What changed in this filing

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Item 1. Financial Statements

2025-02-10 compared with 2024-08-19 · 243 added, 371 removed, 346 unchanged (64% of the section changed)

21 unchanged sentences

Line of credit

Deferred revenue

Deferred revenue and contract liabilities

Pension and retirement plans

15 unchanged sentences

Total liabilities and shareholders’ equity

(1) Retroactively adjusted for the effects of a two for one stock split effected in the form of a 100% stock dividend (see Note 1)

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

Nine Months Ended

Cost of sales:

4 unchanged sentences

Total operating expenses

Operating (loss) income

Operating loss

Other income (expense):

Foreign exchange loss

Foreign exchange gain (loss)

Interest expense

2 unchanged sentences

Total other income, net

(Loss) income before income taxes

Income (loss) before income taxes

Income tax (benefit) expense

Net (loss) income

Net (loss) income attributable to common shareholders

Net (loss) income per common share - basic (1)

Net income (loss)

Net income (loss) attributable to common shareholders

Net income (loss) per common share - basic

Weighted average common shares outstanding - basic

Net (loss) income per common share - diluted (1)

Net income (loss) per common share - diluted

Weighted average common shares outstanding - diluted

(1) Retroactively adjusted for the effects of a two for one stock split effected in the form of a 100% stock dividend (see Note 1)

See accompanying notes to unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

Three Months Ended

Nine Months Ended

Net (loss) income

Foreign currency translation gain adjustments, net

Net income (loss)

Foreign currency translation (loss) gain adjustments, net of tax effect

Total comprehensive (loss) income

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the three months ended June 30, 2024 and 2023

(Amounts in thousands, except per share data)

comprehensive

Shareholders’

Three Months Ended June 30, 2024:

Balance as of March 31, 2024

Other comprehensive income

Stock-based compensation

Restricted stock cancellation

Purchase of common stock

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

Balance as of June 30, 2024

comprehensive

Shareholders’

Three Months Ended June 30, 2023:

Balance as of March 31, 2023

Other comprehensive income

Stock-based compensation

Purchase of common stock

Cash dividends paid on common stock ($ 0.02 per share) (1)

Balance as of June 30, 2023

(1) Retroactively adjusted for the effects of a two for one stock split effected in the form of a 100% stock dividend (see Note 1)

See accompanying notes to unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the nine months ended June 30, 2024 and 2023

For the three months ended December 31, 2024 and 2023:

(Amounts in thousands, except per share data)

1 unchanged sentence

Shareholders’

Nine months ended June 30, 2024:

Three months ended December 31, 2024:

Balance as of September 30, 2024

Adoption of Accounting Standards Update 2016-13

Other comprehensive income

Other comprehensive loss

Stock-based compensation

Restricted stock cancellation

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Purchase of common stock

Cash dividends paid on common stock ($ 0.075 per share) (1)

Balance as of June 30, 2024

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

Balance as of December 31, 2024

comprehensive

Shareholders’

Nine months ended June 30, 2023:

Three months ended December 31, 2023:

Balance as of September 30, 2023

Adoption of Accounting Standards Update 2016-13

Other comprehensive income

Stock-based compensation

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Purchase of common stock

Cash dividends paid on common stock ($ 0.05 per share) (1)

Balance as of June 30, 2023

(1) Retroactively adjusted for the effects of a two for one stock split effected in the form of a 100% stock dividend (see Note 1)

Cash dividends declared on common stock ($ 0.02 per share)

Balance as of December 31, 2023

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Nine Months Ended

Three Months Ended

Operating activities

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

Net income (loss)

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

Amortization of intangibles

Foreign exchange loss

Loss on disposal of fixed assets, net

Foreign exchange (gain) loss

Provision for credit losses - financing receivables

6 unchanged sentences

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

Increase in financing receivable

(Increase) decrease in inventories

Decrease in refundable income taxes

Decrease in other assets

Increase (decrease) in accounts payable and accrued expenses

Decrease in interest payable

Decrease in operating lease liabilities

Decrease in deferred revenue

Decrease in pension and retirement plans liabilities

Decrease in income taxes payable

Increase (decrease) in other noncurrent liabilities

Net cash provided by (used in) operating activities

Accounts receivable

Financing receivables

Refundable income taxes

Accounts payable and accrued expenses

Operating lease liabilities

Deferred revenue and contract liabilities

Pension and retirement plans liabilities

Income taxes payable

Other noncurrent liabilities

Net cash provided by operating activities

Investing activities

Life insurance premiums paid

Purchase of held-to-maturity investments

Proceeds from maturities of held-to-maturity investments

Additions of intangible assets

2 unchanged sentences

Financing activities

Dividends paid

Net borrowing under line-of-credit agreement

Repayments on note payable

Principal payments on finance leases

Purchase of common stock

Proceeds from issuance of shares under equity compensation plans

Net cash used in financing activities

Effects of exchange rate on cash, net

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents beginning of period

1 unchanged sentence

Supplementary cash flow information:

Cash paid for income taxes

Cash paid for interest

Supplementary non-cash financing activities:

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

Dividend declared during period

Customer financing for inventory sold (see Note 5 Financing receivables, net for details)

Vendor financing for inventory purchased (see Note 8 Accounts payable and accrued expenses, and Other noncurrent liabilities for details)

See accompanying notes to unaudited condensed consolidated financial statements.

