What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-12-16 compared with 2024-12-20 · 423 added, 416 removed, 982 unchanged (46% of the section changed)

7 unchanged sentences

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective.

This is due to the fact that we have identified material weaknesses described in this Item 9A and we are not yet able to conclude that such material weaknesses have been remediated by the changes we made in response to those material weaknesses.

Management’s Report on Internal Control over Financial Reporting.

Based on the evaluation of our disclosure controls and procedures as of September 30, 2025, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting.

4 unchanged sentences

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

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2024.

“In making its assessment of internal control, management used the criteria described in “Internal Control Integrated Framework” under the 2013 Framework issued by the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission.” As a result of its assessment, management has concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2024.

Material Weaknesses

As of September 30, 2024, management has identified material weaknesses.

As defined in Rule 12b-2 under the Exchange Act, a material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected in a timely basis.

In August 2024 during its fiscal 2024 third quarter review the Company identified certain control deficiencies related to its business expense reimbursement and selected purchases policy and application of a legacy credit card program for Company credit cards.

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

Based on our evaluation under the COSO 2013 Framework, our management concluded that our internal control over financial reporting was effective as of September 30, 2025.

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

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2025 was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that call for the Company to provide only management’s report in this Annual Report on Form 10-K.

Remediation of Previously Identified Material Weaknesses

As reported in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, management identified two material weaknesses in internal control over financial reporting in connection with internal controls as described below:

Corporate credit cards

The control deficiencies related to the Company’s business expense reimbursement and selected purchases policy and application of a legacy credit card program for Company credit cards.

The control deficiencies arose out of a lack of adequate review and incomplete supporting documentation related to certain business expenses including those for reimbursement for Company credit card charges from a C level Company executive as well as undocumented compensation agreement with regards to the use of credit card points which resulted in undisclosed compensation.

The Audit Committee engaged a third party to investigate and analyze certain transactions made on the corporate credit card and it was not led by management.

As of September 30, 2024, the C-level executive returned to the Company approximately $20,000 in aggregate related to the portion of the undisclosed compensation in excess of the intended compensation agreement

In response to these control deficiencies, the Company performed additional analysis and reconciliation around all the credit card activity, including reimbursement, purchases and review of the credit card use policies, assessed various alternatives to remediate this material weakness and implemented changes to our internal controls including implementation of additional review and confirmation process by designated employees and the termination of the legacy benefit program identified above.

During the preparation of the Company’s annual financial statement, the Company performed further analysis and testing of these controls including the newly implemented controls.

These identified control deficiencies could have resulted in a material misstatement of the Company’s financial statements that would not have been prevented or detected, although no such misstatements occurred.

During the preparation of our annual financial statements, we determined that the controls over the credit card process were not operating effectively, and the resulting control gap amounted to a material weakness in our controls over financial reporting.

As a result, we concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2024.

The COSO principles of Exercises oversight responsibility and develops control activities were not properly followed in our internal controls.

Although we have implemented changes to our internal controls over financial reporting as described herein, at this time we cannot conclude that the material weakness has been remediated.

Accordingly, management concluded that the control deficiencies were a material weakness in the Company’s internal control over financial reporting.

Remediation of Material Weaknesses

We are committed to maintaining a strong internal control environment and implementing measures designed to help ensure that the material weaknesses are remediated as soon as possible.

We believe we have made progress towards remediation and continue to implement our remediation plan for the material weakness, which includes the following steps.

● All points earned on the Company credit cards will accrue only to the benefit of the .Company.

● The Company will further update its Credit Card purchase and Reimbursement Policy and take steps to ensure the Expense Policy is followed with documentation and proper approvals.

● In fiscal year 2025, internal audit will test a reasonable number of selections from all corporate credit card expenses monthly and report findings directly to the Company’s CFO.

If there is an exception, this will be reported to the Audit Committee

● Quarterly a summary report of Credit card internal audit results will be reported to the Audit Committee.

They consider the material weakness remediated after the applicable controls operate for a sufficient period of time, and management has concluded, through testing, that the controls are operating effectively.

The process of designing and implementing an effective accounting and financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain an accounting and financial reporting system that is adequate to satisfy our reporting obligations.

As we continue to evaluate and take actions to improve our internal control over financial reporting, we may determine to take additional actions to address control deficiencies or determine to modify certain of the remediation measures described above.

Management identified another material weakness in our internal controls over financial reporting for income taxes relating to current/non-current taxes payable, certain deferred tax assets and liabilities, and current and deferred tax expenses.

As a result, the C-level executive returned to the Company approximately $20,000 in aggregate related to the portion of the undisclosed compensation in excess of the intended compensation agreement in fiscal year 2024.

Remediation procedures:

A formal policy was introduced for all credit cards including the C-level Company executive.

This formal policy requires approval on all expenses as well as certain supporting documentation.

This control deficiency for reporting income taxes related to current/non-current taxes payable, certain deferred tax assets and liabilities, and current and deferred tax expenses.

We use a third-party provider to prepare our tax provision and related disclosures on a quarterly basis.

1 unchanged sentence

We believe the material weakness occurred due to a lack of competency of the third-party provider and management needs to perform a more comprehensive review with the third-party preparer

Management put in place a remediation plan to address the material weakness as described below however, as a result, we concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2024.

Remediation of Material Weaknesses

With oversight from the Audit Committee, management designed and began implementing changes in processes and controls to remediate the material weakness relating to income taxes identified and has enhanced the Company's internal control over financial reporting as follows:

o Hire a new accounting firm with global expertise as our new third-party tax provider to prepare tax provisions and corporate income tax returns.

We intend to use this firm to assist with enhancing internal controls over financial reporting for income taxes and developing and implementing a remediation plan.

o Hold quarterly meetings with our new third-party tax provider to discuss changes in tax law, key aspects of our quarterly/annual provisions and required updates to provisions, deciding a course of action and documenting such actions, review and approval of the tax data by senior members of our finance team and final discussion, review and approval of the third-party provider prepared provisions and returns.

o Provide income tax accounting training to those involved in the review of the tax data from our third-party tax provider.

Attestation Report

This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2024, was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that call for the Company to provide only management’s report in this Annual Report on Form 10-K.

Remediation procedures:

A new accounting firm was hired with global expertise as our new third-party tax provider to prepare tax provisions and corporate income tax returns.

This firm assisted with enhancing internal controls over financial reporting for income taxes.

Quarterly meetings were held with the new third-party tax provider to discuss changes in tax law, key aspects of our quarterly/annual provisions and required updates to provisions, deciding a course of action and documenting such actions, review and approval of the tax data by senior members of our finance team and final discussion, review and approval of the third-party provider prepared provisions and returns.

Income tax accounting training was provided to those involved in the review of the tax data from our third-party tax provider.

As a result of the implementation of these processes and testing these processes in fiscal year 2025, management has determined that the remediation actions discussed above were effectively designed and demonstrated effective operation for a sufficient period of time to enable the Company to conclude that the previously identified material weaknesses in internal control over financial reporting have been remediated as of September 30, 2025.

Changes in Internal Control over Financial Reporting.

During the year ended September 30, 2024, the Company began implementing the remediation efforts described above for both material weaknesses.

There were no other changes in our internal control over financial reporting during the year ended September 30, 2024, that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Except as discussed above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with management’s evaluation during our

fiscal year 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other Information

During the three months ended September 30, 2025, no director or officer of the Company adopted or terminated any “ Rule 10b5-1 trading arrangement” or “ non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdiction that Prevent Inspections

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable

6 unchanged sentences

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

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

In fiscal 2024 and 2023, the Company granted certain key employees, certain officers including its Chief Executive Officer and non-employee directors’ shares of non-vested common stock instead of stock options.

