What changed in this filing

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Item 1. Financial Statements

2026-02-12 compared with 2025-08-14 · 189 added, 335 removed, 379 unchanged (58% of the section changed)

8 unchanged sentences

Financing receivables, net of allowances of $ 39 and $ 34

Refundable income taxes

Other current assets

1 unchanged sentence

Property, equipment and improvements, net

Operating lease right-of-use assets

Operating lease right-of-use assets, net

Intangibles, net

30 unchanged sentences

Three Months Ended

Nine Months Ended

Cost of sales:

1 unchanged sentence

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 (loss) gain

Interest expense

2 unchanged sentences

Total other income, net

(Loss) income before income taxes

Income tax (benefit) expense

Net (loss) income

Net (loss) income attributable to common shareholders

Net (loss) income per common share - basic

Income before income taxes

Income tax expense (benefit)

Net income attributable to common shareholders

Net income per common share - basic

Weighted average common shares outstanding - basic

Net (loss) income per common share - diluted

Net income per common share - diluted

Weighted average common shares outstanding - diluted

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

Three Months Ended

Nine Months Ended

Net (loss) income

Foreign currency translation gain adjustments, net of tax effect

Total comprehensive (loss) income

See accompanying notes to unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the three months ended June 30, 2025 and 2024

(Amounts in thousands, except per share data)

comprehensive

Shareholders’

Three months ended June 30, 2025:

Balance as of March 31, 2025

Other comprehensive income

Stock-based compensation

Restricted stock cancellation

Purchase of common stock

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

Balance as of June 30, 2025

comprehensive

Shareholders’

Three months ended June 30, 2024:

Balance as of March 31, 2024

Other comprehensive income

Stock-based compensation

Restricted stock cancellation

Purchase of common stock

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

Balance as of June 30, 2024

Other comprehensive income (loss):

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

Other comprehensive income (loss)

Total comprehensive income (loss)

See accompanying notes to unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the nine months ended June 30, 2025 and 2024

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three months ended December 31, 2025 and 2024:

(Amounts in thousands, except per share data)

1 unchanged sentence

Shareholders’

Nine months ended June 30, 2025:

Three months ended December 31, 2025:

Balance as of September 30, 2025

2 unchanged sentences

Restricted stock cancellation

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Purchase of common stock

Cash dividends paid on common stock ($ 0.09 per share)

Balance as of June 30, 2025

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

Balance as of December 31, 2025

comprehensive

Shareholders’

Nine months ended June 30, 2024:

Three months ended December 31, 2024:

Balance as of September 30, 2024

Adoption of Accounting Standards Update 2016-13

Other comprehensive income

Other comprehensive loss

Stock-based compensation

Restricted stock cancellation

Restricted stock issuance

Issuance of shares under employee stock purchase plan

Purchase of common stock

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

Balance as of June 30, 2024

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

Balance as of December 31, 2024

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Nine Months Ended

Three Months Ended

Operating activities

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

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

Amortization of intangibles

Loss on disposal of fixed assets, net

Foreign exchange loss

Foreign exchange loss (gain)

Provision (benefit) for credit losses - financing receivables

Provision for credit losses - accounts receivable

Provision for obsolete inventory

(Benefit) provision for credit losses - accounts receivable

Amortization of lease right-of-use assets

9 unchanged sentences

Deferred revenue and contract liabilities

Pension and retirement plans liabilities

Pension and retirement plans

Income taxes payable

Other noncurrent liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Investing activities

Life insurance premiums paid

Additions of intangible assets

Purchases of property, equipment and improvements

1 unchanged sentence

Financing activities

Dividends paid

Net repayments under line-of-credit agreement

Repayments on note payable

Repurchases of common stock

Proceeds from issuance of shares under equity compensation plans

Net cash used in financing activities

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

Net cash provided by (used in) financing activities

Effects of exchange rate on cash, net

2 unchanged sentences

Cash and cash equivalents end of period

See accompanying notes to unaudited condensed consolidated financial statements.

Supplementary cash flow information:

2 unchanged sentences

Supplementary non-cash financing activities:

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

Dividend declared during period

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

7 unchanged sentences

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

Basis of Presentation and Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of presentation

5 unchanged sentences

Significant Accounting Policies

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

Accounting Pronouncement Not Yet Adopted as of June 30, 2025

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

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

There have been no significant changes to the Company's significant accounting policies described in PART II, Item 8, Note 1, "Basis of Presentation and Summary of Significant Accounting Policies", of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

Accounting Pronouncement Not Yet Adopted as of December 31, 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.