5 unchanged sentences

The Company operates in two segments, its Technology Solutions (“TS”) segment and High Performance Products (“HPP”) segment.

Basis of Presentation and New Significant Accounting Policy

Summary of Significant Accounting Policies

Basis of presentation

3 unchanged sentences

Accordingly, the Company believes that although the disclosures are adequate to make the information presented not misleading, the unaudited condensed consolidated financial statements should be read in conjunction with the notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Presentation – sales whose payment terms exceed one year

Effective in fiscal year 2024 sales whose payment terms exceed one year is now presented as “Financing receivables, net of allowances” on the Consolidated Balance Sheets rather than being combined with Accounts receivable, net of allowances.

The financial statement line item Long-term receivable is now labeled as “Financing receivables due after one year, net of allowances.” These changes are reflected retrospectively as of September 30, 2023.

This change was made to provide more detail on the balance sheet related to these receivables and align with our notes to the unaudited condensed consolidated financial statements.

Presentation – two-for-one stock split

On February 21, 2024, the Board of Directors of CSP Inc.

approved an amendment to the Company’s Articles of Organization to increase the total number of its authorized shares of Common Stock, par value $ 0.01 , from 7,500,000 shares to 9,753,900 shares (the “Amendment”).

No shareholder approval was required under the Massachusetts Business Corporation Act with respect to the Amendment.

The Amendment became effective upon filing with the Secretary of the Commonwealth of Massachusetts on February 21, 2024.

On June 26, 2024, the stockholders of CSP, Inc.

approved an amendment to the Company's Articles of Organization, as amended (the "Articles of Organization"), to increase the number of authorized shares of Common Stock from 9,753,900 to 20,000,000 (the "Amendment").

On June 26, 2024, the Company filed an Articles of Amendment to the Articles of Organization with the Secretary of the Commonwealth of Massachusetts to effect the Amendment, which became effective immediately upon such filing.

This amendment is included as Exhibit 3.1 and is incorporated herein by reference.

On February 21, 2024, the Company announced its Board of Directors approved and declared a two -for-one stock split to be effected in the form of a 100 % stock dividend.

The stock dividend was paid on March 20, 2024 to shareholders of record as of the close of business on March 6, 2024.

In accordance with ASC 505 Equity , specifically ASC 505-20-25-3 through ASC 505-20-25-6 , we have determined this had a material effect on reducing share market value and therefore was treated this event as a stock split for accounting purposes.

All common shares and per share amounts contained in these condensed interim financial statements and notes have been retrospectively restated to reflect this two -for-one stock split in the form a 100 % dividend in accordance with ASC 260 Earnings Per Share , specifically ASC 260-10-55-12 .

Use of estimates

The preparation of condensed consolidated interim 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.

These estimates and assumptions are related to the allowance for credit losses for accounts receivable and financing receivables, reserves for inventory obsolescence, the impairment assessment of intangible assets, right-of-use assets and lease liabilities, and the calculation of standalone selling price for revenue recognition, the calculation of liabilities related to deferred compensation and retirement plans and the calculation of income tax liabilities.

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

The significant accounting policies and estimates used in preparing these Condensed Consolidated Financial Statements were applied on a basis consistent with those reflected in the September 30, 2024 Consolidated Financial Statements.

Significant Accounting Policies

Except for the change in certain accounting policies upon adoption of the accounting standard described below, there have been no significant changes to the Company's significant accounting policies described in PART II, Item 8, Note 1 Summary of Significant Accounting Policies , of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Recently Adopted Accounting Pronouncements

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

Additional updates were issued in 2018-2020.

The amended guidance replaces the current incurred loss impairment methodology for measurement of credit losses on financial instruments with a methodology (the “current expected credit losses model,” or “CECL model”) that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

Under the CECL model, the allowance for losses on financial assets, measured at amortized cost, reflects management’s estimate of credit losses over the remaining expected life of such assets.

The Company adopted ASU 2016-13 (the “new CECL standard”) as of October 1, 2023 using the modified retrospective method, with a cumulative-effect adjustment to the opening balance of Shareholders’ equity as of October 1, 2023.

The adoption primarily impacted the estimation of our Allowance for credit losses for Accounts receivable and Financing receivables.

Additionally, it affected allowance for credit losses of contract assets with effects being immaterial.

The total impact recorded on our initial adoption of ASU 2016-13 as of October 1, 2023 included an increase of Accounts receivable, net of $ 67 k and a decrease of Financing receivables, net in the amount of $ 82 k with the total adjustment decreasing retained earnings of $ 15 k.

For the accounting policies adopted and details of impacts from adoption refer to Note 4 - Accounts receivable, net and Note 5 - Financing receivables, net .

Recently Accounting Pronouncements Not Yet Adopted

Improvements to Reportable Segment Disclosures.

There have been no significant changes to the Company's significant accounting policies described in PART II, Item 8, Note 1, "Summary of Significant Accounting Policies", of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Accounting Pronouncement Not Yet Adopted as of December 31, 2024

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires disclosure of incremental segment information on an annual and interim basis.

Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis.

1 unchanged sentence

The Company is currently evaluating the effect of this pronouncement on its disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This ASU expands existing income tax disclosures primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The ASU is effective for all public entities for annual periods beginning after December 15, 2024, with early adoption permitted.

Entities should apply the amendments on a prospective basis, but retrospective application is permitted.

