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What changed in CSP INC /MA/'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CSP INC /MA/'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+144 added−160 removedSource: 10-K (2025-12-16) vs 10-K (2024-12-20)

Top changes in CSP INC /MA/'s 2025 10-K

144 paragraphs added · 160 removed · 118 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeUnfavorable competitive factors include low name recognition, limited geographic coverage and pricing. ​ ​ 5 Table of Contents Sources and Availability of Product ​ No components used in our TS segment products are obtained from sole-source suppliers. ​ ​ Backlog The gross backlog of customer orders and contracts for the TS segment was approximately $4.9 million as of September 30, 2024, as compared to $7.5 million as of September 30, 2023.
Biggest changeSources and Availability of Product ​ No components used in our TS segment products are obtained from sole-source suppliers. 5 Table of Contents ​ Backlog The gross backlog of customer orders and contracts for the TS segment was approximately $7.1 million as of September 30, 2025 compared to $4.9 million as of September 30, 2024. Our backlog can fluctuate greatly.
Through our business relationships with these vendors, we are able to offer competitively priced robust products to meet our diverse customers’ technology needs, 3 Table of Contents providing procurement and engineering expertise in server infrastructure, storage, security, unified communications, mobility and networking, to the small-to-medium sized businesses ("SMBs") and large enterprise businesses ("LEBs") with unique and/or complex IT environments.
Through our business relationships with these vendors, we are able to offer competitively priced robust products to meet our diverse customers’ technology needs, providing procurement and engineering expertise in server infrastructure, storage, security, unified communications, 3 Table of Contents mobility and networking to the small-to-medium sized businesses ("SMBs") and large enterprise businesses ("LEBs") with unique and/or complex IT environments.
Our software-defined platform makes it easier for organizations to achieve enterprise-wide network security with a focus on the protection of critical assets, applications and devices from cyberattacks. ​ Markets and Marketing ​ Cyber Security Products Market ​ The ARIA SDS solution is targeted at organizations that need to get additional functionality out of their current cybersecurity solutions to find and stop attacks, while also reducing their operating costs.
Our software-defined platform makes it easier for organizations to achieve enterprise-wide network security with a focus on the protection of critical assets, applications and devices from cyberattacks. ​ Markets and Marketing ​ Cyber Security Products Market ​ The ARIA SDS and ADR solution is targeted at organizations that need to get additional functionality out of their current cybersecurity solutions to find and stop attacks, while also reducing their operating costs.
Many of our SMB customers have unique technology needs and may lack technical purchasing expertise or have very limited IT engineering resources on staff. We offer our customers a single point of contact for complicated multi-vendor technology purchases. We also provide installation, integration, logistical assistance and other value-added services that customers may require.
Many of our SMB customers have unique technological needs and may lack technical purchasing expertise or have very limited IT engineering resources on staff. We offer our customers a single point of contact for complicated multi-vendor technology purchases. We also provide installation, integration, logistical assistance and other value-added services that customers may require.
It compliments other protection technologies already in place and can stop some of the most well-known attacks including the SolarWinds attack, and the recent Russian sponsored Sandworm attacks used on utilities and energy infrastructure.
It compliments other protection technologies in place and can stop some of the most well-known attacks including the SolarWinds attack, and the recent Russian sponsored Sandworm attacks used on utilities and energy infrastructure.
The product is already deployed and generating revenue from its initial contracts. ​ ● Revenue is derived from: (i) license sales of our software platform components, (ii) support packages and (iii) any required supporting services.
The product is deployed and generating revenue from its initial contracts. ​ ● Revenue is derived from: (i) license sales of our software platform components, (ii) support packages and (iii) any required supporting services.
We have newly issued as well as pending patents for the ARIA AZT PROTECT™ software and will be pursuing additional patent rights over time. ​ Sources and Availability of Product ​ No components used in our HPP segment products are obtained from sole-source suppliers. ​ Backlog The gross backlog of customer orders and contracts in the HPP segment was $0.8 million as of September 30, 2024 as compared to $1.8 million as of September 30, 2023.
We have newly issued as well as pending patents for the ARIA AZT PROTECT™ software and will be pursuing additional patent rights over time. ​ Sources and Availability of Product ​ No components used in our HPP segment products are obtained from sole-source suppliers. ​ Backlog The gross backlog of customer orders and contracts in the HPP segment was $1.0 million as of September 30, 2025 as compared to $0.8 million as of September 30, 2024.
The information contained on the Company’s website is not included in, nor incorporated by reference into, this annual report on Form 10-K. 7 Table of Contents Financial Information about Geographic Areas Information regarding our sales by geographic area and percentage of sales based on the location to which the products are shipped or services rendered are in Note 18 Segment Information of the notes to the consolidated financial statements.
The information contained on the Company’s website is not included in, nor incorporated by reference into, this annual report on Form 10-K. 7 Table of Contents Financial Information about Geographic Areas Information regarding our sales by geographic area and percentage of sales based on the location to which the products are shipped or services rendered are in Note 17 Segment Information of the notes to the consolidated financial statements.
Noting that sales cycles can be up to 1 year. ​ Competition ​ CSPi’s competition in the cybersecurity space comes primarily from the large, traditional security vendors like Palo Alto, VMware and security services providers like Arctic Wolf. ​ Manufacturing, Assembly and Testing ​ 6 Table of Contents Currently, products are shipped to our customers directly from our plant in Lowell, Massachusetts. ​ Research and Development For the year ended September 30, 2024, our expenses for R&D were approximately $3.0 million compared to approximately $3.1 million for the year ended September 30, 2023.
Noting that sales cycles can be up to 1 year. ​ Competition ​ CSPi’s competition in the cybersecurity space comes primarily from the large, traditional security vendors like Palo Alto, VMware and security services providers like Arctic Wolf. ​ ​ Manufacturing, Assembly and Testing ​ Currently, products are shipped to our customers directly from our plant in Lowell, Massachusetts. ​ 6 Table of Contents Research and Development For the year ended September 30, 2025, our expenses for R&D were $3.3 million compared to $3.0 million for the year ended September 30, 2024.
The detection and automation capabilities found in ARIA solutions are valuable as they allow these security service providers to scale their offerings while increasing the productivity of their security operation center staff. ​ Manufacturing Market ​ Our focus for fiscal 2025 and beyond is to expand from our initial successes more broadly into this market and its various sub segments. ​ Energy/Utility Market ​ We believe our AZT PROTECT product is well suited to address a critical security gap in this market.
The detection and automation capabilities found in ARIA solutions are valuable as they allow these security service providers to scale their offerings while increasing the productivity of their security operation center staff. ​ Manufacturing Market ​ Our focus for fiscal year 2026 and beyond is to expand from our initial successes more broadly into this market and its various sub segments. ​ Energy/Utility Market ​ We believe our AZT PROTECT product is well suited to address a critical security gap in this market.
Our backlog can fluctuate greatly. We can experience large fluctuations due to the timing of receipt of large orders often for purchases from prime contractors for sales to the government. It is expected nearly all of the customer orders in backlog will ship and/or be provided through fiscal year 2025.
Our backlog can fluctuate greatly. We can experience large fluctuations due to the timing of receipt of large orders often for purchases from prime contractors for sales to the government. It is expected nearly all of the customer orders in backlog will ship and/or be provided through fiscal year 2026.
We provide managed and cloud services in the following areas: ● Proactive monitoring and remote management of IT Infrastructure that includes network (both wired and wireless), data center (which includes compute, storage and virtualization), desktops, unified communications platforms and security. ● Managed and Hosted Unified Communication as a Service via a Cisco Communication and Collaboration solution under an annuity program. ● Managed Security (firewall, endpoint protection, malware, anti-virus Managed Detection & Response). ● Managed BackUp and Replication. ● Cloud services that include Microsoft 365, Azure, Azure Virtual Desktop, Greencloud, Amazon Web Services and Google Cloud Platform.
We provide managed and cloud services in the following areas: ● Proactive monitoring and remote management of IT Infrastructure that includes networks (both wired and wireless), data centers (which includes compute, storage and virtualization), desktops, unified communications platforms and security. ● Managed and Hosted Unified Communication as a Service via a Cisco Communication and Collaboration solution under an annuity program. ● Managed Security (firewall, endpoint protection, malware, anti-virus Managed Detection & Response). ● Managed BackUp and Replication. ● Cloud services that include Microsoft 365, Azure, Azure Virtual Desktop, Greencloud, Amazon Web Services and Google Cloud Platform.
We also have begun selling our unique solution into Managed Security Service Providers (“MSSPs”) that want to offer a lower cost, more effective service at detecting today’s widening range of cyber-attacks. ​ ● The Myricom SmartNIC adapters (“ARC Series” and Myricom Secure Intelligent Adapters or “SIA”) are optimized for and sold into markets that require high-bandwidth and low-latency including (i) packet capture, (ii) financial transactions, (iii) machine vision and (iv) network security.
We also have begun selling our unique solution into MSSPs that want to offer a lower cost, more effective service at detecting today’s widening range of cyber-attacks. ​ ● The Myricom SmartNIC adapters (“ARC Series” and Myricom Secure Intelligent Adapters or “SIA”) are optimized for and sold into markets that require high-bandwidth and low-latency including (i) packet capture, (ii) financial transactions, (iii) machine vision and (iv) network security.
The software licenses, the support packages, as well as supporting services 2 Table of Contents are renewable on a recurring basis. ​ ● The ARIA portfolio is of value to regulated industries, such as manufacturing, pharmaceuticals, financial services, energy production, utilities, transport and healthcare, due to the rise of critical infrastructure regulations enforced at the federal, U.S. state, and international level, as well as industry entities.
The software licenses, the support packages, as well as supporting services 2 Table of Contents are renewable on a recurring basis. ​ ● The ARIA portfolio is of value to regulated industries, such as manufacturing, pharmaceuticals, financial services, energy production, utilities, transportation and healthcare, due to the rise of critical infrastructure regulations enforced at the federal, state, and international level, as well as by industry entities.
The revenue from these products, as a percentage of overall Company revenue, is expected to continue to decline over time. ​ Sales Information by Industry Segment The following table details our sales by operating segment for fiscal years ending September 30, 2024 and 2023.
The revenue from these products, as a percentage of overall Company revenue, is expected to continue to decline over time. ​ Sales Information by Industry Segment The following table details our sales by operating segment for fiscal years ended September 30, 2025 and 2024.
The focus is now supporting its applications on 3rd party provided intelligent network interface cards. ​ ● Multicomputer products for DSP applications are no longer actively developed but will continue to be sold into established programs through FY 2025 and supported for several years via our repair services offering.
The focus is now supporting its applications on third party provided intelligent network interface cards. ​ ● Multicomputer products for DSP applications are no longer actively developed but will continue to be sold into established programs through fiscal year 2025 and supported for several years via our repair services offering.