2014 Employee Stock Purchase Plan (the "ESPP"), the 2015 Stock Incentive Plan and the 2025 Stock Incentive Plan.

In fiscal year 2025 and 2024, the Company granted certain key employees and non-employee directors shares of non-vested common stock instead of stock options.

The non-vested common stock has a four-year vesting period for key employees and officers including the Chief Executive Officer.

16 unchanged sentences

Equity plans approved by security holders:

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

Stock Incentive Plan

Employee Stock Purchase Plan

(1) Includes only non-vested restricted stock awards issued under the 2015 and 2025 Stock Incentive Plan.

The 2015 Stock Incentive Plan expired in fiscal year 2025, but does not affect restricted stock awards issued from this plan.

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

(3) Includes 191,434 shares under the 2015 Stock Incentive Plan and 509,377 shares under the 2014 Employee Stock Purchase Plan.

We incorporate additional information required by this Item by reference to the section captioned “Security Ownership of Certain Beneficial Owners and Management” in our Schedule 14A Proxy Statement for our 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2025.

7 unchanged sentences

Consolidated Statements of Operations for the years ended September 30, 2025 and 2024

Consolidated Statements of Comprehensive Income for the years ended September 30, 2024 and 2023

Consolidated Statements of Comprehensive (Loss) Income for the years ended September 30, 2025 and 2024

Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2025 and 2024

28 unchanged sentences

January 25, 2019

2015 Lowell, MA Lease

December 24, 2015

2015 Deerfield Beach, FL Lease

2025 Stock Incentive Plan

December 30, 2024

4 unchanged sentences

Insider Trading Policy

Consent of RSM LLP, Independent Registered Public Accounting Firm

December 20, 2024

Consent of RSM US LLP, Independent Registered Public Accounting Firm

Consent of CBIZ CPAs P.C., Independent Registered Public Accounting Firm

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

9 unchanged sentences

XBRL Taxonomy Extension Presentation

Cover Page Interactive Data File

Management contract or compensatory plan.

18 unchanged sentences

Mike Newbanks

Shelton James

/s/ Anthony Folger

December 16, 2025

Shelton James

/s/ Raymond Charles Blackmon

Anthony Folger

/s/ Stephen Webber

December 16, 2025

Raymond Charles Blackmon

Stephen Webber

/s/ Marilyn T.

3 unchanged sentences

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors

To the Shareholders and Board of Directors of

and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CSP Inc.

and Subsidiaries (the Company) as of September 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of CSP Inc.

and Subsidiaries (the “Company”) as of September 30, 2025, the related consolidated statements of operations, comprehensive (loss) income, shareholders’ equity and cash flows for the year ended September 30, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025, and the results of its operations and its cash flows for the year ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Gross Versus Net Presentation

As described in Note 1 to the financial statements, the Company recognizes revenue from third-party service contracts as either gross sales or net sales depending on whether the Company is acting as a principal party to the transaction or simply acting as an agent or broker.

The Company records revenue as gross when the

Company is a principal party to the arrangement and net of cost when they are acting as a broker or agent.

The Company has concluded that it is the agent in sales of third-party maintenance, software or hardware support, and certain security software that is sold with integral third-party delivered software maintenance that include critical updates.

We identified the Company’s accounting for revenue from third-party service contracts described above to be a critical audit matter due to the significant judgments used by management related to the evaluation of the principal versus agent considerations.

Auditing management’s assumptions and conclusions involved a high degree of auditor judgment.

Our audit procedures related to these contracts included the following, among others:

● We evaluated management’s significant accounting policies related to these third-party contracts for consistency with accounting standards.

● For a selection of contracts, we performed the following procedures:

o Inspected the customer invoice and purchase order to determine whether the sale represented a valid and enforceable transaction with a customer.

o Compared the cost per the Company’s records to the cost per the vendor invoice.

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

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

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

net transactions.

• Assessed the reasonableness of the revenue allocation of third-party service contracts and the related vendor costs.

• Evaluated the accuracy of the summary file through inspection of customer and vendor invoices, purchase orders and information on vendor websites accessed through third-party search engines and through inquiries with management.

/s/ RSM US LLP

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

We have served as the Company’s auditor since 2025.

Tampa, Florida

December 16, 2025

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of CSP Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of CSP Inc.

and subsidiaries (the Company) as of September 30, 2024, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows, for the year then ended, and the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

/s/ RSM US LLP

We served as the Company’s auditor from 2007 to 2025.

Coral Gables, Florida

12 unchanged sentences

Property, equipment and improvements, net

Operating lease right-of-use assets

Operating lease right-of-use assets, net

Intangibles, net

25 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 for fiscal year 2023 (see Note 1)

See accompanying notes to consolidated financial statements.

7 unchanged sentences

Operating expenses:

Engineering and development

Research and development

Selling, general and administrative

Total operating expenses

Operating (loss) income

Operating loss

Other income (expense):

Foreign exchange loss

Foreign exchange gain (loss)

Interest expense

Interest income

Employee Retention Tax Credit, net of costs to collect

Other income, net

Other (expense) income, net

Total other income, net

(Loss) income before income taxes

Loss before income taxes

Income tax benefit

Net (loss) income

Net (loss) income attributable to common shareholders

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

Net loss attributable to common shareholders

Net loss per common share - basic

Weighted average common shares outstanding - basic

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

Net 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 for fiscal year 2023 (see Note 1)

See accompanying notes to consolidated financial statements.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Amounts in thousands)

1 unchanged sentence

September 30,

Net (loss) income

Other comprehensive income:

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

Other comprehensive (loss) income:

Actuarial (loss) gain on minimum pension liability, net of tax effect

Foreign currency translation gain adjustments, net of tax effect

Other comprehensive income

Total comprehensive income

Other comprehensive (loss) income

Total comprehensive (loss) income

See accompanying notes to consolidated financial statements.

7 unchanged sentences

Balance as of September 30, 2024

Adoption of Accounting Standards Update 2016-13

Other comprehensive income

Other comprehensive loss

Stock-based compensation

9 unchanged sentences

Balance as of September 30, 2023

Adoption of Accounting Standards Update 2016-13

Other comprehensive income

Stock-based compensation

Restricted stock cancellation

Restricted stock issuance

3 unchanged sentences

Balance as of September 30, 2024

(1) Retroactively adjusted for the effects of a two for one stock split effected in the form of a 100 % stock dividend for fiscal year 2023 (see Note 1)

See accompanying notes to consolidated financial statements.

5 unchanged sentences

Operating activities

Net (loss) income

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

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

Amortization of intangibles

Loss on disposal of fixed assets, net

Foreign exchange loss

Provision for credit losses - financing receivables

Foreign exchange (gain) loss

Provision (benefit) for credit losses - financing receivables

Provision for credit losses - accounts receivable

5 unchanged sentences

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

Decrease in financing receivables

(Increase) decrease in inventories

Decrease in refundable income taxes

(Increase) decrease in other assets

Increase (decrease) in accounts payable and accrued expenses

Decrease in operating lease liabilities

Increase (decrease) in deferred revenue and contract liabilities

Increase (decrease) in pension and retirement plans liabilities

(Decrease) increase in income taxes payable

Decrease in other noncurrent liabilities

Accounts receivable

Financing receivables

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

1 unchanged sentence

Life insurance premiums paid

Purchase of held-to-maturity investments

Proceeds from maturities of held-to-maturity investments

Additions of intangible assets

3 unchanged sentences

Dividends paid

Net borrowing under line-of-credit agreement

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

Repayments on note payable

Principal payments on finance leases

Purchase of common stock

Repurchases of common stock

Proceeds from issuance of shares under equity compensation plans

Net cash provided by (used in) financing activities

Net cash (used in) provided by 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

Cash and cash equivalents end of period

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

Supplementary cash flow information:

19 unchanged sentences

All significant intercompany accounts and transactions have been eliminated.