5 unchanged sentences

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

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

Entities should apply the amendments on a

prospective basis, but retrospective application is permitted.

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

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

This ASU is effective for fiscal years beginning after December 15, 2026,

and interim periods within fiscal years beginning after December 15, 2027, on a retrospective basis.

Early adoption is permitted.

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

We derive revenue from the sale of integrated hardware and software, third-party service contracts, professional services, managed services, financing of hardware and software, and other services.

We recognize revenue from hardware upon transfer of control, which is at a point in time typically upon shipment when title transfers.

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

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

Professional services are considered a series of distinct services that form one performance obligation and revenue is recognized over time as services are performed.

Revenue generated from managed services is recognized over the term of the contract.

Certain managed services contracts include financing of hardware and software.

Revenues from arrangements which include financing are allocated considering relative standalone selling prices of lease and non-lease components within the agreement.

The lease component includes hardware, which is subject to ASC 842 Leases .

The non-lease components are subject to ASC 606 Revenue from Contracts with Customers .

Other services generally include revenue generated through our royalty, extended warranty, multicomputer repair, and maintenance contracts.

Royalty revenue is sales-based and recognized on the date of subsequent sale of the product, which occurs on the date of customer shipment.

Revenue from extended warranty contracts is recognized ratably over the warranty period.

Multicomputer repair services revenue is recognized upon control transfer when the customer takes possession of the computer at time of shipping.

Revenue generated from maintenance services is recognized evenly over the term of the contract.

The right of return risk lies with the original manufacturer of the product.

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

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

TS Segment Revenue

TS Segment revenue is derived from the sale of hardware, software, professional services, third-party service contracts, maintenance contracts, managed services, and financing of hardware and software.

Third-party service contracts are evaluated to determine whether such service revenue should be recorded as gross or net sales and whether over time or at point in time.

HPP Segment Revenue

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

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

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

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

The transaction price is fixed consideration.

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

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

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

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

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

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

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

Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products’ functionality, and PCS.

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

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

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

Revenue, Deferred revenue and contract liabilities, and Contract balances

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

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

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

Technology Solutions Segment

Three months ended June 30,

Three months ended December 31,

(Amounts in thousands)

17 unchanged sentences

Total Revenue

Technology Solutions Segment

Nine months ended June 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 5 Financing Receivables, net for more details.

Revenue from these agreements in the three months ended June 30, 2025 was $ 879 thousand, which consisted of $ 543 thousand with the Company acting as the principal and $ 336 thousand with the Company acting as the agent.

Revenue from these agreements in the three months ended June 30, 2024 was $ 446 thousand consisting of $ 435 thousand with the Company acting as the agent and $ 11 thousand with the Company acting as principal.

Revenue from these agreements in the nine months ended June 30, 2025 was $ 901 thousand, consisting of $ 543 thousand with the Company acting as the principal and $ 358 thousand with the Company acting as an agent.

Revenue from these agreements in the nine months ended June 30, 2024 was $ 1,872 thousand consisting of $ 1,388 thousand with the Company acting as the principal and $ 484 thousand with CSPi acting as agent.

Revenue from these agreements in the three months ended December 31, 2025 was $ 655 thousand and CSPi acted as the agent.

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

Contract Assets and Liabilities

1 unchanged sentence

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

Current contract assets were $ 0.9 million and $ 1.7 million as of June 30, 2025 and September 30, 2024, respectively.

Current contract assets were $ 0.5 million and $ 0.8 million as of December 31, 2025 and September 30, 2025, respectively.

Current contract assets were $ 1.7 million as of September 30, 2024.

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

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

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

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

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

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

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

Current contract liabilities were $ 1.6 million and $ 2.2 million as of June 30, 2025 and September 30, 2024, respectively.

Current contract liabilities were $ 1.6 million and $ 1.5 million as of December 31, 2025 and September 30, 2025, respectively.

Current contract liabilities were $ 2.2 million as of September 30, 2024.

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

There were immaterial long-term contract liabilities as of June 30, 2025 and none as of September 30, 2024, respectively.

There were $ 50 thousand and $ 33 thousand of long-term contract liabilities as of December 31, 2025 and September 30, 2025, respectively.