Expenditures for R&D are expensed as they are incurred. Product development efforts in fiscal year 2023 and 2024 involved development of the ARIA product set, ARIA Zero Trust (AZT), and enhancements to our ADR product offering. We expect to continue to make investments related to the development of new cybersecurity software applications.
Expenditures on R&D are expensed as they are incurred. Product development efforts in fiscal year 2024 and 2025 involved development of the ARIA product set, ARIA Zero Trust (AZT), and enhancements to our ARIA SDS and ARIA ADR product offering. We expect to continue to make investments related to the development of new cybersecurity software applications.
In addition, due to the complexities and high-costs associated with enterprise-wide security, particularly in the creation and operation of SOCs, we believe that ARIA will be attractive to organizations that desire SOC level protections without incurring the procurement of disparate tools and the need to hire and retain highly trained security analysts.
In addition, due to the complexities and high costs associated with enterprise-wide security, particularly in the creation and operation of SOCs, we believe that ARIA will be attractive to organizations that desire SOC-level protections without incurring the costs of procuring disparate tools and hiring and retaining highly trained security analysts.
Our key offerings include products from Hewlett Packard (HPE)/Aruba, Cisco Systems, Palo Alto Networks, Nutanix, Dell EMC, Juniper Networks, Citrix, Intel, VMWare, Fortinet, Microsoft and Barracuda.
Our key offerings include products from Hewlett Packard Enterprise (HPE)/Aruba, Cisco Systems, Palo Alto Networks, Nutanix, Dell EMC, Juniper Networks, Varonis, Cato Networks, Fortinet, Microsoft and Barracuda.
Additional segment and geographical information are set forth in Note 18 Segment Information to the consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment 2024 % 2023 % ​ ​ (Dollar amounts in thousands) TS ​ $ 51,065 92 % $ 57,774 89 % HPP ​ 4,154 8 % 6,873 11 % Total Sales ​ $ 55,219 100 % $ 64,647 100 % ​ TS Segment Products and Services Integration Solutions The TS segment is a value-added reseller ("VAR") of third-party hardware and software technology solutions along with our advanced technology consulting, professional IT, managed IT and Cloud services.
Additional segment and geographical information are set forth in Note 17 Segment Information to the consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment ​ ​ ​ 2025 ​ ​ ​ % ​ ​ ​ 2024 ​ ​ ​ % ​ ​ (Dollar amounts in thousands) TS ​ $ 56,808 97 % $ 51,065 92 % HPP ​ 1,922 3 % 4,154 8 % Total Sales ​ $ 58,730 100 % $ 55,219 100 % ​ TS Segment Products and Services Integration Solutions The TS segment is a value-added reseller ("VAR") of third-party hardware and software technology solutions along with our advanced technology consulting, professional IT, managed IT and Cloud services.
Our ability to provide managed services through our network operations center and the professional IT services required to design and implement custom IT solutions to address our customers' IT needs are distinct competitive advantages.
Our ability to provide managed services through our network operations center and the professional IT services required to design and implement custom IT solutions to address our customers' IT needs are distinct competitive advantages. Unfavorable competitive factors include low name recognition, limited geographic coverage and pricing.
None of our employees are represented by a labor union and we have had no work stoppages in the last three fiscal years. We consider relations with our employees to be good.
Employees As of September 30, 2025, we had approximately 123 full time equivalent employees worldwide for our consolidated operations. None of our employees are represented by a labor union and we have had no work stoppages in the last three fiscal years. We consider relations with our employees to be good.
Our backlog can fluctuate greatly. These fluctuations can be due to the timing of receiving large orders for third-party products and/or IT services. It is expected that all of the customer orders in backlog will ship and/or be provided during fiscal year 2025.
These fluctuations can be due to the timing of receiving large orders for third-party products and/or IT services. It is expected that all the customer orders in backlog will ship and/or be provided during fiscal year 2026. HPP Segment Products and Services The mission of the HPP team is to deliver a differentiated, smarter approach to cybersecurity.
ARIA Advanced Detection and Response solution used by customers to find and stop threats in real-time by monitoring their entire network, device and services footprint. It is used as the basis of MDR (Managed Detection and Response) services offered by ARIA and its MSSP partners who provide it as part of a 24x7 managed SOC (Security Operations Center) offering.
It is used as the basis of MDR (Managed Detection and Response) services offered by ARIA and its Managed Security Service Provider (“MSSP”) partners who provide it as part of a 24x7 managed SOC (Security Operations Center) offering.
Significant Customers See Note 18 Segment Information in the notes to the consolidated financial statements for detailed information regarding customers which comprised more than 10% of consolidated revenues for the years ended September 30, 2024 and 2023. Employees As of September 30, 2024, we had approximately 111 full time equivalent employees worldwide for our consolidated operations.
All Companies Significant Customers See Note 17 Segment Information in the notes to the consolidated financial statements for detailed information regarding customers. There were no customers which comprised more than 10% of consolidated revenues for the years ended September 30, 2025 or 2024.
Removed
HPP Segment Products and Services The mission of the HPP team is to deliver a differentiated, smarter approach to cybersecurity.
Added
ARIA Advanced Detection and Response (“ADR”) solution used by customers to find and stop threats in real-time by monitoring their entire network, device and services footprint.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we have a material weakness in our internal controls, our results of operations or financial condition may be materially adversely affected, or our stock price may decline. Risks Related to Ownership of Our Common Stock Failure to remediate and then maintain our internal control over our financial reporting could cause our financial reports to be inaccurate.
Biggest changeRisks Related to Ownership of Our Common Stock Failure to remediate and then maintain our internal control over our financial reporting could cause our financial reports to be inaccurate. We are required to maintain internal control over financial reporting and to assess and report on the effectiveness of those controls.
Our quarterly results may be subject to fluctuations resulting from a number of other factors, including: ● delays in completion of internal product development projects; 12 Table of Contents ● delays in shipping hardware and software; ● delays in acceptance testing by customers; ● a change in the mix of products sold to our served markets; ● changes in customer order patterns; ● production delays due to quality problems with outsourced components; ● inability to scale quick reaction capability products due to low product volume; ● shortages and costs of components; ● the timing of product line transitions; ● declines in quarterly revenues from previous generations of products following announcement of replacement products containing more advanced technology; ● inability to realize the expected benefits from acquisitions and restructurings, or delays in realizing such benefits; ● potential asset impairment, including goodwill and intangibles, write-off of deferred tax assets or restructuring charges; and ● changes in estimates of completion on fixed price service engagements.
Our quarterly results may be subject to fluctuations resulting from a number of other factors, including: ● delays in completion of internal product development projects; ● delays in shipping hardware and software; ● delays in acceptance testing by customers; ● a change in the mix of products sold to our served markets; ● changes in customer order patterns; ● production delays due to quality problems with outsourced components; 11 Table of Contents ● inability to scale quick reaction capability products due to low product volume; ● shortages and costs of components; ● the timing of product line transitions; ● declines in quarterly revenues from previous generations of products following announcement of replacement products containing more advanced technology; ● inability to realize the expected benefits from acquisitions and restructurings, or delays in realizing such benefits; ● potential asset impairment, including goodwill and intangibles, write-off of deferred tax assets or restructuring charges; and ● changes in estimates of completion on fixed price service engagements.
If any of our products or third-party components used in our products contain defects or bugs, or have reliability, quality or compatibility problems, we may not be able to successfully design workarounds.
If any of our products or third-party components used in our products contain defects or bugs, or have reliability, quality or compatibility problems, we may not be able to successfully design workarounds or corrections.
If we experience a local or regional disaster or other business continuity problem, such as a hurricane, earthquake, terrorist attack, pandemic or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel, our office facilities, and the proper functioning of our computer, telecommunication and other related systems and operations.
If we experience a local or regional disaster or other business continuity problem, such as a hurricane, earthquake, terrorist attack, pandemic or other natural or human-made disaster, our continued success will depend, in part, on the availability of our personnel, our office facilities, and the proper functioning of our computer, telecommunication and other related systems and operations.
The impact of a pandemic, epidemic, or other disease outbreak, such as COVID-19, may include, but would not be limited to: (i) disruption to operations due to the unavailability of employees due to illness, quarantines, risk of illness, travel restrictions or factors that limit our existing or potential workforce; (ii) volatility in the demand for or availability of our products and services, (iii) inability to meet our customers’ needs due to disruptions in the manufacture, sourcing and distribution of our products and services, or (iv) failure of third parties on which we rely, including our suppliers, clients, and external business partners, to meet their obligations to us, or significant disruptions in their ability to do so.
The impact of a pandemic, epidemic, or other disease outbreak may include, but would not be limited to: (i) disruption to operations due to the unavailability of employees due to illness, quarantines, risk of illness, travel restrictions or factors that limit our existing or potential workforce; (ii) volatility in the demand for or availability of our products and services, (iii) inability to meet our customers’ needs due to disruptions in the manufacture, sourcing and distribution of our products and services, or (iv) failure of third parties on which we rely, including our suppliers, clients, and external business partners, to meet their obligations to us, or significant disruptions in their ability to do so.
Furthermore, with respect to our issued patents and patent applications, we cannot assure that patents from any pending patent applications (or from any future patent applications) will be issued, that the scope of any patent protection will include competitors or provide competitive advantages to us, that any of our patents will be held 11 Table of Contents valid if subsequently challenged or that others will not claim rights in or ownership of the patents (and patent applications) and other proprietary rights held by us.
Furthermore, with respect to our issued patents and patent applications, we cannot assure that patents from any pending patent applications (or from any future patent applications) will be issued, that the scope of any patent protection will include competitors or provide competitive advantages to us, that any of our patents will be held valid if subsequently challenged or that others will not claim rights in or ownership of the patents (and patent applications) and other proprietary rights held by us.
As a public company, we operate in an increasingly demanding regulatory environment, which requires us to comply with the Sarbanes-Oxley Act of 2002, and the related rules and regulations of the SEC. Company responsibilities required by the Sarbanes-Oxley Act include establishing corporate oversight and adequate internal control over financial reporting and disclosure controls and procedures.
As a public company, we operate in an increasingly demanding regulatory environment, which requires us to comply with the Sarbanes-Oxley Act of 2002, and the related rules and regulations of the SEC. Company responsibilities required by the Sarbanes-Oxley Act include establishing corporate oversight and adequate internal control over financial 14 Table of Contents reporting and disclosure controls and procedures.
Any claim of infringement could cause us to incur substantial costs defending against the claim even if the claim is invalid and could distract management from other business. Any judgment against us could require substantial payment in damages and could also include an injunction or other court order that could prevent us from offering certain products.