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 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 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 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 .

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.

Adopted Accounting Pronouncement in the Year Ended September 30, 2025

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 2 - Accounts receivable, net and Note 3 - Financing receivables, net .

Accounting Pronouncement Not Yet Adopted as of September 30, 2024

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

In November 2024, the Financial 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.

This ASU also requires disclosure of the title and position of the Chief Operating Decision Maker (CODM) and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources.

Under ASU 2023-07, the disclosures that are currently required on an annual basis under Topic 280, Segment Reporting , pertaining to reportable segment profit or loss and assets will also be required for interim periods.

The amendments in this Update do not change how an entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

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.

Early adoption is permitted.

The Company retrospectively adopted this as of and for the year ended September 30, 2025.

The effects of adopting this ASU only impacted the Company’s disclosures and did not have an effect on its consolidated financial statements.

See Note 17 – Segment Information for additional information.

Accounting Pronouncement Not Yet Adopted as of September 30, 2025

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides new optional guidance relating to the estimation of expected credit losses on current accounts receivable and current contract assets under Topic 326.

This ASU permits entities to apply a practical expedient when estimating credit losses and is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted, and should be applied prospectively.

We are currently evaluating the adoption of this standard and its impact to the Company's consolidated financial statements and related 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.

5 unchanged sentences

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

In November 2024, the FASB issued ASU 2024-04, 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.

Foreign Currency Translation

10 unchanged sentences

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

The Company maintains its cash and cash equivalents with financial institutions and, at times, the balance may exceed the Federal Deposit Insurance Corporation federally insured limits (United States - $250,000 per depositer) or Financial Services Compensation Scheme (United Kingdom - £85,000 per depositer).

The Company maintains its cash and cash equivalents with financial institutions and, at times, the balance may exceed the Federal Deposit Insurance Corporation federally insured limits (United States - $250,000 per depositor) or Financial Services Compensation Scheme (United Kingdom - £85,000 per depositor).

The Company has never experienced any losses related to these balances.

Employee Retention Tax Credit

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

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

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

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

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

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

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

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

Research and Development Expense

10 unchanged sentences

Intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

If the fair value of an intangible asset subject to amortization is determined to be less than its carrying value, then an impairment charge is recorded to write down that asset to its fair value.

If the fair value of an intangible asset subject

to amortization is determined to be less than its carrying value, then an impairment charge is recorded to write down that asset to its fair value.

There was no impairment for the years ended September 30, 2025 and 2024.

7 unchanged sentences

The discount rate used to assess classification is the incremental borrowing rate at the commencement date due to the implicit rate not being readily determinable.

The incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.

The incremental borrowing rate commensurate with the lease term is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.

The lease term includes periods when we are reasonably certain we will exercise the renewal option.

14 unchanged sentences

The Company has operating lease agreements with lease components (e.g.

fixed payments including rent, real estate taxes, and insurance costs) as well as nonlease components (e.g.

fixed payments including rent) as well as nonlease components (e.g.

common-area maintenance, colocation services).

1 unchanged sentence

Lease expense is recognized on a straight-line basis over the lease term.

Leases as Lessor

The process for identifying and classifying a lease is similar to the process described above in the lessee section.

Additionally, the most relevant criteria to classification is transfer of ownership and present value of the total lease payments in relation to fair value of the underlying asset.

The Company as a lessor only has sales-type leases.

All the Company’s agreements are bundled agreements containing managed services, software, and/or other services.

The fixed payments under bundled agreements are allocated based on the relative standalone selling prices of the lease and non-lease deliverables are consistent with ASC 606.

The allocation of the fixed payments may be calculated using a budgeted cost-plus margin approach if there are other services in addition to managed services.

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

There is no variable consideration in these agreements.

The discount rate used as a lessor pertaining to the lease component is the implicit rate.

Lease agreements transfer ownership at the end of the lease and there is no renewal option.

The leases typically do not have any residual value to the Company.

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

Revenue from sales-type leases is presented on a gross basis when the Company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business.

In addition, we have elected to account for sales

tax and other similar taxes collected from a lessee as lessee costs and therefore we exclude these costs from contract consideration and variable consideration and present revenue net of these costs.

See Note 10 Leases for additional information.

Inventories are stated at the lower of cost or net realizable value, with cost determined using the first-in, first-out method.

6 unchanged sentences

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

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

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

Repairs and maintenance costs are expensed as incurred.

11 unchanged sentences

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.

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

Various factors are also assessed in the allowance for credit losses including internal historical data as well as macroeconomic forecast assumptions and management judgments applicable to and through the expected life of the portfolios.

4 unchanged sentences

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

Gains and losses, prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive loss, net of tax, until they are amortized as a component of net periodic pension/postretirement benefits expense.

amortized as a component of net periodic pension/postretirement benefits expense.

Additionally, plan assets and obligations are measured as of our fiscal year-end balance sheet date (September 30).

8 unchanged sentences

These whole life insurance policies are carried on the balance sheet at their cash surrender values as they are owned by the Company and not assets of the defined benefit plans.

In the U.S., the Company also provides for officer death benefits and

post-retirement health insurance benefits through supplemental post-retirement plans to certain officers.

In the U.S., the Company also provides for officer death benefits and post-retirement health insurance benefits through supplemental post-retirement plans to certain officers.

The Company also funds these supplemental plans’ obligations through whole life insurance policies on the officers.

22 unchanged sentences

For each identified performance obligation in a transaction, we evaluate the facts and circumstances present to determine whether or not we control the specified good or service prior to transfer to the customer.

This evaluation includes, but is not limited to, assessing indicators such as whether:

This evaluation includes, but is not limited to,

assessing indicators such as whether:

(i) we are primarily responsible for fulfilling the promise to provide the specified goods or service, (ii) we have inventory risk before the specified good or service has been transferred to a customer and (iii) we have discretion in establishing the price for the specified good or service.

7 unchanged sentences

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.

When CSPi sells goods and services with a financing component the strongest indicator is whether the Company has discretion in selling price as many of the agreements are brought to us at predetermined price by the manufacturer.

13 unchanged sentences

The Company records shipping billed to its customers as Product revenue and the related freight costs as Product cost of sales when the underlying product revenue is recognized.

For freight not billed to its customers, the Company records the freight costs as Product cst of sales.

For freight not billed to its customers, the Company records the freight costs as Product cost of sales.

The Company considers shipping to be a fulfillment activity and not a separate performance obligation.

1 unchanged sentence

Managed service contracts contain the right to refund if canceled within 30 days of inception.

Any products with a standard warranty are treated as a warranty obligation under ASC 460, Guarantees.

Any products the Company manufactures, all in our HPP segment, with a standard warranty are treated as a warranty obligation under ASC 460, Guarantees.

The following policies are applicable to our major categories of segment revenue transactions:

6 unchanged sentences

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

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

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

The software licenses or hardware with integrated software are not distinct from their accompanying maintenance, as they are dependent upon regular threat updates.

The software updates and upgrades are highly interdependent and highly interrelated, working together to deliver continuously updated protection from cyber threats to customers.

By identifying and addressing new threats, the software updates significantly modify the licensed software and are integral to maintaining its utility given the rapid pace with which new threats are identified, the value of the licensed software diminishes rapidly without the software updates.

As control transfers to the customer over time of the contract term, we therefore consider the software license and related support obligations a single, combined performance obligation with revenue recognized ratably over time as our solutions are delivered.

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

4 unchanged sentences

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.

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.

See disaggregated revenues below by products/services and geography.