The Company is currently evaluating the impact this ASU will have on its disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires expanded disclosures in the notes to the financial statements about certain costs and expenses.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, on a retrospective basis.

Early adoption is permitted.

The Company is currently evaluating the effect of this pronouncement on its disclosures.

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.

Revenue from software is recognized at a point in time when the license is granted with the exception of the Company’s own software ARIA Advanced Threat Detection and Response (“ADR”), which is recognized evenly over time that includes the contract term.

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

16 unchanged sentences

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.

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.

HPP segment revenue is derived from the sale of ARIA product lines, integrated hardware and software, maintenance, and other services through the Myricom, and Multicomputer.

ARIA ADR revenue is derived from sale of software and hardware.

There is one performance obligation in an ARIA ADR sale as the software and hardware are combined because they are inputs in the contract to deliver an output of threat protection.

This combined performance obligation is recognized evenly over the contract term.

The transaction price is fixed consideration.

ARIA Zero Trust Gateway (“AZT”) revenue contains two performance obligations:

a software license and post contract support.

The transaction price is generally fixed consideration and allocated based on relative stand-alone selling price.

a perpetual software license and post-contract customer support (“PCS”).

The transaction price is fixed consideration and allocated based on relative

stand-alone selling price.

The software license has a large majority of transaction price allocated to it.

Software license revenue is recognized at a point in time, generally when the license is made available to the customer.

Post contract support revenue is recognized ratably over the contractual period of generally one year.

PCS revenue is recognized ratably over the contractual period of generally one year.

The PCS can be renewed and is sold on a standalone basis after the initial contract term expires.

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 PCS.

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

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

See disaggregated revenues below by products/services and divisions/segments.

Technology Solutions Segment

Three months ended June 30,

(Amounts in thousands)

See disaggregated revenues below by division.

Technology Solutions Segment

Three months ended June 30,

Three months ended December 31,

(Amounts in thousands)

Technology Solutions Segment

Nine months ended June 30,

Three months ended December 31,

(Amounts in thousands)

* Finance revenue is related to equipment leasing and is not subject to the guidance on revenue from contracts with customers (ASC 606).

See details of timing of revenue recognition, whether CSPi acted as the principal or agent, and geography below.

Geographic areas are based on which the products were shipped or services rendered.

Technology Solutions Segment

Nine months ended June 30,

Three months ended December 31,

(Amounts in thousands)

* Finance revenue is related to equipment leasing and is not subject to the guidance on revenue from contracts with customers (ASC 606).

Significant Judgments

The input method using labor hours expended relative to the total expected hours is used to recognize revenue for professional services.

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

An estimate of hours for each professional service agreement is made at the beginning of each contract

based on prior experience and monitored throughout the performance of the services.

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

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

As a practical expedient, we have elected not to adjust the amount of consideration for effects of a significant financing component when it is anticipated the promised good or service will be transferred and the subsequent payment will be one year or less.

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

The interest rate used reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement.

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 .

When product and non-managed services are sold together, the allocation of the transaction price to each performance obligation is calculated based on the estimated relative selling price or a budgeted cost-plus margin approach, as appropriate.

Due to the complex nature of these contracts, there is significant judgment in allocating the transaction price.

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

For items sold separately, including hardware, software, professional services, maintenance contracts, other services, and third-party service contracts, there is no allocation as there is one performance obligation.

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

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

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

Under gross sales recognition, the entire selling price is recorded in revenue and our cost to the third-party service provider or vendor is recorded in cost of sales.

Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenue resulting in net sales equal to the gross profit on the transaction.

Third-party service contracts are sold in different combinations with hardware, software, and services.

When 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.

Timing of Revenue Recognition

Transferred at a point in time where CSPi is principal

Transferred at a point in time where CSPi is agent

Transferred over time where CSPi is principal

Total Revenue

United States

Americas (excluding United States)

Total Revenue

Timing of Revenue Recognition

Transferred at a point in time where CSPi is principal

Transferred at a point in time where CSPi is agent

Transferred over time where CSPi is principal

Total Revenue

United States

Americas (excluding United States)

Total Revenue

In the TS US division, financing of goods and services is offered to certain customers.

This involves amounts due reflecting sales whose payment terms exceed one year.

See Note 5 Financing Receivables, net for more details.

Revenue from these agreements in the three months ended December 31, 2024 was $ 23 thousand and CSPi acted as the agent.

Revenue from these agreements in the three months ended December 31, 2023 was $ 1.4 million, which nearly all of the revenue was with CSPi acting as the principal.

Contract Assets and Liabilities

1 unchanged sentence

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

Current contract assets were $ 0.8 million and $ 0.9 million as of June 30, 2024 and September 30, 2023, respectively.

Current contract assets were $ 0.7 million and $ 1.7 million as of December 31, 2024 and September 30, 2024, respectively.

Current contract assets were $ 0.9 million as of September 30, 2023.

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

There were no noncurrent contract assets as of June 30, 2024 and September 30, 2023.

There were no noncurrent contract assets as of December 31, 2024 and September 30, 2024.

There were no noncurrent contract assets as of September 30, 2023.

The difference in the balances is due to regular timing differences between when work is performed and having an unconditional right to payment.

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

Current contract liabilities were $ 1.6 million and $ 1.9 million as of June 30, 2024 and September 30, 2023, respectively.