Any claim of infringement could cause us to incur substantial costs defending against the claim even if the claim is invalid and could distract management from other 10 Table of Contents business. Any judgment against us could require substantial payment in damages and could also include an injunction or other court order that could prevent us from offering certain products.
The effects of the ongoing conflict could heighten many of our known risks described in these "Risk Factors.” ​ Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing conflict between Israel and Hamas. 14 Table of Contents The global economy has been negatively impacted by the military conflict between Israel and Hamas.
The effects of the ongoing conflict could heighten many of our known risks described in these "Risk Factors.” ​ Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the conflict between Israel and Hamas. The global economy has been negatively impacted by the military conflict between Israel and Hamas.
These broad market and industry factors may materially adversely affect the market price of our common stock, regardless of our actual operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against such companies.
These broad market and industry factors may materially adversely affect the market price 15 Table of Contents of our common stock, regardless of our actual operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against such companies.
Because 15 Table of Contents of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
As we grow our operations, the potential for particular types of natural or man-made disasters, political, economic or infrastructure instabilities, or other country- or region-specific business continuity risks increases. 13 Table of Contents If we suffer any data breaches involving the designs, schematics, or source code for our products or other sensitive information, our business and financial results could be adversely affected.
As we grow our operations, the potential for particular types of natural or human-made disasters, political, economic or infrastructure instabilities, or other country- or region-specific business continuity risks increases. If we suffer any data breaches involving the designs, schematics, or source code for our products or other sensitive information, our business and financial results could be adversely affected.
Further escalation of the Israel and Hamas conflict and geopolitical tensions related to such military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyber attacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business, financial condition and results of operations.
Violation of the peace process may lead to to renewed military conflict and/or escalation of the Israel and Hamas conflict and geopolitical tensions related to such military conflict and/or escalation, including increased trade barriers or restrictions on global trade, could result in, among other things, cyber attacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business, financial condition and results of operations.
In particular, it is possible activity in the United Kingdom and the rest of Europe will be adversely impacted and that we will face increased regulatory and legal complexities, including those related to tax, trade, and employee relations as a result of Brexit.
In particular, it is possible activity in the United Kingdom and the rest of Europe will be adversely impacted and that we will face increased regulatory and legal complexities, including those related to tax, trade, data protection, and employee relations as a result of Brexit and evolving international regulations.
Because these customers may use our products and services in connection with a variety of defense programs or other projects with different sizes and durations, a customer’s orders for one quarter generally do not indicate a trend for future orders by that customer.
Because these customers may use our products and services in connection with other projects with different sizes and durations, a customer’s orders for one quarter generally do not indicate a trend for future orders by that customer.
Foreign-based revenue is determined based on the location to which the product is shipped or services are rendered and represented 3% and 3% of our total revenue for the fiscal years ended September 30, 2024 and 2023, respectively.
Foreign-based revenue is determined based on the location to which the product is shipped or services are rendered and represented 10% and 12% of our total revenue for the fiscal years ended September 30, 2025 and 2024, respectively.
Pandemics, epidemics, or disease outbreaks, such as COVID-19 may cause harm to us, our employees, our clients, our vendors and supply chain partners, and financial institutions, which could have a material adverse effect on our business, results of operations, cash flows, and financial condition.
Pandemics, epidemics or disease outbreaks may materially adversely affect our business, results of operations, cash flows and financial condition. Pandemics, epidemics, or disease outbreaks, may cause harm to us, our employees, our clients, our vendors and supply chain partners, and financial institutions, which could have a material adverse effect on our business, results of operations, cash flows, and financial condition.
We are largely dependent upon the skills and efforts of our senior management, managerial, sales and technical employees. None of our senior management personnel or other key employees are subject to any employment contracts except Victor Dellovo, our Chief Executive Officer and President.
We depend on key personnel and skilled employees and face competition in hiring and retaining qualified employees. We are largely dependent upon the skills and efforts of our senior management, managerial, sales and technical employees. None of our senior management personnel or other key employees are subject to any employment contracts except Victor Dellovo, our Chief Executive Officer and President.
In addition, due to the rapidly changing nature of technology, new competitors may emerge. Competitors may be able to offer more attractive pricing or develop products that could offer performance features that are superior to our products, resulting in reduced demand for our products. Such competitors could have a negative impact on our ability to win future business opportunities.
Competitors may be able to offer more attractive pricing or develop products that could offer performance features that are superior to our products, resulting in reduced demand for our products. Such competitors could have a negative impact on our ability to win future business opportunities.
Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
Both the HPP and TS segments are reliant upon a small number of significant customers, and the loss of or significant reduction in sales to any one of which could have a material adverse effect on our business.
Both the HPP and TS segments are reliant upon a small number of significant customers, and the loss of or significant reduction in sales to any one of which could have a material adverse effect on our business. For the fiscal years ended September 30, 2025 and 2024, no one customer accounted for 10% or more of our total revenues.
There could be an expansion of the countries involved, which could lead to significant detrimental effects to the global economy. Although we do not have significant customers or suppliers in the Middle East region, we do have customers and suppliers in surrounding regions which may be affected.
Although we do not have significant customers or suppliers in the Middle East region, we do have customers and suppliers in surrounding regions which may be affected.
The markets for our products are highly competitive and are characterized by rapidly changing technology, frequent product performance improvements and evolving industry standards. Many of our competitors are substantially larger than we are and have greater access to capital and human resources and in many cases price their products and services less than ours.
Many of our competitors are substantially larger than we are and have greater access to capital and human resources and in many cases price their products and services less than ours. In addition, due to the rapidly changing nature of technology, new competitors may emerge.
There can be no assurance that one or more of 9 Table of Contents such factors will not have a material adverse effect on our future international activities and, consequently, on our business, financial condition or results of operations. We face competition that could adversely affect our sales and profitability.
A portion of our revenues are from sales to foreign entities, including foreign governments, which are primarily paid in the form of foreign currencies. 9 Table of Contents There can be no assurance that one or more of such factors will not have a material adverse effect on our future international activities and, consequently, on our business, financial condition or results of operations.
Other potential costs could include loss of brand value, incident response costs, loss of stock market value, regulatory inquiries, litigation, and management distraction. In addition, a security breach that involved classified information could subject us to civil or criminal penalties, loss of a government contract, loss of access to classified information, or debarment as a government contractor.
In addition, a security breach that involved classified information could subject us to civil or criminal penalties, 12 Table of Contents loss of a government contract, loss of access to classified information, or debarment as a government contractor.
In addition, our compliance with existing regulations may have a material adverse impact on us. Under applicable federal securities laws, we are required to evaluate and determine the effectiveness of our internal control structure and procedures.
Under applicable federal securities laws, we are required to evaluate and determine the effectiveness of our internal control structure and procedures. If we have a material weakness in our internal controls, our results of operations or financial condition may be materially adversely affected, or our stock price may decline.
The effects of the ongoing conflict could heighten many of our known risks described in these "Risk Factors.” ​ Legal and Regulatory Risks. Changes in regulations could materially adversely affect us. Our business, results of operations, or financial condition could be materially adversely affected if laws, regulations, or standards relating to us or our products are newly implemented or changed.
Our business, results of operations, or financial condition could be materially adversely affected if laws, regulations, or standards relating to us or our products are newly implemented or changed. In addition, our compliance with existing regulations may have a material adverse impact on us.
No assurance can be given that our customers will not experience financial or other difficulties that could adversely affect their operations and, in turn, our results of operations. We depend on key personnel and skilled employees and face competition in hiring and retaining qualified employees.
Our revenues are largely dependent upon the ability of our customers to continue to grow or need services or to develop and sell products that incorporate our products. No assurance can be given that our customers will not experience financial or other difficulties that could adversely affect their operations and, in turn, our results of operations.
We are required to maintain internal control over financial reporting and to assess and report on the effectiveness of those controls. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our management concluded that our internal control over financial reporting was effective as of September 30, 2025.
This requires that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. As of September 30, 2024, we discovered material weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements.
This requires that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. Our internal control over financial reporting will not prevent or detect all errors and all fraud.
Removed
For the fiscal year ended September 30, 2024 and 2023 no one customer accounted for 10% or more of our total revenues for the fiscal year. Our revenues are largely dependent upon the ability of our customers to continue to grow or need services or to develop and sell products that incorporate our products.
Added
We face competition that could adversely affect our sales and profitability. The markets for our products are highly competitive and are characterized by rapidly changing technology, frequent product performance improvements and evolving industry standards.
Removed
A portion of our revenues are from sales to foreign entities, including foreign governments, which are primarily paid in the form of foreign currencies.
Added
Other potential costs could include loss of brand value, incident response costs, loss of stock market value, regulatory inquiries, litigation, and management distraction.
Removed
Pandemics, epidemics or disease outbreaks, such as the novel coronavirus (“COVID-19”), may materially adversely affect our business, results of operations, cash flows and financial condition.
Added
The effects of the ongoing conflict could heighten many of our known risks described in these "Risk Factors.” ​ 13 Table of Contents Significant political, trade, regulatory developments, and other circumstances beyond our control, could have a material adverse effect on our financial condition or results of operations. ​ Significant political, trade, or regulatory developments in the jurisdictions in which we sell or purchase our products, including country of origin of such products, are difficult to predict and may create periods of volatility in such markets which may have a material adverse effect on us.
Removed
Government Contracting Risks During certain fiscal years, we may depend on contracts with the federal government, primarily with the Department of Defense ("DoD"), for a portion of our revenue, and our business could be seriously harmed if the government significantly decreased or ceased doing business with us.
Added
Recent changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. Beginning in the second quarter of 2025, new U.S. Tariffs were announced, including additional tariffs on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the EU, among others.
Removed
We derived below 1% of our total revenue in fiscal year 2024 and 5% of our total revenue in fiscal year 2023 from the DoD as a subcontractor. Although we only derived 1% of our total revenue in fiscal year 2024, we expect that the DoD contracts to continue to be important to our business for the foreseeable future.
Added
In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and other retaliatory measures. Various modifications and delays to the U.S. Tariffs have been announced and further changes are expected to be made in the future, which may include additional sector-based tariffs or other measures. For example, the U.S.
Removed
If we were suspended or debarred from contracting with the federal government generally, the General Services Administration, or any significant agency in the intelligence community or the DoD, if our reputation or relationship with government agencies were to be impaired, or if the government otherwise ceased doing business with us or significantly decreased the amount of business it does with us, our business, prospects, financial condition and operating results would be materially and adversely affected.
Added
Department of Commerce has initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, into, among other things, imports of semiconductors, semiconductor manufacturing equipment, and their derivative products, including downstream products that contain semiconductors.
Removed
Our business could be adversely affected by changes in budgetary priorities of the federal government. Because we derive a significant percentage of our revenue from contracts with the federal government, changes in federal government budgetary priorities could directly affect our financial performance.
Added
These tariffs do not currently include software, services, intangibles, and other digital services; however, we cannot predict future trade policy or tariffs, including the impact or timing thereof, or whether such services will be subject to any form of tariffs or other restrictions in the future.
Removed
A significant decline in government expenditures, a shift of expenditures away from programs that we support or a change in federal government contracting policies could cause federal government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts.
Added
The ultimate impact remains uncertain and will depend on several factors, including whether additional or incremental U.S. Tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, and the overall magnitude and duration of these measures.
Removed
In years when Congress does not complete its budget process before the end of its fiscal year (September 30), government operations are funded through a continuing resolution ("CR") that temporarily funds federal agencies. Recent CRs have generally provided funding at the levels provided in the previous fiscal year and have not authorized new spending initiatives.
Added
If disputes and conflicts further escalate, actions by governments in response could be significantly more severe and restrictive. Any of the foregoing could materially adversely affect the Company’s business, results of operations, financial condition and stock price. ​ ​ Legal and Regulatory Risks Changes in regulations could materially adversely affect us.
Removed
When the federal government operates under a CR, delays can occur in the procurement of products 10 Table of Contents and services. Historically, such delays have not had a material effect on our business; however, should funding of the federal government by CR be prolonged or extended, it could have significant consequences for our business and our industry.
Removed
Additionally, our business could be seriously affected if changes in DoD priorities reduces the demand for our services on contracts supporting some operations and maintenance activities or if we experience an increase in set-asides for small businesses, which could result in our inability to compete directly for contracts. U.S. Federal government contracts contain numerous provisions that are unfavorable to us.
Removed
Federal government contracts contain provisions and are subject to laws and regulations that give the government rights and remedies, some of which are not typically found in commercial contracts, including allowing the government to: ● cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable; ● claim rights in systems and software developed by us; ● suspend or debar us from doing business with the federal government or with a governmental agency; ● impose fines and penalties and subject us to criminal prosecution; and ● control or prohibit the export of our data and technology.
Removed
If the government terminates a contract for convenience, we may recover only our incurred or committed costs, settlement expenses and profit on work completed prior to the termination.
Removed
If the government terminates a contract for default, we may be unable to recover even those amounts, and instead may be liable for excess costs incurred by the government in procuring undelivered items and services from another source. Depending on the value of a contract, such termination could cause our actual results to differ materially and adversely from those anticipated.
Removed
As is common with government contractors, we have experienced and continue to experience occasional performance issues under certain of our contracts. Depending upon the value of the matters affected, a performance problem that impacts our performance of a program or contract could cause our actual results to differ materially and adversely from those anticipated.
Removed
Our management concluded that our internal control over financial reporting was ineffective as of September 30, 2024, and identified certain material weaknesses in our internal controls. While management is working to remediate the material weaknesses, there is no assurance that such changes will remediate the identified material weaknesses or that the controls will prevent or detect future material weaknesses.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe management team consists our Vice President and General Manager of the High Performance Products segment, which has developed cybersecuritiy software at the Company that multiple Fortune 500 companies are currently using. In addition, he has been the Chief Technical Officer and served in various roles at several cybersecuritiy companies over his 40 year career.
Biggest changeIn addition, he has been the Chief Technical Officer and served in various roles at several cybersecurity companies over his 40 year career. He holds a Bachelor of Science in Business and Engineering as well as a Masters of Science in Finance.
Governance A formal process exists through our enterprise risk management matrix developed by the management team of the Company that tracks the Company’s material risks, associated mitigation and remediation strategies and direct accountability which is submitted quarterly to the Audit Committee for review and oversight.
Governance A formal process exists through our enterprise risk management matrix developed by the management team of the Company that tracks the Company’s material risks, associated mitigation and remediation strategies and direct accountability which is submitted quarterly to the Audit Committee of the Board of Directors for review and oversight. 16 Table of Contents The management team includes our Vice President and General Manager of the HPP segment, who has developed cybersecurity software at the Company.
He holds a Bachelor of Science in Business and Engineering as well as a Masters of Science in 17 Table of Contents Finance. Also on the team is the Vice President of Managed services at the Technology Solutions segment, who has over twenty years of technology experience including the monitoring and management of other oganization’s security systems.
Also on the team is the Vice President of Managed Services at the TS segment, who has over twenty years of technology experience including the monitoring and management of other organization’s security systems.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeManagement considers all facilities listed below to be suitable for the purpose(s) for which they are used, including manufacturing, research and development, sales, marketing, service and administration. ​ ​ ​ ​ ​ ​ ​ ​ ​ Owned ​ ​ ​ ​ ​ or ​ Approximate Location ​ Principal Use ​ Leased ​ Floor Area HPP Segment Properties: ​ ​ ​ ​ CSP Inc. ​ Corporate Headquarters ​ Leased ​ 8,257 S.F. 175 Cabot Street, Suite 210 ​ Manufacturing, Sales, ​ ​ ​ Lowell, MA 01854 ​ Marketing and ​ ​ ​ ​ ​ Administration ​ ​ ​ ​ TS Segment Properties: ​ ​ ​ ​ Modcomp, Inc. ​ Division Headquarters ​ Leased ​ 11,815 S.F. 1182 East Newport Center Drive ​ Sales, Marketing and ​ ​ ​ Deerfield Beach, FL 33442 ​ Administration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Modcomp, Ltd. ​ Sales, Marketing and ​ Leased ​ 484 S.F.
Biggest changeManagement considers all facilities listed below to be suitable for the purpose(s) for which they are used, including manufacturing, research and development, sales, marketing, service and administration. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owned ​ ​ ​ ​ ​ ​ ​ ​ or ​ Approximate Location ​ Principal Use ​ Leased ​ Floor Area HPP Segment Properties: ​ ​ ​ ​ ​ ​ CSP Inc. ​ Corporate Headquarters ​ Leased ​ 8,257 S.F. 175 Cabot Street, Suite 210 ​ Sales, Marketing and ​ ​ ​ ​ Lowell, MA 01854 ​ Administration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TS Segment Properties: ​ ​ ​ ​ ​ ​ Modcomp, Inc. ​ Division Headquarters ​ Leased ​ 9,900 S.F. 951 Broken Sound Parkway, Suite 250 ​ Sales, Marketing and ​ ​ ​ ​ Boca Raton, Florida 33487 ​ Administration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CSPI Ltd ​ Sales, Marketing and ​ Leased ​ 484 S.F.
Item 2. Properties Listed below are our principal facilities as of September 30, 2024.
Item 2. Properties Listed below are our principal facilities as of September 30, 2025.
Removed
Indigo House, Mulberry Business Park ​ Administration ​ ​ Wokingham, Berkshire RG41 2GY ​ ​ ​ United Kingdom ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Item 3. Legal Proceedings We are currently not a party to any material legal proceedings. Item 4. Mine Safety Disclosures Not Applicable.
Added
Innovation House, Molly Millars Close ​ Administration ​ ​ ​ ​ Wokingham, Berkshire RG41 2RX ​ ​ ​ ​ ​ ​ United Kingdom ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor the fiscal years ended September 30, 2024 and 2023 the Company paid cash dividends as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount Paid Fiscal Year ​ Date Declared ​ Record Date ​ Date Paid ​ Per Share 2023 (1) 12/6/2022 ​ 12/21/2022 ​ 1/6/2023 ​ $ 0.015 2023 (1) ​ 2/8/2023 ​ 2/24/2023 ​ 3/14/2023 ​ $ 0.015 2023 (1) ​ 5/10/2023 ​ 5/25/2023 ​ 6/13/2023 ​ $ 0.020 2023 (1) ​ 8/9/2023 ​ 8/23/2023 ​ 9/12/2023 ​ $ 0.020 2024 (1) ​ 12/12/2023 ​ 12/22/2023 ​ 1/9/2024 ​ $ 0.020 2024 (1) ​ 2/14/2024 ​ 2/26/2024 ​ 3/8/2024 ​ $ 0.025 2024 ​ 5/8/2024 ​ 5/24/2024 ​ 6/12/2024 ​ $ 0.030 2024 ​ 8/13/2024 ​ 8/23/2024 ​ 9/10/2024 ​ $ 0.030 ​ (1) Retroactively adjusted for the effects of a two for one stock split effected in the form of a 100% stock dividend (see Note 1) ​
Biggest changeFor the fiscal years ended September 30, 2025 and 2024 the Company paid cash dividends as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount Paid Fiscal Year ​ Date Declared ​ Record Date ​ Date Paid ​ Per Share 2024 12/12/2023 ​ 12/22/2023 ​ 1/9/2024 ​ $ 0.020 2024 ​ 2/14/2024 ​ 2/26/2024 ​ 3/8/2024 ​ $ 0.025 2024 ​ 5/8/2024 ​ 5/24/2024 ​ 6/12/2024 ​ $ 0.030 2024 ​ 8/13/2024 ​ 8/23/2024 ​ 9/10/2024 ​ $ 0.030 2025 ​ 12/20/2024 ​ 12/27/2024 ​ 1/15/2025 ​ $ 0.030 2025 ​ 2/10/2025 ​ 2/24/2025 ​ 3/10/2025 ​ $ 0.030 2025 ​ 5/14/2025 ​ 5/28/2025 ​ 6/11/2025 ​ $ 0.030 2025 ​ 8/14/2025 ​ 8/29/2025 ​ 9/15/2025 ​ $ 0.030 ​ ​ ​ Item 6. [Reserved] ​
Below are the purchases that have been made for the three months ended September 30, 2024. 18 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total number of shares purchased ​ Average price paid per share ​ Total number of shares purchased as part of publicly announced plans ​ Maximum number that may yet be purchased under the repurchase plan August 1-31, 2024 100 ​ $ 13.96 ​ 100 ​ 337,354 September 1-30, 2024 2,700 ​ $ 12.04 ​ 2,700 ​ 334,654 ​ Market information .
Below are the purchases that have been made for the three months ended September 30, 2025. ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Total number of shares purchased ​ Average price paid per share ​ Total number of shares purchased as part of publicly announced plans ​ Maximum number that may yet be purchased under the repurchase plan July 1-31, 2025 — ​ ​ — ​ — ​ 291,854 August 1-30, 2025 11,402 ​ $ 12.32 ​ 11,402 ​ 280,452 September 1-30, 2025 8,098 ​ ​ 11.50 ​ 8,098 ​ 272,354 Total 19,500 ​ $ 11.98 ​ 19,500 ​ ​ ​ Market information .
We had approximately 64 holders of record of our common stock as of December 20, 2024. This number does not include stockholders for whom shares were held in a “nominee” or “street” name.
We had approximately 137 holders of record of our common stock as of December 8, 2025. This number does not include stockholders for whom shares were held in a “nominee” or “street” name. We believe the number of beneficial owners of our shares of common stock (including shares held in street name) at that date was approximately 2,558. Dividends .
The stock repurchase program may be suspended, terminated, or modified at any time for any reason. ​ Common stock of CSP Inc. may be repurchased on the open market at the discretion of management. Open market repurchases will be made in compliance with the Securities and Exchanges Commission’s Rule 10b-18 in addition to complying with applicable legal and other considerations.
The stock repurchase program may be suspended, terminated, or modified at any time for any reason. ​ Common stock of CSP Inc. may be repurchased on the open market at the discretion of management.
On February 8, 2011, the Board of Directors authorized the Company to repurchase up to 500 thousand additional shares of the Company's outstanding common stock (retroactively adjusted for the effects of a stock split effected in the form of a 100% stock dividend, see Note 1 in this Form 10-K) at market price. The plan does not expire.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Purchases of equity securities . On February 8, 2011, the Board of Directors authorized the Company to repurchase up to 500 thousand additional shares of the Company's outstanding common stock at market price. The plan does not expire.
Our common stock is traded on the Nasdaq Global Market under the symbol CSPI. The following table provides the high and low sales prices of our common stock as reported on the Nasdaq Global Market for the periods indicated.
Our common stock is traded on the Nasdaq Global Market under the symbol CSPI.
Amounts below 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Fiscal Year: High Low High Low 1st Quarter ​ $ 13.85 ​ $ 8.00 ​ $ 4.73 ​ $ 3.51 2nd Quarter ​ $ 27.95 ​ $ 9.10 ​ $ 6.80 ​ $ 4.71 3rd Quarter ​ $ 19.57 ​ $ 12.20 ​ $ 7.40 ​ $ 5.25 4th Quarter ​ $ 17.82 ​ $ 11.25 ​ $ 11.80 ​ $ 5.08 ​ Stockholders .
The following table provides the high and low sales prices of our common stock as reported on the Nasdaq Global Market for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 Fiscal Year: ​ ​ ​ High ​ ​ ​ Low ​ ​ ​ High ​ ​ ​ Low 1st Quarter ​ $ 20.45 ​ $ 12.20 ​ $ 13.85 ​ $ 8.00 2nd Quarter ​ $ 20.82 ​ $ 15.25 ​ $ 27.95 ​ $ 9.10 3rd Quarter ​ $ 17.14 ​ $ 10.68 ​ $ 19.57 ​ $ 12.20 4th Quarter ​ $ 13.41 ​ $ 10.14 ​ $ 17.82 ​ $ 11.25 ​ Stockholders .
Removed
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Purchases of equity securities .
Added
Open market repurchases will be made in compliance with the Securities and Exchange Commission’s Rule 10b-18 in addition to 17 Table of Contents complying with applicable legal and other considerations.
Removed
We believe the number of beneficial owners of our shares of common stock (including shares held in street name) at that date was approximately 2,639. ​ Dividends .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe Company recorded an income tax benefit of $(93) thousand, which reflected an effective tax rate of 22.2%, for the fiscal year ended September 30, 2024 compared to an income tax benefit of $(469) thousand, which reflected an effective tax rate of (9.9)% for the fiscal year ended September 30, 2023. ​ ​ ​ ​ ​ ​ ​ ​ 20 Table of Contents The following table details our results of operations in dollars and as a percentage of sales for the fiscal years ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % ​ ​ ​ ​ % ​ September 30, 2024 of sales September 30, 2023 of sales ​ ​ (Dollar amounts in thousands) Sales ​ $ 55,219 100 % $ 64,647 100 % Costs and expenses: ​ ​ ​ Cost of sales ​ 36,364 66 % 42,727 66 % Engineering and development ​ 2,956 5 % 3,140 5 % Selling, general and administrative ​ 17,771 32 % 16,910 26 % Total costs and expenses ​ 57,091 103 % 62,777 97 % Operating (loss) income ​ (1,872) (3) % 1,870 3 % Other income, net ​ 1,453 3 % 2,865 4 % (Loss) income before income taxes ​ (419) (1) % 4,735 7 % Income tax benefit ​ (93) — % (469) (1) % Net (loss) income ​ $ (326) ​ (1) % $ 5,204 ​ 8 % ​ Revenues Revenue decreased by approximately $9.4 million, or approximately 15%, to $55.2 million for the fiscal year ended September 30, 2024 compared to $64.6 million for the fiscal year ended September 30, 2023.
Biggest changeThe following table details our results of operations in dollars and as a percentage of sales for the fiscal years ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % ​ ​ ​ ​ % ​ ​ ​ ​ September 30, 2025 ​ ​ ​ of sales ​ ​ ​ September 30, 2024 ​ ​ ​ of sales ​ ​ (Dollar amounts in thousands) Sales ​ $ 58,730 100 % $ 55,219 100 % Costs and expenses: ​ ​ ​ ​ ​ ​ ​ Cost of sales ​ 40,219 68 % 36,364 66 % Research and development ​ 3,250 6 % 2,956 5 % Selling, general and administrative ​ 18,370 31 % 17,771 32 % Total costs and expenses ​ 61,839 105 % 57,091 103 % Operating loss ​ (3,109) (5) % (1,872) (3) % Other income, net ​ 1,448 2 % 1,453 2 % Loss before income taxes ​ (1,661) (3) % (419) (1) % Income tax benefit ​ (1,570) (3) % (93) — % Net loss ​ $ (91) ​ — % $ (326) ​ (1) % ​ Revenues Revenue increased by approximately $3.5 million, or approximately 6%, to $58.7 million for the fiscal year ended September 30, 2025 compared to $55.2 million for the fiscal year ended September 30, 2024. ​ 19 Table of Contents TS segment revenue changes by products and services for the fiscal years ended September 30, 2025 and 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ Increase ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ $ ​ ​ ​ % ​ ​ (Dollar amounts in thousands) ​ Products ​ $ 37,262 ​ $ 34,194 ​ $ 3,068 ​ 9 % Services ​ 19,546 ​ 16,871 ​ 2,675 ​ 16 % Total ​ $ 56,808 ​ $ 51,065 ​ $ 5,743 ​ 11 % ​ Our TS segment revenue increased by approximately $5.7 million consisting of an increase of $5.5 million in our U.S. division combined with an increase of $0.2 million in our U.K. division.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: revenue recognition, valuation allowances, specifically the net deferred tax asset valuation allowance, inventory valuation, and pension and retirement plans.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements: revenue recognition, valuation allowances, specifically the net deferred tax asset valuation allowance, and pension and retirement plans.
As a practical expedient, we have elected not to adjust the amount of consideration for effects of a significant financing component when it is anticipated the promised good or service will be transferred and the subsequent payment will be one year or less. 27 Table of Contents ​ Certain contracts contain a financing component including managed services contracts with financing of hardware and software.
As a practical expedient, 25 Table of Contents we have elected not to adjust the amount of consideration for effects of a significant financing component when it is anticipated the promised good or service will be transferred and the subsequent payment will be one year or less. ​ Certain contracts contain a financing component including managed services contracts with financing of hardware and software.
The defined benefit plans in the U.K. are closed to newly hired employees and have been for the two years ended September 30, 2024. In the U.S., the Company provides defined contribution plans that cover most employees and supplementary retirement plans to certain employees and former employees who are now retired.
The defined benefit plans in the U.K. are closed to newly hired employees and have been for the two years ended September 30, 2025. In the U.S., the Company provides defined contribution plans that cover most employees and supplementary retirement plans to certain employees and former employees who are now retired.
You should review the “Special Note Regarding Forward Looking Statements” and “Risk Factors” sections of this annual report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
You should review the “Special Note Regarding Forward Looking Statements” and “Risk Factors” sections of this annual report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements 18 Table of Contents contained in the following discussion and analysis.
These supplementary retirement plans are also closed to newly hired employees and have been for the two years ended September 30, 2024. These supplementary plans are funded through whole life insurance policies.
These supplementary retirement plans are also closed to newly hired employees and have been for the two years ended September 30, 2025. These supplementary plans are funded through whole life insurance policies.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered 28 Table of Contents or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Management has reviewed the discount rates and rates of return with our consulting actuaries and investment advisers and concluded they were reasonable. A decrease in the expected return on pension assets would increase pension expense. Expected compensation increases are 29 Table of Contents estimated based on historical and expected increases in the future.
Management has reviewed the discount rates and rates of return with our consulting actuaries and investment advisers and concluded they were reasonable. A decrease in the expected return on pension assets would increase pension expense. Expected compensation increases are estimated based on historical and expected increases in the future.
Recent trends affecting our financial performance As of September 30, 2024, the Russian/Ukrainian military conflict and the Israeli-Hamas conflict have not had a direct significant impact on revenue as we do not have any significant recurring customers in either region.
Recent trends affecting our financial performance As of September 30, 2025, the Russian/Ukrainian military conflict and the Israeli-Hamas conflict have not had a direct or significant impact on revenue as we do not have any significant recurring customers in either region.
Income Taxes We use the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Income Taxes We use the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement 26 Table of Contents carrying amounts of existing assets and liabilities and their respective tax bases.
A decrease in the discount rate would result in greater pension expense while an increase in the discount rate would decrease pension expense. The Company funds its pension plans in amounts sufficient to meet the requirements set forth in applicable employee benefits laws and local tax laws.
A decrease in the discount rate would result in greater pension expense while an increase in the discount rate would decrease pension expense. 27 Table of Contents The Company funds its pension plans in amounts sufficient to meet the requirements set forth in applicable employee benefits laws and local tax laws.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This management’s discussion and analysis of financial condition and results of operations and other portions of this filing contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by the forward-looking information.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This management’s discussion and analysis of financial condition and results of operations and other portions of this filing contain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated by the forward-looking statements.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate our estimates, including those related to the inventory valuation, income taxes, deferred compensation, revenue recognition, retirement plans, and contingencies.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate our estimates, including those related to income taxes, revenue recognition, and retirement plans.
Other Liquidity and Capital Resources Items Our cash held by our foreign subsidiary in the United Kingdom totaled the equivalent of approximately $5.4 million as of September 30, 2024, which consisted of 0.4 million Euros, 0.3 million British Pounds, and 4.7 million U.S. Dollars. This cash is included in our total cash and cash equivalents reported within our financial statements.
Other Liquidity and Capital Resources Items Our cash held by our foreign subsidiary in the United Kingdom totaled the equivalent of approximately $4.9 million as of September 30, 2025, which consisted of 0.6 million euros, 0.4 million British pounds, and 3.6 million U.S. dollars. This cash is included in our total cash and cash equivalents reported within our financial statements.
The $0.6 million increase in our TS segment service GM in fiscal year 2024 as compared to the prior year resulted from an increase in GM in the U.S. division.
The $1.6 million increase in our TS segment service GM in fiscal year 2025 as compared to the prior year resulted from an increase in GM in the U.S. division.
The GM as a percentage of sales from products increased 9% primarily due to the large ARIA AZT sale which was nearly all GM. The GM as a percentage of sales from services decreased 5% primarily due to decreased Multicomputer royalty revenues, which is nearly all GM and recorded as service revenue.
The GM as a percentage of sales from products decreased 26% primarily due to a nonrecurring prior year large ARIA AZT software license sale which was nearly all GM. The GM as a percentage of sales from services decreased 9% primarily due to decreased Multicomputer royalty revenues, which is nearly all GM and recorded as service revenue.
Interest expense decreased $27 thousand for the year ended September 30, 2024 compared to the prior year period primarily due to less interest expense related to multi-year agreements with vendors in the TS U.S. division. Payments on these agreements contain both principal and interest expense. As principal payments are made the interest expense decreases.
Interest expense increased $0.1 million for the year ended September 30, 2025 compared to the prior year period primarily due to increased interest expense related to multi-year agreements with vendors in the TS U.S. division. Payments on these agreements contain both principal and interest expense. As principal payments are made the interest expense decreases.
The primary difference was the timing in the net borrowing on the line-of-credit, which for the year ended September 30, 2024 we had a net borrowing of $2.7 million compared to a net payment of $1.6 million in the prior year.
The primary difference was the timing in the net borrowing on the line-of-credit, which for the year ended September 30, 2025 we had a net repayment of $3.3 million compared to a net borrowing of $2.7 million in the prior year period.
This line of credit also includes availability of a limited cash withdrawal of up to $1.0 million. Amounts of $10.2 million and $13.5 million were available as of September 30, 2024 and September 30, 2023, respectively. As of September 30, 2024 and September 30, 2023 there were 26 Table of Contents no cash withdrawals outstanding.
This line of credit also includes availability of a limited cash withdrawal of up to $1.0 million. Amounts of $14.1 million and $10.8 million were available as of September 30, 2025 and September 30, 2024, respectively. As of September 30, 2025 and 2024 there were no cash withdrawals outstanding.
See Note 9 Accounts payable and accrued expenses, and Other noncurrent liabilities in Item 1 to this Annual Report on Form 10-K. 24 Table of Contents Interest income increased $0.6 million for the year ended September 30, 2024 when compared to the prior year.
See Note 9 Accounts payable and accrued expenses, and Other noncurrent liabilities in Item 15 to this Annual Report on Form 10-K. Interest income decreased $0.2 million for the year ended September 30, 2025 when compared to the prior year.
Income Taxes The Company recorded an income tax benefit of $(93) thousand, which reflected an effective tax rate of 22.2%, for the year ended September 30, 2024. The provision is primarily driven by the benefit recognized as a result of windfalls for restricted stock awards that vested during the period, offset by the change in valuation allowance.
For the year ended September 30, 2024, the income tax benefit was approximately $(93) thousand, which resulted in an effective tax rate of a 22.2%. The benefit was primarily driven by windfalls for restricted stock awards that vested during the period, partially offset by the change in valuation allowance.
Cash and cash equivalents increased by $5.4 million to $30.6 million as of September 30, 2024 from $25.2 million as of September 30, 2023. ​ ​ ​ ​ 25 Table of Contents The following is a summary of our cash flows for the fiscal year ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ ​ (Dollar amounts in thousands) ​ 2024 ​ 2023 ​ ​ (Dollar amounts in thousands) Net cash provided by (used in): ​ ​ Operating activities ​ $ 4,213 $ 3,907 Investing activities ​ ​ (256) ​ ​ (341) Financing activities ​ ​ 1,379 ​ ​ (2,401) Effect of exchange rate changes on cash ​ ​ 32 ​ ​ 70 Increase in cash and cash equivalents ​ $ 5,368 $ 1,235 ​ Operating Activities Cash provided by operating activities was $4.2 million for the year ended September 30, 2024 compared to $3.9 million for the prior year.
The following is a summary of our cash flows for the fiscal years ended September 30, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended September 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ ​ (Dollar amounts in thousands) Net cash provided by (used in): ​ ​ ​ ​ Operating activities ​ $ 2,268 $ 4,213 Investing activities ​ ​ (428) ​ ​ (256) Financing activities ​ ​ (5,036) ​ ​ 1,379 Effect of exchange rate changes on cash ​ ​ 29 ​ ​ 32 (Decrease) increase in Cash and cash equivalents ​ $ (3,167) $ 5,368 ​ Operating Activities Cash provided by operating activities was $2.3 million for the year ended September 30, 2025 compared to $4.2 million for the prior year period.
Sales to Europe decreased by $0.3 million primarily due to a decrease by our HPP segment of $0.3 million. Sales to Europe in the TS segment remained flat with an increase in the TS-US division of $0.1 million, offset with a decrease in the TS-UK division of $0.1 million. Sales to Asia-Pacific increased $0.4 million due to the TS-US division.
Sales to Europe increased by $0.2 million primarily due to an increase by our TS-US division of $0.1 million and an increase of $0.1 million in the TS-UK division. Sales to APAC and Africa decreased $0.5 million due to a decrease of $0.4 million by the TS-US division and a decrease of $0.1 million in the HPP segment.
The $2.1 million product GM decrease in fiscal year 2024 as compared to the prior year resulted from a decrease in the U.S. division. Product GM as a percentage of revenue decreased 2% for fiscal year 2024 compared to the prior year due to product mix.
The $0.1 million product GM decrease in fiscal year 2025 as compared to the prior year resulted from a decrease in the U.S. division. Product GM as a percentage of revenue decreased 2% for fiscal year 2025 compared to the prior year due to higher volume of sales to certain customers with lower margins.
Gross Margins Our gross margin ("GM") decreased by $3.1 million to $18.9 million for fiscal year 2024 as compared to GM of approximately $21.9 million for fiscal year 2023.
Gross Margins Our gross margin ("GM") decreased to $18.5 million for fiscal year 2025 as compared to GM of $18.9 million for fiscal year 2024.
The increase in HPP service revenue of approximately $0.2 million for the fiscal year ended September 30, 2024 was primarily the result of a $0.5 million increase in ARIA revenue, partially offset with a decrease of $0.3 million in royalty revenues on high-speed processing boards related to the E2D program as compared to the fiscal year ended September 30, 2023.
The decrease in HPP services revenue of approximately $0.1 million for the fiscal year ended September 30, 2025 compared to the same period for the prior year was primarily the result of a $0.3 million decrease in repairs revenue and a $0.2 million decrease in royalty revenues on high-speed processing boards related to the E2D program, partially offset by an increase in Multicomputer revenue of $0.2 million and increased ARIA revenue of $0.2 million.
Additionally, in fiscal year 2024 there were increased cash dividends paid by $0.4 million and increased treasury stock repurchases of $0.1 million compared to the prior fiscal year.
Additionally, in fiscal year 2025 there was increased repurchases of common stock of $0.9 million and increased cash dividends paid by $0.2 million compared to the prior fiscal year.
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 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 23 Table of Contents valuation allowance against these credits. The Company continued to maintain a full valuation allowance against the net U.K. deferred tax assets.
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 be reversed during year ended September 30, 2024.
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 decrease in TS segment product revenue of $7.5 million during the period was the result of a $7.4 million decrease in the U.S. division combined with a decrease of $0.1 million in the U.K. division.
The increase in TS segment products revenue of $3.0 million during the period was the result of a $2.8 million increase in the U.S. division combined with an increase of $0.2 million in the U.K. division.
This agreement has many contingencies and the expected timeframe of the sale occurring is 4 to 16 months from the date of this filing. ​ As of September 30, 2024 and September 30, 2023, the Company maintained a line of credit with a capacity of up to $15.0 million for inventory accessible to both the HPP and TS segments.
This agreement has contingencies and the expected timeframe of the buy-in contract turning into a buy-out contract is within fiscal year 2026. ​ As of September 30, 2025 and September 30, 2024, the Company maintained a line of credit with a capacity of up to $15.0 million for inventory accessible to both the HPP and TS segments.
The total GM as a percentage of revenue remained flat at 34% for fiscal year 2024 and 2023. ​ The following table summarizes GM changes by segment for fiscal years ended September 30: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ Increase (decrease) ​ ​ (Dollar amounts in thousands) ​ ​ GM$ GM% GM$ GM% GM$ GM% TS ​ $ 16,153 32 % $ 17,666 31 % $ (1,513) 1 % HPP ​ 2,702 65 % 4,254 62 % (1,552) 3 % Total ​ $ 18,855 34 % $ 21,920 34 % $ (3,065) — % ​ 22 Table of Contents The impact of product mix within our TS segment on gross margins for the fiscal years ended September 30 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ Increase (decrease) ​ GM$ GM% GM$ GM% GM$ GM% ​ ​ (Dollar amounts in thousands) ​ Products ​ $ 6,130 18 % $ 8,197 20 % $ (2,067) (2) % Services ​ 10,023 59 % 9,469 59 % 554 — % Total ​ $ 16,153 32 % $ 17,666 31 % $ (1,513) 1 % ​ The overall TS segment GM as a percentage of revenue increased to 32% in fiscal year 2024 from 31% in fiscal year 2023.
The total GM as a percentage of revenue decreased to 32% for fiscal year 2025 compared to 34% for fiscal year 2024. ​ The following table summarizes GM changes by segment for fiscal years ended September 30: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ Increase (decrease) ​ ​ (Dollar amounts in thousands) ​ ​ ​ ​ ​ GM$ ​ ​ ​ GM% ​ ​ ​ GM$ ​ ​ ​ GM% ​ ​ ​ GM$ ​ ​ ​ GM% TS ​ $ 17,635 31 % $ 16,153 32 % $ 1,482 (1) % HPP ​ 876 46 % 2,702 65 % (1,826) (19) % Total ​ $ 18,511 32 % $ 18,855 34 % $ (344) (2) % ​ The impact of product mix within our TS segment on gross margins for the fiscal years ended September 30 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ Increase (decrease) ​ ​ ​ ​ GM$ ​ ​ ​ GM% ​ ​ ​ GM$ ​ ​ ​ GM% ​ ​ ​ GM$ ​ ​ ​ GM% ​ ​ (Dollar amounts in thousands) ​ Products ​ $ 6,062 16 % $ 6,130 18 % $ (68) (2) % Services ​ 11,573 59 % 10,023 59 % 1,550 — % Total ​ $ 17,635 31 % $ 16,153 32 % $ 1,482 (1) % ​ The overall TS segment GM as a percentage of revenue decreased to 31% in fiscal year 2025 from 32% in fiscal year 2024.
The impact of product mix on gross margins within our HPP segment for the fiscal years ended September 30 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ Increase (decrease) ​ ​ (Dollar amounts in thousands) ​ ​ GM$ GM% GM$ GM% GM$ GM% Products ​ $ 1,863 72 % $ 3,428 63 % $ (1,565) 9 % Services ​ 839 54 % 826 59 % 13 (5) % Total ​ $ 2,702 65 % $ 4,254 62 % $ (1,552) 3 % ​ The overall HPP segment GM as a percentage of revenue increased to 65% in fiscal year 2024 from 62% in fiscal year 2023.
Service GM as a percentage of revenue remained flat at 59% in fiscal year 2025 due to a proportional increase in the cost of sales compared to revenue. 21 Table of Contents The impact of product mix on gross margins within our HPP segment for the fiscal years ended September 30 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ 2024 ​ Decrease ​ ​ (Dollar amounts in thousands) ​ ​ ​ ​ ​ GM$ ​ ​ ​ GM% ​ ​ ​ GM$ ​ ​ ​ GM% ​ ​ ​ GM$ ​ ​ ​ GM% Products ​ $ 224 46 % $ 1,863 72 % $ (1,639) (26) % Services ​ 652 45 % 839 54 % (187) (9) % Total ​ $ 876 46 % $ 2,702 65 % $ (1,826) (19) % ​ The overall HPP segment GM as a percentage of revenue decreased to 46% in fiscal year 2025 from 65% in fiscal year 2024.
Fiscal year 2024 and 2023 expenses were primarily for product engineering expenses incurred in connection with the further development of the ARIA Zero Trust (AZT) and ARIA SDS cyber security products. ​ ​ 23 Table of Contents Selling, General and Administrative The following table details our selling, general and administrative (“SG&A”) expenses by operating segment for the years ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended September 30, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ $ ​ % ​ ​ 2024 Total 2023 Total ​ Increase Increase ​ ​ ​ (Dollar amounts in thousands) ​ By Operating Segment: ​ ​ ​ ​ TS segment ​ $ 13,179 74 % $ 13,089 77 % $ 90 1 % HPP segment ​ 4,592 26 % 3,821 23 % 771 20 % Total ​ $ 17,771 100 % $ 16,910 100 % $ 861 5 % ​ The TS segment SG&A expenses increased approximately $0.1 million for the fiscal year ended September 30, 2024 when compared to the prior year.
Selling, General and Administrative The following table details our selling, general and administrative (“SG&A”) expenses by operating segment for the years ended September 30, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended September 30, ​ ​ $ ​ % ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Increase ​ Increase ​ ​ ​ ​ ​ 2025 ​ ​ ​ Total ​ ​ ​ 2024 ​ ​ ​ Total ​ ​ ​ ​ (decrease) ​ ​ ​ ​ ​ (Dollar amounts in thousands) ​ By Operating Segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TS segment ​ $ 13,786 75 % $ 13,179 74 % $ 607 5 % HPP segment ​ 4,584 25 % 4,592 26 % (8) — % Total ​ $ 18,370 100 % $ 17,771 100 % $ 599 3 % ​ The TS segment SG&A expenses increased approximately $0.6 million for the fiscal year ended September 30, 2025 when compared to the prior year.
Interest income from cash and cash equivalents in fiscal year 2024 increased $0.7 million from prior year due to a significantly higher average balance during fiscal year 2024 earning interest income, partially offset by decreased interest income from multi-year agreements of $0.1 million.
This is due to lower interest income of $0.1 million from Cash and cash equivalents in fiscal year 2025 compared to the prior year due to a lower average balance and lower average interest rate during fiscal year. Additionally, there was $0.1 million decreased interest income from multi-year agreements.
Engineering and Development Expenses Our engineering and development expenses are only in our HPP segment. These expenses decreased $0.1 million to $3.0 million for fiscal year 2024 from $3.1 million for fiscal year 2023.
Research and Development Expenses Our research and development expenses are only in our HPP segment. These expenses increased $0.3 million from $3.0 million in fiscal year 2024 to $3.3 million in fiscal year 2025. This was primarily due to increased consulting of $0.1 million, increased stock compensation of $0.1 million, and increased salaries of $0.1 million.
We generated an operating loss of $(1.9) million for the fiscal year ended September 30, 2024 as compared to operating income of $1.9 million for the fiscal year ended September 30, 2023. Other income, net was $1.5 million for the fiscal year ended September 30, 2024 as compared to $2.9 million for the prior year.
Gross profit margin percentage decreased to 32% for the fiscal year ended September 30, 2025 compared to 34% for the fiscal year ended September 30, 2024. We generated an operating loss of $(3.1) million for the fiscal year ended September 30, 2025 as compared to an operating loss of $(1.9) million for the fiscal year ended September 30, 2024.
The U.K. division has bank accounts with U.S. dollars and Euros. In consolidation, U.S. dollars and Euros are remeasured into the functional currency, British Pounds, of our U.K. subsidiary. This non-cash remeasurement is included in foreign exchange gain or loss on the income statement and the foreign exchange gain or loss is primarily from a U.S.
This non-cash remeasurement is included in foreign exchange gain or loss on the income statement and the foreign exchange gain or loss is primarily from the U.S. dollar and euro bank accounts.
Our total revenues by geographic area based on the location to which the products were shipped or services rendered were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ Increase (decrease) ​ ​ 2024 % 2023 % $ % ​ ​ (Dollar amounts in thousands) ​ Americas ​ $ 53,308 97 % $ 62,763 97 % $ (9,455) ​ (15) % Europe ​ 1,125 2 % 1,429 2 % (304) ​ (21) % Asia-Pacific ​ 786 1 % 455 1 % 331 ​ 73 % Totals ​ $ 55,219 100 % $ 64,647 100 % $ (9,428) ​ (15) % ​ The $9.5 million decrease in the Americas revenue for the fiscal year ended September 30, 2024 as compared to the fiscal year ended September 30, 2023 was primarily due to decreased revenue by our TS-US division of $7.0 million, decreased revenue by our TS-UK division of $0.1 million, and decreased revenue by our HPP segment of $2.4 million.
The non-recurring AZT software license transaction discussed above was originally sold with annual post contract support, which was renewed in fiscal year 2025 for another year of service. 20 Table of Contents Our total revenues by geographic area based on the location to which the products were shipped or services rendered were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ Increase (decrease) ​ ​ ​ ​ ​ 2025 ​ ​ ​ % ​ ​ ​ 2024 ​ ​ ​ % ​ ​ ​ $ ​ ​ ​ % ​ ​ (Dollar amounts in thousands) ​ Americas ​ $ 57,111 98 % $ 53,308 97 % $ 3,803 ​ 7 % Europe ​ 1,362 2 % 1,125 2 % 237 ​ 21 % APAC and Africa ​ 257 — % 786 1 % (529) ​ (67) % Totals ​ $ 58,730 100 % $ 55,219 100 % $ 3,511 ​ 6 % ​ The $3.8 million increase in the Americas revenue for the fiscal year ended September 30, 2025 as compared to the fiscal year ended September 30, 2024 was primarily due to increased revenue by our TS-US division of $5.8 million combined with increased revenue in our TS-UK division of $0.1 million, partially offset by decreased revenue in our HPP segment of $2.1 million.
These agreements have payment terms in excess of one year (see Note 3 Financing Receivables, net in Item 1 to this Annual Report on Form 10-K for details) and are only in the TS-US segment. The Employee Retention Tax Credit, net of costs to collect of $2.1 million was recognized in the fourth quarter of fiscal year 2023.
The prime rate has decreased since the end of fiscal year 2023 resulting in customers getting better lower interest rates meaning less interest income. These agreements have payment terms in excess of one year (see Note 3 Financing Receivables, net in Item 15 to this Annual Report on Form 10-K for details) and are only in the TS-US division.
Overview of Fiscal 2024 Results of Operations Revenue decreased by approximately $9.4 million, or 15%, to $55.2 million for the fiscal year ended September 30, 2024 compared to $64.6 million for the fiscal year ended September 30, 2023. Gross profit margin percentage remained consistent at 34% for the fiscal year ended September 30, 2024 and 2023.
Overview of Fiscal Year 2025 Results of Operations Revenue increased by approximately $3.5 million, or 6%, to $58.7 million for the fiscal year ended September 30, 2025 compared to $55.2 million for the fiscal year ended September 30, 2024.
The primary decreases include a decrease of net income (loss) change of $5.5 million, a decrease of $4.9 million in other assets, and a decrease of $2.7 million in accounts receivable. ​ The remaining differences are related to timing differences in operating assets and liabilities. ​ Investing Activities Cash used in investing activities was $258 thousand for the year ended September 30, 2024 compared to $341 thousand used in investing activities for the prior year.
The remaining differences are related to timing differences in operating assets and liabilities. ​ Investing Activities Cash used in investing activities was $(428) thousand for the year ended September 30, 2025 compared to $(256) thousand used in investing activities for the prior year.
Financing Activities Cash provided by financing activities was $1.4 million for the year ended September 30, 2024 compared to $2.4 million used in financing activities for the prior year.
The increase from the prior year is primarily related to increased purchases of property, equipment, and improvements during fiscal year 2025 when compared to the prior fiscal year. Financing Activities Cash used in financing activities was $(5.0) million for the year ended September 30, 2025 compared to $1.4 million provided by financing activities for the prior year period.
The decrease in the U.K. division year over year was primarily associated with two major customers. The increase in TS segment service revenue of $0.8 million as compared to the prior year was in the U.S. division.
The increase in our U.S. division product revenue year over year was primarily associated with several existing major customers as well as one new customer. The increase in the U.K. division year over year was primarily associated with two major existing customers.
If cash generated from operations is insufficient to satisfy working capital requirements, we may need to access funds through bank loans or other means.
There is a total of $16.3 million due to the Company of customer financing agreements outstanding as of September 30, 2025, including $9.9 million to be received in the next 12 months from September 30, 2025 If cash generated from operations is insufficient to satisfy working capital requirements, we may need to access funds through bank loans or other means.
The Company records liabilities for estimated tax obligations in the U.S. and other tax jurisdictions. These estimated tax liabilities include the provision for taxes that may become payable in the future. Inventories Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out method.
The Company records liabilities for estimated tax obligations in the U.S. and other tax jurisdictions. These estimated tax liabilities include the provision for taxes that may become payable in the future. Pension and Retirement Plans The funded status of pension and other post-retirement benefit plans is recognized prospectively on the consolidated balance sheet.
This increase was primarily due to an increase in audit and tax fees of $0.3 million, an increase in stock compensation expense of $0.2 million, an increase in actuarial fees of $0.2 million in connection to preparing to sell the pension in the TS-UK division, partially offset with decreased variable compensation of $0.3 million and decreased bonus of $0.3 million.
This increase was primarily in the TS-US division due to an increase of $0.4 million in variable compensation, an increase of $0.1 million in salaries, and an increase of $0.1 million in recruiting fees.
For a further discussion of the Company’s line of credit, including its financial covenants, see Item 1, Note 12 Line of Credit. The last note payable was paid in full in fiscal year 2024 of $0.4 million and no notes remain outstanding as of September 30, 2024.
The last note payable was paid in full in fiscal year 2025 of $0.4 million and no notes remain outstanding as of September 30, 2025. There is a total of $5.3 million due to vendors with financing agreements outstanding as of September 30, 2025, including $3.5 million payments to be made in the next 12 months from September 30, 2025.
In fiscal year 2024 as compared to the prior year, the U.S. division had an increase of $1.1 million in third party maintenance revenue, an increase of $0.4 million in managed services, partially offset by a decrease of $0.7 million in internal services. ​ ​ ​ 21 Table of Contents HPP segment revenue changes by product and services for the fiscal years ended September 30, 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, Increase (decrease) ​ ​ 2024 2023 $ % ​ ​ ​ (Dollar amounts in thousands) ​ Products ​ $ 2,599 ​ $ 5,475 ​ $ (2,876) ​ (53) % Services ​ 1,555 ​ 1,398 ​ 157 ​ 11 % Total ​ $ 4,154 ​ $ 6,873 ​ $ (2,719) ​ (40) % ​ Our HPP segment revenue decreased by approximately $2.7 million or 40%.
HPP segment revenue changes by products and services for the fiscal years ended September 30, 2025 and 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, Decrease ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ $ ​ ​ ​ % ​ ​ ​ (Dollar amounts in thousands) ​ Products ​ $ 487 ​ $ 2,599 ​ $ (2,112) ​ (81) % Services ​ 1,435 ​ 1,555 ​ (120) ​ (8) % Total ​ $ 1,922 ​ $ 4,154 ​ $ (2,232) ​ (54) % ​ Our HPP segment revenue decreased by approximately $2.2 million or 54%.
The decrease in HPP product revenue of $2.9 million in the fiscal year ended September 30, 2024 was primarily the result of two major non-recurring transactions of $1.8 million and $1.2 million in the prior year along with several other customers, partially offset by one major AZT sale in fiscal year 2024.
The decrease in HPP products revenue of $2.1 million in the fiscal year ended September 30, 2025 was primarily the result of decreased ARIA AZT revenue of $1.7 million combined with decreased Myricom revenue of $0.4 million.
Other Income/Expenses The following table details our other income (expense) for the years ended September 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve months ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2024 September 30, 2023 $ Change ​ ​ ​ (Amounts in thousands) ​ Foreign exchange loss ​ $ (438) ​ $ (581) ​ $ 143 ​ Interest expense ​ ​ (235) ​ ​ (262) ​ ​ 27 ​ Interest income ​ 2,047 ​ 1,460 ​ 587 ​ Employee Retention Tax Credit, net of costs to collect ​ ​ — ​ ​ 2,136 ​ ​ (2,136) ​ Other income, net ​ 79 ​ 112 ​ (33) ​ Total other income, net ​ $ 1,453 ​ $ 2,865 ​ $ (1,412) ​ ​ For the year ended September 30, 2024 the foreign exchange loss decreased $0.1 million primarily due to the U.S. dollar weakening less against the British pound in fiscal year 2024 compared to the prior year.
The HPP segment SG&A expense remained flat at $4.6 million for fiscal year 2025 and 2024 without any significant changes in types of expenses. ​ ​ ​ 22 Table of Contents Other Income/Expenses The following table details our other income (expense) for the years ended September 30, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2025 ​ ​ ​ September 30, 2024 ​ ​ ​ $ Change ​ ​ ​ (Amounts in thousands) ​ Foreign exchange gain (loss) ​ $ 33 ​ $ (438) ​ $ 471 ​ Interest expense ​ ​ (357) ​ ​ (235) ​ ​ (122) ​ Interest income ​ 1,854 ​ 2,047 ​ (193) ​ Other (expense) income, net ​ (82) ​ 79 ​ (161) ​ Total other income, net ​ $ 1,448 ​ $ 1,453 ​ $ (5) ​ ​ For the year ended September 30, 2025, there was an increase in foreign exchange gain of $0.5 million primarily due to the TS U.K. division carrying a higher U.S. dollar bank account balance earlier in fiscal year 2025 when the dollar was on average stronger than the British pound, which caused a foreign exchange gain.
Removed
TS segment revenue changes by products and services for the fiscal years ended September 30, 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ Increase (decrease) ​ 2024 2023 $ % ​ ​ (Dollar amounts in thousands) ​ Products ​ $ 34,194 ​ $ 41,674 ​ $ (7,480) ​ (18) % Services ​ 16,871 ​ 16,100 ​ 771 ​ 5 % Total ​ $ 51,065 ​ $ 57,774 ​ $ (6,709) ​ (12) % ​ Our TS segment revenue decreased by approximately $6.7 million consisting of a decrease of $6.6 million in our U.S. division combined with a decrease of $0.1 million in our U.K. division.
Added
Other income, net was consistent at approximately $1.5 million for the fiscal years ended September 30, 2025 and 2024.
Removed
Interest rates were relatively high compared to prior years in fiscal year 2024 along with inflation which caused economic uncertainty and some reduced customer spending on products. The decrease in our U.S. division product revenue year over year was primarily associated with several existing major customers, partially offset by an increase with several new major customers and existing customers.
Added
The Company recorded an income tax benefit of $(1.6) million, which reflected an effective tax rate of 94.5%, for the fiscal year ended September 30, 2025 compared to an income tax benefit of $(0.1) million, which reflected an effective tax rate of 22.2% for the fiscal year ended September 30, 2024.
Removed
Service GM as a percentage of revenue remained flat at 59% in fiscal year 2024 due to increased third party maintenance revenue, which is recorded as net sales meaning all the gross margin is recorded in the services revenue financial statement line item causing increased GM as a percentage of revenue, offset by decreased GM from internal services which have associated fixed costs which decreased the GM as a percentage of revenue.
Added
The increase in TS segment services revenue of $2.7 million as compared to the prior year was in the U.S. division due to an increase of $1.3 million in third-party maintenance revenue, an increase of $1.1 million in internal and third party services, and an increase of $0.3 million in managed services.
Removed
This was primarily due to decreased labor expenses of $0.2 million in fiscal year 2024 when compared to fiscal year 2023, partially offset by increased stock compensation of $0.1 million.
Added
The ARIA revenue decrease was due to one large nonrecurring ARIA AZT software license sale of $2.0 million in the prior year, partially offset by increased total ARIA AZT software license sales of $0.3 million. The decreased Myricom revenue was primarily due to one large nonrecurring transaction in the prior year.
Removed
The HPP segment SG&A expense increase of $0.8 million for the fiscal year ended September 30, 2024 when compared to the prior year was primarily attributed to increased consulting of $0.4 million, increased professional services of $0.2 million, increased selling including travel and events of $0.2 million, increased stock compensation of $0.1 million, increased recruiting of $0.1 million, partially offset by decreased bonuses of $0.2 million.
Added
ARIA AZT service revenue is from post contract support of the ARIA AZT software license and ARIA ADR revenue is all recorded to service revenue.
Removed
Dollar and Euro bank account. The U.S. Dollar bank account consists of approximately 87% of the currency held in the U.K. subsidiary after remeasurement into U.S. dollars.
Added
Fiscal year 2025 and 2024 expenses were primarily for product engineering expenses incurred in connection with the further development of the ARIA Zero Trust (AZT), ARIA SDS, and ARIA ADR cyber security products.
Removed
The Coronavirus Aid, Relief, and Economic Security Act provided an Employee Retention Credit (“ERC”) which is a refundable tax credit against certain employment taxes.
Added
In the prior fiscal year the U.S. dollar significantly weakened against the British pound causing an exchange loss. Additionally, the euro strengthened relative to the British pound in fiscal year 2025 compared to fiscal year 2024 in which the euro weakened relative to the British pound. The U.K. division has bank accounts with U.S. dollars and euros.
Removed
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.
Added
There are also transactions in both of these currencies in the TS U.K. division. In consolidation, U.S. dollars and euros are remeasured into the functional currency, British pounds, of our U.K. subsidiary.
Removed
Both the TS-US division and HPP segment qualified for the ERC beginning in March 2021 for qualified wages through September 2021. There are no other amounts that will be received related to this credit.
Added
Income Taxes The Company recorded an income tax benefit of $(1.6) million, which resulted in an effective tax rate of 94.5%, for the year ended September 30, 2025. The benefit was primarily driven by the U.S. pre-tax loss, windfalls for restricted stock awards that vested during the period, and the change in valuation allowance.
Removed
The benefit recorded during the fiscal year was $189 thousand for the windfall on restricted stock awards vesting during the period and an expense of $180 thousand for the change in valuation allowances against deferred tax assets.
Added
Liquidity and Capital Resources Cash Flows Our primary source of liquidity and capital resources is our cash from operations and our line of credit. Cash and cash equivalents decreased by $3.2 million to $27.4 million as of September 30, 2025 from $30.6 million as of September 30, 2024.
Removed
For the year ended September 30, 2023, the income tax benefit was approximately $(469) thousand, which reflected an effective tax rate of a (9.9)% benefit. The provision was primarily driven by the benefit recognized as a result of the release of the valuation allowance against the majority of the Company's deferred tax assets.
Added
The decrease from prior year is primarily related to a decrease in Accounts receivable of $2.5 million and an increase of $7.5 in Accounts payable and accrued expenses, partially offset with a decrease in financing receivables of $7.7 million.
Removed
The benefit recorded during the fiscal year was $1.8 million for valuation allowances released on deferred tax assets related to prior years. The Company also claimed and received the Employee Retention Credit, which resulted in a net benefit of approximately $134 thousand, after amending prior year returns.
Added
Due to the pension obligation in the U.K., we maintain a large balance of cash in the U.K. In October 2024, in connection with the planned 24 Table of Contents termination of our defined benefit pension plan in the U.K., we paid 8.5 million British pounds to enter into a buy-in contract.
Removed
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. Liquidity and Capital Resources Cash Flows Our primary source of liquidity and capital resources is our cash from operations and our line of credit.
Added
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.
Removed
The increase from prior year is primarily related the change in Accounts payable and accrued expense payments of $13.0 million as a large payment run at the end of fiscal year 2023 when in fiscal year 2024 there was not and a decrease in pension and retirement plan liabilities of $0.4 million.
Added
Each vendor financing agreement was related to a sale and has a related financing receivable.
Removed
The decrease from the prior year is primarily related to less additions of intangible assets and less purchases of property, equipment, and improvements during fiscal year 2024 when compared to the prior fiscal year.

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