Technology Solutions Segment

Year ended September 30, 2024

(Amounts in thousands)

Technology Solutions Segment

Year ended September 30, 2023

(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 and whether CSPi acted as the principal or agent below.

Also see geographic areas based on the which the products were shipped or services rendered.

Technology Solutions Segment

Year ended September 30,

(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 3 Financing Receivables, net for more details.

Revenue from these agreements in fiscal year 2024 was $ 2.0 million, which consisted of $ 1.5 million with CSPi acting as the principal and $ 0.5 million with CSPi acting as the agent.

Revenue from these agreements in fiscal year 2023 was $ 0.8 million with CSPi acting as the agent.

See details of timing of revenue recognition and whether CSPi acted as the principal or agent and geographic areas based on which the products were shipped or services rendered in Note 17 Segment Information .

Contract Assets and Liabilities

4 unchanged sentences

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

As of September 30, 2025 there was $ 0.1 million related to amounts billed but not paid by customers under retainage provisions included in current contract assets.

All amounts are expected to be collected within one year.

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

5 unchanged sentences

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

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

There were $ 37 thousand of long-term contract liabilities as of September 30, 2025 and none as of September 30, 2024, respectively.

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

Revenue recognized for the year ended September 30, 2025 that was included in contract liabilities as of September 30, 2024 was $ 1.8 million.

At times, customers delay projects that were supposed to be complete within a year, which is why the full balance of Deferred revenue and contract liabilities as of September 30, 2023 was not recognized in the twelve months ended September 30, 2024.

The Company cannot reasonably predict when the customers will make these delays.

At times, customers delay projects that were supposed to be complete within a year, which is why the full balance of Deferred revenue and contract liabilities as of

September 30, 2024 was not recognized in the twelve months ended September 30, 2025.

The Company cannot reasonably predict when delays will arise.

Contract Costs

9 unchanged sentences

Costs to fulfill a contract are related to the TS portion of the business and involve activities performed before managed services can be completed.

Fulfillment costs are amortized consistent with the pattern of transferring the services to which the cost relates ratably over the term of the contract.

Current capitalized fulfillment costs are in the other current assets and noncurrent costs are in other assets on the consolidated balance sheets.

There were no current capitalized costs as of September 30, 2024 and $ 9 thousand as of September 30, 2023, respectively.

There were no current capitalized costs as of September 30, 2025 and 2024.

There were no noncurrent capitalized costs as of September 30, 2025 and 2024, respectively.

The amount of fulfillment costs amortized year ended September 30, 2024 and 2023 were $ 9 thousand and $ 13 thousand, respectively.

There were no amounts of fulfillment costs amortized for the year ended September 30, 2025.

An amount of $ 9 thousand was amortized for the year ended September 30, 2024.

These costs amortized were recorded in cost of sales.

There was no impairment related to fulfillment costs capitalized for the year ended and 2023.

There was no impairment related to fulfillment costs capitalized for the year ended September 30, 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 day s to pay in full except in Europe where it could be up to 90 day s.

Most of our contracts are less than one year.

Most of our contracts are for less than one year.

There are certain contracts that contain a financing component.

See Note 1 Summary of Significant Accounting Policies to the consolidated financial statements for additional information.

We elected to use the optional exemption to not disclose the aggregate amount of the transaction price allocated to performance obligations that have an original expected duration of one year or less.

7 unchanged sentences

Product Warranty Accrual

Our product sales generally include a hardware warranty which ranges from 90 -days to three-years .

At time of product shipment, we accrue for the estimated cost including labor and hardware to repair or replace potentially defective products.

Our HPP product sales with hardware generally include a hardware warranty which ranges from 90 days to three years .

At time of product shipment, we accrue for the estimated cost including labor and hardware to repair or replace

potentially defective products.

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

Engineering and Development Expenses

Engineering and development expenses include payroll, employee benefits, stock-based compensation and other headcount-related expenses associated with product development.

Engineering and development expenses also include third-party development and programming costs.

Research and Development Expenses

Research and development expenses include payroll, employee benefits, stock-based compensation and other headcount-related expenses associated with product development.

Research and development expenses also include third-party development and programming costs.

We consider technological feasibility for our software products to be reached upon the release of the software, accordingly, no internal software development costs have been capitalized.

11 unchanged sentences

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

Earnings per Share of Common Stock

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

Diluted net income per common share reflects the maximum dilution that would have resulted from the assumed exercise and share repurchase related to dilutive restricted stock awards and is computed by dividing net income available to common shareholders by the assumed weighted average number of common shares outstanding.

Net loss per common share

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 (loss) income per share computations for the Company’s reported net (loss) income attributable to common stockholders are as follows:

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

Diluted net loss per common share reflects the maximum dilution that would have resulted from the assumed exercise and share repurchase related to dilutive restricted stock awards.

As the Company has reported losses for all periods presented, all potentially dilutive securities are antidilutive and accordingly, basic net loss per common share equals diluted net loss per common share.

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

September 30,

Net (loss) income

net income attributable to nonvested common stock

3 unchanged sentences

Weighted average number of common shares outstanding - basic

potential common shares from non-vested stock awards (1)

potential common shares from non-vested restricted stock awards

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 for fiscal year 2023 (see Note 1)

All anti-dilutive securities, including restricted stock awards, are excluded from the diluted (loss) income per share computation.

Non-vested restricted stock awards of 396 thousand shares were excluded from net loss per share for the year ended September 30, 2024 because their inclusion would have been anti-dilutive as there was a net loss for the period.

Non-vested restricted stock awards of 108 thousand shares were excluded from net income per share for the year ended September 30, 2023 because their inclusion would have been anti-dilutive.

Net loss per common share - basic

Net loss per common share - diluted

All anti-dilutive securities, RSA’s, are excluded from the diluted loss per share computation.

Non-vested restricted stock awards of 304 thousand and 396 thousand shares were excluded from net loss per share for the year ended September 30, 2025 and 2024 because their inclusion would have been anti-dilutive as there was a net loss for the period.

Use of Estimates

8 unchanged sentences

Concentrations of Credit Risk

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

Below are customers with 10% or more of financing receivables as of September 30, 2024 or 2023.

As of September 30,

(Amounts in millions)

Financing Receivables

We do not believe we have a significant credit risk with respect to accounts receivable or financing receivables.

Subsequent Events

The Company recognizes in the consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the statement of financial position, including the estimates inherent in the process of preparing financial statements.

The Company has evaluated subsequent events through the date of this filing, see Note 22 Subsequent event.

The Company has bank accounts in the United States and United Kingdom, which have cash deposits in excess of federally insured limits.

For information about other concentration of credit risk, see Note 3 Financing receivables and Note 17 Segment Information .

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 credit losses on accounts receivable in an amount equal to the current expected credit losses.

The Company recognizes an allowance for credit 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.

The balance of accounts receivable, net as of September 30, 2022 was $ 14.0 million, adjusted for the change in Presentation – sales whose payment terms exceed one year (see Note 1 for details).

Also adjusted, the balance of the current and non-current portion of financing receivables as of September 30, 2022 was $ 9.0 million and $ 7.4 million, respectively.

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

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

16 unchanged sentences

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 due to the likelihood of loss being higher.

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

The risk characteristics of each portfolio are consistent with the Fitch rating or equivalent.

According to Fitch Ratings, “'’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.” According to Fitch Ratings, “'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.”

The only significant change in factors that influenced the estimate of expected credit losses as of September 30, 2024 was a significant customer having its Fitch Rating upgraded from BB+ to BBB-.

This customer had a balance of $ 1.9 million, or 25 %, of financing receivables, net and $ 2.5 million, or 22 %, as of September 30, 2024 and September 30, 2023, respectively.

