognized using the effective interest method. See Note 2 Accounts and Long-Term Receivables for further details on financing arrangements. Pension and Retirement Plans 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. Additionally, plan assets and obligations are measured as of our fiscal year-end balance sheet date (September 30). We have defined benefit and defined contribution plans in the United Kingdom (the “U.K.”) and in the U.S. 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 plan in the U.K. is closed to newly hired employees and has been for the two year s ended September 30, 2023. 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. These supplementary retirement plans are also closed to newly hired employees and have been for the two year s ended September 30, 2023. These supplementary plans are funded through whole life insurance policies. The Company expects to recover all insurance premiums paid under these policies in the future, through the cash surrender value of the policies and any death benefits or portions thereof to be paid upon the death of the participant. These whole life insurance policies are carried on the balance sheet at their cash surrender values as they are owned by the Company and not assets of the defined benefit plans. In the U.S., the Company also provides for officer death benefits and post-retirement health insurance benefits through supplemental post-retirement plans to certain officers. The Company also funds these supplemental plans’ obligations through whole life insurance policies on the officers. Pension expense is based on an actuarial computation of current future benefits using estimates for expected return on assets, expected compensation increases and applicable discount rates. Management has reviewed the discount rates and rates of return with our consulting actuaries and investment advisor and concluded they were reasonable. A decrease in the expected return on pension assets would increase pension expense. Expected compensation increases are estimated based on historical and expected increases in the future. Increases in estimated compensation increases would result in higher pension expense while decreases would lower pension expense. Discount rates are selected based upon rates of return on high quality fixed income investments currently available and expected to be available during the period to maturity of the pension benefit. A decrease in the discount rate would result in greater pension expense while an increase in the discount rate would decrease pension expense. The Company funds its pension plans in amounts sufficient to meet the requirements set forth in applicable employee benefits laws and local tax laws. Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheets. Segment Information We have two operating segments: (i) Technology Solutions ("TS") and (ii) High Performance Products ("HPP"). 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 46 Table of Contents products. 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. Revenue Recognition We derive revenue from the sale of integrated hardware and software, third-party service contracts, professional services, managed services, financing of hardware and software, and other services. We recognize revenue from hardware upon transfer of control, which is at a point in time typically upon shipment when title transfers. Revenue from software is recognized at a point in time when the license is granted. We recognize revenue from third-party service contracts as either gross sales or net sales depending on whether 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. 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 we are an agent, revenue is typically recorded at a point in time. When we are the principal, revenue is recognized over the contract term. We have concluded we are the agent in sales of third-party maintenance, software or hardware support, and certain security software that is sold with integral third-party delivered software maintenance that includes critical updates. Professional services generally include implementation, installation, and training services. Professional services are considered a series of distinct services that form one performance obligation and revenue is recognized over time as services are performed. Revenue generated from managed services is recognized over the term of the contract. Certain managed services contracts include financing of hardware and software. Revenues from arrangements which include financing are allocated considering relative standalone selling prices of lease and non-lease components within the agreement. The lease component includes hardware, which is subject to ASC 842, Leases . The non-lease components are subject to ASC 606, Revenue from Contracts with Customers . Other services generally include revenue generated through our royalty, extended warranty, multicomputer repair, and maintenance contracts. Royalty revenue is sales-based and recognized on date of subsequent sale of the product, which occurs on the date of customer shipment. Revenue from extended warranty contracts is recognized ratably over the warranty period. Multicomputer repair services revenue is recognized upon control transfer when the customer takes possession of the computer at time of shipping. Revenue generated from maintenance services is recognized evenly over the term of the contract. The right of return risk lies with the original manufacturer of the product. Managed service contracts contain the right to refund if canceled within 30 days of inception. Any products with a standard warranty are treated as a warranty obligation under ASC 460, Guarantees. The following policies are applicable to our major categories of segment revenue transactions: TS Segment Revenue TS Segment revenue is derived from the sale of hardware, software, professional services, third-party service contracts, maintenance contracts, managed services, and financing of hardware and software. Financing revenue pertaining to the portion of an arrangement containing a lease is recognized in accordance with ASC 842. Financing revenue related to the lease is recorded in revenue as equipment leasing is part of our operations. 47 Table of Contents Third-party service contracts are evaluated to determine whether such service revenue should be recorded as gross or net sales and whether over time or at point in time. HPP Segment Revenue HPP segment revenue is derived from the sale of integrated hardware and software, maintenance, and other services through the Multicomputer, Myricom, and ARIA product lines. Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products’ functionality, and post contract maintenance and support. Post contract maintenance and support is considered immaterial in the context of the contract and therefore is not a separate performance obligation. 