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

Revenue recognized for the nine months ended June 30, 2025 that was included in contract liabilities as of September 30, 2024 was $ 1.6 million.

Long-term contract liabilities are in Other noncurrent liabilities on the condensed consolidated balance sheets.

Revenue recognized for the three months ended December 31, 2025 that was included in contract liabilities as of September 30, 2025 was $ 0.6 million.

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

Contract Costs

2 unchanged sentences

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

The period of amortization is generally three years .

Incremental costs are related to commissions in the TS portion of the business.

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

The portion of current capitalized costs were $ 1 thousand and $ 177 thousand as of June 30, 2025 and September 30, 2024, respectively.

The period of amortization is generally one to three years .

Incremental costs in fiscal year 2026 are related to commissions in the HPP segment and in fiscal year 2025 incremental costs were related to commissions in both segments.

In fiscal year 2026 the TS segment paid commissions on a monthly basis for contracts over one year.

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

The portion of current capitalized costs was $ 31 thousand and $ 33 thousand as of December 31, 2025 and September 30, 2025, respectively.

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

The amount of incremental costs amortized for the three months ended June 30, 2025 and 2024 were $ 22 thousand and $ 122 thousand, respectively.

The amount of incremental costs amortized for the nine months ended June 30, 2025 and 2024 were $ 176 thousand and $ 351 thousand, respectively and is recorded in selling, general, and administrative expenses.

There was no impairment related to incremental costs capitalized during the nine months ended June 30, 2025 and 2024.

The amount of incremental costs amortized for the three months ended December 31, 2025 and 2024 were $ 10 thousand and $ 104 thousand, respectively.

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

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

Projects are typically billed upon completion or at certain milestones.

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

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

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

Most of our contracts are less than one year.

Most of our contracts’ term are for less than one year.

There are certain contracts that contain a financing component.

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

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.

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

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

This is due to a low number of performance obligations, which are less than one year from being unsatisfied at each period end.

2 unchanged sentences

The royalty agreement is longer than one year but not included in the table below as the royalties are sales-based.

Managed service contracts are generally longer than one year and revenue is recognized ratably over the contract term.

For these contracts the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2025 is set forth in the table below:

Managed service contracts are generally longer than one year.

For these contracts the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2025 is set forth in the table below:

(Amounts in thousands)

1 unchanged sentence

Earnings Per Share of Common Stock

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

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

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

We are required to present earnings per share ("EPS") utilizing the two-class method because we had outstanding, non-vested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, which are considered participating securities.

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

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

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

Diluted net income per share includes the dilutive effect of restricted stock awards (RSA’s), if any, calculated using the treasury stock method.

Using the treasury stock method, the effect of dilutive securities includes the additional shares of common stock that would have been outstanding based on the assumption that these potentially dilutive securities had been issued.

The treasury stock method assumes proceeds from the unamortized compensation expense of restricted stock awards are used to repurchase common shares at the average market price during the period, thus reducing the dilutive effect.

RSA’s with assumed proceeds per unit above the Company’s average share price for the periods presented are excluded from the diluted EPS calculation because the effect is anti-dilutive.

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

Three Months Ended

Nine Months Ended

(Amounts in thousands except per share data)

Net (loss) income

net income attributable to nonvested common stock

Net (loss) income attributable to common shareholders

Net income attributable to common shareholders

Weighted average total shares outstanding - basic

3 unchanged sentences

Weighted average common shares outstanding - diluted

Net (loss) income per common share - basic

Net (loss) income per common share - diluted

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

Non-vested restricted stock awards of 82 thousand shares and 193 thousand shares were excluded from net loss per share for the three months ended June 30, 2025 and 2024 because their inclusion would have been anti-dilutive as there was a net loss for the period.

Net income per common share - basic

Net income per common share - diluted

All anti-dilutive securities (RSA’s) are excluded from the diluted net income per share computation.

Non-vested restricted stock awards of 87 thousand were excluded from net income per share for the three months ended December 31, 2025 because their inclusion would have been anti-dilutive.

Accounts receivable, net

3 unchanged sentences

The Company assesses collectability by pooling receivables where similar characteristics exist and evaluates receivables individually when specific customer balances no longer share those risk characteristics and are considered at risk or uncollectible.