Current contract liabilities were $ 2.6 million and $ 2.2 million as of December 31, 2024 and September 30, 2024, respectively.

Current contract liabilities were $ 1.9 million as of September 30, 2023.

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

There were no long-term contract liabilities as of June 30, 2024 and September 30, 2023, respectively.

Revenue recognized for the three and nine months ended June 30, 2024 that was included in contract liabilities as of September 30, 2023 was $ 0.2 million and $ 1.3 million, respectively.

There were no long-term contract liabilities as of December 31, 2024 and September 30, 2024, respectively.

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

Revenue recognized for the three months ended December 31, 2024 that was included in contract liabilities as of September 30, 2024 was $ 0.7 million.

Revenue recognized for the three months ended December 31, 2023 that was included in contract liabilities as of September 30, 2023 was $ 0.9 million.

Contract Costs

2 unchanged sentences

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

The period of amortization is generally three years .

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 condensed consolidated balance sheets as of June 30, 2024 and September 30, 2023.

The portion of current capitalized costs were $ 190 thousand and $ 172 thousand as of June 30, 2024 and September 30, 2023, respectively.

There are no noncurrent capitalized costs on the condensed consolidated balance sheets as these commissions are paid annually even when the contract extends beyond a one year period.

The amount of incremental costs amortized for the three months ended June 30, 2024 and 2023 were $ 122 thousand and $ 103 thousand, respectively.

The amount of incremental costs amortized for the nine months ended June 30, 2024 and 2023 were $ 351 thousand and $ 302 thousand, respectively and is recorded in selling, general, and administrative expenses.

There was no impairment related to incremental costs capitalized during the nine months ended June 30, 2024 and 2023.

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.

The were no current capitalized costs as of June 30, 2024 or September 30, 2023.

Current capitalized contract costs are within the other current assets on the condensed consolidated balance sheets as of December 31, 2024 and September 30, 2024.

The portion of current capitalized costs were $ 73 thousand and $ 177 thousand as of December 31, 2024 and September 30, 2024, respectively.

There are no noncurrent capitalized costs on the condensed consolidated balance sheets.

The amount of incremental costs amortized for the three months ended December 31, 2024 and 2023 were $ 104 thousand and $ 108 thousand, respectively.

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

There was no impairment related to incremental costs capitalized during the three months ended December 31, 2024 and 2023.

Projects are typically billed upon completion or at certain milestones.

1 unchanged sentence

Payment terms are typically 30 days to pay in full except in Europe where it could be up to 90 days .

Most of our contracts are less than one year.

Most of our contracts are for less than one year.

There are certain contracts that contain a financing component.

See Note 5 Financing receivables, net to the condensed consolidated financial statements for additional information.

See Note 5 Financing receivables to the condensed 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.

3 unchanged sentences

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 and revenue is recognized ratably over the contract term.

For these contracts the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2024 is set forth in the table below:

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 December 31, 2024 is set forth in the table below:

(Amounts in thousands)

2025 (remaining 9 months )

Earnings Per Share of Common Stock

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

Diluted net income per share includes the dilutive effect of restricted stock, if any, calculated using the treasury stock method.

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

Diluted net income (loss) per

share includes the dilutive effect of restricted stock, if any, calculated using the treasury stock method.

For unvested restricted stock, assumed proceeds under the treasury stock method would include unamortized compensation cost.

Net losses are not allocated to participating share-based payment awards, which include the non-vested 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:

A net loss is not allocated to these participating securities as there are no contractual obligations that require participation in the Company’s losses.

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

Three Months Ended

Nine Months Ended

(Amounts in thousands except per share data)

Net (loss) income

Net income (loss)

net income attributable to nonvested common stock

Net (loss) income attributable to common shareholders

Net income (loss) attributable to common shareholders

Weighted average total shares outstanding - basic

3 unchanged sentences

Weighted average common shares outstanding - diluted

Net (loss) income per common share - basic (1)

Net (loss) income per common share - diluted (1)

(1) Retroactively adjusted for the effects of a two for one stock split effected in the form of a 100% stock dividend (see Note 1)

Anti-dilutive securities include restricted stock, which are excluded from the diluted income per share computation.

There were anti-dilutive securities for the three months ended June 30, 2024 of $ 193 thousand.

Net income (loss) per common share - basic

Net income (loss) per common share - diluted

Anti-dilutive securities include restricted stock, which are excluded from the diluted income (loss) per common share computation.

Non-vested restricted stock awards of 207 thousand were excluded from the diluted loss per common share calculation for the three months ended December 31, 2023 because there was a net loss for this period and their inclusion would have been anti-dilutive.

Accounts receivable, net

Upon adoption of the new CECL standard as described in Note 1 Basis of Presentation and New Significant Accounting Policy , the Company recognizes an allowance for losses on accounts receivable in an amount equal to the current expected credit losses.

The Company recognizes an allowance for losses on accounts receivable in an amount equal to the current expected credit losses.

The estimation of the allowance is based on an analysis of historical loss experience, management’s assessment of current conditions and reasonable and supportable expectation of future conditions as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible including reviewing the current receivables aging.

2 unchanged sentences

The expense associated with the allowance for expected credit losses is recognized in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

Amounts disclosed below for the three and nine months ended June 30, 2024 reflect adoption of the new CECL standard and the amounts disclosed for the three and nine months ended June 30, 2023 reflect superseded guidance.