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Technology Solutions Segment ​ ​ ​ ​ High ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ United ​ ​ ​ ​ ​ ​ ​ Consolidated Year ended September 30, 2023 Segment Kingdom U.S. Total Total ​ ​ (Amounts in thousands) 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 5,475 ​ $ 734 ​ $ 40,938 ​ $ 41,672 ​ $ 47,147 Service ​ ​ 1,398 ​ ​ 288 ​ ​ 15,812 ​ ​ 16,100 ​ ​ 17,498 Finance * ​ ​ — ​ ​ — ​ ​ 2 ​ ​ 2 ​ ​ 2 Total sales ​ $ 6,873 ​ $ 1,022 ​ $ 56,752 ​ $ 57,774 ​ $ 64,647 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Technology Solutions Segment ​ ​ ​ ​ High ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ United ​ ​ ​ ​ ​ ​ ​ Consolidated Year ended September 30, 2022 Segment Kingdom U.S. Total Total ​ ​ (Amounts in thousands) 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 2,516 ​ $ 518 ​ $ 33,653 ​ $ 34,171 ​ $ 36,687 Service ​ ​ 1,327 ​ ​ 325 ​ ​ 16,021 ​ ​ 16,346 ​ ​ 17,673 Finance * ​ ​ — ​ ​ — ​ ​ 1 ​ ​ 1 ​ ​ 1 Total sales ​ $ 3,843 ​ $ 843 ​ $ 49,675 ​ $ 50,518 ​ $ 54,361 ​ * Finance revenue is related to equipment leasing and is not subject to the guidance on revenue from contracts with customers ( ASC 606 ). Contract Assets and Liabilities When we have performed work but do not have an unconditional right to payment, a contract asset is recorded. When we have the right to bill a customer, accounts receivable is recorded as an unconditional right exists. Current contract assets were $ 0.9 million and $ 4.4 million as of September 30, 2023 and September 30, 2022, respectively. The current portion is recorded in other current assets on the consolidated balance sheets. There were no noncurrent contract assets as of September 30, 2023 and September 30, 2022. The difference in the balances is due to regular timing differences between when work is performed and having an unconditional right to payment. 48 Table of Contents Contract liabilities arise when payment is received before we transfer a good or service to the customer. Current contract liabilities were $ 1.9 million and $ 4.1 million as of September 30, 2023 and September 30, 2022, respectively. 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, 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. Contract Costs Incremental costs of obtaining a contract involving customer transactions where the revenue and the related transfer of goods and services are equal to or less than a one year period, are expensed as incurred, utilizing the practical expedient in ASC 340-40-25-4 . For a period greater than one year, incremental contract costs are capitalized if we expect to recover these costs. The costs are amortized over the contract term and expected renewal periods. The period of amortization is generally three to six years . Incremental costs are related to commissions in the TS portion of the business. Current capitalized contract costs are within the other current assets on the consolidated balance sheets as of September 30, 2023 and 2022. The portion of current capitalized costs were $ 172 thousand and $ 128 thousand as of September 30, 2023 and 2022, respectively. 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, 2023 and 2022 were $ 436 thousand and $ 366 thousand, respectively. This is recorded in selling, general, and administrative expenses. There was no impairment related to incremental costs capitalized for the years ended September 30, 2023 and 2022, 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. Costs to fulfill a contract are related to the TS portion of the business and involve activities performed before managed services can be completed. Current capitalized fulfillment costs are in the other current assets and noncurrent costs are in other assets on the consolidated balance sheets. 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. These costs amortized were recorded in cost of sales. There was no impairment related to fulfillment costs capitalized for the years ended September 30, 2023 and 2022, respectively. Other Projects are typically billed upon completion or at certain milestones. Product and services are typically billed when shipped or as services are being performed. Payment terms are typically 30 day s to pay in full except in Europe where it could be up to 90 day s. Most of our contracts are less than one year. There are certain contracts that contain a financing component. See Note 1 Summary of Significant Accounting Policies to the consolidated financial statements for additional information. We elected to use the optional exemption to not disclose the aggregate amount of the transaction price allocated to performance obligations that have an original expected duration of one year or less. This is due to a low amount of performance obligations, which are less than one year from being unsatisfied at each period end. Most of these contracts are related to product sales. We have certain contracts that have an original term of more than one year. The royalty agreement is longer than one year, but not included in the table below as the royalties are sales-based. Managed service contracts are generally longer than one year. For these contracts the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied or partially unsatisfied as of September 30, 2023 is set forth in the table below: ​ ​ ​ ​ ​ ​ (Amounts in thousands) Fiscal 2024 ​ ​ 248 Fiscal 2025 ​ ​ 123 Fiscal 2026 ​ ​ 53 ​ ​ $ 424 ​ 49 Table of Contents Product Warranty Accrual Our product sales generally include a hardware warranty which ranges from 90 -days to three-years . At time of product shipment, we accrue for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar products. Engineering and Development Expenses 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. 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. Income Taxes We use the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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 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. This methodology requires estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities. Valuation allowances are recorded against the gross deferred tax assets that management believes, after considering all available positive and negative objective evidence, historical and prospective, with greater weight given to historical evidence, that it is more likely than not that these assets will not be realized. In addition, we are required to recognize in the consolidated financial statements, those tax positions determined to be more-likely-than-not of being sustained upon examination, based on the technical merits of the positions as of the reporting date. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are recognized. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. The Company records liabilities for estimated tax obligations in the U.S. and other tax jurisdictions. These estimated tax liabilities include the provision for taxes that may become payable in the future. Earnings per Share of Common Stock 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 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. Basic and diluted earnings per share computations for the Company’s reported net income attributable to common stockholders are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended 50 Table of Contents ​ ​ September 30, ​ September 30, ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Net income $ 5,204 $ 1,889 Less: net income attributable to nonvested common stock ​ ( 320 ) ​ ( 100 ) Net income attributable to common shareholders ​ $ 4,884 $ 1,789 ​ ​ ​ ​ ​ ​ ​ Weighted average total shares outstanding – basic ​ ​ 4,668 ​ ​ 4,498 Less: weighted average non–vested shares outstanding ​ ​ ( 287 ) ​ ​ ( 237 ) Weighted average number of common shares outstanding – basic ​ ​ 4,381 ​ 4,261 Add: potential common shares from non–vested stock awards ​ ​ 90 ​ 17 Weighted average common shares outstanding – diluted ​ $ 4,471 ​ 4,278 ​ ​ ​ ​ ​ ​ ​ Net income per common share - basic ​ $ 1.11 ​ $ 0.42 Net income per common share - diluted ​ $ 1.09 ​ $ 0.42 ​ All anti-dilutive securities, including stock options, are excluded from the diluted income per share computation. 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 periods. 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 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. 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 Cash and cash equivalents are maintained with several financial institutions in the U.S. and the U.K. Deposits held with banks may exceed the amount of insurance on such deposits. 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 in cash and cash equivalents. 51 Table of Contents 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. 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, 2023. No other customers accounted for 10% or more of total consolidated accounts receivable as of September 30, 2023. Subsequent Events The Company recognizes in the consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the statement of financial position, including the estimates inherent in the process of preparing financial statements. The Company has evaluated subsequent events through the date of this filing. New accounting standards not adopted as of September 30, 2023 In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) , an amendment of the FASB Accounting Standards Codification. This ASU will change how entities account for credit losses for most financial assets and certain other instruments. For trade receivables, loans and held-to-maturity debt securities entities will be required to estimate lifetime expected credit losses. For available-for-sale debt securities entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset. Additionally, there will be a significant increase in the amount of disclosures by year of origination for certain financing receivables. For public entities classified as a smaller reporting company, the new standard is effective for annual periods beginning after December 15, 2022 (ASU 2019-10 Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates ), including interim periods within that annual period. The Company is evaluating the effect that ASU 2016-13 will have on its consolidated financial statements and related disclosures. ​ ​ 52 Table of Contents 2. Accounts and Long-Term Receivable Within accounts receivable and long-term receivable there are amounts due reflecting sales whose payment terms exceed one year . This financing is separate from agreements with a leasing component, see Note 9 Leases for financing through leases. These receivables are included in Accounts Receivable and Long-Term Receivable in the amount of $ 7.2 million and $ 4.2 million as of September 30, 2023, respectively. These receivables are included in Accounts Receivable and Long-Term Receivable in the amount of $ 8.9 million and $ 7.4 million as of September 30, 2022, respectively. The receivables with a payment term exceeding one year carry an average weighted interest rate of 6.2 % as of September 30, 2023, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement. There is not an allowance for credit losses nor impairments for accounts and long-term receivables with a contractual maturity of over one year . All accounts had no past amounts due as of September 30, 2023 or 2022, respectively. There was no activity in the allowance for credit losses of these receivables for the years ended September 30, 2023 and 2022, respectively. All these agreements are looked at as one portfolio in determining credit losses. There are various factors that are considered in extending a customer payment terms longer than one year including payment history, economic conditions, and capacity to pay. The credit quality of customers is monitored by payment activity. The unearned income represents a rate similar to market at the inception of the agreement. The amount of interest income earned from sales whose payment terms exceed one year for the year ended September 30, 2023 and 2022 was $ 810 thousand and $ 548 thousand, respectively. Interest income from these agreements is recorded in Other income, net on the Consolidated Statements of Operations. 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 $ 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. A payment due in excess of 30 days is considered delinquent. If a payment is received for a receivable on nonaccrual status the payment is first applied to interest and then principal. Recording interest income resumes once no reasonable doubt exists regarding collecting all interest and principal. Contractual maturities of outstanding financing receivables with an original contractual maturity over one year are as follows: ​ ​ ​ ​ Fiscal year ending September 30: (Amounts in thousands) 2024 ​ $ 7,714 2025 ​ ​ 3,170 2026 ​ ​ 742 2027 ​ ​ 628 Total payments ​ $ 12,254 Less: unearned interest income ​ ​ ( 859 ) Total, net of unearned interest income ​ $ 11,395 ​ ​ 53 Table of Contents 3. Inventories Inventories consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2023 2022 ​ ​ (Amounts in thousands) Raw materials ​ $ 247 ​ $ 421 Work-in-process ​ 36 ​ ​ 23 Finished goods ​ 2,259 ​ ​ 3,928 Total ​ $ 2,542 ​ $ 4,372 ​ 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 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. 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. 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. 4. Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of ​ ​ Accumulated ​ ​ Foreign ​ Minimum ​ Other ​ ​ Currency ​ Pension ​ Comprehensive ​ ​ Translation ​ Liability ​ Loss ​ ​ (Amounts in thousands) Balance as of September 30, 2021 ​ $ ( 4,050 ) ​ $ ( 5,398 ) ​ $ ( 9,448 ) Change in period ​ ( 1,741 ) ​ 4,096 ​ 2,355 Tax effect of change in period ​ — ​ ( 235 ) ​ ( 235 ) Balance as of September 30, 2022 ​ $ ( 5,791 ) ​ $ ( 1,537 ) ​ $ ( 7,328 ) Change in period ​ 962 ​ 244 ​ 1,206 Tax effect of change in period ​ — ​ 28 ​ 28 Balance as of September 30, 2023 ​ $ ( 4,829 ) ​ $ ( 1,265 ) ​ $ ( 6,094 ) ​ 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. 54 Table of Contents 5. Income Taxes The components of income (loss) before income tax (benefit) expense and income tax (benefit) expense are comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ September 30, ​ 2023 2022 ​ ​ (Amounts in thousands) Income (loss) before income tax expense ​ ​ ​ ​ ​ ​ U.S. ​ $ 5,202 $ 417 Foreign ​ ( 467 ) 1,522 ​ ​ $ 4,735 $ 1,939 Income tax expense: ​ ​ ​ ​ ​ Current: ​ ​ ​ ​ ​ Federal ​ $ 1,551 $ — State ​ 326 50 ​ ​ $ 1,877 $ 50 Deferred: ​ ​ ​ ​ ​ Federal ​ $ ( 1,971 ) $ — State ​ ( 375 ) — ​ ​ ( 2,346 ) — ​ ​ ​ ​ ​ ​ ​ Total income tax (benefit) expense ​ $ ( 469 ) $ 50 ​ ​ The effective income tax rate differed from the statutory federal income tax rate due to the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended September 30, ​ ​ 2023 ​ 2022 ​ ​ (Dollar amounts in thousands) Computed “expected” tax expense $ 994 21.0 % $ 407 21.0 % Increases (reductions) in taxes resulting from: ​ ​ ​ State income taxes, net of federal tax benefit ​ 106 2.2 % 27 1.5 % Foreign rate differential ​ 9 0.2 % ( 30 ) ( 1.5 ) % Employee Retention Credit ​ ​ ( 134 ) ​ ( 2.8 ) % ​ — ​ — % Permanent differences ​ ( 7 ) ( 0.2 ) % ( 19 ) ( 1.0 ) % Change in valuation allowance ​ ( 1,746 ) ( 36.8 ) % ( 226 ) ( 11.5 ) % Research and development credit ​ ( 112 ) ( 2.4 ) % ( 131 ) ( 6.8 ) % Deferred Tax True Ups ​ ​ 322 ​ 6.8 % ​ — ​ — % FIN 48 Reserves ​ ​ 166 ​ 3.5 % ​ — ​ — % Return to Provision Adjustments ​ ​ ( 64 ) ​ ( 1.3 ) % ​ 14 ​ 0.7 % Other items ​ ( 3 ) ( 0.1 ) % 8 0.2 % Income tax (benefit) expense ​ $ ( 469 ) ( 9.9 ) % $ 50 2.6 % ​ 55 Table of Contents Significant components of the Company's net deferred tax assets and liabilities as of September 30, 2023 and 2022 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2023 2022 ​ ​ (Amounts in thousands) Deferred tax assets: ​ ​ ​ ​ Pension ​ $ 321 ​ $ 373 Intangibles ​ — ​ 29 Capitalized research and development expenses ​ ​ 651 ​ ​ — Other reserves and accruals ​ 1,118 ​ 596 Inventory reserves and other ​ 278 ​ 244 Federal and state tax credits ​ 771 ​ 1,273 Federal and state net operating loss carryforwards ​ — ​ 151 Foreign net operating loss carryforwards ​ 2,945 ​ 2,693 Lease Liability ​ ​ 239 ​ ​ — Gross deferred tax assets ​ ​ 6,323 ​ ​ 5,359 Less: valuation allowance ​ ( 3,283 ) ​ ( 5,029 ) Realizable deferred tax asset ​ ​ 3,040 ​ ​ 330 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ ( 84 ) ​ ​ ( 121 ) ROU Asset ​ ​ ( 235 ) ​ ​ — Pension ​ ​ ( 372 ) ​ ​ ( 209 ) Intangibles ​ ​ ( 3 ) ​ ​ — Realizable deferred tax liabilities ​ ​ ( 694 ) ​ ​ ( 330 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax assets ​ $ 2,346 ​ $ — ​ 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 $ 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 56 Table of Contents 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. 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. 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. taxes. The state tax impact of a distribution of foreign earnings and profits would not be material. In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. The Company records liabilities for estimated tax obligations in the U.S. and other tax jurisdictions. These estimated tax liabilities include the provision for taxes that may become payable in the future. 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: ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended For the Year Ended ​ ​ September 30, 2023 ​ September 30, 2022 ​ ​ (Amounts in thousands) Balance, beginning of year ​ $ 502 ​ $ 433 Additions for tax positions of current year ​ 22 ​ ​ 68 (Subtractions) additions for tax positions of prior years ​ ( 201 ) ​ ​ 1 Balance, end of period ​ $ 323 ​ $ 502 ​ 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 2020 through 2023, and believes that any tax adjustments not currently reserved in any audited year will not be material. 6. Property, Equipment and Improvements, Net Property, equipment and improvements, net consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ September 30, September 30, ​ ​ 2023 ​ 2022 ​ ​ (Amounts in thousands) Leasehold improvements ​ $ 224 ​ $ 224 Equipment ​ 8,626 ​ 8,842 Automobiles ​ 194 ​ 116 Property, equipment and improvements, gross ​ 9,044 ​ 9,182 Less accumulated depreciation and amortization ​ ( 8,519 ) ​ ( 8,535 ) Property, equipment and improvements, net ​ $ 525 ​ $ 647 ​ 57 Table of Contents The Company uses the straight-line method over the estimated useful lives of the assets to record depreciation expense. Depreciation expense was $ 343 thousand and $ 350 thousand for the years ended September 30, 2023 and 2022, respectively. 7. Acquired Intangible Assets As of September 30, 2023 and 2022, intangible assets are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 ​ September 30, 2022 ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ ​ ​ ​ ​ ​ ​ Amortization ​ ​ ​ Accumulated ​ ​ ​ Amortization ​ ​ ​ Accumulated ​ ​ ​ Period Gross Amortization Net Period Gross Amortization Net ​ ​ (Amounts in thousands) Customer list 1 year ​ $ 90 ​ $ ( 89 ) ​ $ 1 2 years ​ $ 90 ​ $ ( 80 ) ​ $ 10 Patent ​ 9 years ​ $ 51 ​ $ ( 6 ) ​ $ 45 — ​ $ — ​ $ — ​ $ — ​ Amortization expense on these intangible assets was $ 15 thousand and $ 9 thousand for the year ended September 30, 2023 and 2022, respectively. Annual amortization expense related to intangible assets for each of the following successive fiscal years is as follows: ​ ​ ​ ​ Fiscal year ending September 30: (Amounts in thousands) 2024 $ 6 2025 ​ 5 2026 ​ ​ 5 2027 ​ ​ 5 2028 ​ ​ 5 Thereafter ​ ​ 20 Total ​ $ 46 ​ ​ ​ 8. Accounts payable and accrued expenses, and Other noncurrent liabilities Accounts payable and accrued expenses consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ 2023 2022 ​ ​ (Amounts in thousands) Accounts payable ​ $ 6,719 ​ $ 19,241 Commissions ​ 615 ​ 631 Compensation and fringe benefits ​ 1,958 ​ 1,607 Professional fees ​ 199 ​ 175 Taxes, other than income ​ 130 ​ 211 Finance lease liability ​ ​ — ​ ​ 4 Operating lease liability ​ ​ 502 ​ ​ 550 Employee Retention Tax Credit Payable ​ 640 ​ — Product warranty ​ 22 ​ 44 Total ​ $ 10,785 ​ $ 22,463 ​ 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 2 Accounts and Long-Term Receivable for further information related to the multi-year agreements with customers. 58 Table of Contents 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 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. Interest expense related to these agreements was $ 229 thousand and $ 260 thousand for the years ended September 30, 2023 and 2022, 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 11 Line of Credit and Note 12 Notes Payable for amounts due to banks and other financial institutions for borrowings. Below are details of the aforementioned agreements with the vendors that contain imputed interest: ​ ​ ​ ​ ​ ​ ​ September 30, 2023 ​ September 30, 2022 ​ (Amounts in thousands) Current $ 1,718 ​ $ 1,758 Less: discount ​ ( 140 ) ​ ​ ( 186 ) Accounts payable and accrued expenses $ 1,578 ​ $ 1,572 ​ ​ ​ ​ ​ ​ Noncurrent $ 1,967 ​ $ 3,186 Less: discount ​ ( 116 ) ​ ​ ( 140 ) Other noncurrent liabilities $ 1,851 ​ $ 3,046 ​ The Company had a total of approximately $ 3.3 million due (net of interest) to one of these vendors as of September 30, 2023. This is approximately 26 % of Accounts payable and other noncurrent liabilities. 