What changed in this filing

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Item 1. Business

2024-12-20 compared with 2023-12-13 · 24 added, 32 removed, 131 unchanged (30% of the section changed)

("CSPi"

or "CSPI"

or "the Company"

or "we"

or "our") was incorporated in 1968 and is based in Lowell, Massachusetts.

("CSPi" or "CSPI" or "the Company" or "we" or "our") was incorporated in 1968 and is based in Lowell, Massachusetts.

To meet the diverse requirements of our commercial and defense customers worldwide, CSPi and its subsidiaries develop and market IT integration solutions, advanced security products, managed IT services, cloud services, purpose built network adapters, and high-performance cluster computer systems.

CSPI operates in two segments:

Technology Solutions ("TS") and High Performance Products ("HPP").

● The TS segment consists of our wholly-owned Modcomp, Inc.

subsidiary, which operates in the United States and the United Kingdom.

The TS segment generates product revenues by reselling third-party computer hardware and software as a value added reseller ("VAR").

The TS segment generates service revenues by the delivery of professional services for complex IT solutions, including advanced security;

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data center solutions;

and network solutions as well as managed IT services ("MSP") that primarily serve the small and mid-sized business market ("SMB").

Third party products and professional services are marketed and sold through the Company’s direct sales force into a variety of vertical markets, including;

federal, state and local government;

and maritime.

and network solutions as well as managed IT services ("MSP") that primarily serve the small and mid-sized business market ("SMB").

Third party products and professional services are marketed and sold through the Company’s direct sales force into a variety of vertical markets, including automotive, defense, healthcare, education, federal, state and local government, and maritime.

● The HPP segment revenue comes from three distinct product lines:

(i) a cybersecurity solution marketed as ARIA™ Software-Defined Security (“SDS”), which is offered to commercial, original equipment manufacturers ("OEM") and government customers;

(ii) the Myricom ® network adapters and related software for commercial, government and OEM customers;

and (iii) the legacy Multicomputer product portfolio for digital signal processing ("DSP") applications within the defense markets.

● The ARIA SDS solution is a software portfolio comprised of 3 products:

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● In July of 2023 ARIA Zero Trust (AZT) PROTECT™ was introduced to the market.

ARIA AZT PRTOECT™ was designed to fill a gap in the market – stopping the most sophisticated attacks that are used to attack critical infrastructure applications before harm can be done.

ARIA AZT PROTECT™ was designed to fill a gap in the market – stopping the most sophisticated attacks that are used to attack critical infrastructure applications before harm can be done.

It compliments other protection technologies already in place and can stop some of the most well-known attacks including the SolarWinds attack, and the recent Russian sponsored Sandworm attacks used on utilities and energy infrastructure.

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state, and international level, as well as industry entities.

In addition, due to the complexities and high-costs associated with enterprise-wide security, particularly in the creation and operation of Security Operation Centers (“SOCs”), we believe that ARIA will be attractive to organizations that desire SOC level protections without incurring the procurement of disparate tools and the need to hire and retain highly trained security analysts.

In addition, due to the complexities and high-costs associated with enterprise-wide security, particularly in the creation and operation of SOCs, we believe that ARIA will be attractive to organizations that desire SOC level protections without incurring the procurement of disparate tools and the need to hire and retain highly trained security analysts.

We also have begun selling our unique solution into Managed Security Service Providers (“MSSPs”) that want to offer a lower cost, more effective service at detecting today’s widening range of cyber-attacks.

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Integration Solutions

The TS segment is a value-added reseller ("VAR") of third-party hardware and software technology solutions along with our advanced technology consulting, professional IT, managed IT and Cloud services.

Our value proposition is our ability to support the complete IT life cycle of planning, designing, implementing and optimizing a comprehensive solution into our customer’s IT environments, to help achieve their expected business outcomes.

Our value proposition is our ability to support the complete IT life cycle of planning, designing, implementing and optimizing a comprehensive solution into our customers’ IT environments, to help achieve their expected business outcomes.

Third-Party Hardware and Software

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Our key offerings include products from Hewlett Packard (HPE)/Aruba, Cisco Systems, Palo Alto Networks, Nutanix, Dell EMC, Juniper Networks, Citrix, Intel, VMWare, Fortinet, Microsoft and Barracuda.