The following table presents the changes in the allowance for accounts receivable for the periods indicated.

The following table presents the components of the Company’s accounts receivable for the periods indicated.

Three months ended

June 30, 2024

June 30, 2023

(Amounts in thousands)

Allowance for credit losses for accounts receivable:

Balances at beginning of the period

Provision for credit losses

Balances at end of the period

Nine months ended

June 30, 2024

June 30, 2023

December 31, 2024

December 31, 2023

(Amounts in thousands)

5 unchanged sentences

Financing receivables, net

In the TS US division financing of goods and services is offered to certain customers.

In the TS U.S.

division, financing of goods and services is offered to certain customers.

This involves amounts due reflecting sales whose payment terms exceed one year.

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The credit quality of customers is continually monitored by these items.

Accounts rated low risk have the equivalent of a Fitch rating of BBB– or higher, while accounts rated moderate risk have the equivalent of BB.

The Company does not offer financing for customers where the risk is classified as higher, which would be lower than the equivalent of a BB Fitch rating.

Financing receivables, net carry an average weighted average interest rate of 7.1 %, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement.

The amount of interest income earned from sales whose payment terms exceed one year for the three months ended June 30, 2024 and 2023 was $ 177 thousand and $ 234 thousand, respectively.

The amount of interest income earned from sales whose payment terms exceed one year for the nine months ended June 30, 2024 and 2023 was $ 528 thousand and $ 605 thousand, respectively.

Accounts rated low risk have the equivalent of a Fitch rating of BBB– or higher, moderate risk accounts have the equivalent of BB, and high risk accounts have the equivalent of B.

The risk characteristics of each customer are consistent with the Fitch rating or equivalent, which are defined by Fitch as the following:

'BBB' ratings indicate that expectations of default risk are currently low.

The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.

’BB' ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time;

however, business or financial flexibility exists that supports the servicing of financial commitments.

‘B’ ratings indicate that material default risk is present, but a limited margin of safety remains.

Financial commitments are currently being met;

however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.

Financing receivables, net carry an average weighted interest rate of 9.6 %, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement.

The amount of interest income earned from sales whose payment terms exceed one year for the three months ended December 31, 2024 and 2023 was $ 141 thousand and $ 193 thousand, respectively.

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

Amounts disclosed below as of June 30, 2024 reflect adoption of the new CECL standard and the amounts disclosed as of September 30, 2023 reflect superseded guidance.

The following table presents the components of the Company’s Financing receivables, net segregated by portfolio (risk rating) for the periods indicated:

As of June 30, 2024

As of December 31, 2024

As of September 30, 2024

(Amounts in thousands)

Financing receivables, net:

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Financing receivables, net

The following table presents the changes in Allowance for credit losses for Financing receivables, net for the periods indicated:

Three months ended

June 30, 2024

June 30, 2023

(Amounts in thousands)

Allowance for credit losses for financing receivables:

Balances at beginning of the period

Provision charged to Consolidated Statements of Operations

Balances at end of the period

Nine months ended

June 30, 2024

June 30, 2023

(Amounts in thousands)

December 31, 2024

December 31, 2023

(Amounts in thousands)

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Balances at beginning of the period

Adjustment for adoption of new CECL standard

Provision charged to Consolidated Statements of Operations

Adjustment for adoption of new accounting standard

(Credit) provision charged to Consolidated Statements of Operations

Balances at end of the period

Upon adoption of the new CECL standard as described in Note 1 Basis of Presentation and New Significant Accounting Policy , the Company recognizes an allowance for credit losses for financing receivables in an amount equal to the probable losses net of recoveries.

The Company recognizes an allowance for credit losses for financing receivables in an amount equal to the probable losses net of recoveries.

A probability method for calculating credit losses is used based on historical data of defaults of Fitch ratings and length of time.

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Macroeconomic conditions include the level of gross domestic product (“GDP”) growth and unemployment rates, which directly correlate with our historical credit losses.

The expense associated with the

allowance for expected credit losses is recognized in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

The expense associated with the allowance for expected credit losses is recognized in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

Financing receivables whose payment terms exceed one year are placed on non-accrual 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.

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Recording interest income resumes once no reasonable doubt exists regarding collecting all interest and principal.

There were no financing receivables placed on non-accrual status as of June 30, 2024 or September 30, 2023.

The following table presents Financing receivables, gross, including accrued interest and excluding any allowance, by credit quality indicator segregated by risk rating and year of origination as of June 30, 2024:

June 30, 2024

There were no financing receivables placed on non-accrual status as of December 31, 2024 or September 30, 2024.