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 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 59 Table of Contents 9. Leases Information related to both lessee and lessor 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 September 30, 2023 September 30, 2022 ​ ​ ​ (Amounts in thousands) Assets ​ ​ ​ ​ ​ ​ ​ Operating leases Operating lease right-of-use assets ​ $ 966 ​ $ 1,160 ​ ​ ​ ​ ​ ​ ​ ​ Lease receivable - current Investment in lease, net-current portion ​ $ 8 ​ $ 17 Lease receivable - noncurrent Investment in lease, net-less current portion ​ ​ 7 ​ ​ 3 Total lease receivable ​ ​ $ 15 ​ $ 20 ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ Current operating lease liabilities Accounts payable and accrued expenses ​ $ 502 ​ $ 550 Non-current operating lease liabilities Operating lease liabilities - noncurrent portion ​ ​ 482 ​ ​ 623 Total operating lease liabilities ​ ​ $ 984 ​ $ 1,173 ​ ​ ​ ​ ​ ​ ​ ​ Current finance lease liabilities Accounts payable and accrued expenses ​ $ — ​ $ 4 ​ The components of lease costs for the year ended September 30, 2023 and 2022 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ Condensed Consolidated Statements of Operations Location ​ September 30, 2023 ​ September 30, 2022 ​ ​ ​ (Amounts in thousands) Finance Lease: ​ ​ ​ ​ ​ ​ ​ Interest on lease liabilities Interest expense ​ $ 1 ​ $ 4 Operating Lease: ​ ​ ​ ​ ​ Operating lease cost Selling, general, and administrative ​ 618 ​ 615 Short-term lease cost Selling, general, and administrative ​ ​ 43 ​ ​ 137 Total lease costs ​ ​ $ 662 ​ $ 756 Less sublease interest income Revenue ​ ​ ( 3 ) ​ ​ ( 1 ) Total lease costs, net of sublease interest income ​ ​ $ 659 ​ $ 755 ​ ​ ​ ​ ​ ​ ​ ​ ​ 60 Table of Contents Future lease payments under our non-cancellable leases and payments to be received as a sublessor as of September 30, 2023 are in the following table: ​ ​ ​ ​ ​ ​ ​ Operating lease ​ Sublease Fiscal year ending September 30: Costs ​ Payments received ​ (Amounts in thousands) 2024 $ 535 ​ $ 10 2025 ​ 388 ​ ​ 8 2026 107 ​ — Total $ 1,030 ​ $ 18 Less imputed interest ​ ( 46 ) ​ ​ ( 3 ) Total $ 984 ​ $ 15 ​ Supplemental cash flow information related to leases for the fiscal year ended September 30, 2023 and 2022 is below: ​ ​ ​ ​ ​ ​ Year ended ​ September 30, 2023 September 30, 2022 ​ (Amounts in thousands) Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ Operating cash flows paid for operating leases $ 628 $ 633 Operating cash flows paid for short-term leases ​ 43 ​ 137 Operating cash flows paid for finance leases ​ 1 ​ 4 Financing cash flows paid for finance leases ​ 4 ​ 47 Lease assets obtained in exchange for new lease liabilities ​ ​ ​ ​ Operating leases ​ 392 ​ 352 Cash received from subleases ​ ( 20 ) ​ ( 49 ) ​ 61 Table of Contents Information as a lessee related to weighted averages of lease term and discount rate as of September 30, 2023 is below: ​ ​ Weighted-average remaining lease term (years) September 30, 2023 Operating leases 2.0 ​ ​ Weighted-average discount rate September 30, 2023 Operating leases 6.4 % ​ ​ 10. Product Warranties Product warranty activity for the year ended September 30 2023 and 2022 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 ​ ​ (Amounts in thousands) Balance at the beginning of the year ​ $ 44 ​ $ 67 Accruals for warranties for products sold in the period ​ — ​ — Fulfillment of warranty obligations ​ ( 22 ) ​ ( 23 ) Balance at the end of the year ​ $ 22 ​ $ 44 ​ These amounts are within Accounts payable and accrued expenses on the Consolidated Balance Sheets. 11. Line of Credit As of September 30, 2023 and September 30, 2022, 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. to purchase inventory from approved vendors with payment terms which exceed those offered by the vendors. No interest accrues under the inventory line of credit when advances are paid within terms, however, late payments are subject to an interest charge of the rate published in the Wall Street Journal as the “prime rate” plus 5 %. The prime rate was 8.5 % as of September 30, 2023. 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, 2023 and September 30, 2022, Company borrowings, all from the TS segment, under the inventory line of credit were $ 1.5 million and $ 3.1 million, respectively, and the Company was in compliance with all covenants. There is no unused commitment fee. As of September 30, 2023 and September 30, 2022, this line of credit also included availability of a limited cash withdrawal option of up to $ 1.0 million. As of September 30, 2023 and 2022, there were no cash withdrawals outstanding. 12. Notes Payable 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. ​ ​ ​ ​ ​ 62 Table of Contents 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. ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 ​ September 30, 2022 ​ (Amounts in thousands) Current $ 449 ​ $ 449 Less: notes discount ​ — ​ ( 22 ) Notes payable - current portion $ 449 ​ $ 427 ​ ​ ​ ​ ​ ​ Noncurrent $ — ​ $ 449 Less: notes discount ​ — ​ — Notes payable - noncurrent portion $ — ​ $ 449 ​ ​ ​ 13. Pension and Retirement Plans We have defined benefit and defined contribution plans in the U.K. and in the U.S. In the U.K., the Company provides defined benefit pension plans for certain employees and former employees and defined contribution plans for the majority of the employees. 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. These supplementary plans are funded through whole life insurance policies. The Company expects to recover all insurance premiums paid under these policies in the future, through the cash surrender value of the policies and any death benefits or portions thereof to be paid upon the death of the participant. These whole life insurance policies are carried on the balance sheet at their cash surrender values as they are owned by the Company and not assets of the defined benefit plans. In the U.S., the Company also provides for officer death benefits and post-retirement health insurance benefits through supplemental post-retirement plans to certain officers. The Company also funds these supplemental plans’ obligations through whole life insurance policies on the officers. 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 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. These insurance policies are included in the balance sheet at their cash surrender value, net of policy loans, aggregating $ 3.7 million and $ 3.5 million as of September 30, 2023 and 2022, respectively. The loans against the policies have been taken out by the Company to pay the premiums. The costs and benefit payments for these plans are paid through operating cash flows of the Company to the extent that they cannot be funded through the use of the cash values in the insurance policies. The Company expects that the recorded value of the insurance policies will be sufficient to fund all of the Company’s obligations under these plans. 