Financing receivables, net carry an average weighted average interest rate of 8.4 %, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement.

According to Fitch Ratings:

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

'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 a weighted average interest rate of 8.7 %, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement.

Interest income attributable to financing receivables is recognized on the accrual basis using the effective interest method.

The amount of interest income earned from sales whose payment terms exceed one year for the years ended September 30, 2025 and 2024 was $ 641 thousand and $ 700 thousand, respectively.

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

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

Interest income from these agreements is recorded in Interest income on the 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:

2 unchanged sentences

(Amounts in thousands)

Financing receivables, net:

3 unchanged sentences

Financing receivables, net

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

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

2 unchanged sentences

(Amounts in thousands)

Allowance for credit losses for financing receivables:

Balances at beginning of the period

Adjustment for adoption of new CECL standard

Recovery charged to Consolidated Statements of Operations

Adjustment for adoption of new accounting standard

Provision (benefit) 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.

4 unchanged sentences

A payment due in excess of 30 days is considered delinquent.

If a payment is received for a receivable on non-accrual status the payment is first applied to interest and then principal.

If a payment is received

for a receivable on non-accrual status the payment is first applied to interest and then principal.

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

There were no financing receivables placed on non-accrual status as of September 30, 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 September 30, 2024:

The following table presents Financing receivables, gross, including accrued interest and excluding any allowance for credit loss, by credit quality indicator segregated by risk rating and year of origination as of September 30, 2025:

September 30, 2025

7 unchanged sentences

Total, net of unearned interest income and allowance for credit losses

Inventories, net

Inventories, net consist of the following:

Inventories consist of the following:

September 30,

22 unchanged sentences

Balance as of September 30, 2025

The changes in the minimum pension liability are net of an amortization gain of $ 185 thousand in 2024 and a gain of $ 200 thousand in 2023 included in net periodic pension cost.

The changes in the minimum pension liability are net of an amortization loss of $ 243 thousand in 2025 and a loss of $ 185 thousand in 2024 included in net periodic pension cost.

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

8 unchanged sentences

(Dollar amounts in thousands)

Computed “expected” tax expense

Tax benefit at the statutory rate

Increases (reductions) in taxes resulting from:

State income taxes, net of federal tax benefit

Foreign rate differential

Employee Retention Credit

Permanent differences

State income taxes, net of federal benefit

Impact of non-U.S.

Change in valuation allowance

Research and development credit

Deferred Tax True Ups

FIN 48 Reserves

Return to Provision Adjustments

Excess stock compensation deductions

Permanent differences

Non-deductible executive compensation

Change in uncertain tax positions

Return to provision and prior period assessments

Income tax benefit

4 unchanged sentences

Deferred tax assets:

Net operating loss carryforward

Capitalized research and development expenses

Other reserves and accruals

Inventory reserves and other

Federal and state tax credits

Federal and state net operating loss carryforwards

Foreign net operating loss carryforwards

Lease liability

Accrued expenses

Inventory reserve

Other temporary differences

Gross deferred tax assets

valuation allowance

Realizable deferred tax asset

Net deferred tax asset

Deferred tax liabilities:

Depreciation and amortization

Realizable deferred tax liabilities

1 unchanged sentence

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

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

jurisdiction will be utilized and that associated valuation allowances should not be reversed at September 30, 2024 or 2023.

The Company separately analyzed the realizability of its federal and state credits and determined $ 796 thousand (net of federal benefit) of state credits are expected to expire unutilized and kept a valuation allowance against these credits.

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

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

jurisdiction.

The Company has determined that it is more likely than not that substantially all of its net deferred tax assets in the U.S., except for certain state tax credits, will be realized for the fiscal years ended September 30, 2024 and 2025.

The Company separately analyzed the realizability of its federal and state credits and determined $ 495 thousand (net of federal benefit) of state credits are expected to expire unutilized and maintained a

valuation allowance against these credits.

The Company continued to maintain a full valuation allowance against the net U.K.

deferred tax assets.

As of September 30, 2025 and 2024, the Company had no U.S.

net operating loss or tax credit carryforwards for federal purposes.

net operating loss or tax credit carryforwards for federal tax purposes.

As of September 30, 2025 and 2024, the Company had U.S.

net operating loss carryforwards for state purposes of approximately $ 60 thousand and $ 12 thousand, respectively, which are available to offset future taxable income through 2035.

As of September 30, 2024, the Company had state tax credit carryforwards of $ 1.1 million available to reduce future state tax expense, of which $ 55 thousand has unlimited carryover status and the remainder of the credits are available through FY 2038.

As of September 30, 2024, the Company had U.K.

net operating loss carryforwards of approximately $ 10.6 million that have an indefinite life with no expiration.

net operating loss carryforwards for state purposes of approximately $ 60 thousand and $ 60 thousand, respectively, which begin to expire in FY 2031.

As of September 30, 2025, the Company had state tax credit carryforwards of $ 1.0 million available to reduce future state tax expense, of which $ 50 thousand has unlimited carryover status and the remainder of the credits begin to expire in FY 2029.

As of September 30, 2025 and 2024, the Company had U.K.

net operating loss carryforwards of approximately $ 10.8 million and $ 10.6 million, respectively, that have an indefinite life with no expiration.

Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $ 10.3 million and $ 10.3 million as of September 30, 2025 and 2024, respectively.

The Company is considering cash distribution of undistributed foreign earnings in the future and will continue to assess the potential impact of any future distributions on U.S.

The Company is considering cash distributions of undistributed foreign earnings in the future and will continue to assess the potential impact of any future distributions on U.S.

The state tax impact of a distribution of foreign earnings and profits would not be material.

3 unchanged sentences

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

As of September 30, 2024, the total amount of uncertain tax liabilities relates to federal and state tax credit carryforwards which are partially recorded net in deferred taxes and partially as a long term tax payable.

As of September 30, 2025, uncertain tax benefits were primarily related to federal and state tax credits and were partially recorded net in deferred taxes and as a long term tax payable.

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

9 unchanged sentences

Balance, end of period

The unrecognized tax benefits of $ 350 thousand as of September 30, 2024, if recognized, would reduce our annual effective tax rate, subject to the valuation allowance.

The unrecognized tax benefits of $ 306 thousand as of September 30, 2025, if recognized, would reduce our annual effective tax rate, subject to the valuation allowance maintained against certain state tax credits.

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

1 unchanged sentence

federal jurisdiction and various state and foreign jurisdictions.

The Company has reviewed the tax positions taken on returns filed domestically and in its foreign jurisdictions for all open years, generally fiscal 2021 through 2024, and believes that any tax adjustments not currently reserved in any audited year will not be material.

The Company has reviewed the tax positions taken on returns filed domestically and in its foreign jurisdictions for all open years, generally fiscal 2022 through 2025, and believes that any tax adjustments not currently reserved in any audited year would not be material.

Property, Equipment and Improvements, net

9 unchanged sentences

Depreciation expense was $ 237 thousand and $ 292 thousand for the years ended September 30, 2025 and 2024, respectively.

Acquired Intangible Assets

Intangibles, net

As of September 30, 2025 and 2024, intangible assets are as follows:

2 unchanged sentences

(Amounts in thousands)

Customer list

Amortization expense on these intangible assets was $ 7 thousand and $ 6 thousand for the years ended September 30, 2025 and 2024, respectively.

There were additions of $ 10 and $ 51 thousand for the years ended Septembe 30, 2024 and 2023.

There were additions of $ 26 thousand and $ 10 thousand for the years ended September 30, 2025 and 2024, respectively.

These additions were at our HPP segment related to our ARIA cybersecurity products.

