Financial Analysis

"14. Stock Based Incentive Compensation In 2015, the Company adopted the 2015 Stock Incentive Plan (the ""2015 Plan"") and authorized 600,000 shares of common stock to be reserved for issuance pursuant to the 2015 Plan. This plan expired on November 18, 2024. Awards issued under the 2015 Plan are not affected by expiration of the plan, but no further awards will be issued under this plan. In fiscal year 2025, the Company adopted the 2025 Stock Incentive Plan (the ""2025 Plan"") and authorized 600,000 shares of common stock to be reserved for issuance pursuant to the 2025 Plan. As of September 30, 2025, there were 535,595 shares available to be granted under the 2025 Plan. Under the 2025 Plan, incentive and non-qualified stock options and restricted stock awards may be granted to officers, key employees and other people providing services to the Company. The 2025 Plan has a ten-year life and is the only effective plan as of September 30, 2025. The Company had no awarded stock options outstanding as of September 30, 2025 or 2024. The Company issues restricted stock awards at their fair value on the date of grant. Vesting of restricted stock awards granted pursuant to the 2025 Plan is determined by the Companys compensation committee. In fiscal year 2025 and 2024, the Company granted non-employee directors, officers, and key employees shares of nonvested common stock. The vesting period for officers and key employees restricted stock awards is four years. The vesting for non-emp …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

18. Fair Value Disclosures Under the fair value standards fair value is based on the exit price and defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement should reflect all the assumptions that market participants would use in pricing an asset or liability. A fair value hierarchy is established in the authoritative guidance outlined in three levels ranking from Level 1 to level 3 with Level 1 being the highest priority. Level 1: observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly Level 3: unobservable inputs (e.g., a reporting entitys or other entitys own data) The Company had no assets or liabilities measured at fair value on a recurring (except our pension plan assets, see Note 13 Pension and Retirement Plan ) or non-recurring basis as of September 30, 2025 or September 30, 2024. To estimate fair value of the financial instruments below quoted market prices are used when available and classified within Level 1. If this data is not available, we use observable market-based inputs to estimate fair value, which are classified within Level 2. If the preceding information is unavailable, we use internally generated data to estimate fair value which i …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

6. Income Taxes The components of income (loss) before income tax benefit and income tax benefit are comprised of the following: For the Years Ended September 30, 2025 2024 (Amounts in thousands) Income (loss) before income tax benefit U.S. $ (1,620) $ 74 Foreign (41) (493) $ (1,661) $ (419) Income tax expense: Current: Federal $ $ 123 State 173 172 $ 173 $ 295 Deferred: Federal $ (1,173) $ (372) State (570) (15) $ (1,743) $ (387) Total income tax benefit $ (1,570) $ (93) The effective income tax rate differed from the statutory federal income tax rate due to the following: For the Years Ended September 30, 2025 2024 (Dollar amounts in thousands) Tax benefit at the statutory rate $ (349) 21.0 % $ (88) 21.0 % Increases (reductions) in taxes resulting from: State income taxes, net of federal benefit 16 (1.0) % (87) 20.8 % Impact of non-U.S. earnings 2 (0.1) % - % Change in valuation allowance (293) 17.6 % 180 (43.0) % Excess stock compensation deductions (748) 45.0 % (189) 45.1 % Permanent differences 31 (1.9) % 19 (4.5) % Non-deductible executive compensation 240 (14.4) % - % Change in uncertain tax positions (94) 5.7 % 89 (21.2) % Tax credits (148) 8.9 % (90) 21.5 % Return to provision and prior period assessments (226) 13.6 % 43 (10.3) % Other items (1) 0.1 % 30 (7.2) % Income tax benefit $ (1,570) 94.5 % $ (93) 22.2 % Significant components of the Company's net deferred tax assets and liabilities as of September 30, 2025 and 2024 are as follows: September 30, September 30, …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Adopted Accounting Pronouncement in the Year Ended September 30, 2025 In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU also requires disclosure of the title and position of the Chief Operating Decision Maker (CODM) and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. Under ASU 2023-07, the disclosures that are currently required on an annual basis under Topic 280, Segment Reporting , pertaining to reportable segment profit or loss and assets will also be required for interim periods. The amendments in this Update do not change how an entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. Early adoption is permitted. The Company retrospectively adopted this as of and for the year ended September 30, 2025. The effects of adopting this ASU only impacted the Companys disclosures and did not have an effect on its consolidated financial statements. See Note 17 S …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