63 Table of Contents Assumptions: The following table provides the weighted average actuarial assumptions used to determine the actuarial present value of projected benefit obligations at: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ International ​ ​ September 30, ​ September 30, ​ 2023 2022 2023 2022 Discount rate: 5.62 % 5.14 % 5.4 % 5.2 % Expected return on plan assets: 5.1 % 6.0 % ​ The following table provides the weighted average actuarial assumptions used to determine net periodic benefit cost for years ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic International ​ ​ September 30, ​ September 30, ​ 2023 2022 2023 2022 Discount rate: 5.14 % 2.75 % 5.4 % 5.2 % Expected return on plan assets: 5.1 % 6.0 % ​ For domestic plans, the discount rate was determined by comparison against the FTSE pension liability index for AA rated corporate instruments. The Company monitors other indices to assure that the pension obligations are fairly reported on a consistent basis. The international discount rates were determined by comparison against country specific AA corporate indices, adjusted for duration of the obligation. The periodic benefit cost and the actuarial present value of projected benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. The Company revises these assumptions based on an annual evaluation of long-term trends, as well as market conditions that may have an impact on the cost of providing retirement benefits. 64 Table of Contents The components of net periodic benefit costs related to the U.S. and international plans are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended September 30, ​ ​ 2023 ​ 2022 ​ U.K. U.S. Total U.K. U.S. Total ​ ​ (Amounts in thousands) Pension: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest cost ​ $ 429 ​ $ 13 ​ $ 442 ​ $ 268 ​ $ 11 ​ $ 279 Expected return on plan assets ​ ( 575 ) ​ — ​ ( 575 ) ​ ( 449 ) ​ — ​ ( 449 ) Amortization of past service costs ​ ​ 7 ​ ​ — ​ ​ 7 ​ ​ 7 ​ ​ — ​ ​ 7 Amortization of net (gain) loss ​ — ​ ( 4 ) ​ ( 4 ) ​ 97 ​ 1 ​ 98 Net periodic (benefit) cost ​ $ ( 139 ) ​ $ 9 ​ $ ( 130 ) ​ $ ( 77 ) ​ $ 12 ​ $ ( 65 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Post Retirement: ​ ​ ​ ​ ​ ​ Service cost ​ $ — ​ $ 24 ​ $ 24 ​ $ — ​ $ 44 ​ $ 44 Interest cost ​ — ​ 62 ​ 62 ​ — ​ 46 ​ 46 Amortization of net gain ​ — ​ ( 196 ) ​ ( 196 ) ​ — ​ ( 7 ) ​ ( 7 ) Net periodic (benefit) cost ​ $ — ​ $ ( 110 ) ​ $ ( 110 ) ​ $ — ​ $ 83 ​ $ 83 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension: ​ ​ ​ ​ ​ ​ Decrease in minimum liability included in other comprehensive income ​ $ ( 313 ) ​ ​ ( 1 ) ​ $ ( 314 ) ​ $ ( 3,509 ) ​ ​ ( 20 ) ​ $ ( 3,529 ) Post Retirement: ​ ​ ​ ​ ​ ​ Increase (decrease) in minimum liability included in other comprehensive income ​ — ​ 70 ​ 70 ​ — ​ ( 567 ) ​ ( 567 ) Total: ​ ​ ​ ​ ​ ​ (Decrease) increase in minimum liability included in other comprehensive income ​ $ ( 313 ) ​ $ 69 ​ $ ( 244 ) ​ $ ( 3,509 ) ​ $ ( 587 ) ​ $ ( 4,096 ) ​ 65 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended September 30 ​ ​ 2023 ​ 2022 ​ Foreign U.S. Total Foreign U.S. Total ​ ​ (Amounts in thousands) Pension: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in projected benefit obligation (“PBO”) ​ ​ ​ ​ ​ ​ Balance beginning of year ​ $ 7,726 ​ $ 261 ​ $ 7,987 ​ $ 14,317 ​ $ 339 ​ $ 14,656 Interest cost ​ 429 ​ 13 ​ 442 ​ 268 ​ 11 ​ 279 Changes in actuarial assumptions ​ ( 317 ) ​ ( 4 ) ​ ( 321 ) ​ ( 4,574 ) ​ ( 21 ) ​ ( 4,595 ) Foreign exchange impact ​ 759 ​ — ​ 759 ​ ( 1,873 ) ​ — ​ ( 1,873 ) Benefits paid ​ ( 521 ) ​ ( 68 ) ​ ( 589 ) ​ ( 412 ) ​ ( 68 ) ​ ( 480 ) Projected benefit obligation at end of year ​ $ 8,076 ​ $ 202 ​ $ 8,278 ​ $ 7,726 ​ $ 261 ​ $ 7,987 Changes in fair value of plan assets: ​ ​ ​ ​ ​ ​ Fair value of plan assets at beginning of year ​ $ 8,825 ​ $ — ​ $ 8,825 ​ $ 11,921 ​ $ — ​ $ 11,921 Actual gain (loss) on plan assets ​ 628 ​ — ​ 628 ​ ( 1,026 ) ​ — ​ ( 1,026 ) Company contributions ​ 239 ​ 68 ​ 307 ​ 253 ​ 68 ​ 321 Foreign exchange impact ​ 863 ​ — ​ 863 ​ ( 1,911 ) ​ — ​ ( 1,911 ) Benefits paid ​ ( 521 ) ​ ( 68 ) ​ ( 589 ) ​ ( 412 ) ​ ( 68 ) ​ ( 480 ) Fair value of plan assets at end of year ​ $ 10,034 ​ $ — ​ $ 10,034 ​ $ 8,825 ​ $ — ​ $ 8,825 Funded status \ net amount recognized ​ $ 1,958 ​ $ ( 202 ) ​ $ 1,756 ​ $ 1,099 ​ $ ( 261 ) ​ $ 838 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Post Retirement: ​ ​ ​ ​ ​ ​ Change in projected benefit obligation (“PBO”): ​ ​ ​ ​ ​ ​ Balance beginning of year ​ $ — ​ $ 1,186 ​ $ 1,186 ​ $ — ​ $ 1,670 ​ $ 1,670 Service cost ​ — ​ 24 ​ 24 ​ — ​ 44 ​ 44 Interest cost ​ — ​ 62 ​ 62 ​ — ​ 46 ​ 46 Changes in actuarial assumptions ​ — ​ ( 125 ) ​ ( 125 ) ​ — ​ ( 574 ) ​ ( 574 ) Projected benefit obligation at end of year ​ $ — ​ $ 1,147 ​ $ 1,147 ​ $ — ​ $ 1,186 ​ $ 1,186 Funded status \ net amount recognized ​ $ — ​ $ ( 1,147 ) ​ $ ( 1,147 ) ​ $ — ​ $ ( 1,186 ) ​ $ ( 1,186 ) ​ 66 Table of Contents The amounts recognized in the consolidated balance sheet consist of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended September 30 ​ ​ 2023 ​ 2022 ​ Foreign U.S. Total Foreign U.S. Total ​ ​ (Amounts in thousands) Pension: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrued benefit asset (liability) ​ $ 1,958 ​ $ ( 202 ) ​ $ 1,756 ​ $ 1,099 ​ $ ( 261 ) ​ $ 838 Deferred tax ​ — ​ 26 ​ 26 ​ — ​ 25 ​ 25 Accumulated other comprehensive income ​ 318 ​ 8 ​ 326 ​ 631 ​ 9 ​ 640 Net amount recognized ​ $ 2,276 ​ $ ( 168 ) ​ $ 2,108 ​ $ 1,730 ​ $ ( 227 ) ​ $ 1,503 Post Retirement: ​ ​ ​ ​ ​ ​ ​ ​ Accrued benefit liability ​ $ — ​ $ ( 1,147 ) ​ $ ( 1,147 ) ​ $ — ​ $ ( 1,186 ) ​ $ ( 1,186 ) Deferred tax ​ — ​ 277 ​ 277 ​ — ​ 305 ​ 305 Accumulated other comprehensive loss ​ — ​ ( 240 ) ​ ( 240 ) ​ — ​ ( 282 ) ​ ( 282 ) Net amount recognized ​ $ — ​ $ ( 1,110 ) ​ $ ( 1,110 ) ​ $ — ​ $ ( 1,163 ) ​ $ ( 1,163 ) Total pension and post retirement: ​ ​ ​ ​ ​ ​ Accrued benefit asset (liability) ​ $ 1,958 ​ $ ( 1,349 ) ​ $ 609 ​ $ 1,099 ​ $ ( 1,447 ) ​ $ ( 348 ) Deferred tax ​ — ​ 303 ​ 303 ​ — ​ 330 ​ 330 Accumulated other comprehensive income (loss) ​ 318 ​ ( 232 ) ​ 86 ​ 631 ​ ( 273 ) ​ 358 Net amount recognized ​ $ 2,276 ​ $ ( 1,278 ) ​ $ 998 ​ $ 1,730 ​ $ ( 1,390 ) ​ $ 340 Accumulated Benefit Obligation: ​ ​ ​ ​ ​ ​ Pension ​ $ ( 8,076 ) ​ $ ( 202 ) ​ $ ( 8,278 ) ​ $ ( 7,726 ) ​ $ ( 261 ) ​ $ ( 7,987 ) Post Retirement ​ — ​ ( 1,147 ) ​ ( 1,147 ) ​ — ​ ( 1,186 ) ​ ( 1,186 ) Total accumulated benefit obligation ​ $ ( 8,076 ) ​ $ ( 1,349 ) ​ $ ( 9,425 ) ​ $ ( 7,726 ) ​ $ ( 1,447 ) ​ $ ( 9,173 ) ​ 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, ​ 2023 2022 ​ ​ (Amounts in thousands) Non-current benefits assets ​ $ 1,958 ​ $ 1,099 ​ ​ ​ ​ ​ ​ ​ Current accrued benefit liability ​ $ 98 ​ $ 110 Non-current accrued benefit liability ​ 1,251 ​ 1,337 Total accrued benefit liability ​ $ 1,349 ​ $ 1,447 ​ 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 gain expected to be recognized as a component of net periodic benefit cost for the year ending September 30, 2023, is approximately $ 207 thousand. 