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

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

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

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

Three months ended

June 30, 2025

June 30, 2024

(Amounts in thousands)

Allowance for credit losses for accounts receivable:

Balances at beginning of the period

Provision (benefit) for credit losses

Balances at end of the period

Nine months ended

June 30, 2025

June 30, 2024

December 31, 2025

December 31, 2024

(Amounts in thousands)

1 unchanged sentence

Balances at beginning of the period

Adjustment for adoption of new CECL standard

Provision (benefit) for credit losses

(Benefit) provision for credit losses

Balances at end of the period

5 unchanged sentences

Determining whether to offer financing involves looking at the customer’s payment history, economic conditions, and capacity to pay.

These financing arrangements do not contain collateral.

The Company assigns an internal risk rating to each customer at inception, which groups customers into a portfolio based off this risk rating.

11 unchanged sentences

Financing receivables, net carry an average weighted interest rate of 8.6 %, which reflects the approximate interest rate consistent with a separate financing transaction with the customer at the inception of the agreement.

The amount of interest income earned from sales whose payment terms exceed one year for the three months ended June 30, 2025 and 2024 was $ 152 thousand and $ 177 thousand, respectively.

The amount of interest income earned from sales whose payment terms exceed one year for the nine months ended June 30, 2025 and 2024 was $ 406 thousand and $ 528 thousand, respectively.

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

The amount of interest income earned from sales whose payment terms exceed one year for the three months ended December 31, 2025 and 2024 was $ 342 thousand and $ 141 thousand, respectively.

Interest income from these agreements is recorded in Interest income on the Condensed Consolidated Statements of Operations.

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

As of June 30, 2025

As of December 31, 2025

As of September 30, 2025

7 unchanged sentences

Three months ended

June 30, 2025

June 30, 2024

(Amounts in thousands)

Allowance for credit losses for financing receivables:

Balances at beginning of the period

(Benefit) provision charged to Consolidated Statements of Operations

Balances at end of the period

Nine months ended

June 30, 2025

June 30, 2024

December 31, 2025

December 31, 2024

(Amounts in thousands)

1 unchanged sentence

Balances at beginning of the period

Adjustment for adoption of new accounting standard

(Benefit) provision charged to Consolidated Statements of Operations

Provision (benefit) charged to Consolidated Statements of Operations

Balances at end of the period

3 unchanged sentences

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

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

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

Financing receivables whose payment terms exceed one year are placed on non-accrual status, meaning interest income stops being recorded, when the customer has a past due amount in excess of 30 days or reasonable doubt exists in collecting all interest and principal.

1 unchanged sentence

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 June 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 June 30, 2025:

June 30, 2025

Recording interest income

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

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

The following table presents Financing receivables, gross, including accrued interest, by credit quality indicator segregated by risk rating and year of origination as of December 31, 2025:

December 31, 2025

Fiscal year of origination

10 unchanged sentences

(Amounts in thousands)

Raw materials

Work-in-process

1 unchanged sentence

Information related to both lessee and lessor

The components of lease costs for the three months ended June 30, 2025 and 2024 are as follows:

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

Three months ended

Consolidated Statements of Operations Location

June 30, 2025

June 30, 2024

(Amounts in thousands)

Operating Lease:

Operating lease cost

Selling, general, and administrative

Short-term lease cost

Selling, general, and administrative

Total lease costs

Less sublease interest income

Total lease costs, net of sublease interest income

The components of lease costs for the nine months ended June 30, 2025 and 2024 are as follows:

Nine months ended

Consolidated Statements of Operations Location

June 30, 2025

June 30, 2024

December 31, 2025

December 31, 2024

(Amounts in thousands)

Finance Lease:

Operating Lease:

4 unchanged sentences

Total lease costs

Less sublease interest income

Total lease costs, net of sublease interest income

Supplemental cash flow information related to leases for the nine months ended June 30, 2025 and 2024 is below:

Nine months ended

June 30, 2025

June 30, 2024

Less lessor interest income

Total lease costs, net of lessor interest income

Supplemental cash flow information related to leases for three months ended December 31, 2025 and 2024 is below:

Three months ended

December 31, 2025

December 31, 2024

(Amounts in thousands)

2 unchanged sentences

Operating cash flows paid for short-term leases

Operating cash flows paid for finance leases

Cash received from subleases

Lease assets obtained in exchange for new lease liabilities

Operating leases

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

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

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

Cash received from lessor agreements

Accounts payable and accrued expenses, and Other noncurrent liabilities

3 unchanged sentences

principal and interest.