The following table presents Financing receivables, gross, including accrued interest, by credit quality indicator segregated by risk rating and year of origination as of December 31, 2024:

December 31, 2024

Fiscal year of origination

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Finished goods

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

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

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

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

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

Information related to both lessee and lessor

The components of lease costs for the three months ended June 30, 2024 and 2023 are as follows:

The components of lease costs for the three months ended December 31, 2024 and 2023 are as follows:

Three months ended

Condensed Consolidated Statements of Operations Location

June 30, 2024

June 30, 2023

(Amounts in thousands)

Operating Lease:

Operating lease cost

Selling, general, and administrative

Short-term lease cost

Selling, general, and administrative

Total lease costs

Less sublease interest income

Total lease costs, net of sublease interest income

The components of lease costs for the nine months ended June 30, 2024 and 2023 are as follows:

Nine months ended

Condensed Consolidated Statements of Operations Location

June 30, 2024

June 30, 2023

Consolidated Statements of Operations Location

December 31, 2024

December 31, 2023

(Amounts in thousands)

Finance Lease:

Interest on lease liabilities

Interest expense

Operating Lease:

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Total lease costs, net of sublease interest income

Supplemental cash flow information related to leases for the nine months ended June 30, 2024 and 2023 is below:

Nine months ended

June 30, 2024

June 30, 2023

Supplemental cash flow information related to leases for three months ended December 31, 2024 and 2023 is below:

Three months ended

December 31, 2024

December 31, 2023

(Amounts in thousands)

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Operating cash flows paid for short-term leases

Operating cash flows paid for finance leases

Financing cash flows paid for finance leases

Cash received from subleases

Lease assets obtained in exchange for new lease liabilities

Operating leases

Accounts payable and Other noncurrent liabilities

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.

Accounts payable and accrued expenses, and Other noncurrent liabilities

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

See Note 5 Financing receivables, net for further information related to the multi-year agreements with customers.

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principal and interest.

As of June 30, 2024 the average imputed interest rate for the agreements was determined to be 8.2 %.

The average imputed interest rate for the agreements was determined to be 8.0 % as of December 31, 2024.

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

Interest expense related to these agreements for the three months ended June 30, 2024 and 2023 was $ 52 thousand and $ 74 thousand, respectively.

Interest expense related to these agreements for the nine months ended June 30, 2024 and 2023 was $ 139 thousand and $ 185 thousand, respectively.

Interest expense related to these agreements for the three months ended December 31, 2024 and 2023 was $ 75 thousand and $ 45 thousand, respectively.

The increase was due to several agreements entered into in fiscal year 2024 and one in fiscal year 2025, partially offset with payments made on agreements made prior to these fiscal years.

The amounts owed for these agreements are in Accounts payable and Other noncurrent liabilities because they are owed to vendors rather than banks or financial institutions for borrowings.

See Note 9 Notes Payable and Line of Credit for amounts due to banks and other financial institutions for borrowings.

See Note 9 Line of Credit for amounts due to financial institutions for borrowings.

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

June 30, 2024

December 31, 2024

September 30, 2024

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Other noncurrent liabilities

The Company had a total of approximately $ 1.4 million due (net of interest) to one of these vendors as of June 30, 2024.

This is approximately 10 % of Accounts payable and other noncurrent liabilities.

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.

It was the same vendor as of June 30, 2024 and September 30, 2023 that only transacts with the US division of the TS segment.

The TS segment has many vendors it transacts with and does not have any specific agreement with this vendor that it must purchase certain products from the vendor.

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

Notes Payable and Line of Credit

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.

There was no interest expense related to the note payable for the nine months ended June 30, 2024.

Interest expense related to the notes for the three and nine months ended June 30, 2023 was $ 5 thousand and $ 16 thousand, respectively.

June 30, 2024

September 30, 2023

(Amounts in thousands)

notes discount

Note payable - current portion

As of June 30, 2024 and September 30, 2023, the Company maintained an inventory line of credit with a borrowing capacity of $ 15.0 million.

It may be used by the TS and HPP segments in the US to purchase inventory from approved vendors with payment terms which exceed those offered by the vendors.

Line of Credit

As of December 31, 2024 and September 30, 2024, the Company maintained an inventory line of credit with a borrowing capacity of $ 15.0 million.

It may be used by the TS and HPP segments in the U.S.

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 Prime plus 5 %.

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(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 June 30, 2024 and September 30, 2023, Company borrowings, all from the TS segment, under the inventory line of credit were $ 0.8

million and $ 1.5 million, respectively, and the Company was in compliance with all financial covenants.

As of June 30, 2024 and September 30, 2023, this line of credit also includes availability of a limited cash withdrawal of up to $ 1.0 million.

As of June 30, 2024 and September 30, 2023 there were no cash withdrawals outstanding.

As of December 31, 2024 and September 30, 2024, Company borrowings, all from the TS segment, under the inventory line of credit were $ 2.6 million and $ 4.2 million, respectively, and the Company was in compliance with all financial covenants.

As of December 31, 2024 and September 30, 2024, this line of credit also includes availability of a limited cash withdrawal of up to $ 1.0 million.

As of December 31, 2024 and September 30, 2024 there were no cash withdrawals outstanding.

Pension and Retirement Plans

The Company’s operations have defined benefit and defined contribution plans in the UK and in the US.

In the UK, the Company provides defined benefit pension plans and defined contribution plans for some of its employees.

In the US, the Company provides benefits through supplemental retirement plans to certain former employees.

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

The Company also provides for officer death benefits through post-retirement plans to certain current officers of the Company in the US All the Company’s defined benefit plans are closed to newly hired employees and have been since September 2009.

The Company’s operations 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 and defined contribution plans for some of its employees.

In the U.S., the Company provides benefits through supplemental retirement plans to certain former employees.

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

The Company also provides for officer death benefits through post-retirement plans to certain current officers of the Company in the U.S.

All the Company’s defined benefit plans are closed to newly hired employees and have been since September 2009.

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 condensed consolidated balance sheets.

The Company’s pension plan in the UK is the only plan with plan assets.