67 Table of Contents Contributions The Company expects to contribute $ 0.2 million to its pension plans in fiscal 2024. Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (amounts in thousands): ​ ​ ​ ​ Fiscal year ending September 30: (Amounts in thousands) 2024 ​ $ 575 2025 ​ $ 603 2026 ​ $ 643 2027 ​ $ 681 2028 ​ $ 730 Thereafter ​ $ 1,249 ​ Plan Assets 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. Pension plan assets are managed by a fiduciary committee. The Company’s investment strategy for pension plan assets is to maximize the long-term rate of return on plan assets within an acceptable level of risk while maintaining adequate funding levels. Local regulations, local funding rules, and local financial and tax considerations are part of the funding and investment process. In deciding on the investments to be held, the trustees take into account the risk of possible fluctuations in income from, and market values of, the assets as well as the risk of departing from an asset profile which broadly matches the liability profile. The committee has invested the plan assets in a single pooled fund with an authorized investment company (the “Fund”). The Fund selected by the trustees is consistent with the plan’s overall investment principles and strategy described herein. There are no specific targets as to asset allocation other than those contained within the Fund that is managed by the authorized investment company. The fair value of the assets held by the U.K. pension plan by asset category are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Values as of ​ ​ September 30, 2023 ​ September 30, 2022 ​ ​ Fair Value Measurements Using Inputs Considered as ​ Fair Value Measurements Using Inputs Considered as Asset Category Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 ​ ​ (Amounts in thousands) Cash on deposit ​ $ 428 ​ $ 428 ​ $ — ​ $ — ​ $ 200 ​ $ 200 ​ $ — ​ $ — Fixed income ​ ​ 8,703 ​ ​ 7,251 ​ ​ 1,452 ​ ​ — ​ ​ 1,801 ​ ​ 1,253 ​ ​ 548 ​ ​ — Equity ​ 903 ​ 266 ​ ​ 637 ​ ​ — ​ 6,824 ​ 3,539 ​ 3,285 ​ ​ — Total plan assets ​ $ 10,034 ​ $ 7,945 ​ $ 2,089 ​ $ — ​ $ 8,825 ​ $ 4,992 ​ $ 3,833 ​ $ — ​ The expected long-term rates of return on plan assets are equal to the yields to maturity of appropriate indices for government and corporate bonds and by adding a premium to the government bond return for equities. The expected rate of return on cash is the Bank of England base rate in force at the effective date. Level 1 investments represent mutual funds for which a quoted market price is available on an active market. 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. ​ 68 Table of Contents Defined Contribution Plans The Company has defined contribution plans in domestic and international locations under which the Company matches a portion of the employee’s contributions and may make discretionary contributions to the plans. The Company’s contributions were $ 206 thousand and $ 193 thousand for the years ended September 30, 2023 and 2022, respectively. 14. Stock Based Incentive Compensation 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 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 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 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, 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. The following table summarizes stock-based compensation expense in the Company’s consolidated statements of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ September 30, ​ September 30, ​ 2023 2022 ​ ​ (Amounts in thousands) Cost of sales ​ $ 2 ​ $ — Engineering and development ​ 107 ​ 56 Selling, general and administrative ​ 1,018 ​ 923 Total ​ $ 1,127 ​ $ 979 ​ For the year ended September 30, 2023, the Company granted 71,172 nonvested shares to certain key employees, 52,000 nonvested shares to certain officers including 35,000 shares granted to the Chief Executive Officer, and 20,000 nonvested shares to its non-employee directors. For the year ended September 30, 2022, the Company granted 80,246 nonvested shares to certain key employees, 52,000 nonvested shares to certain officers including 38,000 shares granted to the Chief Executive Officer, and 20,000 nonvested shares to its non-employee directors. 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. All equity compensation awards granted for the years ended September 30, 2023 and September 30, 2022 were restricted stock awards. 69 Table of Contents 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. No cash was used to settle equity instruments granted under share-base payment arrangements in any of the years in the two-year period ended September 30, 2023. The following tables provide summary data of stock option award activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Weighted ​ Average ​ Aggregate ​ ​ ​ ​ average ​ Remaining ​ Intrinsic ​ ​ Number ​ exercise ​ Contractual ​ Value ​ of Options price Term (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at September 30, 2021 500 ​ $ 3.43 — ​ — Granted — ​ — — ​ — Expired ( 500 ) ​ ​ 3.43 — ​ — Forfeited — ​ — — ​ — Exercised — ​ — — ​ — Outstanding at September 30, 2022 — ​ $ — — ​ — Granted — ​ — — ​ — Expired — ​ ​ — — ​ — Forfeited — ​ — — ​ — Exercised — ​ — — ​ ​ — Outstanding at September 30, 2023 — ​ $ — — ​ ​ — ​ The following table provides summary data of nonvested stock award activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ Weighted ​ ​ ​ ​ ​ ​ ​ Average ​ Average ​ Aggregate ​ ​ ​ ​ Grant Date ​ Remaining ​ Intrinsic ​ ​ ​ ​ Fair ​ Contractual ​ Value ​ Shares Value Term (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonvested shares outstanding at September 30, 2021 197,063 ​ $ 10.28 2.15 Years ​ $ 1,760 Activity in fiscal year 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Granted 152,246 ​ $ 8.53 — ​ — Vested ( 87,957 ) ​ $ 10.57 — ​ — Forfeited ( 1,564 ) ​ $ 13.24 — ​ — Nonvested shares outstanding at September 30, 2022 259,788 ​ $ 9.14 2.38 Years ​ $ 1,868 Activity in fiscal year 2023: ​ ​ Granted 143,172 ​ $ 10.09 — ​ — Vested ( 107,885 ) ​ $ 9.36 — ​ — Nonvested shares outstanding at September 30, 2023 295,075 ​ $ 9.53 2.33 Years ​ $ 5,164 ​ As of September 30, 2023, there was $ 2.0 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements (including nonvested stock awards) granted under the Company’s stock incentive plans. This cost is expected to be expensed over a weighted average period of approximately 2.57 years. The total fair value of shares vested during the years ended September 30, 2023 and 2022 was $ 1.0 million and $ 0.9 million, respectively. 70 Table of Contents 15. Employee Stock Purchase Plan 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. Pursuant to the ESPP, the Company issued 30,885 and 31,372 shares for the years ended September 30, 2023 and September 30, 2022, respectively. As of September 30, 2023, 269,535 shares remain authorized to be issued under the Employee Stock Purchase Plan. 16. Repurchase of Common Stock 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. 