13. Pension and Retirement Plans We have defined benefit and defined contribution plans in the U.K. and in the U.S. In the U.K., the Company provides defined benefit pension plans for certain employees and former employees and defined contribution plans for the majority of the employees. The defined benefit plan in the U.K. is frozen to newly hired employees and has 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. 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. The Company expects to recover all insurance premiums paid under these policies in the future, through the cash surrender value of the policies and any death benefits or portions thereof to be paid upon the death of the participant. These whole life insurance policies are carried on the balance sheet at their cash surrender values as they are owned by the Company and not assets of the defined benefit plans. In the U.S., the Company also provides for officer death benefits and post-retirement health insurance benefits through supplemental post-retirement plans to certain officers. The Company also funds these supplemental plans obligations through whole life insurance policies …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

20. Related Party Transactions Under ASC 850 Related Party Transactions an entity or person is considered to be a related party if it has control, significant influence or is a key member of management personnel or affiliate. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company, in accordance with ASC 850 presents disclosures about related party transactions and outstanding balances with related parties. The Audit Committee has the responsibility of reviewing and approving transactions with related parties. In connection with the review of any related party transactions, the Audit Committee considers, among other matters, the nature, timing and duration of the transactions, the relationships of the parties to the transactions, whether the transactions are in the ordinary course of the Companys business, the dollar value of the transactions and whether the transactions are in the interests of the Company. Gary Southwell, Vice President and General Manager of High Performance Products segment, is a minority shareholder in one of our vendors. He has no operational responsibilities. There were $267 thousand and $324 thousand of purchases from this vendor for the fiscal year ended September 30, 2025 and 2024, respectively. An amount of $69 thousand was due to this vendor as of September 30, 2025. There was no balance due as of September 30, 2024. …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

17. Segment Information We have two reporting segments, High Performance Products and Technology Solutions, discussed below. The Companys country of domicile is the United States. High Performance Products (HPP) The HPP segment consists of primarily of the following product lines: ARIA, Multicomputer, and Myricom. Most of the revenue is from US customers for all product lines, but the segment has expanded into APAC and Africa regions with its ARIA product line. The segments operations are based in Lowell, Massachusetts. Technology Solutions (TS) The TS segment generates revenue by reselling third-party computer hardware, software, and related support/maintenance/warranty as a value-added reseller (VAR). The TS segment generates service revenues by the delivery of professional services for complex IT solutions, including advanced security; unified communications and collaboration; wireless and mobility; data center solutions; and network solutions as well as managed IT services that primarily serve the small and mid-sized business market. TS has two divisions United Kingdom and U.S. which are displayed separately and in total below. The U.S. division, located in Boca Raton, Florida, primarily has U.S. customers and the United Kingdom division, located in Wokingham, Berkshire, primarily has U.K. customers as well as other European countries. The factors used in identifying the Companys reportable segments include geographical location of operations and the types of products and …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

19. Dividend Holders of outstanding shares of common stock are entitled to receive ratably any dividends declared by our Board of Directors, in its discretion, out of assets legally available, subject to any preferences that may be applicable to any preferred stock outstanding at the time. There was no outstanding preferred stock as of September 30, 2025 and or 2024. Payment of dividends on the common stock may be restricted by loan agreements, indentures and other transactions entered into by us from time to time. There were no restrictions during the year ended September 30, 2025 and 2024. For the fiscal year ended September 30, 2025 the Company paid cash dividends on common stock below. 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 …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