Annual amortization expense related to intangible assets for each of the following successive fiscal years is as follows:

Annual amortization expense related to intangible assets for each of the following five successive fiscal years is as follows:

Fiscal year ending September 30:

22 unchanged sentences

The amounts owed for these agreements are within the Consolidated balance sheets in accounts payable and other noncurrent liabilities because they are owed to a vendor rather than banks or financial institutions for borrowings.

See Note 12 Line of Credit and Note 13 Note Payable for amounts due to banks and other financial institutions for borrowings.

See Note 12 Line of Credit for amounts due to banks and other financial institutions for borrowings.

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

3 unchanged sentences

Accounts payable and accrued expenses

Other noncurrent liabilities

Total within Other noncurrent liabilities

The TS US division has many vendors it transacts with and does not have any specific agreement with any vendor that it must purchase certain products.

6 unchanged sentences

(Amounts in thousands)

Operating leases

Operating lease right-of-use assets

Operating leases, net

Operating lease right-of-use assets, net

Lease receivable - current

12 unchanged sentences

(Amounts in thousands)

Finance Lease:

Interest on lease liabilities

Interest expense

Operating Lease:

4 unchanged sentences

Total lease costs

Less sublease interest income

Total lease costs, net of sublease interest income

Future lease payments under our non-cancellable leases and payments to be received as a sublessor as of September 30, 2024 are in the following table:

Less lessor interest income

Total lease costs, net of lessor interest income

For the year ended September 30, 2025 an amount of $ 100 thousand was recognized in Sales:

Product and $ 86 thousand in Cost of sales - Product for a sales-type lease.

For the year ended September 30, 2024 an amount of $ 20 thousand was recognized in Sales:

Product and $ 10 thousand in Cost of sales - Product related for a sales-type lease.

Future lease payments under our non-cancellable leases and payments to be received as a lessor as of September 30, 2025 are in the following table:

Operating lease

2 unchanged sentences

Less imputed interest

Supplemental cash flow information related to leases for the fiscal year ended September 30, 2024 and 2023 is below:

Supplemental cash flow information related to leases for the fiscal years ended September 30, 2025 and 2024 is below:

September 30, 2025

5 unchanged sentences

Operating cash flows paid for finance leases

Financing cash flows paid for finance leases

Cash received from subleases

Cash received from lessor agreements

Lease assets obtained in exchange for new lease liabilities

19 unchanged sentences

to purchase inventory from approved vendors with payment terms which exceed those offered by the vendors.

No interest accrues under the inventory line of credit when advances are paid within terms, however, late payments are subject to an interest charge of the rate published in the Wall Street Journal as the “prime rate” plus 5 %.

The prime rate was 8.0 % as of September 30, 2024.

There is no expiration date or minimum principal payment.

However, the credit agreement for the inventory line of credit contains financial covenants which require the Company to maintain the following TS segment-specific financial ratios:

The line of credit automatically renews for one year periods unless terminated by the Company with at least 60 days’ notice or immediate termination by the lender.

The collateral is a blanket UCC filing on Modcomp, Inc.

and CSPi assets.

The credit agreement for the inventory line of credit contains financial covenants which require the Company to maintain the following TS segment-specific financial ratios:

(1) a minimum current ratio of 1.2 , (2) tangible net worth of no less than $ 4.0 million, and (3) a maximum ratio of total liabilities to total net worth of less than 5.0 :1.

3 unchanged sentences

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

In October 2019, the Company borrowed $ 2.0 million with a 5.1 % rate of interest related to a multi-year agreement with a customer.

This note payable was paid in full as of September 30, 2024.

There was no interest expense for the year ended September 30, 2024.

Interest expense related to the note for the year ended September 30, 2023 was $ 22 thousand.

Below are details of the notes payable.

September 30, 2024

September 30, 2023

(Amounts in thousands)

note discount

Note payable - current portion

Pension and Retirement Plans

32 unchanged sentences

Expected return on plan assets:

For domestic plans, the discount rate was determined by comparison against the FTSE pension liability index for AA rated corporate instruments.

The Company monitors other indices to assure that the pension obligations are fairly reported on a consistent basis.

The international discount rates were determined by comparison against country specific AA corporate indices, adjusted for duration of the obligation.

The periodic benefit cost and the actuarial present value of projected benefit obligations are based on actuarial assumptions that are reviewed on an annual basis.

The Company revises these assumptions based on an annual evaluation of long-term trends, as well as market conditions, that may have an impact on the cost of providing retirement benefits.

For the supplementary domestic plan, medical benefits are assumed to be increasing based on the Long Term Healthcare Cost Trends Getzen Model commencing with 7.5 % per year with such increase decreasing by 0.5 % per year over the next several years and decreasing in accordance with the model pre 65 and 4.54 % post 65.

The Company revises these assumptions based on an annual evaluation of long-term trends, as well as market conditions, which may have an impact on the cost of providing retirement benefits.

For domestic plans, in making the cost assessments, a discount rate of 5.32 % was used to reflect prevailing interest rates.

Medical benefits are assumed to be increasing based on the Long-Term Healthcare Cost Trends Getzen Model commencing with 8.0 % per year with such increase decreasing by 0.5 % per year over the next several years and decreasing in accordance with the model to 4.54 % in 2090.

For ages 65 and beyond, the increase is 5.00 % for 2025, 4.75 % for 2026 and 4.54 % thereafter.

Life expectancy for medical benefits is based on the PRI-2012 White Collar for Males and Females Pre and Post retirement, Adjusted to 2006 projected using scale MP-2021.

For the international plan, the discount rate based on a yield curve, constructed from the iBoxx Sterling AA Corporate Index as of September 30, 2025.

An assumption of a rate of increase in the Retail Price Index (RPI) is derived from the difference in the yields on fixed and index-linked UK government bonds (gilts) at the effective date published by the Bank of England.

Demographic assumptions are those agreed for the funding valuation as of January 1, 2022, but using more recent mortality projections (CMI2024).

The plan’s main asset is now a buy-in contract.

As the value of this contract is set equal to the value of the liabilities, the expected return on assets is set equal to the assumed discount rate.

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

11 unchanged sentences

Net periodic benefit

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

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

Post Retirement:

Increase in minimum liability included in other comprehensive income

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

The following table presents an analysis of the changes in 2024 and 2023 of the benefit obligation, the plan assets and the funded status of the plans:

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

The following table presents an analysis of the changes in 2025 and 2024 in the benefit obligation, the plan assets and the funded status of the plans:

Years Ended September 30

9 unchanged sentences

Fair value of plan assets at beginning of year

Actual gain (loss) on plan assets

Actual (loss) gain on plan assets

Company contributions

32 unchanged sentences

(Amounts in thousands)

Non-current benefits assets

Pension benefits assets

Current accrued benefit liability

1 unchanged sentence

Total accrued benefit liability

As of September 30, 2024 and 2023, the amounts included in accumulated other comprehensive income, consisted of deferred net gains totaling approximately $ 0.1 million and $ 0.1 million, respectively.

The amount of net deferred gain expected to be recognized as a component of net periodic benefit cost for the year ending September 30, 2024, is approximately $ 185 thousand.

As of September 30, 2025 and 2024, the amounts included in accumulated other comprehensive income, consisted of deferred net losses totaling approximately $ 2.9 million and $ 0.1 million, respectively.

The amount of net deferred loss expected to be recognized as a component of net periodic benefit cost for the year ending September 30, 2026, is approximately $ 129 thousand.

Contributions

The Company expects to contribute $ 0.1 million to its pension plans in fiscal 2025.

The Company does not expect to contribute any money to its pension plans in fiscal 2026.

Estimated Future Benefit Payments

2 unchanged sentences

(Amounts in thousands)

As of September 30, 2024, our pension plan in the U.K.

was the only plan with assets, holding investments of approximately $ 10.8 million.