The average imputed interest rate for the agreements was determined to be 9.4 % as of June 30, 2025.

The average imputed interest rate for the agreements was determined to be 8.6 % as of December 31, 2025.

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

Interest expense related to these agreements for the three months ended June 30, 2025 and 2024 was $ 101 thousand and $ 52 thousand, respectively.

Interest expense related to these agreements for the nine months ended June 30, 2025 and 2024 was $ 251 thousand and $ 139 thousand, respectively.

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

Interest expense related to these agreements for the three months ended December 31, 2025 and 2024 was $ 125 thousand and $ 75 thousand, respectively.

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

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

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

June 30, 2025

December 31, 2025

September 30, 2025

(Amounts in thousands)

Accounts payable and accrued expenses

Other noncurrent liabilities

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

Total within Accounts payable and accrued expenses

Total within Other noncurrent liabilities

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

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

Line of Credit

As of June 30, 2025 and September 30, 2024, the Company maintained an inventory line of credit with a borrowing capacity of $ 15.0 million.

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

No interest accrues under the inventory line of credit when advances are paid within terms, however, late payments are subject to an interest charge of Prime plus 5 %.

As of December 31, 2025 and September 30, 2025, the Company maintained an inventory line of credit with a borrowing capacity of $ 15.0 million.

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

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

No interest accrues under the inventory line of credit when advances are paid within terms, however, late payments are subject to an interest charge of the rate published in the Wall Street Journal as the “ prime rate ” plus 1 %, which was 7.75 % as of December 31, 2025.

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., a wholly-ownwed subsidiary, 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 :1.

As of June 30, 2025 and September 30, 2024, Company borrowings, all from the TS segment, under the inventory line of credit were $ 1.1 million and $ 4.2 million, respectively, and the Company was in compliance with all financial covenants.

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

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

As of December 31, 2025 and September 30, 2025, Company borrowings, all from the TS segment, under the inventory line of credit were $ 1.4 million and $ 0.9 million, respectively, and the Company was in compliance with all financial covenants.

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

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

Pension and Retirement Plans

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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.

In fiscal year 2024 the company paid 8.5 million Great British Pounds to enter into a buy-in contract.

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

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

In accordance with US GAAP, specifically ASC 715-30 Defined Benefit Plans – Pension , the buy-in

contract does not qualify as a significant event and therefore remeasurement is not required.

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

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.

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

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

Three Months Ended June 30,

(Amounts in thousands)

Interest cost

Expected return on plan assets

Amortization of past service costs

Amortization of net gain

Net periodic (benefit) cost

Post Retirement:

Interest cost

Amortization of net gain

Net periodic benefit

Nine Months Ended June 30,

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

plans are as follows:

Three Months Ended December 31,

(Amounts in thousands)

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Amortization of net gain

Net periodic (benefit) cost

Net periodic cost (benefit)

Post Retirement:

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Net periodic benefit

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

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

pension plan by asset category are as follows:

Fair Values as of

June 30, 2025

December 31, 2025

September 30, 2025

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Total plan assets

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

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

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

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

gilt yield, which was around 4.5 % as of September 30, 2024 and 5.2 % as of March 31, 2025 leading to a decrease in fair value.

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

The Company recorded an income tax benefit of $ 751 thousand and $ 75 thousand for the three months ended June 30, 2025 and 2024, respectively.

The Company recorded an income tax benefit of $ 1.5 million and income tax expense of $ 73 thousand for the nine months ended June 30, 2025 and 2024, respectively.

The income tax benefit for the three and nine months ended June 30, 2025 was primarily driven by the impact of the Company's pre-tax loss, the excess tax benefits on restricted stock awards vested during the period, and an income tax refund related to an amended fiscal year 2019 tax return for the Employee Retention Credit wages claimed in which the statute had expired.

No receivable had been recorded for this item, and as such, the Company recorded a discrete tax benefit during the quarter.

The income tax benefit for the three months ended June 30, 2024 was driven by a decrease in pre-tax earnings and the expense for nine months ended June 30, 2024 was primarily driven by income earned in the United States.

*This fair value as of December 31, 2025 is based on the latest information available, which is as of September 30, 2025.

The slight difference from September 30, 2025 is due to the Great British Pounds being converted into U.S.

dollars at a different exchange rate.