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. 71 Table of Contents 17. Segment Information The following table presents certain operating segment information. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Technology Solutions Segment ​ ​ ​ ​ ​ High ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Performance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ United ​ ​ ​ ​ ​ ​ ​ Consolidated Year ended September 30, Segment Kingdom U.S. Total Total ​ ​ (Amounts in thousands) 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product ​ $ 5,475 ​ $ 734 ​ $ 40,940 ​ $ 41,674 ​ $ 47,149 Service ​ 1,398 ​ 288 ​ 15,812 ​ 16,100 ​ 17,498 Total sales ​ $ 6,873 ​ $ 1,022 ​ $ 56,752 ​ $ 57,774 ​ $ 64,647 Operating (loss) income ​ $ ( 2,708 ) ​ $ ( 64 ) ​ $ 4,642 ​ $ 4,578 ​ $ 1,870 Interest expense ​ $ ( 12 ) ​ $ — ​ $ ( 250 ) ​ $ ( 250 ) ​ $ ( 262 ) Interest income ​ $ 20 ​ $ 177 ​ $ 1,263 ​ $ 1,440 ​ $ 1,460 Total assets ​ $ 10,467 ​ $ 7,361 ​ $ 48,076 ​ $ 55,437 ​ $ 65,904 Capital expenditures ​ $ ( 75 ) ​ $ — ​ $ ( 151 ) ​ $ ( 151 ) ​ $ ( 226 ) Depreciation and amortization ​ $ ( 112 ) ​ $ — ​ $ ( 246 ) ​ $ ( 246 ) ​ $ ( 358 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ ​ ​ ​ ​ Sales: ​ ​ ​ ​ ​ Product ​ $ 2,516 ​ $ 518 ​ $ 33,654 ​ $ 34,172 ​ $ 36,688 Service ​ 1,327 ​ 325 ​ 16,021 ​ 16,346 ​ 17,673 Total sales ​ $ 3,843 ​ $ 843 ​ $ 49,675 ​ $ 50,518 ​ $ 54,361 Operating (loss) income ​ $ ( 4,888 ) ​ $ ( 204 ) ​ $ 5,052 ​ $ 4,848 ​ $ ( 40 ) Interest expense ​ $ ( 48 ) ​ $ — ​ $ ( 312 ) ​ $ ( 312 ) ​ $ ( 360 ) Interest income ​ $ 40 ​ $ 53 ​ $ 557 ​ $ 610 ​ $ 650 Total assets ​ $ 8,855 ​ $ 10,069 ​ $ 56,138 ​ $ 66,207 ​ $ 75,062 Capital expenditures ​ $ ( 89 ) ​ $ — ​ $ ( 145 ) ​ $ ( 145 ) ​ $ ( 234 ) Depreciation and amortization ​ $ ( 118 ) ​ $ — ​ $ ( 241 ) ​ $ ( 241 ) ​ $ ( 359 ) ​ 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. Our long-lived assets are located in North America. ​ ​ ​ ​ ​ 72 Table of Contents The following table details the Company’s sales by operating segment for fiscal years ended September 30, 2023 and 2022. The Company’s sales by geographic area based on the location of where the products were shipped or services rendered are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of 2023 ​ Americas ​ Europe ​ Asia ​ Total ​ Total ​ ​ ​ (Amounts in thousands) TS ​ $ 56,584 ​ $ 1,094 ​ $ 96 ​ $ 57,774 ​ 89 % HPP ​ 6,179 ​ 335 ​ 359 ​ 6,873 11 % Total ​ $ 62,763 ​ $ 1,429 ​ $ 455 ​ $ 64,647 100 % % of Total ​ 97 % 2 % 1 % 100 % ​ 2022 ​ ​ ​ ​ ​ TS ​ $ 49,285 ​ $ 1,069 ​ $ 164 ​ $ 50,518 ​ 93 % HPP ​ 3,201 ​ 338 ​ 304 ​ 3,843 7 % Total ​ $ 52,486 ​ $ 1,407 ​ $ 468 ​ $ 54,361 100 % % of Total ​ 96 % 3 % 1 % 100 % ​ ​ 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, 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended September 30, ​ ​ ​ 2023 ​ ​ 2022 ​ ​ ​ (in millions) ​ ​ (in millions) ​ ​ ​ Customer ​ % of Total ​ ​ Customer ​ % of Total ​ ​ Revenues Revenues ​ Revenues Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer A ​ $ 2.8 ​ 4 % ​ $ 10.4 ​ 19 % ​ In addition, accounts receivable from Customer A 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. 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, 2023. No other customers accounted for 10% or more of total consolidated accounts receivable as of September 30, 2023. 18. Fair Value Disclosures Under the fair value standards fair value is based on the exit price and defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement should reflect all the assumptions that market participants would use in pricing an asset or liability. A fair value hierarchy is established in the authoritative guidance outlined in three levels ranking from Level 1 to level 3 with Level 1 being the highest priority. Level 1: observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly Level 3: unobservable inputs (e.g., a reporting entity’s or other entity’s own data) The Company had no assets or liabilities measured at fair value on a recurring (except our pension plan assets, see Note 13 Pension and Retirement Plan ) or non-recurring basis as of September 30, 2023 or September 30, 2022. 73 Table of Contents To estimate fair value of the financial instruments below quoted market prices are used when available and classified within Level 1. If this data is not available, we use observable market-based inputs to estimate fair value, which are classified within Level 2. If the preceding information is unavailable, we use internally generated data to estimate fair value which is classified within Level 3. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of September 30, 2023 ​ ​ As of September 30, 2022 ​ ​ ​ ​ ​ ​ Carrying Amount ​ ​ Fair Value ​ ​ Carrying Amount ​ ​ Fair Value ​ Fair Value Level ​ Reference ​ ​ (Amounts in thousands) ​ ​ ​ ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents $ 25,217 ​ $ 25,217 ​ $ 23,982 ​ $ 23,982 ​ 1 ​ Condensed Consolidated Balance Sheets Accounts and long-term receivable* ​ 11,395 ​ ​ 11,395 ​ ​ 16,328 ​ ​ 16,328 ​ 3 ​ Note 2 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable and accrued expenses and other long-term liabilities* ​ 3,429 ​ ​ 3,429 ​ ​ 4,618 ​ ​ 4,618 ​ 3 ​ Note 8 Line of Credit ​ 1,515 ​ ​ 1,515 ​ ​ 3,124 ​ ​ 3,124 ​ 2 ​ Note 11 Notes payable ​ 449 ​ ​ 449 ​ ​ 876 ​ ​ 876 ​ 3 ​ Note 12 *Original maturity over one year ​ Cash and cash equivalents Carrying amount approximated fair value. Accounts and long-term receivable with original maturity over one year Fair value was estimated by discounting future cash flows based on the current rate with similar terms. Line of credit The fair value of our line of credit is based on borrowing rates currently available to a market participant for loans with similar terms or maturity. The carrying amount of our outstanding revolving line of credit approximates fair value because the base interest rate charged varies with market conditions and the credit spread is commensurate with current market spreads for issuers of similar risk. No interest accrues under the inventory line of credit when advances are paid within terms. Notes Payable Fair value was estimated by discounting future cash flows based on the current rate the Company could get in another transaction with similar terms based on historical information. Fair value of accounts receivable with an original maturity of one year or less and accounts payable was not materially different from their carrying values as of September 30, 2023, and 2022. 74 Table of Contents 19. Dividend For the fiscal year ended September 30, 2023 the Company paid cash dividends as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount Paid Fiscal Year ​ Date Declared ​ Record Date ​ Date Paid ​ Per Share 2022 8/10/2022 ​ 8/22/2022 ​ 9/9/2022 ​ $ 0.03 2023 12/6/2022 ​ 12/21/2022 ​ 1/6/2023 ​ $ 0.03 2023 ​ 2/8/2023 ​ 2/24/2023 ​ 3/14/2023 ​ $ 0.03 2023 ​ 5/10/2023 ​ 5/25/2023 ​ 6/13/2023 ​ $ 0.04 2023 ​ 8/9/2023 ​ 8/23/2023 ​ 9/12/2023 ​ $ 0.04 ​ ​ ​ ​ 20. 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. ​ 75