13. Fair Value of Financial Assets and Liabilities Under the fair value standards fair value is based on the exit price and defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement should reflect all the assumptions that market participants would use in pricing an asset or liability. A fair value hierarchy is established in the authoritative guidance outlined in three levels ranking from Level 1 to Level 3 with Level 1 being the highest priority. Level 1: observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly Level 3: unobservable inputs (e.g., a reporting entitys or other entitys own data) The Company had no assets or liabilities measured at fair value on a recurring (except our pension plan assets and whole life insurance policies, see Note 10 Pension and retirement plans for pension plan assets) or non-recurring basis as of December 31, 2025 or September 30, 2025. To estimate the fair value of the financial instruments below, quoted market prices are used when available and classified within Level 1. If this data is not available, we use observable market-based inputs to estimate fair value, which are classified within Level 2. If the preceding infor …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

11. Income Taxes Income tax expense of $280 thousand was recorded for the three months ended December 31, 2025 compared to an income tax benefit of $115 thousand in the same period of 2024. For the three months ended December 31, 2025, the difference between our effective income tax rate and the U.S. federal statutory rate are the impact of tax credits that we expect to be able to utilize against federal and state taxes, the change in valuation allowance maintained against certain state tax credits, and non-deductible executive compensation. For the three months ended December 31, 2024, the difference between our effective income tax rate and the U.S. federal statutory rate are the impact of tax credits that we expect to be able to utilize against federal and state taxes and the change in valuation allowance maintained against certain state tax credits. On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act (OBBBA) into law. Key corporate tax provisions include the restoration of 100% bonus depreciation, immediate expensing for domestic research and experimental expenditures, changes to Section 163(j) interest limitations, and expanded Section 162(m) aggregation requirements. In accordance with ASC 740, the effects of the new tax law will be recognized in the period of enactment. The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. We have evaluated the impact of the OBBBA and …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

"Significant Accounting Policies There have been no significant changes to the Company's significant accounting policies described in PART II, Item 8, Note 1, ""Basis of Presentation and Summary of Significant Accounting Policies"", of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Accounting Pronouncement Not Yet Adopted as of December 31, 2025 In July 2025, the FASB issued ASU 2025-05, Financial InstrumentsCredit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides new optional guidance relating to the estimation of expected credit losses on current accounts receivable and current contract assets under Topic 326. This ASU permits entities to apply a practical expedient when estimating credit losses and is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted, and should be applied prospectively. We are currently evaluating the adoption of this standard and its impact to the Company's consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income StatementReporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40), which requires expanded disclosures in the notes to the financial statements about certain costs and expenses. This ASU is effective for fiscal years beginning after December 15, …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

10. Pension and Retirement Plans The Companys operations have defined benefit and defined contribution plans in the U.K. and in the U.S. In the U.K., the Company provides defined benefit pension plans and defined contribution plans for some of its employees. In the U.S., the Company provides benefits through supplemental retirement plans to certain former employees. The U.S. supplemental retirement plans have life insurance policies which are not plan assets but were purchased by the Company as a vehicle to fund the costs of the plan. The Company also provides for officer death benefits through post-retirement plans to certain current officers of the Company in the U.S. All the Companys defined benefit plans are closed to newly hired employees and have been since September 2009. The Company funds its pension plans in amounts sufficient to meet the requirements set forth in applicable employee benefits laws and local tax laws. Liabilities for amounts in excess of these funding levels are accrued and reported in the condensed consolidated balance sheets. The Companys pension plan in the U.K. is the only pension plan with plan assets. In fiscal year 2024 the company paid 8.5 million Great British Pounds to enter into a buy-in contract. This payment is subject to adjustment as a result of subsequent data cleansing activities. Under the terms of this buy-in contract, the insurer is liable to pay the benefits of the plan, but the Company still retains full legal responsibility to p …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