The plan assets consist of an investment in a commingled fund which in turn comprises a diversified mix of assets including corporate equity securities, government securities and corporate debt securities.

The components of net periodic benefit costs related to the US and UK plans are as follows:

Three Months Ended June 30,

(Amounts in thousands)

Interest cost

Expected return on plan assets

Amortization of past service costs

Amortization of net gain

Net periodic (benefit) cost

Post Retirement:

Interest cost

Amortization of net gain

Net periodic benefit

Nine months ended June 30,

The Company’s pension plan in the U.K.

is the only pension plan with plan assets.

In October 2024 in connection with the planned termination of our defined benefit pension plan in the U.K.

we entered into a buy-in bulk annuity insurance policy in exchange for a premium payment of 8.9 million Great British Pounds (equivalent to approximately $ 11.2 million as of December 31, 2024), which is subject to adjustment as a result of subsequent data cleansing activities.

Under the terms of this buy-in insurance policy, the insurer is liable to pay the benefits of the plan, but the Company still retains full legal responsibility to pay the benefits to members using the insurance payments.

The buy-in policy will be treated as a plan asset going forward until the buy-in policy is converted to a buy-out policy, which is when individual

insurance policies will be assigned to each member of the plan and the Company will no longer have legal responsibility to pay the benefits to the members.

In accordance with US GAAP the buy-in does not trigger a remeasurement at an interim period.

Therefore, accounting entries to reflect this will be included in the Company’s Annual Report on Form 10-K for the year ending September 30, 2025.

The buy-in policy will be treated as a plan asset going forward until such time as the buy-in policy is converted to a buy-out policy, which is when individual insurance policies will be assigned to each member of the plan and the Company will no longer have legal responsibility to pay the benefits to the members.

The plan assets were converted to all cash during the first quarter of fiscal year 2025.

The components of net periodic benefit costs related to the U.S.

plans are as follows:

Three Months Ended December 31,

(Amounts in thousands)

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Net periodic benefit

The fair value of the assets held by the UK pension plan by asset category are as follows:

The fair value of the assets held by the U.K.

pension plan by asset category are as follows:

Fair Values as of

June 30, 2024

December 31, 2024

September 30, 2024

5 unchanged sentences

Total plan assets

An income tax benefit of $ 75 thousand was recorded for the three months ended June 30, 2024 compared to an income tax benefit of $ 1.7 million in the same period of 2023.

The estimated annualized effective income tax rate for the three months ended June 30, 2024 was 19.2 %, excluding the impacts of the UK entity which continues to experience losses and maintains a full valuation allowance, compared to the estimated annualized effective income tax rate of 51.7 % for the same period of 2023.

The difference between our effective income tax rate and the U.S.

federal statutory rate for the three months ending June 30, 2024 are the impact of state taxes and tax credits that we expect to be able to utilize against federal and state taxes.

During the 3 months ending June 30, 2023, we released a significant portion of the valuation allowance against our U.S.

deferred tax assets and switched from using the discrete effective tax rate method to calculate income taxes to the annualized effective tax rate method, resulting in the shift in the effective tax rate during the period.

The effective tax rate for the three months ended June 30, 2024 was 29.3 %, excluding the UK as previously mentioned, driven by excess tax benefits on restricted stock awards vesting during the period.

The effective tax rate for the three months ended June 30, 2023 was ( 201.9 )%, excluding the UK, which was primarily driven by the release of a significant portion of the valuation allowance against our deferred tax assets in the U.S.

An income tax expense of $ 73 thousand was recorded for the nine months ended June 30, 2024 compared to an income tax benefit of $ 1.5 million in the same period of 2023.

The estimated annualized effective income tax rate for the nine months ended June 30, 2024 was 19.2 %, excluding the impacts of the UK entity which continues to experience losses and maintains a full valuation allowance, compared to the estimated annualized effective income tax rate of 22.0 % for the nine months ended June 30, 2023.

An income tax benefit of $ 115 thousand was recorded for the three months ended December 31, 2024 compared to an income tax expense of $ 13 thousand in the same period of 2023.

The difference between our effective income tax rate and the U.S.

federal statutory rate for the three months ending June 30, 2024 and the same period of 2023 are the impact of state taxes and tax credits that we expect to be able to utilize against federal and state taxes.

The effective tax rate for the nine months ended June 30, 2024 was 4.9 %, excluding the UK as previously mentioned, driven by excess tax benefits on restricted stock awards vesting during the period.

The effective tax rate for

the nine months ended June 30, 2023 was ( 51.4 %), excluding the UK, which was primarily driven by the release of a significant portion of the valuation allowance against our deferred tax assets in the U.S.

federal statutory rate are the impact of tax credits that we expect to be able to utilize against federal and state taxes and the change in valuation allowance maintained against certain state tax credits.

The income tax expense for the three months ended December 31, 2023 was primary driven by income earned in the United States.

Accumulated Other Comprehensive Loss

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unobservable inputs (e.g., a reporting entity’s or other entity’s own data)

The Company had no assets or liabilities measured at fair value on a recurring (except our pension plan assets and whole life insurance policies, see Note 10 Pension and Retirement Plans for pension plan assets) or non-recurring basis as of June 30, 2024 or September 30, 2023.

To estimate fair value of the financial instruments below, quoted market prices are used when available and classified within Level 1.