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

is the only pension plan with plan assets.

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 was not required.

The buy-in contract is 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.

The company’s remeasurement date is September 30, 2025 and the pension assets and liabilities were remeasured as of this date in accordance with our Pension and Retirement Plans accounting policy.

Pension plan assets are managed by a fiduciary committee.

The Company’s investment strategy for pension plan assets is to maximize the long-term rate of return on plan assets within an acceptable level of risk while maintaining adequate funding levels.

Local regulations, local funding rules, and local financial and tax considerations are part of the funding and investment process.

Prior to the conversion of the plan assets to cash the Company’s investment strategy for pension plan assets was to maximize the long-term rate of return on plan assets within an acceptable level of risk while maintaining adequate funding levels.

Local regulations, local funding rules, and local financial and tax considerations were part of the funding and investment process.

In deciding on the investments to be held, the trustees take into account the risk of possible fluctuations in income from, and market values of, the assets as well as the risk of departing from an asset profile which broadly matches the liability profile.

The committee has invested the plan assets in a single pooled fund with an authorized investment company (the “Fund”).

The Fund selected by the trustees is consistent with the plan’s overall investment principles and strategy described herein.

The committee invested the plan assets in a single pooled fund with an authorized investment company (the “Fund”).

The Fund selected by the trustees was consistent with the plan’s overall investment principles and strategy described herein.

There are no specific targets as to asset allocation other than those contained within the Fund that is managed by the authorized investment company.

9 unchanged sentences

Cash on deposit

Buy-in contract

Total plan assets

The expected long-term rates of return on plan assets are equal to the yields to maturity of appropriate indices for government and corporate bonds and by adding a premium to the government bond return for equities.

The expected rate of return on cash is the Bank of England base rate in force at the effective date.

Level 1 investments represent mutual funds for which a quoted market price is available on an active market.

3 unchanged sentences

This investment primarily holds stocks within developed global equity markets, excluding the UK.

Potential sale of U.K.

Subsequent to September 30, 2024 the U.K.

pension assets, excluding cash, were all converted into cash to sell the U.K.

pension obligation.

As of the date of this filing, there is an agreement to sell the pension obligation in full.

This agreement has many contingencies and the expected timeframe of the sale occurring is 4 to 16 months from the date of these consolidated financial statements are issued.

Level 3 represents the buy-in contract.

While the purchase of the buy-in contract does not result in an actual settlement, it can be viewed as financially equivalent to an effective settlement since the majority of the risks and rewards associated with the benefit obligation and related assets have been eliminated (especially if there has been no downgrade in the ratings of the insurance company that wrote the contract).

As a result, the discount rate used in pricing the buy-in contract also represents the rate at which the obligation can be effectively settled (ASC 715-30-35-43).

The fair value of the buy-in contract is equivalent to the total accumulated benefit obligation.

Defined Contribution Plans

The Company has defined contribution plans in domestic and international locations under which the Company matches a portion of the employee’s contributions and may make discretionary contributions to the plans.

The Company has defined contribution plans in domestic and international locations under which the Company matches a portion of the employees’ contributions and may make discretionary contributions to the plans.

The Company’s contributions were $ 226 thousand and $ 212 thousand for the years ended September 30, 2025 and 2024, respectively.

Stock Based Incentive Compensation

In 2015, the Company adopted the 2015 Stock Incentive Plan (the "2015 Plan") and authorized 600,000 (adjusted for stock split in fiscal year 2024, see Note 1 for details) shares of common stock to be reserved for issuance pursuant to the 2015 Plan.

During fiscal year 2019 an additional 600,000 (adjusted for stock split in fiscal year 2024, see Note 1 for details) shares of common stock were authorized to be reserved for issuance pursuant to the 2015 Plan.

During fiscal year 2023 an additional 800,000 (number of shares adjusted for stock split which occurred in fiscal year 2024, see Note 1 for details) shares of common stock were authorized to be reserved for issuance pursuant to the 2015 Plan.

In 2015, the Company adopted the 2015 Stock Incentive Plan (the "2015 Plan") and authorized 600,000 shares of common stock to be reserved for issuance pursuant to the 2015 Plan.

This plan expired on November 18, 2024.

Awards issued under the 2015 Plan are not affected by expiration of the plan, but no further awards will be issued under this plan.

In fiscal year 2025, the Company adopted the 2025 Stock Incentive Plan (the "2025 Plan") and authorized 600,000 shares of common stock to be reserved for issuance pursuant to the 2025 Plan.

As of September 30, 2025, there were 535,595 shares available to be granted under the 2025 Plan.

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

The 2015 Plan has a ten-year life.

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

Under the 2025 Plan, incentive and non-qualified stock options and restricted stock awards may be granted to officers, key employees and other people providing services to the Company.

The 2025 Plan has a ten-year life and is the only effective plan as of September 30, 2025.

The Company had no awarded stock options outstanding as of September 30, 2025 or 2024.

1 unchanged sentence

Vesting of restricted stock awards granted pursuant to the 2025 Plan is determined by the Company’s compensation committee.

In fiscal years 2020 through 2024, the Company granted certain officers including its Chief Executive Officer and non-employee directors, and key employees shares of nonvested common stock.

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

In fiscal year 2025 and 2024, the Company granted non-employee directors, officers, and key employees shares of nonvested common stock.

The vesting period for officers’ and key employees’ restricted stock awards is four years .

The vesting for non-employee directors’ restricted stock awards is one year .

The vesting period for the key employees’ restricted stock awards is typically four years or immediately in the case of a sales commission for the ARIA cybersecurity products.

We measure and recognize compensation expense for nonvested stock-based payment awards made to employees and directors based on the closing market price of our common stock as quoted on the Nasdaq Global Market on the date of grant over the requisite service period.

7 unchanged sentences

Cost of sales

Engineering and development

Research and development

Selling, general and administrative

For the year ended September 30, 2024, the Company granted 161,000 nonvested shares to certain key employees, 104,000 nonvested shares to certain officers including 70,000 shares granted to the Chief Executive Officer, and 40,000 nonvested shares to its non-employee directors.

For the year ended September 30, 2023, the Company granted 142,344 nonvested shares to certain key employees, 104,000 nonvested shares to certain officers including 70,000 shares granted to the Chief Executive Officer, and 40,000 nonvested shares to its non-employee directors.

These numbers for the fiscal year 2023 were retroactively adjusted for the effects of a two for one stock split effected in the form of a 100 % stock dividend (see Note 1 Summary of Significant Accounting Policies ).

For the year ended September 30, 2025, the Company granted a total of 169,205 nonvested shares including 97,705 to key employees, 54,000 to officers including 35,000 to the Chief Executive Officer, and 17,500 to non-employee directors.

For the year ended September 30, 2024, the Company granted a total of 305,000 nonvested shares including 161,000 nonvested shares to certain key employees, 104,000 nonvested shares to certain officers including 70,000 shares granted to the Chief Executive Officer, and 40,000 nonvested shares to its non-employee directors.

No cash was used to settle equity instruments granted under share-base payment arrangements in any of the years in the two-year period ended September 30, 2025.

1 unchanged sentence

(in thousands)

Nonvested shares outstanding at of September 30, 2022

Nonvested shares outstanding as of September 30, 2023

Activity in fiscal year 2024:

6 unchanged sentences

Employee Stock Purchase Plan

In December 2013, the Board of Directors of the Company adopted the 2014 Employee Stock Purchase Plan (the "ESPP") covering up to 500,000 shares (all shares adjusted for stock split, see Note 1) of Common Stock, which was ratified by a vote of the Company’s shareholders in February 2014.