Through our business relationships with these

vendors, we are able to offer competitively priced robust products to meet our diverse customers’ technology needs, providing procurement and engineering expertise in server infrastructure, storage, security, unified communications, mobility and networking, to the small-to-medium sized businesses ("SMBs") and large enterprise businesses ("LEBs") with unique and/or complex IT environments.

Through our business relationships with these vendors, we are able to offer competitively priced robust products to meet our diverse customers’ technology needs,

providing procurement and engineering expertise in server infrastructure, storage, security, unified communications, mobility and networking, to the small-to-medium sized businesses ("SMBs") and large enterprise businesses ("LEBs") with unique and/or complex IT environments.

Many of our SMB customers have unique technology needs and may lack technical purchasing expertise or have very limited IT engineering resources on staff.

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We target SMB and LEB customers across all industries.

Our current customers are in web and infrastructure hosting, education, telecommunications, healthcare services, distribution, financial services, professional services and manufacturing.

Our current customers are in web and infrastructure hosting, education, travel, telecommunications, healthcare services, distribution, financial services, professional services and manufacturing.

Professional Services

1 unchanged sentence

● Assessments, planning, designing, implementation, migration, optimization services and project management.

● Hyper-Converged Infrastructure ("HCI").

We assist our clients with designing and implementing HCI solutions from multiple vendors including DellEMC, Nutanix, HPE and Cisco.

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● IT security compliance services.

We provide services for IT security compliance with personal privacy laws such as the Payment Card Industry Data Security Standard ("PCI DSS"), t he Health Insurance Portability and Accountability Act of 1996 ("

HIPAA"), and internal control regulations under the Sarbanes-Oxley Act ("SOX").

● Unified communications, using Cisco Systems and Microsoft solutions.

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using our direct sales force.

Our primary competition in the TS segment are other VARs ranging from small companies that number in the thousands, to large enterprises such as CDW, PC Connection, Insight, Presidio, Dimension Data, and Computacenter Limited.

Our primary competition in the TS segment is other VARs ranging from small companies that number in the thousands, to large enterprises such as CDW, PC Connection, Insight, Presidio, Dimension Data, and Computacenter Limited.

In addition, we compete directly with many of the companies that manufacture the third-party products we sell, including Cisco Systems, IBM, HPE, EMC (now part of Dell) and others.

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Sources and Availability of Product

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

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

While we believe that many of our competitors face similar supply chain risks, we continue to work closely with our long term suppliers in meeting our projected sales obligations;

however, if a long term supplier is unable to provide sufficient components, and we are unable to find alternative suppliers, our projected sales may be materially impacted.

The gross backlog of customer orders and contracts for the TS segment was approximately $7.5 million at September 30, 2023, as compared to $18.2 million at September 30, 2022.

Our backlog can fluctuate greatly and in the prior year there were supply chain issues which caused a relatively large backlog compared to historical years.

No components used in our TS segment products are obtained from sole-source suppliers.

The gross backlog of customer orders and contracts for the TS segment was approximately $4.9 million as of September 30, 2024, as compared to $7.5 million as of September 30, 2023.

Our backlog can fluctuate greatly.

These fluctuations can be due to the timing of receiving large orders for third-party products and/or IT services.

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Noting that sales cycles can be up to 1 year.

CSPi’s competition in the cybersecurity space comes primarily from the large, traditional security vendors like Palo Alto, VMWare and security services providers like Artic Wolf.

CSPi’s competition in the cybersecurity space comes primarily from the large, traditional security vendors like Palo Alto, VMware and security services providers like Arctic Wolf.

Manufacturing, Assembly and Testing

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Product development efforts in fiscal year 2023 and 2024 involved development of the ARIA product set, ARIA Zero Trust (AZT), and enhancements to our ADR product offering.

We expect to continue to make investments related to the development of new hardware adapter products and new cybersecurity software applications.

We expect to continue to make investments related to the development of new cybersecurity software applications.

Intellectual Property

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We have newly issued as well as pending patents for the ARIA AZT PROTECT™ software and will be pursuing additional patent rights over time.

Sources and Availability of Product

No components used in our HPP segment products are obtained from sole-source suppliers.

The gross backlog of customer orders and contracts in the HPP segment was $0.8 million as of September 30, 2024 as compared to $1.8 million as of September 30, 2023.

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

What changed 10-K

Item 1. Business