The Company had no assets or liabilities measured at fair value on a recurring (except our pension plan assets and whole life insurance policies, see Note 10 Pension and retirement plans for pension plan assets) or non-recurring basis as of December 31, 2024 or September 30, 2024.

To estimate the 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 June 30, 2024

As of December 31, 2024

As of September 30, 2024

4 unchanged sentences

Cash and cash equivalents

Condensed Consolidated Balance Sheets

Consolidated Balance Sheets

Accounts receivable, net

3 unchanged sentences

*Original maturity over one year

**Contains vendor financing agreements with 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

Accounts receivable and Accounts payable and accrued expenses with original maturity of less than one year

Fair value was not materially different from their carrying values as of September 30, 2024, and 2023

Financing receivables, net

Fair value was estimated by discounting future cash flows based on the current rate with similar terms.

Vendor financing agreements within Accounts payable and accrued expenses and other long-term liabilities 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

2 unchanged sentences

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 June 30, 2024 and September 30, 2023.

Segment Information

The following tables present certain operating segment information for the three and nine months ended June 30, 2024 and 2023.

Technology Solutions Segment

Three months ended June 30,

(Amounts in thousands)

Operating (loss) income

Interest expense

Interest income

Capital expenditures

Depreciation and amortization

Operating (loss) income

Interest expense

Interest income

Capital expenditures

Depreciation and amortization

The following tables present certain operating segment information for the three months ended December 31, 2024 and 2023.

Technology Solutions Segment

Nine months ended June 30,

Three months ended December 31,

(Amounts in thousands)

Operating (loss) income

Stock compensation expense

Interest expense

3 unchanged sentences

Operating (loss) income

Stock compensation expense

Interest expense

2 unchanged sentences

Depreciation and amortization

Operating income (loss) consists of sales less cost of sales, engineering and development expenses, and selling, general and administrative expenses but is not affected by either other income (expense) or by income tax expense (benefit).

Non-operating expenses/income consists principally of interest income from transactions with payment terms exceeding one year (see Note 5 Financing receivables, net for details) and interest income from money market accounts in fiscal year 2024 year as interest rates have increased significantly, and interest expense primarily from multi-year agreements with vendors (see Note 8 Accounts payable and other noncurrent liabilities ).

Operating income (loss) from operations consists of sales less cost of sales, engineering and development expenses, and Selling, general and administrative expenses but is not affected by either other income/expense or by income taxes expense (benefit).

Non-operating expenses/income consists principally of interest income from transactions with payment terms exceeding one year (see Note 5, Financing receivables, net for details), interest income from cash and cash equivalents, and interest expense.

All intercompany transactions have been eliminated.

The following table lists customers from which the Company derived revenues of 10% or more of total revenues for the three and nine months ended June 30, 2024 and 2023.

Three months ended June 30,

Nine months ended June 30,

Concentrations of Credit Risk

All customers below are in the U.S.

division of our TS segment.

Each customer’s letter (e.g.

“Customer A”) does not change meaning if Customer A is in multiple tables it is the same customer.

Below are customers with 10% or more of accounts receivables as of December 31, 2024 or September 30, 2024.

As of December 31, 2024

As of September 30, 2024

(Amounts in millions)

Accounts receivable

Below are customers with 10% or more of financing receivables as of December 31, 2024 or September 30, 2024.

As of December 31, 2024

As of September 30, 2024

(Amounts in millions)

Financing Receivables

The following table lists customers from which the Company derived revenues of 10% or more of total revenues for the three months ended December 31, 2024 and 2023.

Three months ended December 31,

(Amounts in millions)

There was no customer with 10% or more of accounts receivable as of June 30, 2024 or September 30, 2023.

A customer not listed above had a balance of $ 8.0 million, or 64 %, of financing receivables, net and $ 7.4 million, or 65 %, as of June 30, 2024 and September 30, 2023, respectively.

A customer not listed above had a balance of $ 1.6 million, or 13 %, of financing receivables, net and $ 2.5 million, or 22 %, as of June 30, 2024 and September 30, 2023, respectively.

A customer not listed above had a balance of $ 1.3 million, or 10 %, of financing receivables and $ 1.5 million, or 13 %, as of June 30, 2024 and September 30, 2023, respectively.

There was no other customer with 10% or more of financing receivables, net as of June 30, 2024 or September 30, 2023.

On December 12, 2023 , the Company’s board of directors declared a cash dividend of $ 0.020 per share outstanding which was paid on January 9, 2024 to shareholders of record as of December 22, 2023 , the record date.

On February 14, 2024 , the Company’s board of directors declared a cash dividend of $ 0.025 per share outstanding which was paid on March 8, 2024 to shareholders of record as of February 26, 2024 , the record date.

On February 21, 2024, the Company announced its Board of Directors approved and declared a two -for-one stock split to be effected in the form of a 100 % stock dividend.

The stock dividend was paid on March 20, 2024 to shareholders of record as of the close of business on March 6, 2024 .

Cash dividend amounts per share in this note are adjusted retroactively for this stock split.

On May 8, 2024 , the Company’s board of directors declared a cash dividend of $ 0.030 per share outstanding which was paid on June 12, 2024 to shareholders of record as of May 24, 2024 , the record date.

On December 20, 2024 , the Company’s board of directors declared a dividend of $ 0.03 per share payable January 15, 2025 , to shareholders of record on the close of business on December 27, 2024 .

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

What changed 10-Q

Item 1. Financial Statements