In December 2013, the Board of Directors of the Company adopted the 2014 Employee Stock Purchase Plan (the "ESPP") covering up to 500,000 shares of Common Stock, which was ratified by a vote of the Company’s shareholders in February 2014.

An additional 600,000 shares of common stock were approved by stockholders in fiscal year 2024.

1 unchanged sentence

Pursuant to the ESPP, the Company issued 26,115 and 29,693 shares for the years ended September 30, 2025 and September 30, 2024, respectively.

The weighted average purchase price was $ 10.96 and $ 9.28 per share for the years ended September 30, 2025 and September 30, 2024, respectively.

As of September 30, 2025, 483,262 shares remain authorized to be issued under the Employee Stock Purchase Plan.

Repurchase of Common Stock

On February 8, 2011, the Board of Directors authorized the Company to purchase up to 500 thousand (adjusted retrospectively for stock split, see Note 1) additional shares of the Company's outstanding common stock at market price.

On February 8, 2011, the Board of Directors authorized the Company to purchase up to 500 thousand additional shares of the Company's outstanding common stock at market price.

The plan does not expire.

The Company repurchased 7,600 shares of its outstanding common stock on the open market during fiscal year 2024 and this is the total shares of treasury stock owned with a cost basis of $ 104 thousand as of September 30, 2024.

The Company repurchased 62,300 shares of its outstanding common stock on the open market during fiscal year 2025.

There were 69,900 total shares of treasury stock with a cost basis of $ 972 thousand as of September 30, 2025.

As of September 30, 2025, 272,354 shares remain authorized to repurchase under the stock repurchase program.

Segment Information

Our reporting segments are aligned to how 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.

We have two reporting segments, High Performance Products and Technology Solutions, discussed below.

The Company’s country of domicile is the United States.

High Performance Products (HPP) – The HPP segment consists of primarily of the following product lines:

ARIA, Multicomputer, and Myricom.

Most of the revenue is from US customers for all product lines, but the segment has expanded into APAC and Africa regions with its ARIA product line.

The segment’s operations are based in Lowell, Massachusetts.

Technology Solutions (TS) – The TS segment generates revenue by reselling third-party computer hardware, software, and related support/maintenance/warranty as a value-added reseller (“VAR”).

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

unified communications and collaboration;

wireless and mobility;

data center solutions;

and network solutions as well as managed IT services that primarily serve the small and mid-sized business market.

TS has two divisions – United Kingdom and U.S.

which are displayed separately and in total below.

division, located in Boca Raton, Florida, primarily has U.S.

customers and the United Kingdom division, located in Wokingham, Berkshire, primarily has U.K.

customers as well as other European countries.

The factors used in identifying the Company’s reportable segments include geographical location of operations and the types of products and services.

The accounting policies of the Company's segments are consistent with those described in Note 1 Basis of presentation and Summary of Significant Accounting Policies .

All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance.

The Company's Chief Operating Decision Maker (“CODM”) Victor Dellovo, Chief Executive Officer , assesses segment performance and allocates resources based upon revenues and operating income before certain other nonroutine items, if any.

Asset information utilized by the CODM for purposes of assessing performance and allocating resources includes Cash and cash equivalents, Accounts receivable, and Financing receivables.

Cash and cash equivalents are utilized due to the HPP segment incurring losses and receiving cash from the TS-US division.

Accounts and Financing receivables are regularly provided to the CODM to assess customer trends, credit policies, and operational efficiency.

The following table presents certain operating segment information.

We have recast certain prior period amounts to conform to the way we internally manage and monitor our business, for details see Note 1 Basis of presentation and Summary of Significant Accounting Policies .

Technology Solutions Segment

1 unchanged sentence

(Amounts in thousands)

Cost of sales:

Total cost of sales

Research and development

Selling, general and administrative

Total operating expenses

Operating (loss) income

1 unchanged sentence

Interest income

Stock compensation expense

Capital expenditures

Depreciation and amortization

Cash and cash equivalents

Accounts receivable, net of allowance

Financing receivables, net of allowance

Capital expenditures

Cost of sales:

Total cost of sales

Research and development

Selling, general and administrative

Total operating expenses

Operating (loss) income

1 unchanged sentence

Interest income

Stock compensation expense

Capital expenditures

Depreciation and amortization

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

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

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

All intercompany transactions have been eliminated.

Our long-lived assets are located in North America.

The following table details the Company’s sales by operating segment for fiscal years ended September 30, 2024 and 2023.

The Company’s sales by geographic area based on the location of where the products were shipped or services rendered are as follows:

Cash and cash equivalents

Accounts receivable, net of allowance

Financing receivables, net of allowance

Capital expenditures

Depreciation and amortization are included in Selling, general, and administrative expenses.

Operating (loss) income is not affected by either non-operating charges/income or by income taxes.

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

Our long-lived assets are located in the United States.

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

Also see geographic areas based on where the products were shipped or services rendered.

Technology Solutions Segment

Year ended September 30,

(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)

APAC and Africa

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)

APAC and Africa

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.

Revenue from these agreements in fiscal year 2025 was $ 2.5

million, which consisted of $ 0.8 million with CSPi acting as the principal and $ 1.7 million with CSPi acting as the agent.

Revenue from these agreements in fiscal year 2024 was $ 2.0 million, which consisted of $ 1.5 million with CSPi acting as the principal and $ 0.5 million with CSPi acting as the agent.

Concentrations of Credit Risk

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

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

All financing receivables are in the TS-US division.

As of September 30, 2025

As of September 30, 2024

(Amounts in millions)

Financing Receivables

The were no customers from which the Company derived revenues of 10% or more of total revenues year ended September 30, 2025 or 2024.

Fair Value Disclosures

32 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.

Holders of outstanding shares of common stock are entitled to receive ratably any dividends declared by our Board of Directors, in its discretion, out of assets legally available, subject to any preferences that may be applicable to any preferred stock outstanding at the time.

There was no outstanding preferred stock as of September 30, 2025 and or 2024.

Payment of dividends on the common stock may be restricted by loan agreements, indentures and other transactions entered into by us from time to time.

There were no restrictions during the year ended September 30, 2025 and 2024.

For the fiscal year ended September 30, 2025 the Company paid cash dividends on common stock below.

Date Declared

(1) Amounts above are retroactively adjusted for the effects of a two for one stock split effected in the form of a 100 % stock dividend February 21, 2024.

Related Party Transactions

Under ASC 850 “Related Party Transactions” an entity or person is considered to be a “related party” if it has control, significant influence or is a key member of management personnel or affiliate.

A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

The Company, in accordance with ASC 850 presents disclosures about related party transactions and outstanding balances with related parties.

The Audit Committee has the responsibility of reviewing and approving transactions with related parties.

In connection with the review of any related party transactions, the Audit Committee considers, among other matters, the nature, timing and duration of the transactions, the relationships of the parties to the transactions, whether the transactions are in the ordinary course of the Company’s business, the dollar value of the transactions and whether the transactions are in the interests of the Company.

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

1 unchanged sentence

There were $ 267 thousand and $ 324 thousand of purchases from this vendor for the fiscal year ended September 30, 2025 and 2024, respectively.

There were no amounts due to the vendor as of September 30, 2024 or 2023.

Subsequent Event

Subsequent to September 30, 2024, the U.K.

pension assets, excluding cash, were all converted into cash to sell the U.K.

pension obligation.

The value of the converted assets were not materially different from the balances as of September 30, 2024.

As of the date of these issued consolidated financial statements, there is an agreement to sell the pension obligation in full.

This agreement has many contingencies and the expected timeframe of the sale occurring is 4 to 16 months from the date of these consolidated financial statements are issued.

An amount of $ 69 thousand was due to this vendor as of September 30, 2025.

There was no balance due as of September 30, 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-K

Item 9A. Controls and Procedures