2 . Revenue, Deferred revenue and contract liabilities, and Contract balances Revenue See details of timing of revenue recognition, whether CSPi acted as the principal or agent, and geography below. Geographic areas are based on which the products were shipped or services rendered. Technology Solutions Segment High Performance Products United Consolidated Three months ended December 31, Segment Kingdom U.S. Total Total (Amounts in thousands) 2025 Timing of Revenue Recognition Transferred at a point in time where CSPi is principal $ 545 $ 23 $ 6,455 $ 6,478 $ 7,023 Transferred at a point in time where CSPi is agent 10 2,135 2,145 2,145 Transferred over time where CSPi is principal 308 2,560 2,560 2,868 Total Revenue $ 853 $ 33 $ 11,150 $ 11,183 $ 12,036 Geography United States $ 413 $ 10 $ 10,603 $ 10,613 $ 11,026 Americas (excluding United States) 492 492 492 Europe 18 52 70 70 APAC and Africa 440 5 3 8 448 Total Revenue $ 853 $ 33 $ 11,150 $ 11,183 $ 12,036 2024 Timing of Revenue Recognition Transferred at a point in time where CSPi is principal $ 82 $ 133 $ 10,915 $ 11,048 $ 11,130 Transferred at a point in time where CSPi is agent 1,804 1,804 1,804 Transferred over time where CSPi is principal 348 47 2,341 2,388 2,736 Total Revenue $ 430 $ 180 $ 15,060 $ 15,240 $ 15,670 Geography United States $ 422 $ 72 $ 14,743 $ 14,815 $ 15,237 Americas (excluding United States) 3 244 244 247 Europe 108 73 181 181 APAC and Africa 5 5 Total Revenue $ 430 $ 180 $ 15,060 $ 15,240 $ 15,670 …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

14. Segment Information The following tables present certain operating segment information for the three months ended December 31, 2025 and 2024. Technology Solutions Segment High Performance Products United Consolidated Three months ended December 31, Segment Kingdom U.S. Total Total (Amounts in thousands) 2025 Sales: Product $ 207 $ 22 $ 6,472 $ 6,494 $ 6,701 Service 646 11 4,678 4,689 5,335 Total sales 853 33 11,150 11,183 12,036 Cost of sales: Product 9 16 5,257 5,273 5,282 Services 225 1,794 1,794 2,019 Total cost of sales 234 16 7,051 7,067 7,301 Gross profit 619 17 4,099 4,116 4,735 Research and development 858 858 Selling, general and administrative 1,034 88 2,867 2,955 3,989 Total operating expenses 1,892 88 2,867 2,955 4,847 Operating (loss) income $ (1,273) $ (71) $ 1,232 $ 1,161 $ (112) Interest expense $ (3) $ $ (125) $ (125) $ (128) Interest income $ 1 $ 36 $ 564 $ 600 $ 601 Depreciation and amortization $ (19) $ $ (43) $ (43) $ (62) Cash and cash equivalents $ 137 $ 5,019 $ 19,772 $ 24,791 $ 24,928 Accounts receivable, net of allowance $ 619 $ 436 $ 10,731 $ 11,167 $ 11,786 Financing receivables, net of allowance $ $ $ 15,138 $ 15,138 $ 15,138 Total assets $ 11,784 $ 5,680 $ 51,690 $ 57,370 $ 69,154 Capital expenditures $ (1) $ $ (104) $ (104) $ (105) 2024 Sales: Product $ 82 $ 133 $ 10,800 $ 10,933 $ 11,015 Service 348 47 4,260 4,307 4,655 Total sales 430 180 15,060 15,240 15,670 Cost of sales: Product 22 119 8,978 9,097 9,119 Services 193 26 1,768 1,794 1,987 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"Organization and Business CSP Inc. (""CSPi"" or ""CSPI"" or ""the Company"" or ""we"" or ""our"") was incorporated in 1968 and is based in Lowell, Massachusetts. CSPi and its subsidiaries develop and market IT integration solutions, advanced security products, managed IT services, purpose built network adapters, and high-performance cluster computer systems to meet the diverse requirements of its commercial and defense customers worldwide. The Company operates in two segments , its Technology Solutions (TS) segment and High Performance Products (HPP) segment. 1. Summary of Significant Accounting Policies Basis of presentation The accompanying interim condensed consolidated financial statements have been prepared by the Company and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All adjustments were of a normal recurring nature. Certain information and footnote disclosures normally included in the annual consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States, have been omitted. Accordingly, the Company believes that although the disclosures are adequate to make the information presented not misleading, the unaudited condensed consolidated financial statements should be read in conjunction with the notes contained in the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2025. T …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

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

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing