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Item 1. Financial Statements

2025-05-15 compared with 2025-02-10 · 267 added, 151 removed, 438 unchanged (49% of the section changed)

8 unchanged sentences

Financing receivables, net of allowances of $ 18 and $ 12

Refundable income taxes

Other current assets

34 unchanged sentences

Three months ended

Six Months Ended

Cost of sales:

4 unchanged sentences

Total operating expenses

Operating loss

Operating (loss) income

Other income (expense):

Foreign exchange gain (loss)

Foreign exchange (loss) gain

Interest expense

Interest income

Other income, net

Other (expense) income, net

Total other income, net

Income (loss) before income taxes

(Loss) income before income taxes

Income tax (benefit) expense

Net income (loss)

Net income (loss) attributable to common shareholders

Net income (loss) per common share - basic

Net (loss) income

Net (loss) income attributable to common shareholders

Net (loss) income per common share - basic

Weighted average common shares outstanding - basic

Net income (loss) per common share - diluted

Net (loss) income per common share - diluted

Weighted average common shares outstanding - diluted

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

Three months ended

Net income (loss)

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

Total comprehensive (loss) income

Six Months Ended

Net (loss) income

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

Total comprehensive income

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

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

For the three months ended March 31, 2025 and 2024

(Amounts in thousands, except per share data)

1 unchanged sentence

Shareholders’

Three months ended December 31, 2024:

Three months ended March 31, 2025:

Balance as of December 31, 2024

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 ($ 0.03 per share)

Balance as of March 31, 2025

comprehensive

Shareholders’

Three months ended March 31, 2024:

Balance as of December 31, 2023

Other comprehensive loss

Stock-based compensation

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Cash dividends paid on common stock ($ 0.025 per share)

Balance as of March 31, 2024

See accompanying notes to unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the six months ended March 31, 2025 and 2024

(Amounts in thousands, except per share data)

comprehensive

Shareholders’

Six months ended March 31, 2025:

Balance as of September 30, 2024

2 unchanged sentences

Restricted stock issuance

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

Balance as of December 31, 2024

Issuance of shares under employee stock purchase plan

Purchase of common stock

Cash dividends paid on common stock ($ 0.06 per share)

Balance as of March 31, 2025

comprehensive

Shareholders’

Three months ended December 31, 2023:

Six months ended March 31, 2024:

Balance as of September 30, 2023

2 unchanged sentences

Stock-based compensation

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

Balance as of December 31, 2023

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Cash dividends paid on common stock ($ 0.045 per share)

Balance as of March 31, 2024

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Three Months Ended

Six Months Ended

Operating activities

Net income (loss)

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

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

Amortization of intangibles

1 unchanged sentence

Foreign exchange (gain) loss

Provision for credit losses - financing receivables

Provision for credit losses - accounts receivable

Provision (benefit) for credit losses - financing receivables

(Benefit) provision for credit losses - accounts receivable

Provision for obsolete inventory

15 unchanged sentences

Investing activities

Life insurance premiums paid

Additions of intangible assets

2 unchanged sentences

Financing activities

Net borrowing under line-of-credit agreement

Dividends paid

Net borrowing/repayment under line-of-credit agreement

Repayments on note payable

Repurchases 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 in cash and cash equivalents

Net (decrease) 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:

Dividend declared during period

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

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

7 unchanged sentences

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

Summary of Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

Basis of Presentation

6 unchanged sentences

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):

Accounting Pronouncement Not Yet Adopted as of March 31, 2025

In November 2023, the Financing Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

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

9 unchanged sentences

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.

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.

23 unchanged sentences

HPP Segment Revenue

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.

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

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.

1 unchanged sentence

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

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.

a perpetual or term 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.

6 unchanged sentences

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

See disaggregated revenues below by division.

Technology Solutions Segment

Three months ended December 31,

(Amounts in thousands)

Technology Solutions Segment

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.

1 unchanged sentence

Technology Solutions Segment

Three months ended December 31,

Three months ended March 31,

(Amounts in thousands)

15 unchanged sentences

Total Revenue

Technology Solutions Segment

Six months ended March 31,

(Amounts in thousands)

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.

1 unchanged sentence

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.

Revenue from these agreements in the three months ended March 31, 2025 was $ 142 thousand and CSPi acted as the agent.

There was no revenue from this type of agreement in the three months ended March 31, 2024.

Revenue from these agreements in the six months ended March 31, 2025 was $ 165 thousand and CSPi acted as the agent.

Revenue from these agreements in the six months ended March 31, 2024 was $ 1,427 thousand, 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 $ 0.7 million and $ 1.7 million as of December 31, 2024 and September 30, 2024, respectively.

Current contract assets were $ 0.9 million and $ 1.7 million as of March 31, 2025 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 December 31, 2024 and September 30, 2024.

There were no noncurrent contract assets as of March 31, 2025 and September 30, 2024.

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

1 unchanged sentence

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

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 $ 2.5 million and $ 2.2 million as of March 31, 2025 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 December 31, 2024 and September 30, 2024, respectively.

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

There were no long-term contract liabilities as of March 31, 2025 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.

Revenue recognized for the six months ended March 31, 2025 that was included in contract liabilities as of September 30, 2024 was $ 1.0 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 to six years .

The period of amortization is generally three 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 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.

Current capitalized contract costs are within the Other current assets on the condensed consolidated balance sheets as of March 31, 2025 and September 30, 2024.

The portion of current capitalized costs were $ 23 thousand and $ 177 thousand as of March 31, 2025 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.

The amount of incremental costs amortized for the three months ended March 31, 2025 and 2024 were $ 50 thousand and $ 121 thousand, respectively.

The amount of incremental costs amortized for the six months ended March 31, 2025 and 2024 were $ 154 thousand and $ 229 thousand, respectively and is recorded in selling, general, and administrative expenses.

There was no impairment related to incremental costs capitalized during the six months ended March 31, 2025 and 2024.

Projects are typically billed upon completion or at certain milestones.

Product and services are typically billed when shipped or as services are being performed.

Products and services are typically billed when shipped or as services are being performed.

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 for less than one year.

Most of our contracts are less than one year.

There are certain contracts that contain a financing component.

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

See Note 5 Financing receivables, net 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.

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:

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 March 31, 2025 is set forth in the table below:

(Amounts in thousands)

1 unchanged sentence

Earnings Per Share of Common Stock

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.

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.

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

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.

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:

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

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

Three months ended

Net income (loss)

Six Months Ended

(Amounts in thousands except per share data)

Net (loss) income

net income attributable to nonvested common stock

Net income (loss) attributable to common shareholders

Net (loss) income attributable to common shareholders

Weighted average total shares outstanding - basic

1 unchanged sentence

Weighted average number of common shares outstanding - basic

potential common shares from non-vested stock awards

potential common shares from non-vested restricted stock awards

Weighted average common shares outstanding - diluted

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.

Net (loss) income per common share - basic

Net (loss) income per common share - diluted

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

Non-vested restricted stock awards of 269 thousand shares were excluded from net loss per share for the three months ended March 31, 2025 because their inclusion would have been anti-dilutive as there was a net loss for the period.

Accounts receivable, net

4 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.

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

The following tables present the changes in the allowance for accounts receivable for the periods indicated.

Three months ended

December 31, 2024

December 31, 2023

March 31, 2025

March 31, 2024

(Amounts in thousands)

1 unchanged sentence

Balances at beginning of the period

(Benefit) provision for credit losses

Balances at end of the period

Six months ended

March 31, 2025

March 31, 2024

(Amounts in thousands)

Allowance for credit losses for accounts receivable:

Balances at beginning of the period

Adjustment for adoption of new CECL standard

Provision for credit losses

(Benefit) provision for credit losses

Balances at end of the period

18 unchanged sentences

Financing receivables, net carry an average weighted interest rate of 9.7 %, 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.

The amount of interest income earned from sales whose payment terms exceed one year for the three months ended March 31, 2025 and 2024 was $ 113 thousand and $ 158 thousand, respectively.

The amount of interest income earned from sales whose payment terms exceed one year for the six months ended March 31, 2025 and 2024 was $ 254 thousand and $ 351 thousand, respectively.

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

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

As of December 31, 2024

As of March 31, 2025

As of September 30, 2024

7 unchanged sentences

Three months ended

December 31, 2024

December 31, 2023

March 31, 2025

March 31, 2024

(Amounts in thousands)

Allowance for credit losses for financing receivables:

Balances at beginning of the period

Provision (benefit) charged to Consolidated Statements of Operations

Balances at end of the period

Six months ended

March 31, 2025

March 31, 2024

(Amounts in thousands)

Allowance for credit losses for financing receivables:

Balances at beginning of the period

Adjustment for adoption of new accounting standard

(Credit) provision charged to Consolidated Statements of Operations

(Benefit) provision charged to Consolidated Statements of Operations

Balances at end of the period

8 unchanged sentences

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 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

There were no financing receivables placed on non-accrual status as of March 31, 2025 or September 30, 2024.

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 March 31, 2025:

March 31, 2025

Fiscal year of origination

2 unchanged sentences

(Amounts in thousands)

2025 (remaining 6 months)

Total payments

9 unchanged sentences

Information related to both lessee and lessor

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

The components of lease costs for the three months ended March 31, 2025 and 2024 are as follows:

Three months ended

Consolidated Statements of Operations Location

December 31, 2024

December 31, 2023

March 31, 2025

March 31, 2024

(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 six months ended March 31, 2025 and 2024 are as follows:

Six months ended

Consolidated Statements of Operations Location

March 31, 2025

March 31, 2024

(Amounts in thousands)

Finance Lease:

7 unchanged sentences

Total lease costs, net of sublease interest income

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

Supplemental cash flow information related to leases for the six months ended March 31, 2025 and 2024 is below:

Six months ended

March 31, 2025

March 31, 2024

(Amounts in thousands)

2 unchanged sentences

Operating cash flows paid for short-term leases

Operating cash flows paid for finance leases

Cash received from subleases

Accounts payable and accrued expenses, and Other noncurrent liabilities

Lease assets obtained in exchange for new lease liabilities

Operating leases

In April 2025, a lease agreement for a new office space for the TS U.S.

division was executed, which will commence in August of 2025 and have a term for 80 months with total rent payments of around $ 1.2 million.

The division’s office in Deerfield Beach will move to Boca Raton, Florida.

Accounts payable 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.

2 unchanged sentences

principal and interest.

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

The average imputed interest rate for the agreements was determined to be 8.4 % as of March 31, 2025.

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 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.

Interest expense related to these agreements for the three months ended March 31, 2025 and 2024 was $ 75 thousand and $ 35 thousand, respectively.

Interest expense related to these agreements for the six months ended March 31, 2025 and 2024 was $ 150 thousand and $ 88 thousand, respectively.

The amounts owed for these agreements are in Accounts payable and accrued expenses and Other noncurrent liabilities because they are owed to vendors rather than banks or 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:

December 31, 2024

March 31, 2025

September 30, 2024

5 unchanged sentences

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.

As of March 31, 2025 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 US 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 %.

1 unchanged sentence

(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 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.

As of March 31, 2025 and September 30, 2024, Company borrowings, all from the TS segment, under the inventory line of credit were $ 0.4 million and $ 4.2 million, respectively, and the Company was in compliance with all financial covenants.

As of March 31, 2025 and September 30, 2024, this line of credit also includes availability of a limited cash withdrawal of up to $ 1.0 million.

As of March 31, 2025 and September 30, 2024 there were no cash withdrawals outstanding.

Pension and Retirement Plans

10 unchanged sentences

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,

In October 2024 the company contributed approximately 0.6 million Great British Pounds to the U.K.

pension plan and all of the plan assets were converted to cash.

Also in October 2024, in connection with the planned termination of our defined benefit pension plan in the U.K., we paid 8.5 million Great British Pounds to enter into a buy-in contract.

This payment is subject to adjustment as a result of subsequent data cleansing activities.

Under the terms of this buy-in contract, 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.

In accordance with US GAAP, specifically ASC 715-30 Defined Benefit Plans – Pension , the buy-in contract does not qualify as a significant event and therefore remeasurement is not required.

The buy-in contract will be treated as a plan asset.

When the buy-in contract transitions to a buy-out contract the Company will no longer have legal responsibility to pay the benefits to the members.

This transition is a significant event and the pension assets and liabilities will be remeasured at this time.

If the transition does not occur before September 30, 2025, the pension assets and liabilities will be remeasured as of this date in accordance with our Pension and Retirement Plans accounting policy.

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

Three Months Ended March 31,

(Amounts in thousands)

8 unchanged sentences

Net periodic benefit

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

pension plan by asset category are as follows:

Six Months Ended March 31,

(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

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

Fair Values as of

December 31, 2024

March 31, 2025

September 30, 2024

4 unchanged sentences

Cash on deposit

Buy-in contract*

Total plan assets

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 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.

*This fair value is as of December 31, 2025 and is based on the latest information available.

The buy-in contract is valued on an insurer pricing basis, which reflects the purchase price adjusted for changes in discount rates and other actuarial assumptions, which approximates fair value.

Due to this, the buy-in contract is classified as a Level 3.

The fair value of the buy-in contract can vary significantly based on the 20-year U.K.

gilt yield, which was around 4.5 % as of September 30, 2024 and 5.0 % as of December 31, 2024 leading to a decrease in fair value.

Additionally, the profit realized by the insurance company is not considered in the fair value and a decrease will occur from payments made to the pensioners.

The Company recorded an income tax benefit of $ 683 thousand and income tax expense of $ 135 thousand for the three months ended March 31, 2025 and 2024, respectively, and an income tax benefit of $ 798 thousand and income tax expense of $ 148 thousand for the six months ended March 31, 2025 and 2024, respectively.

The income tax benefit for the three and six months ended March 31, 2025 was primarily driven by the impact of tax credits that we expect to be able to utilize against federal and state taxes and the excess tax benefits on restricted stock awards vested during the period.

The income tax expense for the three and six months ended March 31, 2024 was primarily driven by income earned in the United States.

Accumulated Other Comprehensive Loss

12 unchanged sentences

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 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.

The Company had no assets or liabilities measured at fair value on a recurring basis (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 March 31, 2025 or September 30, 2024.

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 December 31, 2024

As of March 31, 2025

As of September 30, 2024

14 unchanged sentences

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

Fair value was not materially different from their carrying values as of March 31, 2025, and September 30, 2024

Financing receivables, net

7 unchanged sentences

Segment Information

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

Our reporting segments are aligned to how Victor Dellovo, CEO , who is the Chief Operating Decision Maker allocates resources and assesses performance against the Company’s strategies and budgets.

It is also consistent with how we manage the business and view the markets we serve.

The following tables present certain operating segment information for the three and six months ended March 31, 2025 and 2024.

Technology Solutions Segment

Three months ended December 31,

Three months ended March 31,

(Amounts in thousands)

Operating (loss) income

Stock compensation expense

Interest expense

2 unchanged sentences

Depreciation and amortization

Operating income (loss)

Interest expense

Interest income

Capital expenditures

Depreciation and amortization

Technology Solutions Segment

Six months ended March 31,

(Amounts in thousands)

Operating (loss) income

Stock compensation expense

Interest expense

2 unchanged sentences

Depreciation and amortization

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.

Operating (loss) income

Interest expense

Interest income

Capital expenditures

Depreciation and amortization

Operating (loss) income 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, and interest expense primarily from multi-year agreements with vendors (see Note 8 Accounts payable and other noncurrent liabilities ).

All intercompany transactions have been eliminated.

Concentrations of Credit Risk

All customers below are in the U.S.

All customers below, excluding Customer E, are in the U.S.

division of our TS segment.

1 unchanged sentence

“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

There were no customers with 10% or more of accounts receivable as of March 31, 2025 or September 30, 2024.

Below are customers with 10% or more of financing receivables as of March 31, 2025 or September 30, 2024.

As of March 31, 2025

As of September 30, 2024

4 unchanged sentences

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,

The following table lists customers from which the Company derived revenues of 10% or more of total revenues for the three and six months ended March 31, 2025 and 2024.

Three months ended March 31,

Six months ended March 31,

(Amounts in millions)

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 .

On February 10, 2025 , the Company’s board of directors declared a dividend of $ 0.03 per share payable March 10, 2025 , to shareholders of record on the close of business on February 24, 2025 .

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