Income tax expense of $ 280 thousand was recorded for the three months ended December 31, 2025 compared to an income tax benefit of $ 115 thousand in the same period of 2024.

For the three months ended December 31, 2025, the difference between our effective income tax rate and the U.S.

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

For the three months ended December 31, 2024, the difference between our effective income tax rate and the U.S.

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

On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (“OBBBA”) into law.

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In accordance with ASC 740, the effects of the new tax law will be recognized in the period of enactment.

The Company is currently evaluating the impact of the OBBBA, and an estimate of the financial effect cannot be determined at this time.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through

We have evaluated the impact of the OBBBA and determined that it did not have a material effect on the Company’s financial statements for the three months ended December 31, 2025.

We will continue to assess the implications of the OBBBA as further guidance becomes available but do not expect the legislation to have a material impact on the effective tax rate in future periods.

Accumulated Other Comprehensive Loss

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

The Company had no assets or liabilities measured at fair value on a recurring basis (except our pension plan assets and whole life insurance policies, see Note 10 Pension and Retirement Plans for pension plan assets) or non-recurring basis as of June 30, 2025 or September 30, 2024.

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

The Company had no assets or liabilities measured at fair value on a recurring (except our pension plan assets and whole life insurance policies, see Note 10 Pension and retirement plans for pension plan assets) or non-recurring basis as of December 31, 2025 or September 30, 2025.

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

If this data is not available, we use observable market-based inputs to estimate fair value, which are classified within Level 2.

If the preceding information is unavailable, we use internally generated data to estimate fair value which is classified within Level 3.

As of June 30, 2025

As of December 31, 2025

As of September 30, 2025

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Cash and cash equivalents

Consolidated Balance Sheets

Condensed Consolidated Balance Sheets

Accounts receivable, net

Condensed Consolidated Balance Sheets and Note 4

Financing receivables, net*

Condensed Consolidated Balance Sheets and Note 5

Accounts payable and accrued expenses and other long-term liabilities**

Line of Credit

*Original maturity over one year

**Vendor financing agreements with original maturity over one year within these two financial statement line items

Condensed Consolidated Balance Sheets and Note 9

*Includes original maturity over one year

**Vendor financing agreements with original maturity over one year included within Accounts payable and accrued expenses and Other long-term liabilities

Cash and cash equivalents

Carrying amount approximated fair value.

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

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

Accounts receivable

Fair value was not materially different from carrying values.

Financing receivables, net

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Segment Information

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

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

The following tables present certain operating segment information for the three and nine months ended June 30, 2025 and 2024.

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

Technology Solutions Segment

Three months ended June 30,

Three months ended December 31,

(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

Capital expenditures

Depreciation and amortization

Operating (loss) income

Interest expense

Interest income

Cash and cash equivalents

Accounts receivable, net of allowance

Financing receivables, net of allowance

Capital expenditures

Depreciation and amortization

Technology Solutions Segment

Nine months ended June 30,

(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

Capital expenditures

Depreciation and amortization

Operating (loss) income

Interest expense

Interest income

Cash and cash equivalents

Accounts receivable, net of allowance

Financing receivables, net of allowance

Capital expenditures

Depreciation and amortization

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

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

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

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

All intercompany transactions have been eliminated.

3 unchanged sentences

Each customer’s letter (e.g.

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

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

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

As of June 30, 2025

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

Below are customers with 10% or more of accounts receivables as of December 31, 2025 or September 30, 2025.

As of December 31, 2025

As of September 30, 2025

(Amounts in millions)

Accounts receivable

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

As of December 31, 2025

As of September 30, 2025

(Amounts in millions)

Financing Receivables

2 unchanged sentences

Financing Receivables

The following table lists customers from which the Company derived revenues of 10% or more of total revenues for the three and nine months ended June 30, 2025 and 2024.

Three months ended June 30,

Nine months ended June 30,

(Amounts in millions)

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

Three months ended December 31,

(Amounts in millions)

On December 16, 2025 , the Company’s board of directors declared a dividend of $ 0.03 per share payable January 15, 2026 , to shareholders of record on the close of business on December 26, 2025 .

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

On May 14, 2025 , the Company’s board of directors declared a dividend of $ 0.03 per share payable June 11, 2025 , to shareholders of record on the close of business on May 28, 2025 .

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

What changed 10-Q

Item 1. Financial Statements