10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Fiscal Year Ended September 30, 2015.

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from             to             .

Commission File Number 000-10843

CSP Inc.

(Exact name of Registrant as specified in its Charter)

Massachusetts	04-2441294
(State of incorporation)	(I.R.S. Employer Identification No.)

175 Cabot Street, Lowell, Massachusetts 01852 (978) 663-7598

(Address and telephone number of principal executive offices)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange of Which Registered
Common Stock, par value $0.01 per share	NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  ¨	Smaller Reporting Company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.    Yes  ¨    No  x

As of March 31, 2015, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $23,325,566 based on the closing sale price of $6.78 as reported on the Nasdaq Global Market.

As of December 2, 2015, we had outstanding 3,687,894 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the information required in Part III of this Form 10-K are incorporated by reference from our definitive proxy statement for our 2016 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended September 30, 2015.

TABLE OF CONTENTS

		Page
PART I.
Item 1.	Business	1
Item 1A.	Risk Factors	8
Item 2.	Properties	13
Item 3.	Legal Proceedings	13
Item 4.	Mine Safety Disclosures	13
PART II.
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 8.	Financial Statements and Supplementary Data	25
Item 9.	Change in and Disagreements with Accountants on Accounting and Financial Disclosures	25
Item 9A.	Controls and Procedures	26
Item 9B.	Other Information	27
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	27
Item 11.	Executive Compensation	27
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	28
Item 13.	Certain Relationships, Related Transactions and Director Independence	28
Item 14.	Principal Accountant Fees and Services	28
PART IV.
Item 15.	Exhibits and Financial Statement Schedules	29
Note: Items 1B, 6 and 7A are not required for Smaller Reporting Companies and therefore are not furnished.

i

Special Note Regarding Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. This information may involve known and unknown risks, uncertainties and other factors that are difficult to predict and may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. The discussion below contains certain forward-looking statements related but not limited to, among others, statements concerning future revenues and future business plans. Forward-looking statements include statements in which we use words such as “expect,” “believe,” “anticipate,” “intend,” “project”, “estimate” “should” “could,” “may,” “plan,” “potential,” “predict,” “project,” “will,” “would” and similar expressions. Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, the forward-looking statements are subject to significant risks and uncertainties, and thus we cannot assure you that these expectations will prove to have been correct, and  actual results may vary from those contained in such forward-looking statements. We discuss many of these risks and uncertainties in Item 1A under the heading “Risk Factors” in this Annual Report.

Factors that may cause such variances include, but are not limited to, our dependence on a small number of customers for a significant portion of our revenue, our high dependence on contracts with the U.S. federal government, our reliance in certain circumstances on single sources for supply of key product components, and intense competition in the market segments in which we operate. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this document. We have based the forward-looking statements included in this annual report on Form 10-K on information available to us on the date of this annual report, and we assume no obligation to update any such forward-looking statements, other than as required by law. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we, in the future, may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

All forward-looking statements included herein are expressly qualified in their entirety by the cautionary statements contained or referred to elsewhere in this annual report. Unless otherwise indicated, the information in this annual report is as of September 30, 2015.

PART I

Item 1. Business

CSP Inc. (“CSPI” or “the Company” or “we” or “our”) was incorporated in 1968 and is based in Lowell, Massachusetts. To meet the diverse requirements of our commercial, and defense customers worldwide, CSPI and its subsidiaries develop and market IT integration solutions, advanced security and managed services and purpose built network adapters, as well as high-performance cluster computer systems.

Segments

CSPI operates in two segments; High Performance Products ("HPP") and Technology Solutions ("TS").

HPP Segment

• The HPP segment designs and manufactures computing systems for digital signal processing ("DSP") applications within the defense market and network Ethernet adapters that are offered to both commercial and government customers. Our DSP revenue flows from a modest number of high-value customers.

1

• In addition, we continue to design and manufacture new product lines for our Myricom network Ethernet adapters that support the Company's HPP Segment. The Myricom product line of network Ethernet adapters target three specialized markets: (1) packet capture, (2) financial transactions and (3) storage interconnect market. The packet capture market includes government applications as well as original equipment manufacturer ("OEM") sales into vendors of computer security appliances. Our financial transactions customers are banks, brokerages, and other trading firms looking for low latency adapters with value-added features specifically tied to market data feeds. Our access to storage subsystems customers are primarily using our adapters for film editing but we also derive revenue from supercomputer installations and cable head ends.

• In fiscal year 2015, we continued to invest in R&D for a new generation of 100G network adapter products, and we expect to start to generate revenue from sales of these new products in fiscal year 2016. We sell our networking products primarily through third-party distributors.

• Our Ethernet adapter products have a lower average selling price ("ASP") than our signal processing products but sell in much higher volumes. 

TS Segment

• The TS segment consists of the computer managed services, integration services, and third-party computer hardware and software value added reseller (“VAR”) businesses of our wholly-owned Modcomp subsidiary (“TS”), which operates in the United States, Germany and the United Kingdom. TS markets and sells services and third party products through its own direct sales force. TS provides professional services for complex IT environments, including advanced security; unified communications and collaboration; wireless and mobility; data center solutions; and network solutions. TS also provides managed IT services. The Company leverages its IT expertise into a variety of vertical markets, including automotive; defense; healthcare; education; federal, state and local government; maritime; and many others.

Sales Information by Industry Segment

The following table details our sales by operating segment for fiscal years ending September 30, 2015 and 2014. Additional segment and geographical information is set forth in Note 14 to our financial statements.

Segment	2015		%		2014		%
	(Dollar amounts in thousands)
HPP	$	13,948	16	%	$	14,535	17	%
TS	75,358		84	%	70,084		83	%
Total Sales	$	89,306	100	%	$	84,619	100	%

HPP Segment

Products and Services

In the HPP segment, we design, manufacture and deliver products and services to customers that require specialized networking and signal processing.

Our DSP product line (also referred to as the "Multicomputer" product portfolio) utilizes commercially available, industry standard compliant hardware components and open source software to deliver high-performance, high density and low power consuming computer solution to our customers. These systems incorporate tens to hundreds of processors, interconnected by a high-bandwidth network. They are specifically designed for analysis of complex signals and images in real-time or in modeling and simulations. CSPI's experience in processing density, large memory subsystems, high-bandwidth networking components, optimized signal processing libraries, and specialized algorithms facilitate use of these DSP products in the military/defense markets.

2

Our Ethernet adapters and solutions product line (also referred to as the “Myricom" product line) consist of high performance 10 Gigabit Ethernet adapters and application software specialized for vertical markets. By optimizing latency, throughput and cost, these solutions address the requirements of applications in the packet capture, financial transaction, broadcast video and media markets.

Products

CSPI’s HPP segment continues to offer the Multicomputer product portfolio including its 2000 SERIES VME and 3000 SERIES VXS systems. The 2000 SERIES products, with PowerPC RISC processors with AltiVec™ technology, high-speed memory and Myrinet-2000™ cluster interconnect are in deployment by customers in the aerospace, commercial and defense markets seeking Commercial-Off-The-Shelf (“COTS”) solutions to reduce costs and ensure widespread availability.

The 3000 SERIES VXS product line, incorporating the Freescale QorIQ PowerPC processors with AltiVec technology, delivers next generation performance to its predecessor products in interconnect bandwidth and processing density while preserving absolute code reuse at the application layer. The 3000 SERIES VXS product line targets high performance DSP, signal intelligence (“SIGINT”), radar and sonar applications in airborne, shipboard and unmanned aerial vehicle (“UAV”) platforms where space, power and cooling are at a premium. With its built-in 10 Gigabit Ethernet technology, the 3000 SERIES VXS supports the most prevalent networking standard found in both business and industrial settings.

With the purchase of the Myricom assets on November 4, 2013, the HPP segment acquired the interconnect technology critical to its latest generation of Multicomputer products as well as a strong base of new customers in commercial growth markets. Since the acquisition, the Company has offered Myricom Myri-10G Ethernet adapters and associated network adapter software. Myri-10G is a family of high performance 10 Gigabit Ethernet adapters for Linux, Windows, Mac OS X and VMware ESX.

During fiscal year 2015, CSPi launched the fourth generation of the Myricom network adapter product line. These adapters are purpose built for complex and demanding applications including automated trading and network monitoring. The 10 Gigabit Ethernet adapters ship with our DBL™ software, and target customers seeking ultra low latency to speed up financial trading applications. In addition, the adapters feature advanced server functions, such as A/B arbitration, and precision timestamping accuracy required for regulatory compliance. In addition, our network adapters continue to meet the critical requirements of accessibility and lossless data retrieval for media collaboration with 10GBASE-T adapters added to the list of Myricom adapters tested and qualified for use with the Avid® MediaCentral™ Platform. The latest version of the Sniffer10G application programming interface provides enterprise and government customers the ability to capture, inject, and analyze all network traffic at line rate on a 10 Gigabit Ethernet network. Our 100% lossless packet capture and packet injection, this performance enables thorough inspection of the network traffic to provide better detection of threats for cyber security environments. Sniffer10G serves a number of market segments including network surveillance, deep packet inspection and as a critical technology component within distributed denial-of-service (DDoS) defense appliances.

Royalties

    We license the design of certain of our 2000 SERIES computer processor boards and switched interconnect technology to third parties. In exchange for licensing this technology, we receive a royalty payment for each processor board that the licensee produces that utilizes our design for these products.

Markets, Marketing and Dependence on Certain Customers

Aerospace & Defense Market

We market our Multicomputer products to defense and commercial markets with an emphasis on applications requiring the analysis of complex signals such as sonar, radar, seismic exploration and scientific/engineering research. We commercially distribute our products in these markets as an OEM supplier to system integrators, distributors and value-added resellers.

In the case of sales to the government, the prime contractor will typically incorporate our products into its own future product developments and, therefore, will need early access to low-level, detailed technical specifications and prototype units. These prime contractors typically demand long term product availability and support. As a supplier in this market, we recognize that there may be a significant up-front investment of time and resources in building business relationships. However,

3

the result of this type of long-standing and committed business relationship is a strong potential for long-term revenue streams as programs progress from development phases into deployment.

Our use of high performance embedded computing technologies to support information exchange in real-time is becoming increasingly significant to 21^st century “network centric warfare” military operations. In addition to upgrades of existing military programs, there has been steady growth of new programs requiring signal/image processing and analysis equipment. However, the efficiency inherent in these technologies reduces the number of systems required to achieve the same results. Both new and upgraded programs require a substantial investment in development and evaluation before products deploy into field use. The time from development to deployment varies by program and often extends beyond twenty-four months. Our focus for fiscal 2016 and beyond is to continue to build interest in our 3000 SERIES VXS products that integrate the latest PowerPC with AltiVec^™ processors, while continuing to support established products and existing customer relationships.

Financial Transactions Market

Myricom network adapters with DBL™ application software address the need for the ultra-low latency required in the world of financial trading. Running DBL™ on Myri-10G extreme performance network adapters provides unmatched acceleration for 10 Gigabit Ethernet environments, with benchmarked application-to-application latency in the single digit microseconds for Linux and Microsoft Windows operating systems.

Packet Capture Market

Myricom Sniffer10G software, running on Myri-10G 10 Gigabit Ethernet adapters, provides enterprise and government customers and partners the ability to capture, inject, and analyze network traffic at line rate for all Ethernet packet sizes, with low host-CPU overhead. Sniffer10G serves the following market segments: network surveillance, monitoring and analysis; test, measurement and packet generation; deep packet inspection (DPI); and as a critical technology component within distributed denial-of-service (DDoS) defense appliances.

Storage Interconnect Market

Myricom network adapters are used in a wide range of applications that connect to storage subsystems using Ethernet. Most of these customers are using content creation applications from the storage system to video editing work stations. We also have customers in the supercomputing market and building cable head ends. These adapters with the Myri10GE software deliver best in class throughput performance for Ethernet controllers.

Competition

The markets for our HPP segment are very competitive. Customer requirements coupled with advances in technology drive our efforts to continuously improve existing products and develop new ones. Applications expertise, product innovation, strong technical support and dedicated customer service allow us to compete as a provider of high-performance products and solutions.

Our direct competitors for the Multicomputer products are Mercury Systems Inc., Kontron, Curtis Wright, and G. E. Intelligent Platforms, among others. Our indirect competitors are the board manufacturers that specialize in the DSP segment of this market. In the past, manufacturers such as Emerson, HP, IBM and Dell participated in the low performance segment of the general-purpose computer and single board computer market. Today, those companies manufacture general-purpose computer systems incorporating multi-core processors and are formidable competitors in computation-intensive applications, such as radar and sonar. While we believe our products are designed to offer superior overall value in combined performance, features and price, we may not be able to overcome the capabilities of these much larger companies to address the needs of the cost sensitive customer, where price, as opposed to system performance, size and specialized packaging, is the primary factor in the buying decision.

A continued presence in this market depends upon maintaining our strategic partnerships with prime contractors and providing high density and scalability in a compact, low power and cost effective package that can easily be integrated into OEM designs for high performance computation. Since the majority of sales are to prime contractors, the principal barrier to gaining market share is the reluctance of established users to redesign products currently in production. A key area of opportunity exists in design wins on new programs.

4

Our primary direct competitors for the Myricom products are Solarflare and Intel, among others. In specific application areas we also compete with Napatech and Accolade Technology for the packet processing business; Small Tree, ATTO, and Chelsio in the content creation/post production markets; and Mellanox in the Financial Services arena.

Intel solutions will remain attractive to customers in markets that require the lowest price and whose needs are met by commodity hardware adapters. To compete, the Myricom products must offer a value proposition based on enhanced features, such as support of faster (40/100GbE) networks, precision time stamping and lossless packet capture, to justify our price differential.

Manufacturing, Assembly and Testing

Currently, all Multicomputer systems are shipped to our customers directly from our plant in Lowell, Massachusetts. Our manufacturing activities consist mainly of final assembly and testing of printed circuit boards and systems that are designed by us and fabricated by outside third party vendors.

Upon receipt of material and components by us from outside suppliers, our quality assurance technicians inspect these products and components. During manufacture and assembly, both sub-assemblies and completed systems are subjected to extensive testing, including burn-in and environmental stress screening designed to minimize equipment failure at delivery and over the useful service life of the system. We also use diagnostic programs to detect and isolate potential component failures. A comprehensive log is maintained of past failures to monitor the ongoing reliability of our products and improve design standards.

Currently, Myricom products are shipped to our customers directly from our plants in Pasadena, California and Lowell, Massachusetts. Our network adapters are designed by us and fabricated by outside third party vendors. Material and components received from outside suppliers are inspected by our quality assurance technicians.

With respect to the products described above, we provide a warranty covering defects arising from products sold and service performed, which varies from 90 days to three years, depending upon the particular unit in question.

Sources and Availability of Raw Materials

Several components used in our HPP segment products are obtained from sole-source suppliers. We are dependent on key vendors such as Freescale Semiconductor, Inc. for PowerPC processors for our 2000 SERIES and our 3000 SERIES VXS products and Wind River Systems, Inc. for VxWorks operating system software. Despite our dependence on these sole-source suppliers, based on our current forecast, we do not consider the risk of interruption of supply to be significant to meet our projected sales obligations over the the near term, because we have adequate inventory on hand and/or our current requirements can be met in the existing supply chain.

Research and Development

For the year ended September 30, 2015, our expenses for R&D were approximately $2.8 million compared to approximately $3.5 million for fiscal year 2014. Expenditures for R&D are expensed as they are incurred. Product development efforts in fiscal year 2015 involved enhancements to our Myricom products, into which we expect to continue to make investments related to the development of new hardware adapter products and the software that enables the hardware to meet the needs of specific applications. Our current R&D plan is intended to extend the usefulness and marketability of these products by reducing latency, improving precision time stamping capabilities, and adding features, such as enhanced arbitration, to deliver products fine-tuned to meet the needs of our markets.

Patent rights are not material to our business.

Backlog

The backlog of customer orders and contracts in the HPP segment was approximately $1.6 million at September 30, 2015 as compared to $0.2 million at September 30, 2014. Our backlog can fluctuate greatly. These fluctuations can be due to the timing of receipt of large orders often for purchases from prime contractors for sales to the government. It is expected that all of the customer orders in backlog will ship within the next twelve months.

5

TS Segment

Products and Services

Integration Solutions

In the TS segment, we focus on VAR integrated solutions including third-party hardware, software and technical computer-related consulting services and managed services. Our value proposition is our ability to integrate diverse third-party components together into a complete solution and install the system at the customer site and to offer high value IT consulting services to deliver solutions.

Third-Party Hardware and Software

Our wholly-owned subsidiary, Modcomp, sells third-party hardware and software products in the information technology market, with a strategic focus on industry standard servers and data center infrastructure solutions, midrange data storage infrastructure products, network products, unified communications and IT security hardware and software solutions. Our key offerings include products from HP, Cisco Systems, IBM, Juniper Networks, Dell, Citrix, EMC, Intel, VMWare, Fortinet, nCircle, Microsoft, Arcsight and Checkpoint. Through our business relationships with these vendors, we are able to offer competitively priced robust products to meet our customers' diverse technology needs, providing procurement and engineering expertise in server infrastructure, storage, security, unified communications and networking, to the small-to-medium sized businesses (“SMBs”) and large enterprise businesses (“LEBs”) with complex IT environments. We offer our customers a single point of contact for complex multi-vendor technology purchases. 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 also provide installation, integration, logistical assistance and other value-added services that customers may require. Our current customers are in web and infrastructure hosting, education, telecommunications, healthcare services, distribution, financial services, professional services and manufacturing. We target SMB and LEB customers across all industries.

Professional Services

We provide professional IT consulting services in the following areas:

• Implementation, integration, migration, configuration, installation services and project management.

• Unified Storage Platforms ("USPs"). We help our customers implement USP solutions using products from Dell, EMC, HP and NetApp. USPs have advantages over conventional storage architecture, which include cost savings from better utilization of hardware and lower headcount requirements to run and maintain data storage systems, higher availability and faster data access rates resulting in increased productivity.

• Virtualization. We implement virtualization solutions using products from companies such as VMWare and Citrix. Virtualization allows one computer to do the job of multiple computers by sharing resources of a single computer across multiple environments. With virtual servers and desktops, users can host multiple operating systems and applications, which can eliminate physical and geographical limitations. Other benefits include energy cost savings, lower capital expenditure requirements, high availability of resources, better desktop management, increased security and improved disaster recovery processes.

• Enterprise security intrusion prevention, network access control and unified threat management. Using third-party products from companies like Checkpoint, Palo Alto, Juniper Networks and Cisco Systems, our services are designed to ensure data security and integrity through the establishment of virtual private networks, firewalls and other technologies.

• IT security compliance services. We provide services for IT security compliance with personal privacy laws such as the Payment Card Industry Data Security Standard (PCI DSS), the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and internal control regulations under the Sarbanes-Oxley Act (SOX).

• Unified communications, wireless and routing and switching solutions using Cisco Systems and Aruba Networks products and services.

6

• Custom software applications and solutions development and support. We develop custom applications to customer specifications using industry standard platforms such as Microsoft.Net, SharePoint and OnBase. We are a Microsoft Gold Partner.

• Managed IT services that include monitoring, reporting and management of alerts for the resolution and preventive general IT and IT security support tasks.

• Maintenance and technical support both for third-party products and proprietary Modcomp legacy PCDA systems, including hardware and software, operating system and user support.

Markets, Marketing and Dependence on Certain Customers

We are an IT systems integrator and computer hardware and software VAR. We also provide technical services to achieve a value-add to our customers. We operate within the VAR sales channels of major computer hardware and software OEMs, primarily within the geographic areas of our sales offices and across the U.S. We provide innovative IT solutions, including a myriad of infrastructure products with customized integration consulting services and managed services to meet the unique requirements of our customers. We market the products and services we sell through sales offices in the U.S., Germany and the U.K. using our direct sales force (for a list of our locations, see Item 2 of this Form 10-K).

Competition

The primary competition in the TS segment is other VARs ranging from small companies that number in the thousands, to large enterprises such as CDW, PC Connection, Insight, MoreDirect, Dimension Data, Bechtle AG, Presidio and Computacenter AG & Co oHG. In addition, we compete directly with many of the companies who manufacture the third-party products that we sell, including Cisco Systems, IBM, HP EMC and others. In the network management, security and storage systems integration services business, our competitors are extensive and vary to a certain degree in each of the geographical markets, but they include such competitors as HP/EDS, IBM and Cap Gemini.

Nearly all of our product offerings are available through other channels. Favorable competitive factors for the TS segment include procurement capability, product diversity which enables the delivery of complete and custom solutions to our customers and the strength of our key business relationships with the major IT OEMs. We also consider our ability to supply unique and/or specialized needs of the SMB and LEB markets and our strong knowledge of the IT products that we sell to be a key competitive advantage. Our ability to provide managed services through our network operations center and the consulting integration services required to design and install the custom solutions that fit our customers' IT needs are distinct competitive advantages. Unfavorable competitive factors include low name recognition, limited geographic coverage and pricing.

Backlog

The backlog of customer orders and contracts for the TS segment was approximately $10.1 million at September 30, 2015, as compared to $6.6 million at September 30, 2014. 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 2016.

Significant Customers

See Note 14 to the notes to the consolidated financial statements for detailed information regarding customers which comprised 10% or more of consolidated revenues for the years ended September 30, 2015 and 2014.

Employees

On September 30, 2015, we had approximately 172 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.

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 are rendered are in Note 14 to the notes to the consolidated financial statements.

7

Item 1A. Risk Factors

If any of the risks and uncertainties set forth below actually materialize, our business, financial condition and/or results of operations could be materially and adversely affected, the trading price of our common stock could decline and a stockholder could lose all or part of his or her investment. The risks and uncertainties set forth below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations.

We depend on a small number of customers for a significant portion of our revenue and loss of any customer could significantly affect our business

We are dependent on a small number of customers for a large portion of our revenues. For the fiscal year ended September 30, 2015, just two customers accounted for approximately $31.4 million in revenue, or 35% of our total revenues for the fiscal year. Both the HPP and TS segments are reliant upon a small number of significant customers, the loss of any one of which could have a material adverse effect on our business. A significant reduction in the sales to or loss of any of our major customers would have a material adverse effect on our business, financial condition and results of operations. In addition, 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 depend on contracts with the federal government for a significant portion of our revenue, and our business could be seriously harmed if the government significantly decreased or ceased doing business with us.

We derived 5% of our total revenue in fiscal year 2015 and 7% of our total revenue in fiscal year 2014 from the Department of Defense ("DoD") as a subcontractor. We expect that the DoD contracts will continue to be important to our business for the foreseeable future. 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.

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. 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.

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. When the federal government operates under a CR, delays can occur in the procurement of products 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, and sequestration is not alleviated, it could continue to have significant consequences to our business and our industry.

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 prime contracts.

U.S. Federal government contracts contain numerous provisions that are unfavorable to us.

U.S. 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;

8

•  impose fines and penalties and subject us to criminal prosecution; and

•  control or prohibit the export of our data and technology.

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. 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.

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.

We rely on single sources for supply of certain components and our business may be seriously harmed if our supply of any of these components or other components is disrupted

Several components used in our HPP products are currently obtained from sole-source suppliers. We are dependent on key vendors like Mellanox Technologies for our high-speed interconnect components. Generally, suppliers may terminate their purchase orders with us without cause upon 30 days' notice and may cease offering products to us upon 180 days' notice. Although we do not consider the risk of interruption of supply to be a significant risk in the near term, if in the future, Mellanox Technologies were to limit or reduce the sale of such components to us, or if these or other component suppliers, some of which are small companies, were to experience future financial difficulties or other problems which could prevent them from supplying the necessary components, such events could have a material adverse effect on our business, financial condition and results of operations. These sole source and other suppliers are each subject to quality and performance risks, materials shortages, excess demand, reduction in capacity and other factors that may disrupt the flow of goods to us or our customers, which thereby may adversely affect our business and customer relationships.

We have no guaranteed supply arrangements with our suppliers and there can be no assurance that our suppliers will continue to meet our requirements. If our supply arrangements are interrupted, there can be no assurance that we would be able to find another supplier on a timely or satisfactory basis. Any shortage or interruption in the supply of any of the components used in our products, or the inability to procure these components from alternate sources on acceptable terms, could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that severe shortages of components will not occur in the future. Such shortages could increase the cost or delay the shipment of our products, which could have a material adverse effect on our business, financial condition and results of operations. Significant increases in the prices of these components would also materially adversely affect our financial performance since we may not be able to adjust product pricing to reflect the increase in component costs. We could incur set-up costs and delays in manufacturing should it become necessary to replace any key vendors due to work stoppages, shipping delays, financial difficulties or other factors and, under certain circumstances, these costs and delays could have a material adverse effect on our business, financial condition and results of operations.

Our international operations are subject to a number of risks

We market and sell our products in certain international markets and we have established operations in the U.K. and Germany. Foreign-based revenue is determined based on the location to which the product is shipped or services are rendered and represented 34% and 37% of our total revenue for the fiscal years ended September 30, 2015 and 2014, respectively. If revenues generated by foreign activities are not adequate to offset the expense of establishing and maintaining these foreign subsidiaries and activities, our business, financial condition and results of operations could be materially adversely affected. In addition, there are certain risks inherent in transacting business internationally, such as changes in applicable laws and regulatory requirements, export and import restrictions, export controls relating to technology, tariffs and other trade barriers, longer payment cycles, problems in collecting accounts receivable, political instability, fluctuations in currency exchange rates, expatriation controls and potential adverse tax consequences, any of which could adversely impact the success of our international activities. A portion of our revenues are from sales to foreign entities, including foreign governments, which are primarily paid in the form of foreign currencies. 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.

We depend on key personnel and skilled employees and face competition in hiring and retaining qualified employees.

9

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. The loss of services of any of our executives or other key personnel could have a material adverse effect on our business, financial condition and results of operations. Our future success will depend to a significant extent on our ability to attract, train, motivate and retain highly skilled technical professionals. Our ability to maintain and renew existing engagements and obtain new business depends, in large part, on our ability to hire and retain technical personnel with the skills that keep pace with continuing changes in industry standards and technologies. The inability to hire additional qualified personnel could impair our ability to satisfy our growing client base, requiring an increase in the level of responsibility for both existing and new personnel. There can be no assurance that we will be successful in retaining current or future employees.

Systems failures may disrupt our business and have an adverse effect on our results of operations.

Any systems failures, including network, software or hardware failures, whether caused by us, a third party service provider, unauthorized intruders and hackers, computer viruses, natural disasters, power shortages or terrorist attacks, could cause loss of data or interruptions or delays in our business or that of our clients. Like other companies, we have experienced cyber security threats to our data and systems, our company sensitive information, and our information technology infrastructure, including malware and computer virus attacks, unauthorized access, systems failures and temporary disruptions. We may experience similar security threats at customer sites that we operate and manage as a contractual requirement. Prior cyber attacks directed at us have not had a material adverse impact on our business or our financial results, and we believe that our continuing commitment toward threat detection and mitigation processes and procedures will avoid such impact in the future. Due to the evolving nature of these security threats, however, the impact of any future incident cannot be predicted.

In addition, the failure or disruption of our email, communications or utilities could cause us to interrupt or suspend our operations or otherwise harm our business. Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption and, as a result, our actual results could differ materially and adversely from those anticipated.

The systems and networks that we maintain for our clients, although highly redundant in their design, could also fail. If a system or network we maintain were to fail or experience service interruptions, we might experience loss of revenue or face claims for damages or contract termination. Our errors and omissions liability insurance may be inadequate to compensate us for all the damages that we might incur and, as a result, our actual results could differ materially and adversely from those anticipated.

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. 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. 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. There can be no assurance that a new competitor will not attempt to penetrate the various markets for our products and services. Their entry into markets historically targeted by us may have a material adverse effect on our business, financial condition and results of operations.

Our operating results may fluctuate significantly.

Our operating results have fluctuated widely on a quarterly and annual basis during the last several years and we expect to experience significant fluctuations in future operating results. Many factors, some of which are beyond our control, have contributed to these fluctuations in the past and may continue to do so. Such factors include:

• sales in relatively large dollar amounts to a relatively small number of customers;

• competitive pricing programs and volume discounts;

• loss of customers;

10

• market acceptance of our products;

• product obsolescence;

• general economic conditions;

• change in the mix of products sold;

• whether or not we are able to secure design wins for significant customer systems;

• timing of significant orders;

• delays in completion of internal product development projects;

• delays in shipping our products;

• delays in acceptance testing by customers;

• production delays due to quality programs with outsourced components;

• shortages of components;

• timing of product line transitions;

• declines of revenues from previous generations of products following announcement of replacement products containing more advance technology; and

• fixed nature of our expenditures on personnel, facilities and marketing programs.

We believe that period-to-period comparisons of our results of operations will not necessarily be meaningful and should not be relied upon as indicative of our future performance. It is also possible that in some periods, our operating results may be below the expectations of securities analysts and investors. In such circumstances, the price of our common stock may decline.

To be successful, we must respond to the rapid changes in technology. If we are unable to do so on a timely basis our business could be materially adversely affected.

Our future success will depend in large part on our ability to enhance our current products and to develop new commercial products on a timely and cost-effective basis in order to respond to technological developments and changing customer needs. The design-in process is typically lengthy and expensive and there can be no assurance that we will be able to continue to meet the product specifications of our customers in a timely and adequate manner. In addition, if we fail to anticipate or to respond adequately to changes in technology and customer preferences, or if there is any significant delay in product developments or introductions, this could have a material adverse effect on our business, financial condition and results of operations, including the risk of inventory obsolescence. Because of the complexity of our products, we have experienced delays from time to time in completing products on a timely basis. If we are unable to design, develop or introduce competitive new products on a timely basis, our future operating results would be adversely affected, particularly in our HPP segment. There can be no assurance that we will be successful in developing new products or enhancing our existing products on a timely or cost-effective basis, or that such new products or product enhancements will achieve market acceptance.

We need to continue to expend resources on research and development efforts, particularly our HPP segment, to meet the needs of our customers. If we are unable to do so, our products could become less attractive to customers and our business could be materially adversely affected.

As a result of our need to maintain or increase our spending levels for R&D in this area and the difficulty in reducing costs associated with R&D, our operating results could be materially harmed if our revenues fall below expectations. In addition, as a result of CSPI's commitment to invest in R&D, spending as a percent of revenues may fluctuate in the future.

Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal controls over financial reporting.

11

Our management identified an internal control material weakness as of March 31, 2014. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected in a timely basis.

The material weakness is in connection with our controls over the revenue recognition process, specifically that revenue recognition criteria have been satisfied prior to recognizing revenue and the failure to sufficiently assess gross versus net revenue indicators to certain revenue transactions. We determined that controls over the revenue recognition process were not operating effectively and the resulting control gap amounted to a material weakness in our controls over financial reporting. As a result, we had concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2014. Although we have implemented changes to our internal controls over financial reporting as described below, at this time we cannot conclude that the material weakness has been remediated.

Effective internal control over financial reporting and disclosure controls and procedures are necessary in order for us to provide reliable financial and other reports and effectively prevent fraud. These types of controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the proper preparation of our financial statements, as well as regarding the timely reporting of material information. If we cannot maintain effective internal control or disclosure controls and procedures, or provide reliable financial statements or SEC reports or prevent fraud, investors may lose confidence in our reported financial information, our common stock could be subject to delisting on the stock exchange where it is traded, our operating results and the trading price of our common stock could suffer and we might become subject to litigation.

While our management will continue to review the effectiveness of our internal control over financial reporting and disclosure controls and procedures, there is no assurance that our disclosure controls and procedures or our internal control over financial reporting will be effective in accomplishing all control objectives, including the prevention and detection of fraud, all of the time.

Our stock price may continue to be volatile

Historically, the market for technology stocks has been extremely volatile. Our common stock has experienced and may continue to experience, substantial price volatility. The following factors could cause the market price of our common stock to fluctuate significantly:

• loss of a major customer;

• loss of a major supplier;

• the addition or departure of key personnel;

• variations in our quarterly operating results;

• announcements by us or our competitors of significant contracts, new products or product enhancements;

• acquisitions, distribution partnerships, joint ventures or capital commitments;

• regulatory changes;

• sales of our common stock or other securities in the future;

• changes in market valuations of technology companies; and

• fluctuations in stock market prices and volumes.

In addition, the stock market in general and the NASDAQ Global Market and technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. 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.

You should not rely our forward looking statement as a prediction of actual future financial condition or results.

12

Item 2. Properties

Listed below are our principal facilities as of September 30, 2015. Management 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.

Location	Principal Use	Owned or Leased	Approximate Floor Area
HPP Segment Properties:
CSP Inc.	Corporate Headquarters	Leased	11,450 S.F.
43 Manning Road	Manufacturing, Sales,
Billerica, MA	Marketing and
	Administration
CSP Inc., DBA Myricom	Sales, Marketing and	Leased	2,450 S.F.
3871 East Colorado Blvd	Administration
Pasadena, CA
TS Segment Properties:
Modcomp, Inc.	Division Headquarters	Leased	11,815 S.F.
1182 East Newport Center Drive	Sales, Marketing and
Deerfield Beach, FL	Administration
Modular Computer Systems GmbH	Sales, Marketing, Service	Leased	12,443 S.F.
Oskar-Jager-Strasse 50	and Administration
D-50825 Koln
Germany
Modcomp, Ltd.	Sales, Marketing and	Leased	2,490 S.F.
12a Oaklands Business Park, Fishponds Road	Administration
Wokingham Berkshire
United Kingdom

Item 3.    Legal Proceedings

We are currently not a party to any material legal proceedings.

Item 4.    Mine Safety Disclosures

Not Applicable.

13

PART II

Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market information.    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.

	2015				2014
Fiscal Year:	High		Low		High		Low
1st Quarter	$	8.34	$	6.90	$	8.39	$	6.71
2nd Quarter	7.79		6.18		8.79		7.29
3rd Quarter	7.79		6.46		7.89		6.50
4th Quarter	7.19		5.30		8.48		6.80

Stockholders.    We had approximately 86 holders of record of our common stock as of December 23, 2015. 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 approximately1,600.

Dividends.     On December 17, 2013, our board of directors declared a cash dividend of $0.10 per share which was paid on January 7, 2014 to stockholders of record as of December 27, 2013. On February 11, 2014, our board of directors declared a cash dividend of $0.11 per share which was paid on March 11, 2014 to stockholders of record as of February 27, 2014. On May 14, 2014, our board of directors declared a cash dividend of $0.11 per share which was paid on June 10, 2014 to stockholders of record as of May 30, 2014. On August 6, 2014, our board of directors declared a cash dividend of $0.11 per share which was paid on August 29, 2014 to stockholders of record as of August 21, 2014, the record date.

On December 16, 2014, the Company's board of directors declared a cash dividend of $0.11 per share which was paid

on January 8, 2015 to shareholders of record as of December 28, 2014, the record date. On February 11, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on March 12, 2015 to shareholders of record as of February 26, 2015, the record date. On May 13, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on June 10, 2015 to shareholders of record as of May 29, 2015, the record date. On August 12, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on September 11, 2015 to shareholders of record as of August 26, 2015, the record date.

On December 23, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which will be paid

on January 11, 2016 to shareholders of record as of December 31, 2015, the record date.

14

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 contains forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by the forward-looking information. 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. The following discussion should be read in conjunction with our financial statements and the related notes included elsewhere in this filing

Overview of Fiscal 2015 Results of Operations

Revenue increased by approximately $4.7 million, or 6%, to $89.3 million for the twelve months ended September 30, 2015 versus $84.6 million for the twelve months ended September 30, 2014.

Our gross profit margin percentage decreased overall, from 25% of revenues for the twelve months ended September 30, 2014 to 21% for the twelve months ended September 30, 2015. The fiscal year 2015 gross margin decrease is primarily attributed having one less high margin plane related royalty, changes in product mix and the impact of cost overruns in our U.K. division.

We generated operating income of approximately $0.2 million for the fiscal year ended September 30, 2015 compared to $1.7 million of operating income for the fiscal year ended September 30, 2014.

The following table details our results of operations in dollars and as a percentage of sales for the fiscal years ended :

	September 30, 2015			% of sales		September 30, 2014			% of sales
	(Dollar amounts in thousands)
Sales	$	89,306		100	%	$	84,619		100	%
Costs and expenses:
Cost of sales	70,119			79	%	63,798			76	%
Engineering and development	2,826			3	%	3,484			4	%
Selling, general and administrative	16,135			18	%	16,116			19	%
Total costs and expenses	89,080			100	%	83,398			99	%
Bargain purchase gain, net of tax	—			—	%	462			1	%
Operating income	226			—	%	1,683			2	%
Other expense	(210		)	—	%	(228		)	—	%
Income before income taxes	16			—	%	1,455			2	%
Income tax expense	226			—	%	121			—	%
Net income (loss)	$	(210	)	—	%	$	1,334		2	%

Revenues

Revenue increased by approximately $4.7 million, or 6%, to $89.3 million for the twelve months ended September 30, 2015 versus $84.6 million for the twelve months ended September 30, 2014. HPP revenue decreased by approximately $0.6 million and TS revenues increased by $5.3 million. The HPP segment revenue decrease is attributed to having one less plane royalty and lower Multicomputer repair volumes, which was partially offset by increased Myricom product revenue. The TS segment revenues for our U.S. and U.K. divisions were $5.8 million and $1.7 million higher, respectively, than the prior year, but were partially offset by a $2.2 million decrease in revenue for our German division.

15

HPP segment revenue change by product line for the twelve months ended September 30 was as follows :

(Dollar amounts in thousands)					Increase (Decrease)
	2015		2014		$			%
Product	$	9,894	$	9,151	$	743		8	%
Services	4,054		5,384		(1,330		)	(25	)%
Total	$	13,948	$	14,535	$	(587	)	(4	)%

The increase in HPP product revenues for fiscal year 2015 compared to fiscal year 2014 was the result of an increase in Myricom product revenues. This increase in product revenues was more than offset by the reduction in service revenues attributed to lower plane related royalties and the timing of repairs. The HPP segment recognized approximately $4.5 million of royalty and licensing revenue related to six planes in fiscal year 2014 as compared to $3.5 million of royalty revenue related to five planes in fiscal year 2015. We expect to recognize royalty revenue related to five planes during fiscal year 2016.

TS segment revenue change by product line for the twelve months ended September 30 was as follows:

(Dollar amounts in thousands)					Increase (Decrease)
	2015		2014		$			%
Product	$	56,553	$	49,726	$	6,827		14	%
Services	18,805		20,358		(1,553		)	(8	)%
Total	$	75,358	$	70,084	$	5,274		8	%

The increase in TS segment revenues, for fiscal year 2015 compared to fiscal year 2014, was the result of increases in our US and UK divisions of $5.8 million and $1.7 million, respectively, partially offset by a decrease in our German division of $2.2 million. The increase in TS segment product revenues, for fiscal year 2015 compared to fiscal year 2014, was the result of increases in our US and UK divisions of $6.4 million and $1.9 million, respectfully, partially offset by a decline in Germany of $1.5 million.

Our revenues by geographic area based on the location to which the products were shipped or services rendered was as follows:

(Dollar amounts in thousands)
	For the Twelve Months Ended September 30,								Increase (Decrease)
	2015		%		2014		%		$			%
Americas	$	58,433	66	%	$	53,561	63	%	$	4,872		9	%
Europe	27,848		31	%	28,396		34	%	(548		)	(2	)%
Asia	3,025		3	%	2,662		3	%	363			14	%
Totals	$	89,306	100	%	$	84,619	100	%	$	4,687		6	%

Gross Margins

     Our gross margin decreased by $1.6 million or (4)% of revenues to $19.2 million in fiscal year 2015 as compared to a gross margin of $20.8 million in fiscal year 2014.

The following table summarizes gross margin changes by segment for fiscal year 2015 and 2014:

16

(Dollar amounts in thousands)
	2015				2014				Decrease
	GM$		GM%		GM$		GM%		GM$			GM%
HPP	$	7,949	57	%	$	9,167	63	%	$	(1,218	)	(6	)%
TS	11,238		15	%	11,654		17	%	(416		)	(2	)%
Total	$	19,187	21	%	$	20,821	25	%	$	(1,634	)	(4	)%

The impact of product mix within our HPP segment on gross margin for the twelve months ended September 30 was as follows:

(Dollar amounts in thousands)
	2015				2014				Increase (Decrease)
	GM$		GM%		GM$		GM%		GM$			GM%
Product	$	3,985	40	%	$	3,911	43	%	$	74		(3	)%
Services	3,964		98	%	5,256		98	%	(1,292		)	—	%
Total	$	7,949	57	%	$	9,167	63	%	$	(1,218	)	(6	)%

The decrease in our HPP segment gross margins is primarily attributed to the impact of $4.5 million of royalty licensing revenue related to six planes at approximately 100% gross margin in fiscal year 2014 as compared to $3.5 million of plane related royalties in fiscal year 2015 as well as a decrease in revenue for replacement parts and repairs for the comparative period.

The impact of product mix within our TS segment on gross margin for the twelve months ended September 30 was as follows:

(Dollar amounts in thousands)
	2015				2014				Increase (decrease)
	GM$		GM%		GM$		GM%		GM$			GM%
Product	$	6,984	12	%	$	6,215	12	%	$	769		—	%
Services	4,254		23	%	5,439		27	%	(1,185		)	(4	)%
Total	$	11,238	15	%	$	11,654	17	%	$	(416	)	(2	)%

     For fiscal year 2015 compared to fiscal year 2014, the decrease in our TS segment gross margin of $0.4 million is primarily attributed to the decreases in gross margin of $0.3 million and $0.2 million in our U.K. and German divisions , respectively, partially offset by a $0.1 million increase in our U.S.division. The $0.8 million increase in product gross margins is primarily attributed to increases of $0.3 million and $0.5 million in the U.K. and U.S. divisions, respectively. The $1.2 million decrease in service gross margins is primarily attributed to decreases of $0.4 million and $0.6 million in the U.S. and U.K. divisions, respectively. The U.K. variance is attributed to the under utilization of engineering overhead and the recognition of cost over runs on certain fixed price contracts in the U.K. division, and the decrease in U.S. division margin is attributed to lower service revenues.

Engineering and Development Expenses

The following table details our engineering and development expenses by operating segment for the fiscal years ended September 30, 2015 and 2014:

17

(Dollar amounts in thousands)
	For the Year ended September 30,
	2015		% of Total		2014		% of Total		$ Increase (Decrease)			% Increase (Decrease)
By Operating Segment:
HPP	$	2,772	98	%	$	3,484	100	%	$	(712	)	(20	)%
TS	54		2	%	—		—	%	54			—	%
Total	$	2,826	100	%	$	3,484	100	%	$	(658	)	(19	)%

The decrease in engineering and development expenses in the HPP segment is attributed to the timing of expenditures and reductions in cost. The fiscal year 2015 expenses are primarily for Myricom engineering expenses incurred in connection with the development of new products, which includes the release of our Myricom 10 Gigabyte Ethernet Adapters with DBL software on July 7, 2015, during the fourth quarter of our fiscal year.

Selling, General and Administrative

The following table details our selling, general and administrative (“SG&A”) expense by operating segment for the years ended September 30, 2015 and 2014:

(Dollar amounts in thousands)
	For the Year ended September 30.
	2015		% of Total		2014		% of Total		$ Increase (Decrease)			% Increase (Decrease)
By Operating Segment:
HPP	$	4,692	29	%	$	4,793	30	%	$	(101	)	(2	)%
TS	11,443		71	%	11,323		70	%	120			1	%
Total	$	16,135	100	%	$	16,116	100	%	$	19		—	%

For fiscal year 2015 compared to fiscal year 2014, HPP segment SG&A spending decreased overall by $0.1 million, which reflected increases of $0.4 million for salaries and wages and $0.2 million for employee benefits that were offset by decreased spending on outside consultants of $0.3 million, lower bonus expense of $0.3 million, and net other reductions of $0.1 million. For fiscal year 2015 compared to fiscal year 2014, TS segment SG&A spending increased by $0.1 million as the result higher sales compensation expense in the US and UK.

18

Other Income/Expenses

The following table details our other income/expenses for the years ended September 30, 2015 and 2014:

(Dollar amounts in thousands)
	For the Year ended September 30,
	2015			2014			Increase (Decrease)
Interest expense	$	(84	)	$	(85	)	$	1
Interest income	9			11			(2		)
Foreign exchange loss	(172		)	(162		)	(10		)
Other income, net	37			8			29
Total other expense, net	$	(210	)	$	(228	)	$	18

Income Taxes

The Company recorded an income tax expense of approximately $0.2 million, which reflected an effective tax expense rate of 1414% for the year ended September 30, 2015, compared to income tax expense of approximately $0.1 million for the year ended September 30, 2014, which reflected an effective tax rate of 8%. The significant increase in the effective tax rate for the year ended September 30, 2015 was due to the fact that no tax benefit was recorded from the substantial loss in the UK due to the fact that a full valuation allowance is maintained against the deferred tax assets as discussed below.

As of September 30, 2015, management assessed the positive and negative evidence in the U.S operations, and estimated we will have sufficient future taxable income to utilize the existing deferred tax assets. Significant objective positive evidence included the cumulative profits that we realized over the most recent years. This evidence enhances our ability to consider other subjective evidence such as our projections for future growth. Other factors we considered are the likelihood for continued royalty income in future years, and our expectation that the TS segment will continue to be profitable in future years. On the basis of this evaluation, as of September 30, 2015, we have concluded that our U.S. deferred tax asset is more likely than not to be realized. It should be noted however, that the amount of the deferred tax asset realized could be adjusted in future years, if estimates of taxable income during the carryforward periods are reduced, or if objective negative evidence in the form of cumulative losses is present.

We continue to maintain a full valuation allowance against our U.K. deferred tax assets as we have experienced cumulative losses and do not have any indication that the operation will be profitable in the future to an extent that will allow us to utilize much of our net operating loss carryforwards. To the extent that actual experience deviates from our assumptions, our projections would be affected and hence our assessment of realizability of our deferred tax assets may change.

Liquidity and Capital Resources

Our primary source of liquidity is our cash and cash equivalents, which decreased by approximately $5.2 million to $11.2 million as of September 30, 2015 from $16.4 million as of September 30, 2014. At September 30, 2015, cash equivalents totaled $0.5 million.

Significant uses of cash for the year ended September 30, 2015 included an increase in accounts receivable of approximately $8.2 million, payment of dividends of approximately $1.6 million, a decrease in deferred revenue of approximately $0.8 million, purchases of property and equipment of approximately $0.7 million, and unfavorable currency exchange fluctuation of approximately $0.6 million. Partially offsetting these uses of cash were an increase in accounts payable and accrued expenses of approximately $4.5 million.

Cash held by our foreign subsidiaries located in Germany and the U.K. totaled approximately $3.3 million as of September 30, 2015 and $7.1 million as of September 30, 2014. This cash is included in our total cash and cash equivalents reported above. We consider this cash to be permanently reinvested into these foreign locations because repatriating it would result in unfavorable tax consequences.  Consequently, it is not available for activities that would require it to be repatriated to the U.S.

19

As of September 30, 2015 and September 30, 2014, the Company maintained a line of credit that allows for borrowings of up to $1.0 million. Availability under the facility is reduced by outstanding borrowings thereunder. The interest rates on outstanding borrowings is London Inter-Bank Offer Rate (“LIBOR”) plus 2.5%, with a floor of 4%. Borrowings under the credit agreements are required to be repaid on demand by the lender in certain circumstances, upon termination of the agreements, or may be prepaid by the Company without penalty. The Company did not borrow under the line of credit during the fiscal years ending September 30, 2015 and 2014.

As of September 30, 2015 and September 30, 2014, the Company also maintained an inventory line of credit that may be used by the TS business segment in the U.S. to purchase inventory from approved vendors with payment terms which exceed those offered by the vendors. No interest accrues under the inventory line of credit when advances are paid within terms, late payments are subject to an interest charge of Prime plus 5%. The credit agreements for the inventory line of credit contain financial covenants which require the Company to maintain the following TS segment specific financial ratios: (1) a minimum current ratio of 1.2, (2) tangible net worth of no less than $2.5 million, and (3) a maximum ratio of total liabilities to total net worth of less than 5.0:1. As of September 30, 2015 and September 30, 2014, Company borrowings under the inventory line of credit were $2.9 million and $2.1 million, respectively, and the Company was in compliance with all covenants for the inventory line of credit as of September 30, 2015 and 2014.

For more information, please refer to Note 12 - Lines of Credit, in the Notes to our Consolidated Financial Statements contained in this annual report on Form 10-K.

If cash generated from operations is insufficient to satisfy working capital requirements, we may need to access funds through bank loans, the equity markets, or other means. There is no assurance that we will be able to raise any such capital on terms acceptable to us, on a timely basis or at all. If we are unable to secure additional financing, we may not be able to complete development or enhancement of products, take advantage of future opportunities, respond to competition or continue to effectively operate our business.

Based on our current plans and business conditions, management believes that the Company’s available cash and cash equivalents, the cash generated from operations and availability on our lines of credit will be sufficient to provide for the Company’s working capital and capital expenditure requirements for the foreseeable future.

20

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. 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 uncollectible receivables, inventory valuation, goodwill and intangibles, income taxes, deferred compensation, revenue recognition, retirement plans, restructuring costs and contingencies. We base our estimates on historical performance and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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 allowance for doubtful accounts and net deferred tax asset valuation allowance; inventory valuation; intangibles; and pension and retirement plans.

Revenue Recognition

We derive revenue from the sale of integrated hardware and software, professional services, maintenance contracts, other services, and third party service contracts. Professional services generally include implementation, installation, and training services. Other services generally include revenue generated through our royalty and extended warranty contracts. We recognize revenue when persuasive evidence of an arrangement exists, delivery of the product or service has occurred, the fee is fixed or determinable and collectability is reasonably assured. We enter into multiple element arrangements as well as standalone sales of product, professional services, and other services.

We recognize revenue from standalone product sales upon transfer of title, which is typically upon shipment, provided all other revenue recognition criteria have been met. Revenue generated from standalone professional services and extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met. In some instances professional service contracts include a customer acceptance provision, in which case revenue is deferred until we have evidence of customer acceptance. We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement.

We recognize revenue from multiple element arrangements in accordance with ASC 605-25, Multiple Element Arrangements. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. ASC 605-25 establishes a hierarchy for determining the amount to allocate to each separate deliverable in an arrangement. We determine selling price using vendor specific objective evidence (“VSOE”), if it exists; or, if VSOE does not exist, third party evidence (“TPE”) of fair value is applicable; otherwise, we use the best estimate of selling price (“BESP”). The objective of BESP is to determine the price at which the Company would transact if the element was sold on a standalone basis. Management’s determination of BESP involves several factors including budgeted profit margins, and cost to complete services.

We recognize revenue from third party service contracts as either gross sales or net sales in accordance ASC 605-45, Principal Agent Considerations, which requires us to determine if the Company is acting as a principal party to the transaction or simply acting as an agent or broker. Under ASC 605-45, the assumption of the risks and rewards under the arrangement are

considered indicators of principal parties to the arrangement. We record revenue as gross when it is a principal party to the arrangement and net of cost when we are acting as a broker or agent. Under gross sales recognition, the entire selling price is recorded in revenue and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenue resulting in net sales equal to the gross profit on the transaction.

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

HPP Segment Revenue

HPP segment revenue is derived from the sale of integrated hardware and software, maintenance, and other services through the Multi-computer and Myricom product lines. Multi-computer product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists principally of other

21

services which comprise of warranty and royalty revenue. Revenue generated from extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement.

Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products functionality, and post contract maintenance and support. Revenue on multiple element arrangements is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly revenue for post contract maintenance and support is recognized over the implied maintenance period of three years, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met.

TS Segment Revenue

TS Segment revenue is derived from the sale of hardware, software, professional services, and third party service contracts. TS product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists of professional services which generally include implementation, installation, and training services. Revenue generated from standalone professional services is recognized as services are completed, provided all other revenue recognition criteria has been met. Our standard sales agreements generally do not include customer acceptance provisions. However, in certain instances when arrangements include a customer acceptance provision or there is uncertainty about customer acceptance, revenue is deferred until we have evidence of customer acceptance.

Revenue derived from the sale of products, which are comprised of both hardware and software, and professional services is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly revenue for professional services is recognized as services are completed, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met.

We recognize revenue from certain third party service contracts, which are evaluated to determine whether such service revenue should be recorded as gross sales or net sales in accordance ASC 605-45. We evaluate all third party service contracts to determine whether we act as a principal in the transaction and assume the risks and rewards of ownership or if we are simply acting as an agent or broker. Under gross sales recognition, the entire selling price is recorded in sales and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to sales resulting in net sales equal to the gross profit on the transaction and there are no costs of goods sold. We use the net sales recognition method for the third party service contracts that we sell when we are not the primary obligor on the contract. We use the gross sales recognition for the third party service contracts that we sell when we act as principal and are the primary obligor.

Product Warranty Accrual

Our product sales generally include a 90-day to three-year hardware warranty. At time of product shipment, we accrue for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar products.

Engineering and Development Expenses

Engineering and development expenses include payroll, employee benefits, stock-based compensation and other headcount-related expenses associated with product development. Engineering and development expenses also include third-party development and programming costs. We consider technological feasibility for our software products to be reached upon the release of the software, accordingly, no internal software development costs have been capitalized.

Income Taxes

22

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. 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. We also reduce deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology requires estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities. Valuation allowances are recorded against the gross deferred tax assets that management believes, after considering all available positive and negative objective evidence, historical and prospective, with greater weight given to historical evidence, that it is more likely than not that these assets will not be realized.

In addition, we are required to recognize in the consolidated financial statements, those tax positions determined to be more-likely-than-not of being sustained upon examination, based on the technical merits of the positions as of the reporting date. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are recognized.

In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. 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.

Intangible Assets

Intangible assets that are not subject to amortization are also required to be tested annually, or more frequently if events or circumstances indicate that the asset may be impaired. We did not have intangible assets with indefinite lives other than goodwill at any time during the two years ended September 30, 2015. Intangible assets subject to amortization are amortized over their estimated useful lives, generally three to ten years, and are carried at cost, less accumulated amortization. The remaining useful lives of intangible assets are evaluated on an annual basis. Intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the fair value of an intangible asset subject to amortization is determined to be less than its carrying value, then an impairment charge is recorded to write down that asset to its fair value.

Inventories

Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out method. The recoverability of inventories is based upon the types and levels of inventories held, forecasted demand, pricing, competition and changes in technology. We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Pension and Retirement Plans

The funded status of pension and other post-retirement benefit plans is recognized prospectively on the balance sheet. Gains and losses, prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive income, net of tax, until they are amortized as a component of net periodic pension/post-retirement benefits expense. Additionally, plan assets and obligations are measured as of our fiscal year-end balance sheet date (September 30).

We have defined benefit and defined contribution plans in the U.K., Germany and in the U.S. In the U.K. and Germany, 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 plans in both the U.K. and Germany are closed to newly hired employees and have been for the two years ended September 30, 2015. In the U.S., the Company also 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, 2015. 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

23

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 on the officers.

Pension expense is based on an actuarial computation of current future benefits using estimates for expected return on assets, expected compensation increases and applicable discount rates. 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. Increases in estimated compensation increases would result in higher pension expense while decreases would lower pension expense. Discount rates are selected based upon rates of return on high quality fixed income investments currently available and expected to be available during the period to maturity of the pension benefit. 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. Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheets.

Inflation and Changing Prices

Management does not believe that inflation and changing prices had significant impact on sales, revenues or income (loss) during fiscal 2015 or 2014. There is no assurance that the Company's business will not be materially and adversely affected by inflation and changing prices in the future.

24

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements are included herein.

	Page
Report of Independent Registered Public Accounting Firm	32
Consolidated Balance Sheets as of September 30, 2015 and 2014	33
Consolidated Statements of Operations for the years ended September 30, 2015 and 2014	34
Consolidated Statements of Comprehensive Income (Loss) for the years ended September 30, 2015 and 2014	35
Consolidated Statements of Shareholders' Equity for the years ended September 30, 2015 and 2014	36
Consolidated Statements of Cash Flows for the years ended September 30, 2015 and 2014	37
Notes to Consolidated Financial Statements	38

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None.

25

Item 9A. Controls and Procedures

Evaluation of Controls and Procedures

Disclosure Controls and Procedures. The Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2015. Our chief executive officer, our chief financial officer and other members of our senior management team supervised and participated in this evaluation. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2015, the Company’s chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were not effective, due to the fact that we are not yet able to conclude that the material weakness described in this Item 9A has been remediated by the changes we made in response to that material weakness.

Management's Report on Internal Control over Financial Reporting.

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rule 13a-15(f) under the Exchange Act, internal control over financial reporting is a process designed by or under the supervision of a company's principal executive and principal financial officers and effected by a company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. It includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of a company; and

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

Management has assessed the effectiveness of the Company's internal control over financial reporting as of September 30, 2015. In making its assessment of internal control, management used the criteria described in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. As a result of its assessment, management has concluded that the Company's internal control over financial reporting was not effective as of September 30, 2015.

For the period ended September 30, 2015, management has identified a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected in a timely basis.

    The material weakness is in connection with our controls over the revenue recognition process, specifically that revenue recognition criteria have been satisfied prior to recognizing revenue and the failure to sufficiently assess gross versus net revenue indicators to certain revenue transactions. We determined that controls over the revenue recognition process were not operating effectively and the resulting control gap amounted to a material weakness in our controls over financial reporting. As a result, we had concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2015. Although we have implemented changes to our internal controls over financial reporting as described below, at this time we cannot conclude that the material weakness has been remediated, as we continued to make personnel changes and upgrade systems throughout fiscal year 2015.

26

During the periods following our initial identification of the material weakness referred to above, management assessed various alternatives to remediate this material weakness and we implemented changes to our system of internal controls, which included the implementation enhanced internal auditing procedures, whereby revenue transactions are subjected to an additional review process at the corporate level to ensure the correct accounting methodology is applied to all revenue transactions.  During the twelve months ended September 30, 2015, management took additional action to upgrade our international accounting staff and improved accounting operations in our European divisions.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This Annual Report on Form 10-K does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's assessment of the effectiveness of the Company's internal control over financial reporting as of September 30, 2015 was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the SEC that call for the Company to provide only management's report in this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting.

During the quarter ended September 30, 2015, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.    Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

We incorporate the information required by this item by reference to the sections captioned “Nominees for Election”, “Our Board of Directors”, “Our Executive Officers”, “Section 16(a) Beneficial Ownership Reporting Compliance” and “Corporate Governance” in our Schedule 14A Proxy Statement for our 2014 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2015.

Item 11. Executive Compensation

We incorporate the information required by this item by reference to the sections captioned “Compensation of Executive Officers” and “Compensation of Non-Employee Directors” in our Schedule 14A Proxy Statement for our 2015 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2015.

27

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Securities Authorized for Issuance Under Equity Compensation Plans.

The equity compensation plans approved by our stockholders consist of the CSP, Inc.1997 Incentive Stock Option Plan, the 2003 Stock Incentive Plan, the 2007 Stock Incentive Plan, the 2014 Employee Stock Purchase Plan (the "ESPP") and the 2015 Stock Incentive Plan . In fiscal 2015 and 2014, the Company granted certain officers including its Chief Executive Officer and non-employee directors shares of non-vested common stock instead of stock options. The vesting periods for the officers', the Chief Executive Officer's and the directors' non-vested stock awards are four years, three years and one year, respectively. The following table sets forth information as of September 30, 2015 regarding the total number of securities outstanding under these equity compensation plans.

	(a)(1)(2)	(b)		(c)
Plan Category	Number of securities to be issued upon exercise of outstanding stock options and non-vested shares issued	Weighted-average exercise price of outstanding stock options		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column) (a))(3)
Equity compensation plans approved by security holders	356,471	$	6.43	533,003

(1) Includes 301,345 non-vested shares issued.

(2) Does not include purchase rights under the ESPP, as the purchase price and number of shares to be purchased under the ESPP are not determined until the end of the relevant purchase period.

(3) Includes 327,673 shares available for future issuance under the incentive stock and stock option plans and 205,330 under the ESPP.

We incorporate additional information required by this Item by reference to the section captioned “Security Ownership of Certain Beneficial Owners and Management” in our Schedule 14A Proxy Statement for our 2016 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2015.

Item 13. Certain Relationships and Related Transactions and Director Independence

We incorporate the information required by this item by reference to the section captioned “Corporate Governance” in our Schedule 14A Proxy Statement for our 2016 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2015.

Item 14. Principal Accountant Fees and Services

We incorporate the information required by this item by reference to the section captioned “Fees for Professional Services” and “Pre-approval Policies and Procedures” in our Schedule 14A Proxy Statement for our 2016 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of our fiscal year ended September 30, 2015.

28

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)   (1)   Financial statements filed as part of this report:

Consolidated Balance Sheets as of September 30, 2015 and 2014

Consolidated Statements of Operations for the years ended September 30, 2015 and 2014

Consolidated Statements of Comprehensive Income (Loss) for the years ended September 30, 2015 and 2014.

Consolidated Statements of Shareholders' Equity for the years ended September 30, 2015 and 2014

Consolidated Statements of Cash Flows for the years ended September 30, 2015 and 2014

Notes to Consolidated Financial Statements

(2)   Financial statement schedules

All other financial statements and schedules not listed have been omitted since the required information is included in the consolidated financial statements or the notes thereto included in Item 8, or is not applicable, material or required.

29

(3)   Exhibits

Exhibit No.	Description	Filed with this Form 10-K	Incorporated by Reference
			Form	Filing Date	Exhibit No.
3.1	Articles of Organization and amendments thereto		10-K	December 26, 2007	3.1
3.2	By-laws, as amended December 13, 2012		10-K	December 20, 2012	3.1
10.1	Form of Employee Invention and Non-Disclosure Agreement		10-K	November 22, 1996	10.3
10.2	CSPI Supplemental Retirement Income Plan		10-K	December 29, 2008	10.2
10.9*	2007 Stock Incentive Plan		DEF 14A	March 30, 2007	B
10.10*	2014 Variable Compensation (Executive Bonus) and Base Programs dated November 12, 2013				10.1
10.11*	Death Benefit and Retirement Benefit Agreement between the Company and Victor Dellovo dated September 13, 2013		10-K	December 24, 2013	10.11
10.12*	Form of Change of Control Agreement with Gary W. Levine and William E. Bent Jr. each dated January 11, 2008		10-K	December 22, 2009	10.11
10.15*	2014 Employee Stock Purchase Plan		DEF 14A	January 6, 2014	A
10.16*	2015 Employee Stock Purchase Plan		DEF 14A	January 5, 2015	A
10.20	2015 Lowell, MA Lease	X
10.21	2015 Deerfield Beach, FL Lease	X
21.1	Subsidiaries	X
23.1	Consent of RSM LLP, Independent Registered Public Accounting Firm	X
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation

* Management contract or compensatory plan.

30

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CSP INC.
By:	/s/ Victor Dellovo
	Victor Dellovo Chief Executive Officer and President

Date: December 24, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date
/S/ Victor Dellovo	Chief Executive Officer, President and Director	December 24, 2015
Victor Dellovo
/s/ Gary W. Levine	Chief Financial Officer (Principal Financial Officer)	December 24, 2015
Gary W. Levine
/s/ John M. Leydon	Vice President of Finance (Chief Accounting Officer)	December 24, 2015
John M. Leydon
/s/ C. Shelton James	Director	December 24, 2015
C. Shelton James
/s/ Raymond Charles Blackmon	Director	December 24, 2015
Raymond Charles Blackmon
/s/ Myrilyn T. Smith	Director	December 24, 2015
Marilyn T. Smith

31

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

CSP Inc. and Subsidiaries

Lowell, MA

We have audited the accompanying consolidated balance sheets of CSP Inc. and Subsidiaries (the “Company”) as of September 30, 2015 and 2014, and the related statements of operations, comprehensive income, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2015 and 2014, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

RSM US LLP

Boston, Massachusetts

December 24, 2015

32

CSP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except par value)

	September 30, 2015			September 30, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	11,181		$	16,448
Accounts receivable, net of allowances of $331 and $241	18,468			12,279
Unbilled accounts receivable	1,420			253
Inventories, net	5,749			6,446
Refundable income taxes	43			418
Deferred income taxes	1,337			1,230
Other current assets	1,884			2,372
Total current assets	40,082			39,446
Property, equipment and improvements, net	1,564			1,472
Other assets:
Intangibles, net	416			545
Deferred income taxes	1,687			1,892
Cash surrender value of life insurance	3,064			2,785
Other assets	183			167
Total other assets	5,350			5,389
Total assets	$	46,996		$	46,307
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	13,776		$	9,751
Deferred revenue	2,931			4,101
Pension and retirement plans	675			658
Income taxes payable	—			1
Total current liabilities	17,382			14,511
Pension and retirement plans	10,009			10,440
Other long term liabilities	15			69
Total liabilities	27,406			25,020
Commitments and contingencies
Shareholders’ equity:
Common stock, $.01 par value per share; authorized, 7,500 shares; issued and outstanding 3,688 and 3,619 shares, respectively	37			36
Additional paid-in capital	12,249			11,658
Retained earnings	15,689			17,517
Accumulated other comprehensive loss	(8,385		)	(7,924		)
Total shareholders’ equity	19,590			21,287
Total liabilities and shareholders’ equity	$	46,996		$	46,307

See accompanying notes to consolidated financial statements.

33

CSP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except for per share data)

	For the year ended
	September 30, 2015			September 30, 2014
Sales:
Product	$	66,447		$	58,877
Services	22,859			25,742
Total sales	89,306			84,619
Cost of sales:
Product	55,478			48,751
Services	14,641			15,047
Total cost of sales	70,119			63,798
Gross profit	19,187			20,821
Operating expenses:
Engineering and development	2,826			3,484
Selling, general and administrative	16,135			16,116
Total operating expenses	18,961			19,600
Bargain purchase gain	—			462
Operating income	226			1,683
Other (expense):
Foreign exchange loss	(172		)	(162		)
Other income (expense), net	(38		)	(66		)
Total other (expense), net	(210		)	(228		)
Income before income taxes	16			1,455
Income tax expense	226			121
Net income (loss)	$	(210	)	$	1,334
Net income (loss) attributable to common stockholders	$	(210	)	$	1,284
Net income (loss) per share – basic	$	(0.06	)	$	0.37
Weighted average shares outstanding – basic	3,548			3,448
Net income (loss) per share – diluted	$	(0.06	)	$	0.37
Weighted average shares outstanding – diluted	3,548			3,499

See accompanying notes to consolidated financial statements.

34

CSP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

	For the year ended
	September 30, 2015			September 30, 2014
Net income (loss)	$	(210	)	$	1,334
Other comprehensive income (loss):
Unrealized actuarial loss on minimum pension liability	(131		)	(1,720		)
Foreign currency translation gain (loss)	(330		)	(339		)
Other comprehensive loss	(461		)	(2,059		)
Total comprehensive loss	$	(671	)	$	(725	)

See accompanying notes to consolidated financial statements.

35

CSP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Year Ended September 30, 2015:

(Amounts in thousands)

	Shares	Amount		Additional Paid-in Capital		Retained Earnings			Accumulated other comprehensive loss			Total Shareholders’ Equity
Balance as of September 30, 2013	3,496	$	35	$	11,137	$	17,728		$	(5,865	)	$	23,035
Comprehensive income (loss):
Net income	—	—		—		1,334			—			1,334
Other comprehensive loss	—	—		—		—			(2,059		)	(2,059		)
Stock-based compensation	—	—		359		—			—			359
Tax benefit from exercise of stock options	—	—		47		—			—			47
Restricted stock issuance	106	1		—		—			—			1
Issuance of shares under employee stock purchase plan	14	—		99		—			—			99
Exercise of stock options	3	—		16		—			—			16
Cash dividends on common stock ($0.43 per share)	—	—		—		(1,545		)	—			(1,545		)
Balance as of September 30, 2014	3,619	36		11,658		17,517			(7,924		)	21,287
Comprehensive loss:
Net loss	—	—		—		(210		)	—			(210		)
Other comprehensive loss	—	—		—		—			(461		)	(461		)
Stock-based compensation	—	—		375		—			—			375
Restricted stock issuance	36	1		—		—			—			1
Issuance of shares under employee stock purchase plan	31	—		206		—			—			206
Exercise of stock options	2	—		10		—			—			10
Cash dividends on common stock ($0.44 per share)	—	—		—		(1,618		)	—			(1,618		)
Balance as of September 30, 2015	3,688	$	37	$	12,249	$	15,689		$	(8,385	)	$	19,590

See accompanying notes to consolidated financial statements.

36

CSP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	For the year ended
	September 30, 2015			September 30, 2014
Cash flows from operating activities:
Net income (loss)	$	(210	)	$	1,334
Adjustments to reconcile net income to net cash used in operating activities:
Bargain purchase gain	—			(462		)
Depreciation and amortization	516			510
Amortization of intangibles	130			124
Loss on disposal of fixed assets, net	54			5
Foreign exchange loss	172			162
Non-cash changes in accounts receivable	96			1
Non-cash changes in inventory	560			407
Stock-based compensation expense on stock options and restricted stock awards	375			361
Deferred income taxes	2			(98		)
Increase in cash surrender value of life insurance	(86		)	(135		)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(8,226		)	647
(Increase) decrease in inventories	78			(1,038		)
Decrease in refundable income taxes	356			194
(Increase) decrease in other assets	328			(351		)
Increase (decrease) in accounts payable and accrued expenses	4,461			(656		)
Increase (decrease) in deferred revenue	(812		)	513
Increase (decrease) in pension and retirement plans liability	(83		)	252
Increase (decrease) in income taxes payable	4			(311		)
Decrease in other long term liabilities	(55		)	(336		)
Net cash provided by (used in) operating activities	(2,340		)	1,123
Cash flows from investing activities:
Life insurance premiums paid	(193		)	(170		)
Proceeds from the sale of fixed assets	—			6
Cash paid to acquire business	—			(500		)
Purchases of property, equipment and improvements	(724		)	(590		)
Net cash used in investing activities	(917		)	(1,254		)
Cash flows from financing activities:
Dividends paid	(1,618		)	(1,545		)
Tax benefit from exercise of stock options	—			47
Proceeds from issuance of shares under equity compensation plans	216			114
Net cash used in financing activities	(1,402		)	(1,384		)
Effects of exchange rate on cash	(608		)	(656		)
Net decrease in cash and cash equivalents	(5,267		)	(2,171		)
Cash and cash equivalents, beginning of period	16,448			18,619
Cash and cash equivalents, end of period	$	11,181		$	16,448
Supplementary cash flow information:
Cash paid for income taxes	$	15		$	201
Cash paid for interest	$	85		$	85

See accompanying notes to consolidated financial statements.

37

CSP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014

Organization and Business

CSP Inc. (“CSPI” or “the Company” or “we” or “our”) was founded in 1968 and is based in Lowell, Massachusetts. To meet the diverse requirements of commercial and defense customers worldwide, CSPI and its subsidiaries develop and market IT integration solutions and high-performance cluster computer systems. The Company operates in two segments, its HPP segment and its TS segment.

1.        Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

Foreign Currency Translation

The U.S. Dollar is the reporting currency for all periods presented. The financial information for entities outside the United States is measured using the local currency as the functional currency. Assets and liabilities of the Company's foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at average rates in effect during the period. The resulting translation adjustment is reflected as accumulated other comprehensive income (loss), a separate component of shareholders' equity on the consolidated balance sheets. The translation adjustment for intercompany foreign currency loans that are of a long-term-investment nature is also reflected as accumulated other comprehensive income (loss). Currency transaction gains and losses are recorded as other income (expense) in the statements of operations.

Cash Equivalents

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

Research and Development Expense

For the years ended September 30, 2015 and 2014, our expenses for research and development were approximately $2.8 million and $3.5 million, respectively. Expenditures for research and development are expensed as they are incurred.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management assesses the recoverability of the long-lived assets (other than goodwill) by comparing the estimated undiscounted cash flows associated with the related asset or group of assets against their respective carrying amounts. The amount of impairment, if any, is calculated based on the excess of the carrying amount over the fair value of those assets. Intangible assets that are not subject to amortization are also required to be tested annually, or more frequently if events or circumstances indicate that the asset may be impaired. We did not have intangible assets with indefinite lives at any time during the two years ended September 30, 2015. Intangible assets subject to amortization are amortized on a straight-line basis over their estimated useful lives, generally three to ten years, and are carried at cost, less accumulated amortization. The remaining useful lives of intangible assets are evaluated on an annual basis. Intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the fair value of an intangible asset subject to amortization is determined to be less than its carrying value, then an impairment charge is recorded to write down that asset to its fair value.

38

Inventories

Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out method. The recoverability of inventories is based upon the types and levels of inventories held, forecasted demand, pricing, competition and changes in technology. We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Property, Equipment and Improvements

The components of property, equipment and improvements are stated at cost. The Company provides for depreciation by use of the straight-line method over the estimated useful lives of the related assets (three to seven years). Leasehold improvements are amortized by use of the straight-line method over the lesser of the estimated useful life of the asset or the lease term. Repairs and maintenance costs are expensed as incurred. Property, equipment and improvements are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If the fair value of property, equipment and improvements is determined to be less than their carrying value, then an impairment charge is recorded to write down that asset to its fair value.

Trade Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are stated at amounts that have been billed to customers less an allowance for doubtful accounts. Allowances for doubtful accounts are recorded for the estimated losses resulting from the inability of our customers to make required payments. The estimates for the allowance for doubtful accounts are based on the length of time the receivables are past due, current business environment and our historical experience. If the financial condition of our customers were to deteriorate, resulting in impairment of their ability to make payments, additional allowances may be required. Accounts receivable are charged off against the reserve when management has determined they are uncollectible.

Pension and Retirement Plans

The funded status of pension and other postretirement benefit plans is recognized on the balance sheet. Gains and losses, prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive income, net of tax, until they are amortized as a component of net periodic pension/postretirement benefits expense. Additionally, plan assets and obligations are measured as of our fiscal year-end balance sheet date (September 30).

We have defined benefit and defined contribution plans in the United Kingdom (the “U.K.”), Germany and in the U.S. In the U.K. and Germany, 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 plans in both the U.K. and Germany are closed to newly hired employees and have been for the two years ended September 30, 2015. In the U.S., the Company also 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, 2015. 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 on the officers.

Pension expense is based on an actuarial computation of current future benefits using estimates for expected return on assets, expected compensation increases and applicable discount rates. Management has reviewed the discount rates and rates of return with our consulting actuaries and investment advisor 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. Increases in estimated compensation increases would result in higher pension expense while decreases would lower pension expense. Discount rates are selected based upon rates of return on high quality fixed income investments currently available and expected to be available during the period to maturity of the pension benefit. A decrease in the discount rate would result in greater pension expense while an increase in the discount rate would decrease pension expense.

39

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 consolidated balance sheets.

Revenue Recognition

We derive revenue from the sale of integrated hardware and software, professional services, maintenance contracts, other services, and third party service contracts. Professional services generally include implementation, installation, and training services. Other services generally include revenue generated through our royalty and extended warranty contracts. We recognize revenue when persuasive evidence of an arrangement exists, delivery of the product or service has occurred, the fee is fixed or determinable and collectability is reasonably assured. We enter into multiple element arrangements as well as standalone sales of product, professional services, and other services.

We recognize revenue from standalone product sales upon transfer of title, which is typically upon shipment, provided all other revenue recognition criteria have been met. Revenue generated from standalone professional services and extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met. In some instances professional service contracts include a customer acceptance provision, in which case revenue is deferred until we have evidence of customer acceptance. We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement.

We recognize revenue from multiple element arrangements in accordance with ASC 605-25, Multiple Element Arrangements. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. ASC 605-25 establishes a hierarchy for determining the amount to allocate to each separate deliverable in an arrangement. We determine selling price using vendor specific objective evidence (“VSOE”), if it exists; or, if VSOE does not exist, third party evidence (“TPE”) of fair value if applicable; otherwise, we use the best estimate of selling price (“BESP”). The objective of BESP is to determine the price at which the Company would transact if the element was sold on a standalone basis. Management’s determination of BESP involves several factors including budgeted profit margins, and cost to complete services.

We recognize revenue from third party service contracts as either gross sales or net sales in accordance ASC 605-45, Principal Agent Considerations, which requires us to determine if the Company is acting as a principal party to the transaction or simply acting as an agent or broker. Under ASC 605-45, the assumption of the risks and rewards under the arrangement are

considered indicators of principal parties to the arrangement. We record revenue as gross when it is a principal party to the arrangement and net of cost when we are acting as a broker or agent. Under gross sales recognition, the entire selling price is recorded in revenue and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenue resulting in net sales equal to the gross profit on the transaction.

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

HPP Segment Revenue

HPP segment revenue is derived from the sale of integrated hardware and software, maintenance, and other services through the Multi-computer and Myricom product lines. Multi-computer product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists principally of other services which comprise of warranty and royalty revenue. Revenue generated from extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement.

Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products functionality, and post contract maintenance and support. Revenue on multiple element arrangements is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly revenue for post contract maintenance and support is recognized over the implied maintenance period of three years, and revenue for product sales is recognized upon delivery

40

assuming all other revenue recognition criteria have been met.

TS Segment Revenue

TS Segment revenue is derived from the sale of hardware, software, professional services, and third party service contracts. TS product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists of professional services which generally include implementation, installation, and training services. Revenue generated from standalone professional services is recognized as services are completed, provided all other revenue recognition criteria has been met. Our standard sales agreements generally do not include customer acceptance provisions. However, in certain instances when arrangements include a customer acceptance provision or there is uncertainty about customer acceptance, revenue is deferred until we have evidence of customer acceptance.

Revenue derived from the sale of products, which are comprised of both hardware and software, and professional services is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly revenue for professional services is recognized as services are completed, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met.

We recognize revenue from certain third party service contracts, which are evaluated to determine whether such service revenue should be recorded as gross sales or net sales in accordance ASC 605-45. We evaluate all third party service contracts to determine whether we act as a principal in the transaction and assume the risks and rewards of ownership or if we are simply acting as an agent or broker. Under gross sales recognition, the entire selling price is recorded in sales and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to sales resulting in net sales equal to the gross profit on the transaction and there are no costs of goods sold. We use the net sales recognition method for the third party service contracts that we sell when we are not the primary obligor on the contract. We use the gross sales recognition for the third party service contracts that we sell when we act as principal and are the primary obligor.

Product Warranty Accrual

Our product sales generally include a 90-day to three-year hardware warranty. At time of product shipment, we accrue for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar products.

Engineering and Development Expenses

Engineering and development expenses include payroll, employee benefits, stock-based compensation and other headcount-related expenses associated with product development. Engineering and development expenses also include third-party development and programming costs. We consider technological feasibility for our software products to be reached upon the release of the software, accordingly, no internal software development costs have been capitalized.

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. 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. We also reduce deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology requires estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities. Valuation allowances are recorded against the gross deferred tax assets that management believes, after considering all available positive and negative objective evidence, historical and prospective, with greater weight given to historical evidence, that it is more likely than not that these assets will not be realized.

In addition, we are required to recognize in the consolidated financial statements, those tax positions determined to be more-likely-than-not of being sustained upon examination, based on the technical merits of the positions as of the reporting

41

date. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are recognized.

In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. 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.

Earnings per Share of Common Stock

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

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

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

	For the year ended
	September 30, 2015			September 30, 2014
	(Amounts in thousands except per share data)
Net income (loss)	$	(210	)	$	1,334
Less: Net income attributable to nonvested common stock	—			50
Net income (loss) attributable to common stockholders	$	(210	)	$	1,284
Weighted average total shares outstanding - basic	3,548			3,582
Less: weighted average non-vested shares outstanding	—			134
Weighted average number of common shares outstanding - basic	3,548			3,448
Potential common shares from non-vested stock awards and the assumed exercise of stock options	—			51
Weighted average common shares outstanding - diluted	3,548			3,499
Net income (loss) per share - basic	$	(0.06	)	$	0.37
Net income (loss) per share - diluted	$	(0.06	)	$	0.37

All anti-dilutive securities, including stock options, are excluded from the diluted income per share computation. For the year ended September 30, 2015, 26 thousand stock options were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive. For the fiscal year ended September 30, 2014, approximately 51 thousand stock options were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates under different assumptions or conditions.

Stock-Based Compensation

We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including stock options and nonvested shares of restricted common stock based on estimated fair values of stock-based payment awards on the date of grant. The Company uses the Black-Scholes option-pricing model to calculate the fair value of stock option grants. The fair value of nonvested restricted share awards is equal to the quoted market price of our common stock as quoted on the Nasdaq Global Market on the date of grant. The value of the portion of the award that is ultimately

42

expected to vest is recognized as expense over the requisite service periods in the Company's Consolidated Statements of Operations.

Because stock-based compensation expense recognized in the Consolidated Statements of Operations for the fiscal years ended September 30, 2015 and 2014 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense recognized for the fiscal years ended September 30, 2015 and 2014 consisted of stock-based compensation expense related to options and nonvested restricted stock granted pursuant to the Company's stock incentive and employee stock purchase plans of approximately $0.4 million and $0.4 million, respectively.

Concentrations of Credit Risk

Cash and cash equivalents are maintained with several financial institutions in the US, Germany and in the UK. Deposits held with banks may exceed the amount of insurance on such deposits. Generally, these deposits may be redeemed upon demand. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Subsequent Events

On September 8, 2015, the Company executed a lease for 13,515 square feet of space at 175 Cabot Street in Lowell Massachusetts. The future annual rent payment obligations under the terms of this five year and three month lease are $943,000, which commence as of the December 1, 2015 effective date of the lease.

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

New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014 ‑09, Revenue from Contracts with Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers.  This ASU clarifies the principles for recognizing revenue by, among other things, removing inconsistencies in revenue requirements, improving comparability of revenue recognition practices across entities and industries and providing improved disclosure requirements. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017; however, early adoption at the original effective date is still permitted.  We are currently evaluating the impact that the adoption of this ASU will have on our consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which excludes investments measured at net asset value, as a practical expedient for fair value, from the fair value hierarchy. This ASU is effective for interim and annual reporting periods beginning after December 15, 2015, and requires retrospective application, with early adoption permitted. The implementation of this ASU is not expected to have a material impact to the disclosures in our consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-12, Plan Accounting: Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefits Plans (Topic 965), which requires fully benefit-responsive investment contracts to be measured at contract value. Those Topics also require an adjustment to reconcile contract value to fair value, when these measures differ,

on the face of the plan financial statements. Fair value is measured using the requirements in Topic 820, Fair Value Measurement. This ASU is effective for fiscal years beginning after December 15, 2015, and requires retrospective application, with early adoption permitted. The implementation of this ASU is not expected to have a material impact to the disclosures in our consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) Simplifying the Measurement of Inventory, which requires entities to measure inventory at the lower of cost and net realizable value, except for inventory measured using last-in, first-out (LIFO) or the retail inventory method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017 and requires prospective application, with early adoption permitted as of the beginning of an interim or annual reporting period.

43

The Company has not yet assessed the potential impact of implementing this ASU on the disclosures in our consolidated financial statements.

In November 2015, the FASB issued ASU No, 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes, which require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Topic apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this Topic. The amendments in this Topic are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The implementation of this guidance is not expected to have a material impact to the disclosures in our consolidated financial statements.

2.  Acquired Business

On November 4, 2013 the Company acquired substantially all of the assets of Myricom, Inc.  Myricom has been integrated into the High Performance Products and Solutions business segment.  Prior to our acquisition, Myricom was a manufacturer of high performance interconnect computing devices and software.  The Company acquired Myricom in order to obtain (i) Myricom’s interconnect technology, which is critical to our latest MultiComputer products and (ii) a strong base of new customers in commercial growth markets.  The Company also retained key Myricom technical personnel.  Myricom was a key supplier to CSPI’s MultiComputer Division.  Its interconnect technology is an important component of the latest generation MultiComputer products that we currently supply to our customers.

Although Myricom was an established business prior to our acquisition, it had previously sold off a significant portion of its business and was faced with the likelihood of having to shut down operations if it could not find a buyer to purchase its remaining assets.  This was because the revenue that Myricom was able to generate from these remaining assets was not sufficient to support its cost structure so as to enable Myricom to operate at a profit.  These factors contributed to a purchase price that resulted in the recognition of a bargain purchase gain.  The Company paid total cash consideration of approximately $0.5 million to acquire substantially all of the assets of Myricom and incurred approximately $0.1 million for the assumption of certain other liabilities.  The purchase of Myricom resulted in the recognition of a bargain purchase gain of approximately $0.5 million.  The bargain purchase gain is presented as a component of operating income, net of the federal and state tax effect.

The Myricom inventory was valued at fair value in connection with the acquisition and for the the years ended, September 30, 2015, and 2014, and approximately $0.1 million and $0.2 million, respectively, of the stepped up basis in inventory was amortized through cost of sales.

The purchase price was allocated as follows:

	(Amounts in Thousands)
Inventory	$	1,030
Property & equipment	17
Intangibles	260
Gross assets acquired	1,307
Product warranty liability assumed	(93		)
Net assets acquired	1,214
Less: asset purchase price	500
Bargain purchase gain before tax	714
Deferred tax on bargain purchase gain	(252		)
Bargain purchase gain, net of tax effect	$	462

The results of operations of Myricom for the for the year ended September 30, 2015 and the eleven month period beginning on November 4, 2013 and ending on September 30, 2014 are included in the Company’s consolidated statements of operations for the years ended Septembr 30, 2015 and 2014, respectively.

44

3.         Inventories

Inventories consist of the following:

	September 30, 2015		September 30, 2014
	(Amounts in thousands)
Raw materials	$	1,788	$	2,377
Work-in-process	387		229
Finished goods	3,574		3,840
Total	$	5,749	$	6,446

Finished goods includes inventory that has been shipped, but for which all revenue recognition criteria has not been met, of approximately $0.1 million and $0.4 million as of September 30, 2015 and September 30, 2014, respectively.

Total inventory balances in the table above are shown net of reserves for obsolescence of approximately $4.1 million and $4.7 million as of September 30, 2015 and September 30, 2014, respectively.

4.        Accumulated Other Comprehensive Loss

 The components of Accumulated Other Comprehensive Loss are as follows:

	Effect of Foreign Currency Translation			Minimum Pension Liability			Accumulated Other Comprehensive Loss
	(Amounts in thousands)
Balance as of September 30, 2013	$	(2,156	)	$	(3,709	)	$	(5,865	)
Change in Period	(339		)	(2,164		)	(2,503		)
Tax effect of change in period	—			444			444
Balance as of September 30, 2014	$	(2,495	)	$	(5,429	)	$	(7,924	)
Change in Period	(330		)	(68		)	(398		)
Tax effect of change in period	—			(63		)	(63		)
Balance as of September 30, 2015	$	(2,825	)	$	(5,560	)	$	(8,385	)

The changes in the minimum pension liability are net of amortization of net gain of $140 thousand in 2015 and net gain of $58 thousand in 2014 included in net periodic pension cost.

45

5. Income Taxes

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

	For the Years Ended September 30,
	2015			2014
	(Amounts in thousands)
Income (loss) before income tax:
U.S.	$	576		$	1,460
Foreign	(560		)	(5		)
	$	16		$	1,455
Income tax expense (benefit):
Current:
Federal	$	(4	)	$	(135	)
State	24			14
Foreign	152			37
	172			(84		)
Deferred:
Federal	(36		)	159
State	67			16
Foreign	23			30
	54			205
	$	226		$	121

As of September 30, 2015, management assessed the positive and negative evidence in the U.S operations, and estimated we will have sufficient future taxable income to utilize the existing deferred tax assets. Significant objective positive evidence included the cumulative profits that we realized over the most recent years. This evidence enhances our ability to consider other subjective evidence such as our projections for future growth. Other factors we considered are the likelihood for continued royalty income in future years, and our expectation that the TS segment will continue to be profitable in future years. On the basis of this evaluation, as of September 30, 2015, we have concluded that our U.S. deferred tax asset is more likely than not to be realized. It should be noted however, that the amount of the deferred tax asset realized could be adjusted in future years, if estimates of taxable income during the carryforward periods are reduced, or if objective negative evidence in the form of cumulative losses is present.

The recording and ultimate reversal of valuation allowances for our deferred tax asset requires significant judgment associated with past and projected performance. In assessing the realizability of deferred tax assets, we consider our taxable future earnings and the expected timing of the reversal of temporary differences. We recorded a valuation allowance which reduced the gross deferred tax asset to an amount that we believed was more likely than not to be realized because of the cumulative losses incurred in the U.K. in recent years represented sufficient negative evidence to record a valuation allowance against certain deferred tax assets.

We continue to maintain a full valuation allowance against our U.K. deferred tax assets as we have experienced cumulative losses and do not have any indication that the operation will be profitable in the future to an extent that will allow us to utilize much of our net operating loss carryforwards. To the extent that actual experience deviates from our assumptions, our projections would be affected and hence our assessment of realizability of our deferred tax assets may change.

46

Reconciliation of “expected” income tax expense (benefit) to “actual” income tax expense (benefit) is as follows:

	For the Years Ended September 30,
	2015					2014
	(Dollar amounts in thousands)
Computed “expected” tax expense	$	5		34.0	%	$	338		34.0	%
Increases (reductions) in taxes resulting from:
State income taxes, net of federal tax benefit	79			492.8	%	25			2.5	%
Foreign operations	359			2,243.8	%	99			10.0	%
Permanent differences	14			89.3	%	61			6.1	%
Stock-based compensation	1			4.3	%	(1		)	(0.1	)%
Foreign net operating loss	—			—	%	(16		)	(1.6	)%
Uncertain tax liability adjustment	(54		)	(337.5	)%	(336		)	(33.9	)%
Research & development credit	(91		)	(568.8	)%	(27		)	(2.7	)%
Other items	(87		)	(543.8	)%	(22		)	(2.2	)%
Income tax expense	$	226		1,414.1	%	$	121		12.1	%

For the years ended September 30, 2015 and 2014, temporary differences, which give rise to deferred tax assets (liabilities), are as follows:

	September 30, 2015			September 30, 2014
	(Amounts in thousands)
Deferred tax assets:
Pension	$	2,023		$	2,084
Intangibles	409			517
Other reserves and accruals	618			547
Inventory reserves and other	724			632
State credits, net of federal benefit	253			33
Federal and state net operating loss carryforwards	71			18
Foreign net operating loss carryforwards	2,093			1,940
Foreign tax credits	7			7
Depreciation and amortization	(126		)	(22		)
Gross deferred tax assets	6,072			5,756
Less: valuation allowance	(3,048		)	(2,634		)
Realizable deferred tax asset	3,024			3,122
Gross deferred tax liabilities	—			—
Net deferred tax assets	$	3,024		$	3,122

The deferred tax valuation allowance increased by approximately $414 thousand, as shown above. In assessing the realizability of deferred tax assets, the Company considers its taxable future earnings and the expected timing of the reversal of temporary differences. Accordingly, the Company has recorded a valuation allowance which reduces the gross deferred tax asset to an amount which management believes will more likely than not be realized. The valuation allowance was determined by assessing both positive and negative evidence whether it is more likely than not that deferred tax assets are realizable. Such assessment is done on a jurisdiction-by-jurisdiction basis. The Company's inability to project future profitability beyond fiscal year 2015 and the cumulative losses incurred in recent years in the U.K. represent sufficient negative evidence to record a valuation allowance against certain deferred tax assets.

As of September 30, 2015 and 2014, the Company had U.S. net operating loss carryforwards for state tax purposes of approximately $0.4 million and $0.5 million, respectively, which are available to offset future taxable income through 2031.

47

As of September 30, 2015, the Company had state research and development tax credit carry-forwards in the amount of $327 that expire in years 2024 through 2028. The Company also had other state tax credit carry-forwards of $58k available to reduce future state tax expense of which $56k has unlimited carryover status and $2k will expire in 2017.

As of September 30, 2015 the Company concluded that a net increase of $215k of the valuation allowance was appropriate. As part of the Company’s analysis, the Company evaluated, among other factors, its recent history of generating taxable income in state jurisdictions and its near-term forecasts of future taxable income. The net increase in the Company’s valuation allowance of $215k is to reserve for state tax credit carry-forwards that the Company believes will expire unused.

As of September 30, 2015, the Company had U.K. net operating loss carryforwards of approximately $10.5 million that have an indefinite life with no expiration.

Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $2.5 million and $3.2 million at September 30, 2015 and 2014, respectively. The Company's policy is that its undistributed foreign earnings are indefinitely reinvested and, accordingly, no U.S. federal and state deferred tax liabilities have been recorded.

In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. 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.

As of September 30, 2015, the total amount of uncertain tax liabilities was $0.1 million, all of which would affect our effective tax rate if recognized. We recognize interest and potential penalties accrued related to unrecognized tax benefits in our provision for income taxes.

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

	For the Year Ended September 30, 2015			For the Year Ended September 30, 2014
	(Amounts in thousands)
Balance, beginning of year	$	249		$	589
Increases in tax positions in the current year	—			—
Settlements	(72		)	(362		)
Lapse in statute of limitations	—			—
Accrued penalties and interest	18			22
Balance, end of period	$	195		$	249

We file income tax returns in the U.S. federal jurisdictions and various state and foreign jurisdictions. The Company has reviewed the tax positions taken on returns filed domestically and in its foreign jurisdictions for all open years, generally fiscal 2012 through 2015, and believes that tax adjustments in any audited year will not be material, except for the uncertain tax position described above.

6.    Property, Equipment and Improvements, Net

Property, equipment and improvements, net consist of the following:

	September 30, 2015			September 30, 2014
	(Amounts in thousands)
Leasehold improvements	$	440		$	399
Equipment	8,170			7,933
Automobiles	74			66
	8,684			8,398
Less accumulated depreciation and amortization	(7,120		)	(6,926		)
Property, equipment and improvements, net	$	1,564		$	1,472

48

The Company uses the straight-line method over the estimated useful lives of the assets to record depreciation expense. Depreciation expense was $516 thousand and $510 thousand for the years ended September 30, 2015 and 2014, respectively.

49

7.    Acquired Intangible Assets

As of September 30, 2015 and 2014, intangible assets are as follows:

	September 30, 2015							September 30, 2014
	Weighted Average Remaining Amortization Period	Gross		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period	Gross		Accumulated Amortization		Net
	(Amounts in thousands)
Customer list	4 years	$	910	$	591	$	319	5 years	$	910	$	500	$	410
Non-Compete agreements	0 years	93		93		—		0 years	93		93		—
Developed Technology	1 year	30		$	19	$	11	2 years	30		9		21
Trade Name	3 years	140		$	54	$	86	4 years	140		26		114
Total		$	1,173	$	757	$	416		$	1,173	$	628	$	545

Amortization expense on these intangible assets was $130 thousand and $124 thousand for fiscal 2015 and 2014, respectively.

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

Fiscal year ending September 30:	(Amounts in thousands)
2016	129
2017	120
2018	119
2019	11
2020	9
Thereafter	28
Total	$	416

8.    Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

	September 30,
	2015		2014
	(Amounts in thousands)
Accounts payable	$	10,559	$	6,748
Commissions	248		118
Compensation and fringe benefits	1,426		1,594
Professional fees and shareholders' reporting costs	499		485
Taxes, other than income	25		217
Warranty	125		213
Other	894		376
	$	13,776	$	9,751

9.    Stock Based Incentive Compensation

In 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan”), and authorized 199,650 shares of common stock to be reserved for issuance pursuant to the 1997 Plan. The 1997 plan expired in 2007. Because the 1997 Plan has expired, no further awards will be issued under this plan. In 2003, the Company adopted the 2003 Stock Incentive Plan (the “2003 Plan”) and authorized 200,000 shares of common stock to be reserved for issuance pursuant to the 2003 Plan. The 2003 plan expired in 2014. Because the 2003 Plan has expired, no further awards will be issued under this plan. In 2007, the Company adopted the 2007 Stock Incentive Plan (the “2007 Plan”) and authorized 250,000 shares of common stock to be reserved for

50

issuance pursuant to the 2007 Plan. As of September 30, 2015, there were 27,673 shares available to be granted under the 2007 Plan. In 2015, the Company adopted the 2015 Stock Incentive Plan (the “2015 Plan”) and authorized 300,000 shares of common stock to be reserved for issuance pursuant to the 2015 Plan. As of September 30, 2015, there were 300,000 shares available to be granted under the 2015 Plan. Under all of the stock incentive plans, both incentive stock options and non-qualified stock options may be granted to officers, key employees and other persons providing services to the Company. The 2003 Plan and 2007 Plan also provide for awards of nonvested shares of common stock. All of the Company's stock incentive plans have a ten year life. The total number of available shares under all plans for future awards was 327,673 as of September 30, 2015.

Awards issued under any of the stock option plans are not affected by termination of the plan. The Company issues stock options at their fair market value on the date of grant. Vesting of stock options granted pursuant to the Company's stock incentive plans is determined by the Company's compensation committee. Generally, options granted to employees vest over four years and expire ten years from the date of grant. Options granted to non-employee directors have historically included cliff vesting after six months from the date of grant and expire three years from the date of grant. In fiscal years 2013 through 2015, the Company granted certain officers including its Chief Executive Officer and non-employee directors, and key employees shares of nonvested common stock instead of stock options. The vesting periods for the officers', the Chief Executive Officer's and the directors' nonvested stock awards are four years, three years and one year, respectively. The vesting period for the key employees' awards is four years.

We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including employee stock options and awards of nonvested stock based on estimated fair values, as described in Note 1. Stock-based compensation expense incurred and recognized for the years ended September 30, 2015 and 2014 related to stock options and nonvested stock granted to employees and non-employee directors under the Company's stock incentive and employee stock purchase plans totaled approximately $375 thousand and $361 thousand, respectively. The classification of the cost of share-based compensation, in the statements of operations, is consistent with the nature of the services being rendered in exchange for the share based payment. The following table summarizes stock-based compensation expense in the Company's consolidated statements of operations:

	Year ended
	September 30, 2015		September 30, 2014
	(Amounts in thousands)
Cost of sales	$	2	$	—
Engineering and development	22		25
Selling, general and administrative	351		336
Total	$	375	$	361

For the year ended September 30, 2015, the Company granted 11,000 nonvested shares to certain key employees, 30,500 nonvested shares to certain officers including 12,000 shares granted to the Chief Executive Officer and 16,000 nonvested shares to its non-employee directors. For the year ended September 30, 2014, the Company granted 54,250 nonvested shares to certain key employees, 37,500 nonvested shares to certain officers including 22,500 to its Chief Executive Officer and 16,000 nonvested shares to its non-employee directors.

The Company measures the fair value of nonvested stock awards based upon the market price of its common stock as of the date of grant. The Company used the Black-Scholes option-pricing model to value stock options. The Black-Scholes model requires the use of a number of assumptions including volatility of the Company's stock price, the weighted average risk-free interest rate and the weighted average expected life of the options, at the time of grant. The expected dividend yield is equal to the divided per share declared, divided by the closing share price on the date the options were granted. All equity compensation awards granted for the years ended September 30, 2015 and September 30, 2014 were non-vested stock awards.

As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, expense for grants beginning upon adoption on October 1, 2005 has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The forfeiture rates for the years ended September 30, 2015 and 2014 were based on actual forfeitures.

No cash was used to settle equity instruments granted under share-base payment arrangements in any of the years in the two-year period ended September 30, 2015.

51

The following tables provide summary data of stock option award activity:

	Number of Shares		Weighted average exercise price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at September 30, 2013	107,676		$	7.56	—	—
Granted	—		—		—	—
Expired	(12,500	)	$	7.48	—	—
Forfeited	—		—		—	—
Exercised	(3,050	)	5.02		—	—
Outstanding at September 30, 2014	92,126		$	7.66	—	—
Granted	—		—		—	—
Expired	(35,125	)	$	9.72	—	—
Forfeited	—		—		—	—
Exercised	(1,875	)	5.26		—	—
Outstanding at September 30, 2015	55,126		$	6.43	1.89 Years	$	32
Exercisable at September 30, 2015	54,813		$	6.45	1.86 Years	$	32
Vested and expected to vest at September 30, 2015	55,126		$	6.43	1.89 Years	$	32

There were no stock options granted in the years ended September 30, 2015 and 2014. The aggregate intrinsic value of stock options exercised during the years ended September 30, 2015 and 2014 was $3 thousand and $9 thousand, respectively.

52

The following table provides summary data of nonvested stock award activity:

	Number of nonvested shares		Weighted Average grant date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Nonvested shares outstanding at September 30, 2013	73,500		$	5.21	2.18 years	$	520
Activity in 2014:
Granted	107,750		$	7.72	—	—
Vested	(31,375	)	$	5.64	—	—
Forfeited	(500	)	7.67		—	—
Nonvested shares outstanding at September 30, 2014	149,375		$	6.92	2.45 Years	$	1,191
Activity in 2015:
Granted	57,500		$	5.05	—	—
Vested	(58,296	)	$	6.82	—	—
Forfeited	(18,122	)	7.38		—	—
Nonvested shares outstanding at September 30, 2015	130,457		$	6.08	2.12 Years	$	714
Vested at September 30, 2015	170,888		$	5.11	0.39 Years	$	935
Vested and expected to vest at September 30, 2015	301,345		$	5.53	1.14 Years	$	1,648

As of September 30, 2015 there was $523 thousand of total unrecognized compensation cost related to nonvested share-based compensation arrangements (including stock option and nonvested stock awards) granted under the company's stock incentive plans. This cost is expected to be expensed over a weighted average period of approximately 2.27 years. The total fair value of shares vested during the years ended September 30, 2015 and 2014 was $399 thousand and $180 thousand, respectively.

10.    Employee Stock Purchase Plan

In December 2013, the Board of Directors of the Company adopted the 2014 Employee Stock Purchase Plan covering up to 250,000 shares of Common Stock (the "ESPP”), which was ratified by a vote of the Company's shareholders in February 2014. Under the ESPP, the Company’s employees may purchase shares of common stock at a price per share that is currently 95% of the lesser of the fair market value as of the beginning or end of semi-annual option periods. Pursuant to the ESPP the company issued 31,163 and 13,507 shares for the two years ended September 30, 2015 and September 30, 2014, respectively. Since inception of the plan, there are 205,330 shares available for future issuance under the ESPP as of September 30, 2015.

11.    Pension and Retirement Plans

We have defined benefit and defined contribution plans in the U.K., Germany and in the U.S. In the U.K. and Germany, 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 plans in both the U.K. and Germany are closed to newly hired employees and have been for the two years ended September 30, 2015. In the U.S., the Company also 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, 2015. 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 on the officers.

53

Defined Benefit Plans

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 consolidated balance sheet.

The German Plan does not have any assets and therefore all costs and benefits of the plan are funded annually with cash flow from operations.

The domestic supplemental retirement plans have life insurance policies which are not considered plan assets but were purchased by the Company as a vehicle to fund the costs of the plan. These insurance policies are included in the balance sheet at their cash surrender value, net of policy loans, aggregating $2.0 million and $1.9 million as of September 30, 2015 and 2014, respectively. The loans against the policies have been taken out by the Company to pay the premiums. The costs and benefit payments for these plans are paid through operating cash flows of the Company to the extent that they can not be funded through the use of the cash values in the insurance policies. The Company expects that the recorded value of the insurance policies will be sufficient to fund all of the Company's obligations under these plans.

Assumptions:

The following table provides the weighted average actuarial assumptions used to determine the actuarial present value of projected benefit obligations at:

	Domestic				International
	September 30,				September 30,
	2015		2014		2015		2014
Discount rate:	4.25	%	4.25	%	3.10	%	3.25	%
Expected return on plan assets:					4.20	%	4.40	%
Rate of compensation increase:					1.00	%	1.00	%

The following table provides the weighted average actuarial assumptions used to determine net periodic benefit cost for years ended:

	Domestic				International
	September 30,				September 30,
	2015		2014		2015		2014
Discount rate:	4.25	%	5.00	%	3.25	%	4.40	%
Expected return on plan assets:					4.40	%	4.90	%
Rate of compensation increase:					1.00	%	1.00	%

For domestic plans, the discount rate was determined by comparison against the Citigroup Pension Discount Curve and Liability Index for AA rated corporate instruments. The Company monitors other indices to assure that the pension obligations are fairly reported on a consistent basis. The international discount rates were determined by comparison against country specific AA corporate indices, adjusted for duration of the obligation.

The periodic benefit cost and the actuarial present value of projected benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. The Company revises these assumptions based on an annual evaluation of long-term trends, as well as market conditions that may have an impact on the cost of providing retirement benefits.

54

The components of net periodic benefit costs related to the U.S. and international plans are as follows:

	Years Ended September 30
	2015									2014
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(amounts in thousands)
Pension:
Service cost	$	56		$	—		$	56		$	45		$	—		$	45
Interest cost	634			52			686			770			69			839
Expected return on plan assets	(423		)	—			(423		)	(472		)	—			(472		)
Amortization of:
Prior service gains	—			—			—			—			—			—
Amortization of net (gain)/loss	193			(3		)	190			93			(9		)	84
Net periodic benefit cost	$	460		$	49		$	509		$	436		$	60		$	496
Post Retirement:
Service cost	$	—		$	34		$	34		$	—		$	10		$	10
Interest cost	—			44			44			—			43			43
Expected return on plan assets	—			—			—			—			—			—
Amortization of:
Prior service costs/(gains)	—			—			—			—			—			—
Amortization of net (gain)/loss	—			(50		)	(50		)	—			(142		)	(142		)
Net periodic benefit cost	$	—		$	28		$	28		$	—		$	(89	)	$	(89	)
Pension:
Increase (decrease) in minimum liability included in other comprehensive income (loss)	$	163		$	(6	)	$	157		$	1,868		$	20		$	1,888
Post Retirement:
Increase (decrease) in minimum liability included in other comprehensive income (loss)	—			(89		)	(89		)	—			276			276
Total:
Increase (decrease) in minimum liability included in comprehensive income (loss)	$	163		$	(95	)	$	68		$	1,868		$	296		$	2,164

55

The following table presents an analysis of the changes in 2015 and 2014 of the benefit obligation, the plan assets and the funded status of the plans:

	Years Ended September 30
	2015									2014
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Change in projected benefit obligation (“PBO”)
Balance beginning of year	$	18,919		$	1,228		$	20,147		$	16,651		$	1,371		$	18,022
Service cost	56			—			56			45			—			45
Interest cost	635			52			687			770			69			839
Changes in actuarial assumptions	304			(8		)	296			2,336			10			2,346
Foreign exchange impact	(1,534		)	—			(1,534		)	(389		)	—			(389		)
Benefits paid	(401		)	(250		)	(651		)	(494		)	(222		)	(716		)
Projected benefit obligation at end of year	$	17,979		$	1,022		$	19,001		$	18,919		$	1,228		$	20,147
Changes in fair value of plan assets:
Fair value of plan assets at beginning of year	$	10,094		$	—		$	10,094		$	9,473		$	—		$	9,473
Actual gain (loss) on plan assets	(117		)	—			(117		)	718			—			718
Company contributions	398			251			649			393			222			615
Foreign exchange impact	(673		)	—			(673		)	4			—			4
Benefits paid	(401		)	(251		)	(652		)	(494		)	(222		)	(716		)
Fair value of plan assets at end of year	$	9,301		$	—		$	9,301		$	10,094		—			$	10,094
Funded status	$	(8,678	)	$	(1,022	)	$	(9,700	)	$	(8,825	)	$	(1,228	)	$	(10,053	)
Unamortized net loss	—			—			—			—			—			—
Net amount recognized	$	(8,678	)	$	(1,022	)	$	(9,700	)	$	(8,825	)	$	(1,228	)	$	(10,053	)
Post Retirement:
Change in projected benefit obligation (“PBO”):
Balance beginning of year	$	—		$	1,045		$	1,045		$	—		$	857		$	857
Service cost	—			34			34			—			10			10
Interest cost	—			44			44			—			43			43
Changes in actuarial assumptions	—			(138		)	(138		)	—			135			135
Foreign exchange impact	—			—			—			—			—			—
Benefits paid	—			—			—			—			—			—
Projected benefit obligation at end of year	$	—		$	985		$	985		$	—		$	1,045		$	1,045
Changes in fair value of plan assets:
Fair value of plan assets at beginning of year	—			—			—			—			—			—
Actual gain/(loss) on plan assets	—			—			—			—			—			—
Company contributions	—			—			—			—			—			—
Foreign exchange impact	—			—			—			—			—			—
Benefits paid from plan assets	—			—			—			—			—			—
Fair value of plan assets at end of year	$	—		$	—		$	—		$	—		$	—		$	—
Funded status	$	—		$	(985	)	$	(985	)	$	—		$	(1,045	)	$	(1,045	)
Unamortized net loss	—			—			—			—			—			—
Net amount recognized	$	—		$	(985	)	$	(985	)	$	—		$	(1,045	)	$	(1,045	)

56

The amounts recognized in the consolidated balance sheet consist of:

	Years Ended September 30
	2015									2014
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Accrued benefit liability	$	(8,678	)	$	(1,022	)	$	(9,700	)	$	(8,825	)	$	(1,228	)	$	(10,053	)
Deferred tax	(490		)	24			(466		)	(531		)	22			(509		)
Accumulated other comprehensive income	5,623			11			5,634			5,419			14			5,433
Net amount recognized	$	(3,545	)	$	(987	)	$	(4,532	)	$	(3,937	)	$	(1,192	)	$	(5,129	)
Post Retirement:
Accrued benefit liability	$	—		$	(985	)	$	(985	)	$	—		$	(1,045	)	$	(1,045	)
Deferred tax	—			165			165			—			145			145
Accumulated other comprehensive income	—			(73		)	(73		)	—			(4		)	(4		)
Net amount recognized	$	—		$	(893	)	$	(893	)	$	—		$	(904	)	$	(904	)
Total pension and post retirement:
Accrued benefit liability	$	(8,678	)	$	(2,007	)	$	(10,685	)	$	(8,825	)	$	(2,273	)	$	(11,098	)
Deferred tax	(490		)	189			(301		)	(531		)	167			(364		)
Accumulated other comprehensive income	5,623			(62		)	5,561			5,419			10			5,429
Net amount recognized	$	(3,545	)	$	(1,880	)	$	(5,425	)	$	(3,937	)	$	(2,096	)	$	(6,033	)
Accumulated Benefit Obligation:
Pension	$	(17,866	)	$	(1,022	)	$	(18,888	)	$	(18,798	)	$	(1,228	)	$	(20,026	)
Post Retirement	—			(985		)	(985		)	—			(1,045		)	(1,045		)
Total accumulated benefit obligation	$	(17,866	)	$	(2,007	)	$	(19,873	)	$	(18,798	)	$	(2,273	)	$	(21,071	)

Plans with projected benefit obligations in excess of plan assets are attributable to unfunded domestic supplemental retirement plans, our German plans which are legally not required to be funded and our U.K. retirement plan.

Accrued benefit liability reported as:

	September 30,
	2015		2014
	(Amounts in thousands)
Current accrued benefit liability	$	675	$	658
Non-current accrued benefit liability	10,009		10,440
Total accrued benefit liability	$	10,684	$	11,098

As of September 30, 2015 and 2014 the amounts included in accumulated other comprehensive income, consisted of deferred net losses totaling approximately $5.6 million and $5.4 million, respectively.

The amount of net deferred gain expected to be recognized as a component of net periodic benefit cost for the year ending September 30, 2015, is approximately $67 thousand.

Contributions

The Company expects to contribute $0.7 million to its pension plans for fiscal 2016.

57

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (amounts in thousands):

Fiscal year ending September 30:	(Amounts in thousands)
2016	$	682
2017	673
2018	642
2019	694
2020	717
Thereafter	4,223

Plan Assets

At September 30, 2015, our pension plan in the U.K. was the only plan with assets, holding investments of approximately $9.3 million. Pension plan assets are managed by a fiduciary committee. The Company's investment strategy for pension plan assets is to maximize the long-term rate of return on plan assets within an acceptable level of risk while maintaining adequate funding levels. Local regulations, local funding rules, and local financial and tax considerations are part of the funding and investment process. In deciding on the investments to be held, the trustees take into account the risk of possible fluctuations in income from, and market values of, the assets as well as the risk of departing from an asset profile which broadly matches the liability profile. The committee has invested the plan assets in a single pooled fund with an authorized investment company (the “Fund”). The Fund selected by the trustees is consistent with the plan's overall investment principles and strategy described herein. There are no specific targets as to asset allocation other than those contained within the Fund that is managed by the authorized investment company.

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

	Fair Values as of
	September 30, 2015								September 30, 2014
	Fair Value Measurements Using Inputs Considered as								Fair Value Measurements Using Inputs Considered as
Asset Category	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(Thousands)
Cash on deposit	$	324	$	324	$	—	$	—	$	352	$	352	$	—	$	—
Pooled Funds	8,977		—		8,977		—		9,742		—		9,742		—
Total Plan Assets	$	9,301	$	324	$	8,977	$	—	$	10,094	$	352	$	9,742	$	—

The expected long-term rates of return on plan assets are equal to the yields to maturity of appropriate indices for government and corporate bonds and by adding a premium to the government bond return for equities. The expected rate of return on cash is the Bank of England base rate in force at the effective date.

The Company uses the Net Asset Value ("NAV") to determine the fair value of the underlying investments which (a) do not have readily determinable fair value; and (b) prepare their financial statements consistent with the measurement principles of an investment company. The Fund is not exchange traded. The Fund is not subject to any redemption notice periods or restrictions and can be redeemed on a daily basis. No gates or holdbacks or dealing suspensions are being applied to the Fund. The Fund is of perpetual duration.

Defined Contribution Plans

The Company has defined contribution plans in domestic and international locations under which the Company matches a portion of the employee's contributions and may make discretionary contributions to the plans. The Company's contributions were $174 thousand and $186 thousand for the years ended September 30, 2015 and 2014, respectively.

58

12.    Lines of Credit

As of September 30, 2015 and September 30, 2014, the Company maintained a line of credit notes that allows for borrowings of up to $1.0 million. Availability under this facilities is reduced by outstanding borrowings thereunder. The interest rates on outstanding borrowings is the London Inter-Bank Offer Rate (“LIBOR”) plus 2.5%, with a floor of 4%. Borrowings under the credit agreement are required to be repaid on demand by the lender in some cases, upon termination of the agreements or may be prepaid by the Company without penalty. The credit agreements is not subject to financial covenants and the Company did not borrow under the line of credit during the fiscal years ending September 30, 2015 and 2014.

As of September 30, 2015 and September 30, 2014, the Company maintained an inventory line of credit that may be used by the the TS in the US to purchase inventory from approved vendors with payment terms which exceed those offered by the vendors. No interest accrues under the inventory line of credit when advances are paid within terms, late payments are subject to an interest charge of Prime plus 5%. The credit agreements contain financial covenants which require the Company to maintain the following division specific financial ratios: (1) a minimum current ratio of 1.2, (2) tangible net worth of $2.5 million and (3) a maximum ratio of total liabilities to total net worth of less than 5.0:1. As of September 30, 2015 and September 30, 2014, Company borrowings under the inventory line of credit were $2.9 million and $2.1 million, respectively, and the Company was in compliance with all covenants for the inventory line of credit as of September 30, 2015 and 2014.

13.    Commitments and Contingencies

Leases

The Company occupies office space under lease agreements expiring at various dates during the next five years. The leases are classified as operating leases and provide for the payment of real estate taxes, insurance, utilities and maintenance.

The Company was obligated under non-cancelable operating leases as follows:

Fiscal year ending September 30:	(Amounts in thousands)
2016	$	868
2017	789
2018	724
2019	653
2020	399
	$	3,433

Occupancy expenses under the operating leases approximated $1.3 million in 2015 and $1.3 million in 2014.

Common Stock Repurchase

From time to time the Company's Board of Directors passes resolutions to authorize the Company to purchase shares of its outstanding common stock. The Company did not repurchase any shares during the years ended September 30, 2015 and 2014. As of September 30, 2015 the Company is authorized to repurchase an additional 201 thousand shares pursuant to such resolutions.

59

14.      Segment Information

The following table presents certain operating segment information.

			TS Segment
For the Years Ended September 30,	HPP Segment		Germany		United Kingdom			U.S.		Total			Consolidated Total
	(Amounts in thousands)
2015
Sales:
Product	$	9,894	$	7,808	$	4,025		$	44,720	$	56,553		$	66,447
Service	4,054		15,043		1,114			2,648		18,805			22,859
Total sales	13,948		22,851		5,139			47,368		75,358			89,306
Profit (loss) from operations	485		549		(817		)	9		(259		)	226
Assets	16,668		14,557		2,720			13,051		30,328			46,996
Capital expenditures	156		216		3			349		568			724
Depreciation and amortization	247		172		34			193		399			646
2014
Sales:
Product	$	9,151	$	9,273	$	2,131		$	38,322	$	49,726		$	58,877
Service	5,384		15,790		1,299			3,269		20,358			25,742
Total sales	14,535		25,063		3,430			41,591		70,084			84,619
Profit (loss) from operations	1,352		466		(187		)	52		331			1,683
Assets	16,966		13,499		3,464			12,378		29,341			46,307
Capital expenditures	216		211		90			73		374			590
Depreciation and amortization	225		185		32			192		409			634

Profit (loss) from operations is sales less cost of sales, engineering and development, selling, general and administrative expenses but is not affected by either non-operating charges/income or by income taxes. Non-operating charges/income consists principally of investment income and interest expense.  All intercompany transactions have been eliminated.

The following table details the Company's sales by operating segment for fiscal years September 30, 2015 and 2014. The Company's sales by geographic area based on the location of where the products were shipped or services rendered are as follows:

2015	Americas			Europe			Asia			Total			% of Total
	(Amounts in thousands)
HPP	$	10,774		$	1,135		$	2,039		$	13,948		16	%
TS	47,659			26,713			986			75,358			84	%
Total	$	58,433		$	27,848		$	3,025		$	89,306		100	%
% of Total	66		%	31		%	3		%	100		%
2014
HPP	$	10,918		$	992		$	2,625		$	14,535		17	%
TS	42,643			27,403			38			70,084			83	%
Total	$	53,561		$	28,395		$	2,663		$	84,619		100	%
% of Total	63		%	34		%	3		%	100		%

Substantially all Americas amounts are United States.

60

Long-lived assets by geographic location at September 30, 2015 and 2014 were as follows:

	September 30, 2015		September 30, 2014
	(Amounts in thousands)
North America	$	1,494	$	1,429
Europe	486		589
Totals	$	1,980	$	2,018

Deferred tax assets by geographic location at September 30, 2015 and 2014 were as follows:

	September 30, 2015		September 30, 2014
	(Amounts in thousands)
North America	$	2,254	$	2,300
Europe	770		822
Totals	$	3,024	$	3,122

The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the years ended September 30, 2015 and 2014.

	For the year ended
	September 30, 2015				September 30, 2014
	Amount		% of Revenues		Amount		% of Revenues
	(Amounts in millions)
Customer A	$	17.1	19	%	$	15.2	18	%
Customer B	$	14.3	16	%	$	15.7	19	%

15.       Fair Value Measures

The Company had no assets or liabilities measured at fair value on a recurring or non-recurring basis as of September 30, 2015 or September 30, 2014, except for pension plan assets values, which are discussed in Note 11.

16.Dividend

On December 17, 2013, our board of directors declared a cash dividend of $0.10 per share which was paid on January 7, 2014 to stockholders of record as of December 27, 2013. On February 11, 2014, our board of directors declared a cash dividend of $0.11 per share which was paid on March 11, 2014 to stockholders of record as of February 27, 2014. On May 14, 2014, our board of directors declared a cash dividend of $0.11 per share which was paid on June 10, 2014 to stockholders of record as of May 30, 2014. On August 6, 2014, our board of directors declared a cash dividend of $0.11 per share which was paid on August 29, 2014 to stockholders of record as of August 21, 2014, the record date.

On December 16, 2014, the Company's board of directors declared a cash dividend of $0.11 per share which was paid

on January 8, 2015 to shareholders of record as of December 28, 2014, the record date. On February 11, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on March 12, 2015 to shareholders of record as of February 26, 2015, the record date. On May 13, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on June 10, 2015 to shareholders of record as of May 29, 2015, the record date. On August 12, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on September 11, 2015 to shareholders of record as of August 26, 2015, the record date.

On December 23, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which will be paid on January 11, 2016 to shareholders of record as of December 31, 2015, the record date.

61

17. Related Party Transactions

During the normal course of business, the company sold products to a company whose Board of Directors includes two members of CSP Inc.'s Board of Directors. The total sales were $313,637 and $161,348, for the fiscal years ended 2015 and 2014, respectively. The trade receivables were $12,540 and $29,260 as of September 30, 2015 and 2014. respectively.

62

EX-10.20

EX-10.21

EX-21

Exhibit 21.1

SUBSIDIARIES OF THE REGISTRANT

Each of the below listed subsidiaries is 100% directly owned by CSP Inc. except as otherwise indicated, and all are included in the consolidated financial statements.

NAME OF SUBSIDIARY	STATE OR OTHER JURISDICTION OF INCORPORATION/ ORGANIZATION
CSP Inc. Securities Corp. 43 Manning Road Billerica, MA 01821-3901	Massachusetts
CSP Inc. Foreign Sales Corp., Ltd. 43 Manning Road Billerica, MA 01821-3901	U.S. Virgin Islands
Modcomp, Inc (1). 1500 South Powerline Road Deerfield Beach, FL 33442	Florida

(1) Modcomp has three subsidiaries operating in Europe

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in Registration Statement Nos. 333-64493, 333-124030, 333-124031, 333-151024, and 333-207229 on Form S-8 of CSP, Inc and Subsidiaries of our report dated December 24, 2015, relating to our audit of the consolidated financial statements, which is incorporated in this Annual Report on Form 10-K of CSP, Inc. and Subsidiaries for the year ended September 30, 2015.

Boston, Massachusetts

December 24, 2015

EX-31.1

Exhibit 31.1 

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

I, Victor Dellovo, certify that: 

1.I have reviewed this annual report on Form 10-K of CSP Inc.; 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

December 24, 2015

/s/ Victor Dellovo

Victor Dellovo

Chief Executive Officer and

President

EX-31.2

Exhibit 31.2 

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

I, Gary W. Levine, certify that: 

1.I have reviewed this annual report on Form 10-K of CSP Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

December 24, 2015

 /s/Gary W. Levine

Gary W. Levine

Chief Financial Officer

EX-32.1

Exhibit 32.1 

18 U.S.C. Section 1350, 

AS ADOPTED PURSUANT TO 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 

In connection with the Annual Report on Form 10-K of CSP Inc. (the “Company”) for the year ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned Chief Executive Officer, President and Chairman and Chief Financial Officer of the Company, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 24, 2015	By:	/s/ Victor Dellovo
		Victor Dellovo
		Chief Executive Officer and President and Director
December 24, 2015	By:	/s/ Gary W. Levine
		Gary W. Levine
		Chief Financial Officer

XML

Document And Entity Information - USD ($)	12 Months Ended
	Sep. 30, 2015	Dec. 02, 2015	Mar. 31, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	CSP INC /MA/
Document Type	10-K
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		3,619,148
Entity Public Float			$ 25,577,347
Amendment Flag	false
Entity Central Index Key	0000356037
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Current assets:
Cash and cash equivalents	$ 11,181	$ 16,448
Accounts receivable, net of allowances of $331 and $241	18,468	12,279
Unbilled accounts receivable	1,420	253
Inventories, net	5,749	6,446
Refundable income taxes	43	418
Deferred income taxes	1,337	1,230
Other current assets	1,884	2,372
Total current assets	40,082	39,446
Property, equipment and improvements, net	1,564	1,472
Other assets:
Intangibles, net	416	545
Deferred income taxes	1,687	1,892
Cash surrender value of life insurance	3,064	2,785
Other assets	183	167
Total other assets	5,350	5,389
Total assets	46,996	46,307
Current liabilities:
Accounts payable and accrued expenses	13,776	9,751
Deferred revenue	2,931	4,101
Pension and retirement plans	675	658
Income taxes payable	0	1
Total current liabilities	17,382	14,511
Pension and retirement plans	10,009	10,440
Other long term liabilities	15	69
Total liabilities	$ 27,406	$ 25,020
Commitments and contingencies
Shareholders’ equity:
Common stock, $.01 par value per share; authorized, 7,500 shares; issued and outstanding 3,688 and 3,619 shares, respectively	$ 37	$ 36
Additional paid-in capital	12,249	11,658
Retained earnings	15,689	17,517
Accumulated other comprehensive loss	(8,385)	(7,924)
Total shareholders’ equity	19,590	21,287
Total liabilities and shareholders’ equity	$ 46,996	$ 46,307

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 331	$ 241
Common stock par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	7,500	7,500
Common stock, shares issued	3,688	3,619
Common stock, shares outstanding	3,688	3,619

XML

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Sales:
Product	$ 66,447	$ 58,877
Services	22,859	25,742
Total sales	89,306	84,619
Cost of sales:
Product	55,478	48,751
Services	14,641	15,047
Total cost of sales	70,119	63,798
Gross profit	19,187	20,821
Operating expenses:
Engineering and development	2,826	3,484
Selling, general and administrative	16,135	16,116
Total operating expenses	18,961	19,600
Bargain purchase gain	0	462
Operating income	226	1,683
Other (expense):
Foreign exchange loss	(172)	(162)
Other income (expense), net	(38)	(66)
Total other (expense), net	(210)	(228)
Income before income taxes	16	1,455
Income tax expense	226	121
Net income (loss)	(210)	1,334
Net income (loss) attributable to common stockholders	$ (210)	$ 1,284
Net income per share – basic (in Dollars per share)	$ (0.06)	$ 0.37
Weighted average shares outstanding – basic (in Shares)	3,548	3,448
Net income per share – diluted (in Dollars per share)	$ (0.06)	$ 0.37
Weighted average shares outstanding – diluted (in Shares)	3,548	3,499

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Components of Accumulated Other Comprehensive Loss [Abstract]
Net loss	$ (210)	$ 1,334
Other comprehensive income (loss):
Unrealized actuarial loss on minimum pension liability	(131)	(1,720)
Foreign currency translation gain (loss)	(330)	(339)
Other comprehensive loss	(461)	(2,059)
Total comprehensive loss	$ (671)	$ (725)

XML

Consolidated Statement of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated other comprehensive loss
Balance at Sep. 30, 2013	$ 23,035	$ 35	$ 11,137	$ 17,728	$ (5,865)
Balance (in Shares) at Sep. 30, 2013		3,496,000
Comprehensive income (loss):
Net loss	1,334			1,334
Other comprehensive loss	(2,059)				(2,059)
Stock-based compensation	359		359
Tax benefit from exercise of stock options	(47)		(47)
Restricted stock issuance	1	$ 1	0
Restricted stock shares issued (in Shares)		106,000
Issuance of shares under employee stock purchase plan	$ 99		99
Issuance of shares under employee stock purchase plan (in shares)	13,507	14,000
Exercise of stock options	$ 16		16
Exercise of stock options (in Shares)	3,050	3,000
Cash dividends on common stock	$ (1,545)			(1,545)
Balance at Sep. 30, 2014	$ 21,287	$ 36	11,658	17,517	(7,924)
Balance (in Shares) at Sep. 30, 2014	3,619,000	3,619,000
Comprehensive income (loss):
Net loss	$ (210)			(210)
Other comprehensive loss	(461)				(461)
Stock-based compensation	375		375
Restricted stock issuance	1	$ 1	0
Restricted stock shares issued (in Shares)		36,000
Issuance of shares under employee stock purchase plan	$ 206		206
Issuance of shares under employee stock purchase plan (in shares)	31,163	31,000
Exercise of stock options	$ 10		10
Exercise of stock options (in Shares)	1,875	2,000
Cash dividends on common stock	$ (1,618)			(1,618)
Balance at Sep. 30, 2015	$ 19,590	$ 37	$ 12,249	$ 15,689	$ (8,385)
Balance (in Shares) at Sep. 30, 2015	3,688,000	3,688,000

XML

Consolidated Statement of Shareholders' Equity (Parentheticals) - $ / shares									12 Months Ended
	Aug. 12, 2015	May. 13, 2015	Feb. 11, 2015	Dec. 16, 2014	Aug. 06, 2014	May. 14, 2014	Feb. 11, 2014	Dec. 17, 2013	Sep. 30, 2015	Sep. 30, 2014
Statement of Stockholders' Equity [Abstract]
Dividends per share	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.10	$ 0.44	$ 0.43

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net loss	$ (210)	$ 1,334
Adjustments to reconcile net income to net cash used in operating activities:
Bargain purchase gain	0	(462)
Depreciation and amortization	516	510
Amortization of intangibles	130	124
Loss on disposal of fixed assets, net	54	5
Foreign exchange loss	172	162
Non-cash changes in accounts receivable	96	1
Non-cash changes in inventory	560	407
Stock-based compensation expense on stock options and restricted stock awards	375	361
Deferred income taxes	2	(98)
Increase in cash surrender value of life insurance	(86)	(135)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(8,226)	647
(Increase) decrease in inventories	78	(1,038)
Decrease in refundable income taxes	356	194
(Increase) decrease in other assets	328	(351)
Increase (decrease) in accounts payable and accrued expenses	4,461	(656)
Increase (decrease) in deferred revenue	(812)	513
Increase (decrease) in pension and retirement plans liability	(83)	252
Increase (decrease) in income taxes payable	4	(311)
Decrease in other long term liabilities	(55)	(336)
Net cash provided by (used in) operating activities	(2,340)	1,123
Cash flows from investing activities:
Life insurance premiums paid	(193)	(170)
Proceeds from the sale of fixed assets	0	6
Cash paid to acquire business	0	(500)
Purchases of property, equipment and improvements	(724)	(590)
Net cash used in investing activities	(917)	(1,254)
Cash flows from financing activities:
Dividends paid	(1,618)	(1,545)
Tax benefit from exercise of stock options	0	47
Proceeds from issuance of shares under equity compensation plans	216	114
Net cash used in financing activities	(1,402)	(1,384)
Effects of exchange rate on cash	(608)	(656)
Net decrease in cash and cash equivalents	(5,267)	(2,171)
Cash and cash equivalents, beginning of period	16,448	18,619
Cash and cash equivalents, end of period	11,181	16,448
Supplementary cash flow information:
Cash paid for income taxes	15	201
Cash paid for interest	$ 85	$ 85

XML

Summary of Significant Accounting Policies

12 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

Foreign Currency Translation

The U.S. Dollar is the reporting currency for all periods presented. The financial information for entities outside the United States is measured using the local currency as the functional currency. Assets and liabilities of the Company's foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at average rates in effect during the period. The resulting translation adjustment is reflected as accumulated other comprehensive income (loss), a separate component of shareholders' equity on the consolidated balance sheets. The translation adjustment for intercompany foreign currency loans that are of a long-term-investment nature is also reflected as accumulated other comprehensive income (loss). Currency transaction gains and losses are recorded as other income (expense) in the statements of operations.

Cash Equivalents

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

Research and Development Expense

For the years ended September 30, 2015 and 2014, our expenses for research and development were approximately $2.8 million and $3.5 million, respectively. Expenditures for research and development are expensed as they are incurred.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management assesses the recoverability of the long-lived assets (other than goodwill) by comparing the estimated undiscounted cash flows associated with the related asset or group of assets against their respective carrying amounts. The amount of impairment, if any, is calculated based on the excess of the carrying amount over the fair value of those assets. Intangible assets that are not subject to amortization are also required to be tested annually, or more frequently if events or circumstances indicate that the asset may be impaired. We did not have intangible assets with indefinite lives at any time during the two years ended September 30, 2015. Intangible assets subject to amortization are amortized on a straight-line basis over their estimated useful lives, generally three to ten years, and are carried at cost, less accumulated amortization. The remaining useful lives of intangible assets are evaluated on an annual basis. Intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the fair value of an intangible asset subject to amortization is determined to be less than its carrying value, then an impairment charge is recorded to write down that asset to its fair value.

Inventories

Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out method. The recoverability of inventories is based upon the types and levels of inventories held, forecasted demand, pricing, competition and changes in technology. We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Property, Equipment and Improvements

The components of property, equipment and improvements are stated at cost. The Company provides for depreciation by use of the straight-line method over the estimated useful lives of the related assets (three to seven years). Leasehold improvements are amortized by use of the straight-line method over the lesser of the estimated useful life of the asset or the lease term. Repairs and maintenance costs are expensed as incurred. Property, equipment and improvements are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If the fair value of property, equipment and improvements is determined to be less than their carrying value, then an impairment charge is recorded to write down that asset to its fair value.

Trade Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are stated at amounts that have been billed to customers less an allowance for doubtful accounts. Allowances for doubtful accounts are recorded for the estimated losses resulting from the inability of our customers to make required payments. The estimates for the allowance for doubtful accounts are based on the length of time the receivables are past due, current business environment and our historical experience. If the financial condition of our customers were to deteriorate, resulting in impairment of their ability to make payments, additional allowances may be required. Accounts receivable are charged off against the reserve when management has determined they are uncollectible.

Pension and Retirement Plans

The funded status of pension and other postretirement benefit plans is recognized on the balance sheet. Gains and losses, prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive income, net of tax, until they are amortized as a component of net periodic pension/postretirement benefits expense. Additionally, plan assets and obligations are measured as of our fiscal year-end balance sheet date (September 30).

We have defined benefit and defined contribution plans in the United Kingdom (the “U.K.”), Germany and in the U.S. In the U.K. and Germany, 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 plans in both the U.K. and Germany are closed to newly hired employees and have been for the two years ended September 30, 2015. In the U.S., the Company also 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, 2015. 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 on the officers.

Pension expense is based on an actuarial computation of current future benefits using estimates for expected return on assets, expected compensation increases and applicable discount rates. Management has reviewed the discount rates and rates of return with our consulting actuaries and investment advisor 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. Increases in estimated compensation increases would result in higher pension expense while decreases would lower pension expense. Discount rates are selected based upon rates of return on high quality fixed income investments currently available and expected to be available during the period to maturity of the pension benefit. 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. Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheets.

Revenue Recognition

We derive revenue from the sale of integrated hardware and software, professional services, maintenance contracts, other services, and third party service contracts. Professional services generally include implementation, installation, and training services. Other services generally include revenue generated through our royalty and extended warranty contracts. We recognize revenue when persuasive evidence of an arrangement exists, delivery of the product or service has occurred, the fee is fixed or determinable and collectability is reasonably assured. We enter into multiple element arrangements as well as standalone sales of product, professional services, and other services.

We recognize revenue from standalone product sales upon transfer of title, which is typically upon shipment, provided all other revenue recognition criteria have been met. Revenue generated from standalone professional services and extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met. In some instances professional service contracts include a customer acceptance provision, in which case revenue is deferred until we have evidence of customer acceptance. We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement.

We recognize revenue from multiple element arrangements in accordance with ASC 605-25, Multiple Element Arrangements. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. ASC 605-25 establishes a hierarchy for determining the amount to allocate to each separate deliverable in an arrangement. We determine selling price using vendor specific objective evidence (“VSOE”), if it exists; or, if VSOE does not exist, third party evidence (“TPE”) of fair value if applicable; otherwise, we use the best estimate of selling price (“BESP”). The objective of BESP is to determine the price at which the Company would transact if the element was sold on a standalone basis. Management’s determination of BESP involves several factors including budgeted profit margins, and cost to complete services.

We recognize revenue from third party service contracts as either gross sales or net sales in accordance ASC 605-45, Principal Agent Considerations, which requires us to determine if the Company is acting as a principal party to the transaction or simply acting as an agent or broker. Under ASC 605-45, the assumption of the risks and rewards under the arrangement are

considered indicators of principal parties to the arrangement. We record revenue as gross when it is a principal party to the arrangement and net of cost when we are acting as a broker or agent. Under gross sales recognition, the entire selling price is recorded in revenue and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenue resulting in net sales equal to the gross profit on the transaction.

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

HPP Segment Revenue

HPP segment revenue is derived from the sale of integrated hardware and software, maintenance, and other services through the Multi-computer and Myricom product lines. Multi-computer product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists principally of other services which comprise of warranty and royalty revenue. Revenue generated from extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement.

Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products functionality, and post contract maintenance and support. Revenue on multiple element arrangements is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly revenue for post contract maintenance and support is recognized over the implied maintenance period of three years, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met.

TS Segment Revenue

TS Segment revenue is derived from the sale of hardware, software, professional services, and third party service contracts. TS product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists of professional services which generally include implementation, installation, and training services. Revenue generated from standalone professional services is recognized as services are completed, provided all other revenue recognition criteria has been met. Our standard sales agreements generally do not include customer acceptance provisions. However, in certain instances when arrangements include a customer acceptance provision or there is uncertainty about customer acceptance, revenue is deferred until we have evidence of customer acceptance.

Revenue derived from the sale of products, which are comprised of both hardware and software, and professional services is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly revenue for professional services is recognized as services are completed, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met.

We recognize revenue from certain third party service contracts, which are evaluated to determine whether such service revenue should be recorded as gross sales or net sales in accordance ASC 605-45. We evaluate all third party service contracts to determine whether we act as a principal in the transaction and assume the risks and rewards of ownership or if we are simply acting as an agent or broker. Under gross sales recognition, the entire selling price is recorded in sales and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to sales resulting in net sales equal to the gross profit on the transaction and there are no costs of goods sold. We use the net sales recognition method for the third party service contracts that we sell when we are not the primary obligor on the contract. We use the gross sales recognition for the third party service contracts that we sell when we act as principal and are the primary obligor.

Product Warranty Accrual

Our product sales generally include a 90-day to three-year hardware warranty. At time of product shipment, we accrue for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar products.

Engineering and Development Expenses

Engineering and development expenses include payroll, employee benefits, stock-based compensation and other headcount-related expenses associated with product development. Engineering and development expenses also include third-party development and programming costs. We consider technological feasibility for our software products to be reached upon the release of the software, accordingly, no internal software development costs have been capitalized.

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. 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. We also reduce deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology requires estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities. Valuation allowances are recorded against the gross deferred tax assets that management believes, after considering all available positive and negative objective evidence, historical and prospective, with greater weight given to historical evidence, that it is more likely than not that these assets will not be realized.

In addition, we are required to recognize in the consolidated financial statements, those tax positions determined to be more-likely-than-not of being sustained upon examination, based on the technical merits of the positions as of the reporting date. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are recognized.

In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. 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.

Earnings per Share of Common Stock

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

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

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

	For the year ended
	September 30, 2015			September 30, 2014
	(Amounts in thousands except per share data)
Net income (loss)	$	(210	)	$	1,334
Less: Net income attributable to nonvested common stock	—			50
Net income (loss) attributable to common stockholders	$	(210	)	$	1,284
Weighted average total shares outstanding - basic	3,548			3,582
Less: weighted average non-vested shares outstanding	—			134
Weighted average number of common shares outstanding - basic	3,548			3,448
Potential common shares from non-vested stock awards and the assumed exercise of stock options	—			51
Weighted average common shares outstanding - diluted	3,548			3,499
Net income (loss) per share - basic	$	(0.06	)	$	0.37
Net income (loss) per share - diluted	$	(0.06	)	$	0.37

All anti-dilutive securities, including stock options, are excluded from the diluted income per share computation. For the year ended September 30, 2015, 26 thousand stock options were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive. For the fiscal year ended September 30, 2014, approximately 51 thousand stock options were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates under different assumptions or conditions.

Stock-Based Compensation

We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including stock options and nonvested shares of restricted common stock based on estimated fair values of stock-based payment awards on the date of grant. The Company uses the Black-Scholes option-pricing model to calculate the fair value of stock option grants. The fair value of nonvested restricted share awards is equal to the quoted market price of our common stock as quoted on the Nasdaq Global Market on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company's Consolidated Statements of Operations.

Because stock-based compensation expense recognized in the Consolidated Statements of Operations for the fiscal years ended September 30, 2015 and 2014 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense recognized for the fiscal years ended September 30, 2015 and 2014 consisted of stock-based compensation expense related to options and nonvested restricted stock granted pursuant to the Company's stock incentive and employee stock purchase plans of approximately $0.4 million and $0.4 million, respectively.

Concentrations of Credit Risk

Cash and cash equivalents are maintained with several financial institutions in the US, Germany and in the UK. Deposits held with banks may exceed the amount of insurance on such deposits. Generally, these deposits may be redeemed upon demand. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Subsequent Events

On September 8, 2015, the Company executed a lease for 13,515 square feet of space at 175 Cabot Street in Lowell Massachusetts. The future annual rent payment obligations under the terms of this five year and three month lease are $943,000, which commence as of the December 1, 2015 effective date of the lease.

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

New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014 ‑09, Revenue from Contracts with Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers.  This ASU clarifies the principles for recognizing revenue by, among other things, removing inconsistencies in revenue requirements, improving comparability of revenue recognition practices across entities and industries and providing improved disclosure requirements. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017; however, early adoption at the original effective date is still permitted.  We are currently evaluating the impact that the adoption of this ASU will have on our consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which excludes investments measured at net asset value, as a practical expedient for fair value, from the fair value hierarchy. This ASU is effective for interim and annual reporting periods beginning after December 15, 2015, and requires retrospective application, with early adoption permitted. The implementation of this ASU is not expected to have a material impact to the disclosures in our consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-12, Plan Accounting: Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefits Plans (Topic 965), which requires fully benefit-responsive investment contracts to be measured at contract value. Those Topics also require an adjustment to reconcile contract value to fair value, when these measures differ,

on the face of the plan financial statements. Fair value is measured using the requirements in Topic 820, Fair Value Measurement. This ASU is effective for fiscal years beginning after December 15, 2015, and requires retrospective application, with early adoption permitted. The implementation of this ASU is not expected to have a material impact to the disclosures in our consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) Simplifying the Measurement of Inventory, which requires entities to measure inventory at the lower of cost and net realizable value, except for inventory measured using last-in, first-out (LIFO) or the retail inventory method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017 and requires prospective application, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company has not yet assessed the potential impact of implementing this ASU on the disclosures in our consolidated financial statements.

In November 2015, the FASB issued ASU No, 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes, which require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Topic apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this Topic. The amendments in this Topic are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The implementation of this guidance is not expected to have a material impact to the disclosures in our consolidated financial statements.

XML

Acquisition

12 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Acquired Business

Acquired Business

On November 4, 2013 the Company acquired substantially all of the assets of Myricom, Inc.  Myricom has been integrated into the High Performance Products and Solutions business segment.  Prior to our acquisition, Myricom was a manufacturer of high performance interconnect computing devices and software.  The Company acquired Myricom in order to obtain (i) Myricom’s interconnect technology, which is critical to our latest MultiComputer products and (ii) a strong base of new customers in commercial growth markets.  The Company also retained key Myricom technical personnel.  Myricom was a key supplier to CSPI’s MultiComputer Division.  Its interconnect technology is an important component of the latest generation MultiComputer products that we currently supply to our customers.

Although Myricom was an established business prior to our acquisition, it had previously sold off a significant portion of its business and was faced with the likelihood of having to shut down operations if it could not find a buyer to purchase its remaining assets.  This was because the revenue that Myricom was able to generate from these remaining assets was not sufficient to support its cost structure so as to enable Myricom to operate at a profit.  These factors contributed to a purchase price that resulted in the recognition of a bargain purchase gain.  The Company paid total cash consideration of approximately $0.5 million to acquire substantially all of the assets of Myricom and incurred approximately $0.1 million for the assumption of certain other liabilities.  The purchase of Myricom resulted in the recognition of a bargain purchase gain of approximately $0.5 million.  The bargain purchase gain is presented as a component of operating income, net of the federal and state tax effect.

The Myricom inventory was valued at fair value in connection with the acquisition and for the the years ended, September 30, 2015, and 2014, and approximately $0.1 million and $0.2 million, respectively, of the stepped up basis in inventory was amortized through cost of sales.

The purchase price was allocated as follows:

	(Amounts in Thousands)
Inventory	$	1,030
Property & equipment	17
Intangibles	260
Gross assets acquired	1,307
Product warranty liability assumed	(93		)
Net assets acquired	1,214
Less: asset purchase price	500
Bargain purchase gain before tax	714
Deferred tax on bargain purchase gain	(252		)
Bargain purchase gain, net of tax effect	$	462

The results of operations of Myricom for the for the year ended September 30, 2015 and the eleven month period beginning on November 4, 2013 and ending on September 30, 2014 are included in the Company’s consolidated statements of operations for the years ended Septembr 30, 2015 and 2014, respectively.

XML

Inventories

12 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following:

	September 30, 2015		September 30, 2014
	(Amounts in thousands)
Raw materials	$	1,788	$	2,377
Work-in-process	387		229
Finished goods	3,574		3,840
Total	$	5,749	$	6,446

Finished goods includes inventory that has been shipped, but for which all revenue recognition criteria has not been met, of approximately $0.1 million and $0.4 million as of September 30, 2015 and September 30, 2014, respectively.

Total inventory balances in the table above are shown net of reserves for obsolescence of approximately $4.1 million and $4.7 million as of September 30, 2015 and September 30, 2014, respectively.

XML

Accumulated Other Comprehensive Loss

12 Months Ended

Sep. 30, 2015

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

 The components of Accumulated Other Comprehensive Loss are as follows:

	Effect of Foreign Currency Translation			Minimum Pension Liability			Accumulated Other Comprehensive Loss
	(Amounts in thousands)
Balance as of September 30, 2013	$	(2,156	)	$	(3,709	)	$	(5,865	)
Change in Period	(339		)	(2,164		)	(2,503		)
Tax effect of change in period	—			444			444
Balance as of September 30, 2014	$	(2,495	)	$	(5,429	)	$	(7,924	)
Change in Period	(330		)	(68		)	(398		)
Tax effect of change in period	—			(63		)	(63		)
Balance as of September 30, 2015	$	(2,825	)	$	(5,560	)	$	(8,385	)

The changes in the minimum pension liability are net of amortization of net gain of $140 thousand in 2015 and net gain of $58 thousand in 2014 included in net periodic pension cost.

XML

Income Taxes

12 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

	For the Years Ended September 30,
	2015			2014
	(Amounts in thousands)
Income (loss) before income tax:
U.S.	$	576		$	1,460
Foreign	(560		)	(5		)
	$	16		$	1,455
Income tax expense (benefit):
Current:
Federal	$	(4	)	$	(135	)
State	24			14
Foreign	152			37
	172			(84		)
Deferred:
Federal	(36		)	159
State	67			16
Foreign	23			30
	54			205
	$	226		$	121

As of September 30, 2015, management assessed the positive and negative evidence in the U.S operations, and estimated we will have sufficient future taxable income to utilize the existing deferred tax assets. Significant objective positive evidence included the cumulative profits that we realized over the most recent years. This evidence enhances our ability to consider other subjective evidence such as our projections for future growth. Other factors we considered are the likelihood for continued royalty income in future years, and our expectation that the TS segment will continue to be profitable in future years. On the basis of this evaluation, as of September 30, 2015, we have concluded that our U.S. deferred tax asset is more likely than not to be realized. It should be noted however, that the amount of the deferred tax asset realized could be adjusted in future years, if estimates of taxable income during the carryforward periods are reduced, or if objective negative evidence in the form of cumulative losses is present.

The recording and ultimate reversal of valuation allowances for our deferred tax asset requires significant judgment associated with past and projected performance. In assessing the realizability of deferred tax assets, we consider our taxable future earnings and the expected timing of the reversal of temporary differences. We recorded a valuation allowance which reduced the gross deferred tax asset to an amount that we believed was more likely than not to be realized because of the cumulative losses incurred in the U.K. in recent years represented sufficient negative evidence to record a valuation allowance against certain deferred tax assets.

We continue to maintain a full valuation allowance against our U.K. deferred tax assets as we have experienced cumulative losses and do not have any indication that the operation will be profitable in the future to an extent that will allow us to utilize much of our net operating loss carryforwards. To the extent that actual experience deviates from our assumptions, our projections would be affected and hence our assessment of realizability of our deferred tax assets may change.

Reconciliation of “expected” income tax expense (benefit) to “actual” income tax expense (benefit) is as follows:

	For the Years Ended September 30,
	2015					2014
	(Dollar amounts in thousands)
Computed “expected” tax expense	$	5		34.0	%	$	338		34.0	%
Increases (reductions) in taxes resulting from:
State income taxes, net of federal tax benefit	79			492.8	%	25			2.5	%
Foreign operations	359			2,243.8	%	99			10.0	%
Permanent differences	14			89.3	%	61			6.1	%
Stock-based compensation	1			4.3	%	(1		)	(0.1	)%
Foreign net operating loss	—			—	%	(16		)	(1.6	)%
Uncertain tax liability adjustment	(54		)	(337.5	)%	(336		)	(33.9	)%
Research & development credit	(91		)	(568.8	)%	(27		)	(2.7	)%
Other items	(87		)	(543.8	)%	(22		)	(2.2	)%
Income tax expense	$	226		1,414.1	%	$	121		12.1	%

For the years ended September 30, 2015 and 2014, temporary differences, which give rise to deferred tax assets (liabilities), are as follows:

	September 30, 2015			September 30, 2014
	(Amounts in thousands)
Deferred tax assets:
Pension	$	2,023		$	2,084
Intangibles	409			517
Other reserves and accruals	618			547
Inventory reserves and other	724			632
State credits, net of federal benefit	253			33
Federal and state net operating loss carryforwards	71			18
Foreign net operating loss carryforwards	2,093			1,940
Foreign tax credits	7			7
Depreciation and amortization	(126		)	(22		)
Gross deferred tax assets	6,072			5,756
Less: valuation allowance	(3,048		)	(2,634		)
Realizable deferred tax asset	3,024			3,122
Gross deferred tax liabilities	—			—
Net deferred tax assets	$	3,024		$	3,122

The deferred tax valuation allowance increased by approximately $414 thousand, as shown above. In assessing the realizability of deferred tax assets, the Company considers its taxable future earnings and the expected timing of the reversal of temporary differences. Accordingly, the Company has recorded a valuation allowance which reduces the gross deferred tax asset to an amount which management believes will more likely than not be realized. The valuation allowance was determined by assessing both positive and negative evidence whether it is more likely than not that deferred tax assets are realizable. Such assessment is done on a jurisdiction-by-jurisdiction basis. The Company's inability to project future profitability beyond fiscal year 2015 and the cumulative losses incurred in recent years in the U.K. represent sufficient negative evidence to record a valuation allowance against certain deferred tax assets.

As of September 30, 2015 and 2014, the Company had U.S. net operating loss carryforwards for state tax purposes of approximately $0.4 million and $0.5 million, respectively, which are available to offset future taxable income through 2031.

As of September 30, 2015, the Company had state research and development tax credit carry-forwards in the amount of $327 that expire in years 2024 through 2028. The Company also had other state tax credit carry-forwards of $58k available to reduce future state tax expense of which $56k has unlimited carryover status and $2k will expire in 2017.

As of September 30, 2015 the Company concluded that a net increase of $215k of the valuation allowance was appropriate. As part of the Company’s analysis, the Company evaluated, among other factors, its recent history of generating taxable income in state jurisdictions and its near-term forecasts of future taxable income. The net increase in the Company’s valuation allowance of $215k is to reserve for state tax credit carry-forwards that the Company believes will expire unused.

As of September 30, 2015, the Company had U.K. net operating loss carryforwards of approximately $10.5 million that have an indefinite life with no expiration.

Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $2.5 million and $3.2 million at September 30, 2015 and 2014, respectively. The Company's policy is that its undistributed foreign earnings are indefinitely reinvested and, accordingly, no U.S. federal and state deferred tax liabilities have been recorded.

In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. 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.

As of September 30, 2015, the total amount of uncertain tax liabilities was $0.1 million, all of which would affect our effective tax rate if recognized. We recognize interest and potential penalties accrued related to unrecognized tax benefits in our provision for income taxes.

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

	For the Year Ended September 30, 2015			For the Year Ended September 30, 2014
	(Amounts in thousands)
Balance, beginning of year	$	249		$	589
Increases in tax positions in the current year	—			—
Settlements	(72		)	(362		)
Lapse in statute of limitations	—			—
Accrued penalties and interest	18			22
Balance, end of period	$	195		$	249

We file income tax returns in the U.S. federal jurisdictions and various state and foreign jurisdictions. The Company has reviewed the tax positions taken on returns filed domestically and in its foreign jurisdictions for all open years, generally fiscal 2012 through 2015, and believes that tax adjustments in any audited year will not be material, except for the uncertain tax position described above.

XML

Property, Equipment and Improvements, Net

12 Months Ended

Sep. 30, 2015

Property, Plant and Equipment [Abstract]

Property, Equipment and Improvements, Net

Property, Equipment and Improvements, Net

Property, equipment and improvements, net consist of the following:

	September 30, 2015			September 30, 2014
	(Amounts in thousands)
Leasehold improvements	$	440		$	399
Equipment	8,170			7,933
Automobiles	74			66
	8,684			8,398
Less accumulated depreciation and amortization	(7,120		)	(6,926		)
Property, equipment and improvements, net	$	1,564		$	1,472

The Company uses the straight-line method over the estimated useful lives of the assets to record depreciation expense. Depreciation expense was $516 thousand and $510 thousand for the years ended September 30, 2015 and 2014, respectively.

XML

Acquired Intangible Assets

12 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Acquired Intangible Assets

Acquired Intangible Assets

As of September 30, 2015 and 2014, intangible assets are as follows:

	September 30, 2015							September 30, 2014
	Weighted Average Remaining Amortization Period	Gross		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period	Gross		Accumulated Amortization		Net
	(Amounts in thousands)
Customer list	4 years	$	910	$	591	$	319	5 years	$	910	$	500	$	410
Non-Compete agreements	0 years	93		93		—		0 years	93		93		—
Developed Technology	1 year	30		$	19	$	11	2 years	30		9		21
Trade Name	3 years	140		$	54	$	86	4 years	140		26		114
Total		$	1,173	$	757	$	416		$	1,173	$	628	$	545

Amortization expense on these intangible assets was $130 thousand and $124 thousand for fiscal 2015 and 2014, respectively.

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

Fiscal year ending September 30:	(Amounts in thousands)
2016	129
2017	120
2018	119
2019	11
2020	9
Thereafter	28
Total	$	416

XML

Accounts Payable and Accrued Expenses

12 Months Ended

Sep. 30, 2015

Payables and Accruals [Abstract]

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

	September 30,
	2015		2014
	(Amounts in thousands)
Accounts payable	$	10,559	$	6,748
Commissions	248		118
Compensation and fringe benefits	1,426		1,594
Professional fees and shareholders' reporting costs	499		485
Taxes, other than income	25		217
Warranty	125		213
Other	894		376
	$	13,776	$	9,751

XML

Stock Options and Awards

12 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options and Awards

Stock Based Incentive Compensation

In 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan”), and authorized 199,650 shares of common stock to be reserved for issuance pursuant to the 1997 Plan. The 1997 plan expired in 2007. Because the 1997 Plan has expired, no further awards will be issued under this plan. In 2003, the Company adopted the 2003 Stock Incentive Plan (the “2003 Plan”) and authorized 200,000 shares of common stock to be reserved for issuance pursuant to the 2003 Plan. The 2003 plan expired in 2014. Because the 2003 Plan has expired, no further awards will be issued under this plan. In 2007, the Company adopted the 2007 Stock Incentive Plan (the “2007 Plan”) and authorized 250,000 shares of common stock to be reserved for issuance pursuant to the 2007 Plan. As of September 30, 2015, there were 27,673 shares available to be granted under the 2007 Plan. In 2015, the Company adopted the 2015 Stock Incentive Plan (the “2015 Plan”) and authorized 300,000 shares of common stock to be reserved for issuance pursuant to the 2015 Plan. As of September 30, 2015, there were 300,000 shares available to be granted under the 2015 Plan. Under all of the stock incentive plans, both incentive stock options and non-qualified stock options may be granted to officers, key employees and other persons providing services to the Company. The 2003 Plan and 2007 Plan also provide for awards of nonvested shares of common stock. All of the Company's stock incentive plans have a ten year life. The total number of available shares under all plans for future awards was 327,673 as of September 30, 2015.

Awards issued under any of the stock option plans are not affected by termination of the plan. The Company issues stock options at their fair market value on the date of grant. Vesting of stock options granted pursuant to the Company's stock incentive plans is determined by the Company's compensation committee. Generally, options granted to employees vest over four years and expire ten years from the date of grant. Options granted to non-employee directors have historically included cliff vesting after six months from the date of grant and expire three years from the date of grant. In fiscal years 2013 through 2015, the Company granted certain officers including its Chief Executive Officer and non-employee directors, and key employees shares of nonvested common stock instead of stock options. The vesting periods for the officers', the Chief Executive Officer's and the directors' nonvested stock awards are four years, three years and one year, respectively. The vesting period for the key employees' awards is four years.

We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including employee stock options and awards of nonvested stock based on estimated fair values, as described in Note 1. Stock-based compensation expense incurred and recognized for the years ended September 30, 2015 and 2014 related to stock options and nonvested stock granted to employees and non-employee directors under the Company's stock incentive and employee stock purchase plans totaled approximately $375 thousand and $361 thousand, respectively. The classification of the cost of share-based compensation, in the statements of operations, is consistent with the nature of the services being rendered in exchange for the share based payment. The following table summarizes stock-based compensation expense in the Company's consolidated statements of operations:

	Year ended
	September 30, 2015		September 30, 2014
	(Amounts in thousands)
Cost of sales	$	2	$	—
Engineering and development	22		25
Selling, general and administrative	351		336
Total	$	375	$	361

For the year ended September 30, 2015, the Company granted 11,000 nonvested shares to certain key employees, 30,500 nonvested shares to certain officers including 12,000 shares granted to the Chief Executive Officer and 16,000 nonvested shares to its non-employee directors. For the year ended September 30, 2014, the Company granted 54,250 nonvested shares to certain key employees, 37,500 nonvested shares to certain officers including 22,500 to its Chief Executive Officer and 16,000 nonvested shares to its non-employee directors.

The Company measures the fair value of nonvested stock awards based upon the market price of its common stock as of the date of grant. The Company used the Black-Scholes option-pricing model to value stock options. The Black-Scholes model requires the use of a number of assumptions including volatility of the Company's stock price, the weighted average risk-free interest rate and the weighted average expected life of the options, at the time of grant. The expected dividend yield is equal to the divided per share declared, divided by the closing share price on the date the options were granted. All equity compensation awards granted for the years ended September 30, 2015 and September 30, 2014 were non-vested stock awards.

As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, expense for grants beginning upon adoption on October 1, 2005 has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The forfeiture rates for the years ended September 30, 2015 and 2014 were based on actual forfeitures.

No cash was used to settle equity instruments granted under share-base payment arrangements in any of the years in the two-year period ended September 30, 2015.

The following tables provide summary data of stock option award activity:

	Number of Shares		Weighted average exercise price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at September 30, 2013	107,676		$	7.56	—	—
Granted	—		—		—	—
Expired	(12,500	)	$	7.48	—	—
Forfeited	—		—		—	—
Exercised	(3,050	)	5.02		—	—
Outstanding at September 30, 2014	92,126		$	7.66	—	—
Granted	—		—		—	—
Expired	(35,125	)	$	9.72	—	—
Forfeited	—		—		—	—
Exercised	(1,875	)	5.26		—	—
Outstanding at September 30, 2015	55,126		$	6.43	1.89 Years	$	32
Exercisable at September 30, 2015	54,813		$	6.45	1.86 Years	$	32
Vested and expected to vest at September 30, 2015	55,126		$	6.43	1.89 Years	$	32

There were no stock options granted in the years ended September 30, 2015 and 2014. The aggregate intrinsic value of stock options exercised during the years ended September 30, 2015 and 2014 was $3 thousand and $9 thousand, respectively.

The following table provides summary data of nonvested stock award activity:

	Number of nonvested shares		Weighted Average grant date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Nonvested shares outstanding at September 30, 2013	73,500		$	5.21	2.18 years	$	520
Activity in 2014:
Granted	107,750		$	7.72	—	—
Vested	(31,375	)	$	5.64	—	—
Forfeited	(500	)	7.67		—	—
Nonvested shares outstanding at September 30, 2014	149,375		$	6.92	2.45 Years	$	1,191
Activity in 2015:
Granted	57,500		$	5.05	—	—
Vested	(58,296	)	$	6.82	—	—
Forfeited	(18,122	)	7.38		—	—
Nonvested shares outstanding at September 30, 2015	130,457		$	6.08	2.12 Years	$	714
Vested at September 30, 2015	170,888		$	5.11	0.39 Years	$	935
Vested and expected to vest at September 30, 2015	301,345		$	5.53	1.14 Years	$	1,648

As of September 30, 2015 there was $523 thousand of total unrecognized compensation cost related to nonvested share-based compensation arrangements (including stock option and nonvested stock awards) granted under the company's stock incentive plans. This cost is expected to be expensed over a weighted average period of approximately 2.27 years. The total fair value of shares vested during the years ended September 30, 2015 and 2014 was $399 thousand and $180 thousand, respectively.

XML

Employee Stock Purchase Plan

12 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Stock Purchase Plans

 Employee Stock Purchase Plan

In December 2013, the Board of Directors of the Company adopted the 2014 Employee Stock Purchase Plan covering up to 250,000 shares of Common Stock (the "ESPP”), which was ratified by a vote of the Company's shareholders in February 2014. Under the ESPP, the Company’s employees may purchase shares of common stock at a price per share that is currently 95% of the lesser of the fair market value as of the beginning or end of semi-annual option periods. Pursuant to the ESPP the company issued 31,163 and 13,507 shares for the two years ended September 30, 2015 and September 30, 2014, respectively. Since inception of the plan, there are 205,330 shares available for future issuance under the ESPP as of September 30, 2015.

XML

Pension and Retirement Plans

12 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Pension and Retirement Plans

Pension and Retirement Plans

We have defined benefit and defined contribution plans in the U.K., Germany and in the U.S. In the U.K. and Germany, 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 plans in both the U.K. and Germany are closed to newly hired employees and have been for the two years ended September 30, 2015. In the U.S., the Company also 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, 2015. 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 on the officers.

Defined Benefit Plans

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 consolidated balance sheet.

The German Plan does not have any assets and therefore all costs and benefits of the plan are funded annually with cash flow from operations.

The domestic supplemental retirement plans have life insurance policies which are not considered plan assets but were purchased by the Company as a vehicle to fund the costs of the plan. These insurance policies are included in the balance sheet at their cash surrender value, net of policy loans, aggregating $2.0 million and $1.9 million as of September 30, 2015 and 2014, respectively. The loans against the policies have been taken out by the Company to pay the premiums. The costs and benefit payments for these plans are paid through operating cash flows of the Company to the extent that they can not be funded through the use of the cash values in the insurance policies. The Company expects that the recorded value of the insurance policies will be sufficient to fund all of the Company's obligations under these plans.

Assumptions:

The following table provides the weighted average actuarial assumptions used to determine the actuarial present value of projected benefit obligations at:

	Domestic				International
	September 30,				September 30,
	2015		2014		2015		2014
Discount rate:	4.25	%	4.25	%	3.10	%	3.25	%
Expected return on plan assets:					4.20	%	4.40	%
Rate of compensation increase:					1.00	%	1.00	%

The following table provides the weighted average actuarial assumptions used to determine net periodic benefit cost for years ended:

	Domestic				International
	September 30,				September 30,
	2015		2014		2015		2014
Discount rate:	4.25	%	5.00	%	3.25	%	4.40	%
Expected return on plan assets:					4.40	%	4.90	%
Rate of compensation increase:					1.00	%	1.00	%

For domestic plans, the discount rate was determined by comparison against the Citigroup Pension Discount Curve and Liability Index for AA rated corporate instruments. The Company monitors other indices to assure that the pension obligations are fairly reported on a consistent basis. The international discount rates were determined by comparison against country specific AA corporate indices, adjusted for duration of the obligation.

The periodic benefit cost and the actuarial present value of projected benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. The Company revises these assumptions based on an annual evaluation of long-term trends, as well as market conditions that may have an impact on the cost of providing retirement benefits.

The components of net periodic benefit costs related to the U.S. and international plans are as follows:

	Years Ended September 30
	2015									2014
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(amounts in thousands)
Pension:
Service cost	$	56		$	—		$	56		$	45		$	—		$	45
Interest cost	634			52			686			770			69			839
Expected return on plan assets	(423		)	—			(423		)	(472		)	—			(472		)
Amortization of:
Prior service gains	—			—			—			—			—			—
Amortization of net (gain)/loss	193			(3		)	190			93			(9		)	84
Net periodic benefit cost	$	460		$	49		$	509		$	436		$	60		$	496
Post Retirement:
Service cost	$	—		$	34		$	34		$	—		$	10		$	10
Interest cost	—			44			44			—			43			43
Expected return on plan assets	—			—			—			—			—			—
Amortization of:
Prior service costs/(gains)	—			—			—			—			—			—
Amortization of net (gain)/loss	—			(50		)	(50		)	—			(142		)	(142		)
Net periodic benefit cost	$	—		$	28		$	28		$	—		$	(89	)	$	(89	)
Pension:
Increase (decrease) in minimum liability included in other comprehensive income (loss)	$	163		$	(6	)	$	157		$	1,868		$	20		$	1,888
Post Retirement:
Increase (decrease) in minimum liability included in other comprehensive income (loss)	—			(89		)	(89		)	—			276			276
Total:
Increase (decrease) in minimum liability included in comprehensive income (loss)	$	163		$	(95	)	$	68		$	1,868		$	296		$	2,164

The following table presents an analysis of the changes in 2015 and 2014 of the benefit obligation, the plan assets and the funded status of the plans:

	Years Ended September 30
	2015									2014
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Change in projected benefit obligation (“PBO”)
Balance beginning of year	$	18,919		$	1,228		$	20,147		$	16,651		$	1,371		$	18,022
Service cost	56			—			56			45			—			45
Interest cost	635			52			687			770			69			839
Changes in actuarial assumptions	304			(8		)	296			2,336			10			2,346
Foreign exchange impact	(1,534		)	—			(1,534		)	(389		)	—			(389		)
Benefits paid	(401		)	(250		)	(651		)	(494		)	(222		)	(716		)
Projected benefit obligation at end of year	$	17,979		$	1,022		$	19,001		$	18,919		$	1,228		$	20,147
Changes in fair value of plan assets:
Fair value of plan assets at beginning of year	$	10,094		$	—		$	10,094		$	9,473		$	—		$	9,473
Actual gain (loss) on plan assets	(117		)	—			(117		)	718			—			718
Company contributions	398			251			649			393			222			615
Foreign exchange impact	(673		)	—			(673		)	4			—			4
Benefits paid	(401		)	(251		)	(652		)	(494		)	(222		)	(716		)
Fair value of plan assets at end of year	$	9,301		$	—		$	9,301		$	10,094		—			$	10,094
Funded status	$	(8,678	)	$	(1,022	)	$	(9,700	)	$	(8,825	)	$	(1,228	)	$	(10,053	)
Unamortized net loss	—			—			—			—			—			—
Net amount recognized	$	(8,678	)	$	(1,022	)	$	(9,700	)	$	(8,825	)	$	(1,228	)	$	(10,053	)
Post Retirement:
Change in projected benefit obligation (“PBO”):
Balance beginning of year	$	—		$	1,045		$	1,045		$	—		$	857		$	857
Service cost	—			34			34			—			10			10
Interest cost	—			44			44			—			43			43
Changes in actuarial assumptions	—			(138		)	(138		)	—			135			135
Foreign exchange impact	—			—			—			—			—			—
Benefits paid	—			—			—			—			—			—
Projected benefit obligation at end of year	$	—		$	985		$	985		$	—		$	1,045		$	1,045
Changes in fair value of plan assets:
Fair value of plan assets at beginning of year	—			—			—			—			—			—
Actual gain/(loss) on plan assets	—			—			—			—			—			—
Company contributions	—			—			—			—			—			—
Foreign exchange impact	—			—			—			—			—			—
Benefits paid from plan assets	—			—			—			—			—			—
Fair value of plan assets at end of year	$	—		$	—		$	—		$	—		$	—		$	—
Funded status	$	—		$	(985	)	$	(985	)	$	—		$	(1,045	)	$	(1,045	)
Unamortized net loss	—			—			—			—			—			—
Net amount recognized	$	—		$	(985	)	$	(985	)	$	—		$	(1,045	)	$	(1,045	)

The amounts recognized in the consolidated balance sheet consist of:

	Years Ended September 30
	2015									2014
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Accrued benefit liability	$	(8,678	)	$	(1,022	)	$	(9,700	)	$	(8,825	)	$	(1,228	)	$	(10,053	)
Deferred tax	(490		)	24			(466		)	(531		)	22			(509		)
Accumulated other comprehensive income	5,623			11			5,634			5,419			14			5,433
Net amount recognized	$	(3,545	)	$	(987	)	$	(4,532	)	$	(3,937	)	$	(1,192	)	$	(5,129	)
Post Retirement:
Accrued benefit liability	$	—		$	(985	)	$	(985	)	$	—		$	(1,045	)	$	(1,045	)
Deferred tax	—			165			165			—			145			145
Accumulated other comprehensive income	—			(73		)	(73		)	—			(4		)	(4		)
Net amount recognized	$	—		$	(893	)	$	(893	)	$	—		$	(904	)	$	(904	)
Total pension and post retirement:
Accrued benefit liability	$	(8,678	)	$	(2,007	)	$	(10,685	)	$	(8,825	)	$	(2,273	)	$	(11,098	)
Deferred tax	(490		)	189			(301		)	(531		)	167			(364		)
Accumulated other comprehensive income	5,623			(62		)	5,561			5,419			10			5,429
Net amount recognized	$	(3,545	)	$	(1,880	)	$	(5,425	)	$	(3,937	)	$	(2,096	)	$	(6,033	)
Accumulated Benefit Obligation:
Pension	$	(17,866	)	$	(1,022	)	$	(18,888	)	$	(18,798	)	$	(1,228	)	$	(20,026	)
Post Retirement	—			(985		)	(985		)	—			(1,045		)	(1,045		)
Total accumulated benefit obligation	$	(17,866	)	$	(2,007	)	$	(19,873	)	$	(18,798	)	$	(2,273	)	$	(21,071	)

Plans with projected benefit obligations in excess of plan assets are attributable to unfunded domestic supplemental retirement plans, our German plans which are legally not required to be funded and our U.K. retirement plan.

Accrued benefit liability reported as:

	September 30,
	2015		2014
	(Amounts in thousands)
Current accrued benefit liability	$	675	$	658
Non-current accrued benefit liability	10,009		10,440
Total accrued benefit liability	$	10,684	$	11,098

As of September 30, 2015 and 2014 the amounts included in accumulated other comprehensive income, consisted of deferred net losses totaling approximately $5.6 million and $5.4 million, respectively.

The amount of net deferred gain expected to be recognized as a component of net periodic benefit cost for the year ending September 30, 2015, is approximately $67 thousand.

Contributions

The Company expects to contribute $0.7 million to its pension plans for fiscal 2016.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (amounts in thousands):

Fiscal year ending September 30:	(Amounts in thousands)
2016	$	682
2017	673
2018	642
2019	694
2020	717
Thereafter	4,223

Plan Assets

At September 30, 2015, our pension plan in the U.K. was the only plan with assets, holding investments of approximately $9.3 million. Pension plan assets are managed by a fiduciary committee. The Company's investment strategy for pension plan assets is to maximize the long-term rate of return on plan assets within an acceptable level of risk while maintaining adequate funding levels. Local regulations, local funding rules, and local financial and tax considerations are part of the funding and investment process. In deciding on the investments to be held, the trustees take into account the risk of possible fluctuations in income from, and market values of, the assets as well as the risk of departing from an asset profile which broadly matches the liability profile. The committee has invested the plan assets in a single pooled fund with an authorized investment company (the “Fund”). The Fund selected by the trustees is consistent with the plan's overall investment principles and strategy described herein. There are no specific targets as to asset allocation other than those contained within the Fund that is managed by the authorized investment company.

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

	Fair Values as of
	September 30, 2015								September 30, 2014
	Fair Value Measurements Using Inputs Considered as								Fair Value Measurements Using Inputs Considered as
Asset Category	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(Thousands)
Cash on deposit	$	324	$	324	$	—	$	—	$	352	$	352	$	—	$	—
Pooled Funds	8,977		—		8,977		—		9,742		—		9,742		—
Total Plan Assets	$	9,301	$	324	$	8,977	$	—	$	10,094	$	352	$	9,742	$	—

The expected long-term rates of return on plan assets are equal to the yields to maturity of appropriate indices for government and corporate bonds and by adding a premium to the government bond return for equities. The expected rate of return on cash is the Bank of England base rate in force at the effective date.

The Company uses the Net Asset Value ("NAV") to determine the fair value of the underlying investments which (a) do not have readily determinable fair value; and (b) prepare their financial statements consistent with the measurement principles of an investment company. The Fund is not exchange traded. The Fund is not subject to any redemption notice periods or restrictions and can be redeemed on a daily basis. No gates or holdbacks or dealing suspensions are being applied to the Fund. The Fund is of perpetual duration.

Defined Contribution Plans

The Company has defined contribution plans in domestic and international locations under which the Company matches a portion of the employee's contributions and may make discretionary contributions to the plans. The Company's contributions were $174 thousand and $186 thousand for the years ended September 30, 2015 and 2014, respectively.

XML

Lines of Credit

12 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Lines of Credit

Lines of Credit

As of September 30, 2015 and September 30, 2014, the Company maintained a line of credit notes that allows for borrowings of up to $1.0 million. Availability under this facilities is reduced by outstanding borrowings thereunder. The interest rates on outstanding borrowings is the London Inter-Bank Offer Rate (“LIBOR”) plus 2.5%, with a floor of 4%. Borrowings under the credit agreement are required to be repaid on demand by the lender in some cases, upon termination of the agreements or may be prepaid by the Company without penalty. The credit agreements is not subject to financial covenants and the Company did not borrow under the line of credit during the fiscal years ending September 30, 2015 and 2014.

As of September 30, 2015 and September 30, 2014, the Company maintained an inventory line of credit that may be used by the the TS in the US to purchase inventory from approved vendors with payment terms which exceed those offered by the vendors. No interest accrues under the inventory line of credit when advances are paid within terms, late payments are subject to an interest charge of Prime plus 5%. The credit agreements contain financial covenants which require the Company to maintain the following division specific financial ratios: (1) a minimum current ratio of 1.2, (2) tangible net worth of $2.5 million and (3) a maximum ratio of total liabilities to total net worth of less than 5.0:1. As of September 30, 2015 and September 30, 2014, Company borrowings under the inventory line of credit were $2.9 million and $2.1 million, respectively, and the Company was in compliance with all covenants for the inventory line of credit as of September 30, 2015 and 2014.

XML

Commitments and Contingencies

12 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Leases

The Company occupies office space under lease agreements expiring at various dates during the next five years. The leases are classified as operating leases and provide for the payment of real estate taxes, insurance, utilities and maintenance.

The Company was obligated under non-cancelable operating leases as follows:

Fiscal year ending September 30:	(Amounts in thousands)
2016	$	868
2017	789
2018	724
2019	653
2020	399
	$	3,433

Occupancy expenses under the operating leases approximated $1.3 million in 2015 and $1.3 million in 2014.

Common Stock Repurchase

From time to time the Company's Board of Directors passes resolutions to authorize the Company to purchase shares of its outstanding common stock. The Company did not repurchase any shares during the years ended September 30, 2015 and 2014. As of September 30, 2015 the Company is authorized to repurchase an additional 201 thousand shares pursuant to such resolutions.

XML

Segment Information

12 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

The following table presents certain operating segment information.

			TS Segment
For the Years Ended September 30,	HPP Segment		Germany		United Kingdom			U.S.		Total			Consolidated Total
	(Amounts in thousands)
2015
Sales:
Product	$	9,894	$	7,808	$	4,025		$	44,720	$	56,553		$	66,447
Service	4,054		15,043		1,114			2,648		18,805			22,859
Total sales	13,948		22,851		5,139			47,368		75,358			89,306
Profit (loss) from operations	485		549		(817		)	9		(259		)	226
Assets	16,668		14,557		2,720			13,051		30,328			46,996
Capital expenditures	156		216		3			349		568			724
Depreciation and amortization	247		172		34			193		399			646
2014
Sales:
Product	$	9,151	$	9,273	$	2,131		$	38,322	$	49,726		$	58,877
Service	5,384		15,790		1,299			3,269		20,358			25,742
Total sales	14,535		25,063		3,430			41,591		70,084			84,619
Profit (loss) from operations	1,352		466		(187		)	52		331			1,683
Assets	16,966		13,499		3,464			12,378		29,341			46,307
Capital expenditures	216		211		90			73		374			590
Depreciation and amortization	225		185		32			192		409			634

Profit (loss) from operations is sales less cost of sales, engineering and development, selling, general and administrative expenses but is not affected by either non-operating charges/income or by income taxes. Non-operating charges/income consists principally of investment income and interest expense.  All intercompany transactions have been eliminated.

The following table details the Company's sales by operating segment for fiscal years September 30, 2015 and 2014. The Company's sales by geographic area based on the location of where the products were shipped or services rendered are as follows:

2015	Americas			Europe			Asia			Total			% of Total
	(Amounts in thousands)
HPP	$	10,774		$	1,135		$	2,039		$	13,948		16	%
TS	47,659			26,713			986			75,358			84	%
Total	$	58,433		$	27,848		$	3,025		$	89,306		100	%
% of Total	66		%	31		%	3		%	100		%
2014
HPP	$	10,918		$	992		$	2,625		$	14,535		17	%
TS	42,643			27,403			38			70,084			83	%
Total	$	53,561		$	28,395		$	2,663		$	84,619		100	%
% of Total	63		%	34		%	3		%	100		%

Substantially all Americas amounts are United States.

Long-lived assets by geographic location at September 30, 2015 and 2014 were as follows:

	September 30, 2015		September 30, 2014
	(Amounts in thousands)
North America	$	1,494	$	1,429
Europe	486		589
Totals	$	1,980	$	2,018

Deferred tax assets by geographic location at September 30, 2015 and 2014 were as follows:

	September 30, 2015		September 30, 2014
	(Amounts in thousands)
North America	$	2,254	$	2,300
Europe	770		822
Totals	$	3,024	$	3,122

The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the years ended September 30, 2015 and 2014.

	For the year ended
	September 30, 2015				September 30, 2014
	Amount		% of Revenues		Amount		% of Revenues
	(Amounts in millions)
Customer A	$	17.1	19	%	$	15.2	18	%
Customer B	$	14.3	16	%	$	15.7	19	%

XML

Fair Value Measures (Notes)

12 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Fair Value Measures

The Company had no assets or liabilities measured at fair value on a recurring or non-recurring basis as of September 30, 2015 or September 30, 2014, except for pension plan assets values, which are discussed in Note 11.

XML

Dividend

12 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Dividend

Dividend

On December 17, 2013, our board of directors declared a cash dividend of $0.10 per share which was paid on January 7, 2014 to stockholders of record as of December 27, 2013. On February 11, 2014, our board of directors declared a cash dividend of $0.11 per share which was paid on March 11, 2014 to stockholders of record as of February 27, 2014. On May 14, 2014, our board of directors declared a cash dividend of $0.11 per share which was paid on June 10, 2014 to stockholders of record as of May 30, 2014. On August 6, 2014, our board of directors declared a cash dividend of $0.11 per share which was paid on August 29, 2014 to stockholders of record as of August 21, 2014, the record date.

On December 16, 2014, the Company's board of directors declared a cash dividend of $0.11 per share which was paid

on January 8, 2015 to shareholders of record as of December 28, 2014, the record date. On February 11, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on March 12, 2015 to shareholders of record as of February 26, 2015, the record date. On May 13, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on June 10, 2015 to shareholders of record as of May 29, 2015, the record date. On August 12, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on September 11, 2015 to shareholders of record as of August 26, 2015, the record date.

On December 23, 2015, the Company's board of directors declared a cash dividend of $0.11 per share which will be paid on January 11, 2016 to shareholders of record as of December 31, 2015, the record date.

XML

Related Party Transactions

12 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

During the normal course of business, the company sold products to a company whose Board of Directors includes two members of CSP Inc.'s Board of Directors. The total sales were $313,637 and $161,348, for the fiscal years ended 2015 and 2014, respectively. The trade receivables were $12,540 and $29,260 as of September 30, 2015 and 2014. respectively.

XML

Accounting Policies, by Policy (Policies)

12 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

Foreign Currency Translation

Foreign Currency Translation

The U.S. Dollar is the reporting currency for all periods presented. The financial information for entities outside the United States is measured using the local currency as the functional currency. Assets and liabilities of the Company's foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at average rates in effect during the period. The resulting translation adjustment is reflected as accumulated other comprehensive income (loss), a separate component of shareholders' equity on the consolidated balance sheets. The translation adjustment for intercompany foreign currency loans that are of a long-term-investment nature is also reflected as accumulated other comprehensive income (loss). Currency transaction gains and losses are recorded as other income (expense) in the statements of operations.

Cash Equivalents

Cash Equivalents

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

Impairment Long-Lived Assets

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management assesses the recoverability of the long-lived assets (other than goodwill) by comparing the estimated undiscounted cash flows associated with the related asset or group of assets against their respective carrying amounts. The amount of impairment, if any, is calculated based on the excess of the carrying amount over the fair value of those assets.

Intangible Assets

Intangible assets that are not subject to amortization are also required to be tested annually, or more frequently if events or circumstances indicate that the asset may be impaired. We did not have intangible assets with indefinite lives at any time during the two years ended September 30, 2015. Intangible assets subject to amortization are amortized on a straight-line basis over their estimated useful lives, generally three to ten years, and are carried at cost, less accumulated amortization. The remaining useful lives of intangible assets are evaluated on an annual basis. Intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the fair value of an intangible asset subject to amortization is determined to be less than its carrying value, then an impairment charge is recorded to write down that asset to its fair value.

Inventories

Inventories

Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out method. The recoverability of inventories is based upon the types and levels of inventories held, forecasted demand, pricing, competition and changes in technology. We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Property, Equipment and Improvements

Property, Equipment and Improvements

The components of property, equipment and improvements are stated at cost. The Company provides for depreciation by use of the straight-line method over the estimated useful lives of the related assets (three to seven years). Leasehold improvements are amortized by use of the straight-line method over the lesser of the estimated useful life of the asset or the lease term. Repairs and maintenance costs are expensed as incurred. Property, equipment and improvements are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If the fair value of property, equipment and improvements is determined to be less than their carrying value, then an impairment charge is recorded to write down that asset to its fair value.

Trade Accounts Receivable and Allowance for Doubtful Accounts

Trade Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are stated at amounts that have been billed to customers less an allowance for doubtful accounts. Allowances for doubtful accounts are recorded for the estimated losses resulting from the inability of our customers to make required payments. The estimates for the allowance for doubtful accounts are based on the length of time the receivables are past due, current business environment and our historical experience. If the financial condition of our customers were to deteriorate, resulting in impairment of their ability to make payments, additional allowances may be required. Accounts receivable are charged off against the reserve when management has determined they are uncollectible.

Pension and Retirement Plans

Pension and Retirement Plans

The funded status of pension and other postretirement benefit plans is recognized on the balance sheet. Gains and losses, prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive income, net of tax, until they are amortized as a component of net periodic pension/postretirement benefits expense. Additionally, plan assets and obligations are measured as of our fiscal year-end balance sheet date (September 30).

We have defined benefit and defined contribution plans in the United Kingdom (the “U.K.”), Germany and in the U.S. In the U.K. and Germany, 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 plans in both the U.K. and Germany are closed to newly hired employees and have been for the two years ended September 30, 2015. In the U.S., the Company also 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, 2015. 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 on the officers.

Pension expense is based on an actuarial computation of current future benefits using estimates for expected return on assets, expected compensation increases and applicable discount rates. Management has reviewed the discount rates and rates of return with our consulting actuaries and investment advisor 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. Increases in estimated compensation increases would result in higher pension expense while decreases would lower pension expense. Discount rates are selected based upon rates of return on high quality fixed income investments currently available and expected to be available during the period to maturity of the pension benefit. 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. Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheets.

Revenue Recognition

Revenue Recognition

We derive revenue from the sale of integrated hardware and software, professional services, maintenance contracts, other services, and third party service contracts. Professional services generally include implementation, installation, and training services. Other services generally include revenue generated through our royalty and extended warranty contracts. We recognize revenue when persuasive evidence of an arrangement exists, delivery of the product or service has occurred, the fee is fixed or determinable and collectability is reasonably assured. We enter into multiple element arrangements as well as standalone sales of product, professional services, and other services.

We recognize revenue from standalone product sales upon transfer of title, which is typically upon shipment, provided all other revenue recognition criteria have been met. Revenue generated from standalone professional services and extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met. In some instances professional service contracts include a customer acceptance provision, in which case revenue is deferred until we have evidence of customer acceptance. We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement.

We recognize revenue from multiple element arrangements in accordance with ASC 605-25, Multiple Element Arrangements. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. ASC 605-25 establishes a hierarchy for determining the amount to allocate to each separate deliverable in an arrangement. We determine selling price using vendor specific objective evidence (“VSOE”), if it exists; or, if VSOE does not exist, third party evidence (“TPE”) of fair value if applicable; otherwise, we use the best estimate of selling price (“BESP”). The objective of BESP is to determine the price at which the Company would transact if the element was sold on a standalone basis. Management’s determination of BESP involves several factors including budgeted profit margins, and cost to complete services.

We recognize revenue from third party service contracts as either gross sales or net sales in accordance ASC 605-45, Principal Agent Considerations, which requires us to determine if the Company is acting as a principal party to the transaction or simply acting as an agent or broker. Under ASC 605-45, the assumption of the risks and rewards under the arrangement are

considered indicators of principal parties to the arrangement. We record revenue as gross when it is a principal party to the arrangement and net of cost when we are acting as a broker or agent. Under gross sales recognition, the entire selling price is recorded in revenue and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenue resulting in net sales equal to the gross profit on the transaction.

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

HPP Segment Revenue

HPP segment revenue is derived from the sale of integrated hardware and software, maintenance, and other services through the Multi-computer and Myricom product lines. Multi-computer product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists principally of other services which comprise of warranty and royalty revenue. Revenue generated from extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement.

Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products functionality, and post contract maintenance and support. Revenue on multiple element arrangements is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly revenue for post contract maintenance and support is recognized over the implied maintenance period of three years, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met.

TS Segment Revenue

TS Segment revenue is derived from the sale of hardware, software, professional services, and third party service contracts. TS product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists of professional services which generally include implementation, installation, and training services. Revenue generated from standalone professional services is recognized as services are completed, provided all other revenue recognition criteria has been met. Our standard sales agreements generally do not include customer acceptance provisions. However, in certain instances when arrangements include a customer acceptance provision or there is uncertainty about customer acceptance, revenue is deferred until we have evidence of customer acceptance.

Revenue derived from the sale of products, which are comprised of both hardware and software, and professional services is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly revenue for professional services is recognized as services are completed, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met.

We recognize revenue from certain third party service contracts, which are evaluated to determine whether such service revenue should be recorded as gross sales or net sales in accordance ASC 605-45. We evaluate all third party service contracts to determine whether we act as a principal in the transaction and assume the risks and rewards of ownership or if we are simply acting as an agent or broker. Under gross sales recognition, the entire selling price is recorded in sales and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to sales resulting in net sales equal to the gross profit on the transaction and there are no costs of goods sold. We use the net sales recognition method for the third party service contracts that we sell when we are not the primary obligor on the contract. We use the gross sales recognition for the third party service contracts that we sell when we act as principal and are the primary obligor.

Product Warranty Accrual

Product Warranty Accrual

Our product sales generally include a 90-day to three-year hardware warranty. At time of product shipment, we accrue for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar products.

Research, Engineering and Development Expenses

Engineering and Development Expenses

Engineering and development expenses include payroll, employee benefits, stock-based compensation and other headcount-related expenses associated with product development. Engineering and development expenses also include third-party development and programming costs. We consider technological feasibility for our software products to be reached upon the release of the software, accordingly, no internal software development costs have been capitalized.

Research and Development Expense

For the years ended September 30, 2015 and 2014, our expenses for research and development were approximately $2.8 million and $3.5 million, respectively. Expenditures for research and development are expensed as they are incurred.

Income Taxes

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. 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. We also reduce deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology requires estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities. Valuation allowances are recorded against the gross deferred tax assets that management believes, after considering all available positive and negative objective evidence, historical and prospective, with greater weight given to historical evidence, that it is more likely than not that these assets will not be realized.

In addition, we are required to recognize in the consolidated financial statements, those tax positions determined to be more-likely-than-not of being sustained upon examination, based on the technical merits of the positions as of the reporting date. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are recognized.

In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. 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.

Earnings per Share of Common Stock

Earnings per Share of Common Stock

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

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

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

	For the year ended
	September 30, 2015			September 30, 2014
	(Amounts in thousands except per share data)
Net income (loss)	$	(210	)	$	1,334
Less: Net income attributable to nonvested common stock	—			50
Net income (loss) attributable to common stockholders	$	(210	)	$	1,284
Weighted average total shares outstanding - basic	3,548			3,582
Less: weighted average non-vested shares outstanding	—			134
Weighted average number of common shares outstanding - basic	3,548			3,448
Potential common shares from non-vested stock awards and the assumed exercise of stock options	—			51
Weighted average common shares outstanding - diluted	3,548			3,499
Net income (loss) per share - basic	$	(0.06	)	$	0.37
Net income (loss) per share - diluted	$	(0.06	)	$	0.37

All anti-dilutive securities, including stock options, are excluded from the diluted income per share computation. For the year ended September 30, 2015, 26 thousand stock options were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive. For the fiscal year ended September 30, 2014, approximately 51 thousand stock options were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates under different assumptions or conditions.

Stock-based Compensation

Stock-Based Compensation

We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including stock options and nonvested shares of restricted common stock based on estimated fair values of stock-based payment awards on the date of grant. The Company uses the Black-Scholes option-pricing model to calculate the fair value of stock option grants. The fair value of nonvested restricted share awards is equal to the quoted market price of our common stock as quoted on the Nasdaq Global Market on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company's Consolidated Statements of Operations.

Because stock-based compensation expense recognized in the Consolidated Statements of Operations for the fiscal years ended September 30, 2015 and 2014 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense recognized for the fiscal years ended September 30, 2015 and 2014 consisted of stock-based compensation expense related to options and nonvested restricted stock granted pursuant to the Company's stock incentive and employee stock purchase plans of approximately $0.4 million and $0.4 million, respectively.

Concentrations of Credit Risk

Concentrations of Credit Risk

Cash and cash equivalents are maintained with several financial institutions in the US, Germany and in the UK. Deposits held with banks may exceed the amount of insurance on such deposits. Generally, these deposits may be redeemed upon demand. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Subsequent Events

Subsequent Events

On September 8, 2015, the Company executed a lease for 13,515 square feet of space at 175 Cabot Street in Lowell Massachusetts. The future annual rent payment obligations under the terms of this five year and three month lease are $943,000, which commence as of the December 1, 2015 effective date of the lease.

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

New Accounting Pronouncements

New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014 ‑09, Revenue from Contracts with Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers.  This ASU clarifies the principles for recognizing revenue by, among other things, removing inconsistencies in revenue requirements, improving comparability of revenue recognition practices across entities and industries and providing improved disclosure requirements. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017; however, early adoption at the original effective date is still permitted.  We are currently evaluating the impact that the adoption of this ASU will have on our consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which excludes investments measured at net asset value, as a practical expedient for fair value, from the fair value hierarchy. This ASU is effective for interim and annual reporting periods beginning after December 15, 2015, and requires retrospective application, with early adoption permitted. The implementation of this ASU is not expected to have a material impact to the disclosures in our consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-12, Plan Accounting: Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefits Plans (Topic 965), which requires fully benefit-responsive investment contracts to be measured at contract value. Those Topics also require an adjustment to reconcile contract value to fair value, when these measures differ,

on the face of the plan financial statements. Fair value is measured using the requirements in Topic 820, Fair Value Measurement. This ASU is effective for fiscal years beginning after December 15, 2015, and requires retrospective application, with early adoption permitted. The implementation of this ASU is not expected to have a material impact to the disclosures in our consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) Simplifying the Measurement of Inventory, which requires entities to measure inventory at the lower of cost and net realizable value, except for inventory measured using last-in, first-out (LIFO) or the retail inventory method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017 and requires prospective application, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company has not yet assessed the potential impact of implementing this ASU on the disclosures in our consolidated financial statements.

In November 2015, the FASB issued ASU No, 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes, which require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Topic apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this Topic. The amendments in this Topic are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The implementation of this guidance is not expected to have a material impact to the disclosures in our consolidated financial statements.

XML

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

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

	For the year ended
	September 30, 2015			September 30, 2014
	(Amounts in thousands except per share data)
Net income (loss)	$	(210	)	$	1,334
Less: Net income attributable to nonvested common stock	—			50
Net income (loss) attributable to common stockholders	$	(210	)	$	1,284
Weighted average total shares outstanding - basic	3,548			3,582
Less: weighted average non-vested shares outstanding	—			134
Weighted average number of common shares outstanding - basic	3,548			3,448
Potential common shares from non-vested stock awards and the assumed exercise of stock options	—			51
Weighted average common shares outstanding - diluted	3,548			3,499
Net income (loss) per share - basic	$	(0.06	)	$	0.37
Net income (loss) per share - diluted	$	(0.06	)	$	0.37

XML

Acquisition (Tables)

12 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The purchase price was allocated as follows:

	(Amounts in Thousands)
Inventory	$	1,030
Property & equipment	17
Intangibles	260
Gross assets acquired	1,307
Product warranty liability assumed	(93		)
Net assets acquired	1,214
Less: asset purchase price	500
Bargain purchase gain before tax	714
Deferred tax on bargain purchase gain	(252		)
Bargain purchase gain, net of tax effect	$	462

XML

Inventories (Tables)

12 Months Ended

Sep. 30, 2015

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories consist of the following:

	September 30, 2015		September 30, 2014
	(Amounts in thousands)
Raw materials	$	1,788	$	2,377
Work-in-process	387		229
Finished goods	3,574		3,840
Total	$	5,749	$	6,446

XML

Accumulated Other Comprehensive Loss (Tables)

12 Months Ended

Sep. 30, 2015

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

 The components of Accumulated Other Comprehensive Loss are as follows:

	Effect of Foreign Currency Translation			Minimum Pension Liability			Accumulated Other Comprehensive Loss
	(Amounts in thousands)
Balance as of September 30, 2013	$	(2,156	)	$	(3,709	)	$	(5,865	)
Change in Period	(339		)	(2,164		)	(2,503		)
Tax effect of change in period	—			444			444
Balance as of September 30, 2014	$	(2,495	)	$	(5,429	)	$	(7,924	)
Change in Period	(330		)	(68		)	(398		)
Tax effect of change in period	—			(63		)	(63		)
Balance as of September 30, 2015	$	(2,825	)	$	(5,560	)	$	(8,385	)

XML

Income Taxes (Tables)

12 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

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

	For the Years Ended September 30,
	2015			2014
	(Amounts in thousands)
Income (loss) before income tax:
U.S.	$	576		$	1,460
Foreign	(560		)	(5		)
	$	16		$	1,455
Income tax expense (benefit):
Current:
Federal	$	(4	)	$	(135	)
State	24			14
Foreign	152			37
	172			(84		)
Deferred:
Federal	(36		)	159
State	67			16
Foreign	23			30
	54			205
	$	226		$	121

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Reconciliation of “expected” income tax expense (benefit) to “actual” income tax expense (benefit) is as follows:

	For the Years Ended September 30,
	2015					2014
	(Dollar amounts in thousands)
Computed “expected” tax expense	$	5		34.0	%	$	338		34.0	%
Increases (reductions) in taxes resulting from:
State income taxes, net of federal tax benefit	79			492.8	%	25			2.5	%
Foreign operations	359			2,243.8	%	99			10.0	%
Permanent differences	14			89.3	%	61			6.1	%
Stock-based compensation	1			4.3	%	(1		)	(0.1	)%
Foreign net operating loss	—			—	%	(16		)	(1.6	)%
Uncertain tax liability adjustment	(54		)	(337.5	)%	(336		)	(33.9	)%
Research & development credit	(91		)	(568.8	)%	(27		)	(2.7	)%
Other items	(87		)	(543.8	)%	(22		)	(2.2	)%
Income tax expense	$	226		1,414.1	%	$	121		12.1	%

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

For the years ended September 30, 2015 and 2014, temporary differences, which give rise to deferred tax assets (liabilities), are as follows:

	September 30, 2015			September 30, 2014
	(Amounts in thousands)
Deferred tax assets:
Pension	$	2,023		$	2,084
Intangibles	409			517
Other reserves and accruals	618			547
Inventory reserves and other	724			632
State credits, net of federal benefit	253			33
Federal and state net operating loss carryforwards	71			18
Foreign net operating loss carryforwards	2,093			1,940
Foreign tax credits	7			7
Depreciation and amortization	(126		)	(22		)
Gross deferred tax assets	6,072			5,756
Less: valuation allowance	(3,048		)	(2,634		)
Realizable deferred tax asset	3,024			3,122
Gross deferred tax liabilities	—			—
Net deferred tax assets	$	3,024		$	3,122

Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block]

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

	For the Year Ended September 30, 2015			For the Year Ended September 30, 2014
	(Amounts in thousands)
Balance, beginning of year	$	249		$	589
Increases in tax positions in the current year	—			—
Settlements	(72		)	(362		)
Lapse in statute of limitations	—			—
Accrued penalties and interest	18			22
Balance, end of period	$	195		$	249

XML

Property, Equipment and Improvements, Net (Tables)

12 Months Ended

Sep. 30, 2015

Property, Plant and Equipment [Abstract]

Schedule of Property, Equipment and Improvements [Table Text Block]

Property, equipment and improvements, net consist of the following:

	September 30, 2015			September 30, 2014
	(Amounts in thousands)
Leasehold improvements	$	440		$	399
Equipment	8,170			7,933
Automobiles	74			66
	8,684			8,398
Less accumulated depreciation and amortization	(7,120		)	(6,926		)
Property, equipment and improvements, net	$	1,564		$	1,472

XML

Acquired Intangible Assets (Tables)

12 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

As of September 30, 2015 and 2014, intangible assets are as follows:

	September 30, 2015							September 30, 2014
	Weighted Average Remaining Amortization Period	Gross		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period	Gross		Accumulated Amortization		Net
	(Amounts in thousands)
Customer list	4 years	$	910	$	591	$	319	5 years	$	910	$	500	$	410
Non-Compete agreements	0 years	93		93		—		0 years	93		93		—
Developed Technology	1 year	30		$	19	$	11	2 years	30		9		21
Trade Name	3 years	140		$	54	$	86	4 years	140		26		114
Total		$	1,173	$	757	$	416		$	1,173	$	628	$	545

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

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

Fiscal year ending September 30:	(Amounts in thousands)
2016	129
2017	120
2018	119
2019	11
2020	9
Thereafter	28
Total	$	416

XML

Accounts Payable and Accrued Expenses (Tables)

12 Months Ended

Sep. 30, 2015

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

Accounts payable and accrued expenses consist of the following:

	September 30,
	2015		2014
	(Amounts in thousands)
Accounts payable	$	10,559	$	6,748
Commissions	248		118
Compensation and fringe benefits	1,426		1,594
Professional fees and shareholders' reporting costs	499		485
Taxes, other than income	25		217
Warranty	125		213
Other	894		376
	$	13,776	$	9,751

XML

Stock Options and Awards (Tables)

12 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

The following table summarizes stock-based compensation expense in the Company's consolidated statements of operations:

	Year ended
	September 30, 2015		September 30, 2014
	(Amounts in thousands)
Cost of sales	$	2	$	—
Engineering and development	22		25
Selling, general and administrative	351		336
Total	$	375	$	361

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

The following tables provide summary data of stock option award activity:

	Number of Shares		Weighted average exercise price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at September 30, 2013	107,676		$	7.56	—	—
Granted	—		—		—	—
Expired	(12,500	)	$	7.48	—	—
Forfeited	—		—		—	—
Exercised	(3,050	)	5.02		—	—
Outstanding at September 30, 2014	92,126		$	7.66	—	—
Granted	—		—		—	—
Expired	(35,125	)	$	9.72	—	—
Forfeited	—		—		—	—
Exercised	(1,875	)	5.26		—	—
Outstanding at September 30, 2015	55,126		$	6.43	1.89 Years	$	32
Exercisable at September 30, 2015	54,813		$	6.45	1.86 Years	$	32
Vested and expected to vest at September 30, 2015	55,126		$	6.43	1.89 Years	$	32

Schedule of Nonvested Share Activity [Table Text Block]

The following table provides summary data of nonvested stock award activity:

	Number of nonvested shares		Weighted Average grant date Fair Value		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Nonvested shares outstanding at September 30, 2013	73,500		$	5.21	2.18 years	$	520
Activity in 2014:
Granted	107,750		$	7.72	—	—
Vested	(31,375	)	$	5.64	—	—
Forfeited	(500	)	7.67		—	—
Nonvested shares outstanding at September 30, 2014	149,375		$	6.92	2.45 Years	$	1,191
Activity in 2015:
Granted	57,500		$	5.05	—	—
Vested	(58,296	)	$	6.82	—	—
Forfeited	(18,122	)	7.38		—	—
Nonvested shares outstanding at September 30, 2015	130,457		$	6.08	2.12 Years	$	714
Vested at September 30, 2015	170,888		$	5.11	0.39 Years	$	935
Vested and expected to vest at September 30, 2015	301,345		$	5.53	1.14 Years	$	1,648

XML

Pension and Retirement Plans (Tables)

12 Months Ended

Sep. 30, 2015

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Net Benefit Costs [Table Text Block]

The components of net periodic benefit costs related to the U.S. and international plans are as follows:

	Years Ended September 30
	2015									2014
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(amounts in thousands)
Pension:
Service cost	$	56		$	—		$	56		$	45		$	—		$	45
Interest cost	634			52			686			770			69			839
Expected return on plan assets	(423		)	—			(423		)	(472		)	—			(472		)
Amortization of:
Prior service gains	—			—			—			—			—			—
Amortization of net (gain)/loss	193			(3		)	190			93			(9		)	84
Net periodic benefit cost	$	460		$	49		$	509		$	436		$	60		$	496
Post Retirement:
Service cost	$	—		$	34		$	34		$	—		$	10		$	10
Interest cost	—			44			44			—			43			43
Expected return on plan assets	—			—			—			—			—			—
Amortization of:
Prior service costs/(gains)	—			—			—			—			—			—
Amortization of net (gain)/loss	—			(50		)	(50		)	—			(142		)	(142		)
Net periodic benefit cost	$	—		$	28		$	28		$	—		$	(89	)	$	(89	)
Pension:
Increase (decrease) in minimum liability included in other comprehensive income (loss)	$	163		$	(6	)	$	157		$	1,868		$	20		$	1,888
Post Retirement:
Increase (decrease) in minimum liability included in other comprehensive income (loss)	—			(89		)	(89		)	—			276			276
Total:
Increase (decrease) in minimum liability included in comprehensive income (loss)	$	163		$	(95	)	$	68		$	1,868		$	296		$	2,164

Schedule of Changes in Projected Benefit Obligations [Table Text Block]

The following table presents an analysis of the changes in 2015 and 2014 of the benefit obligation, the plan assets and the funded status of the plans:

	Years Ended September 30
	2015									2014
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Change in projected benefit obligation (“PBO”)
Balance beginning of year	$	18,919		$	1,228		$	20,147		$	16,651		$	1,371		$	18,022
Service cost	56			—			56			45			—			45
Interest cost	635			52			687			770			69			839
Changes in actuarial assumptions	304			(8		)	296			2,336			10			2,346
Foreign exchange impact	(1,534		)	—			(1,534		)	(389		)	—			(389		)
Benefits paid	(401		)	(250		)	(651		)	(494		)	(222		)	(716		)
Projected benefit obligation at end of year	$	17,979		$	1,022		$	19,001		$	18,919		$	1,228		$	20,147
Changes in fair value of plan assets:
Fair value of plan assets at beginning of year	$	10,094		$	—		$	10,094		$	9,473		$	—		$	9,473
Actual gain (loss) on plan assets	(117		)	—			(117		)	718			—			718
Company contributions	398			251			649			393			222			615
Foreign exchange impact	(673		)	—			(673		)	4			—			4
Benefits paid	(401		)	(251		)	(652		)	(494		)	(222		)	(716		)
Fair value of plan assets at end of year	$	9,301		$	—		$	9,301		$	10,094		—			$	10,094
Funded status	$	(8,678	)	$	(1,022	)	$	(9,700	)	$	(8,825	)	$	(1,228	)	$	(10,053	)
Unamortized net loss	—			—			—			—			—			—
Net amount recognized	$	(8,678	)	$	(1,022	)	$	(9,700	)	$	(8,825	)	$	(1,228	)	$	(10,053	)
Post Retirement:
Change in projected benefit obligation (“PBO”):
Balance beginning of year	$	—		$	1,045		$	1,045		$	—		$	857		$	857
Service cost	—			34			34			—			10			10
Interest cost	—			44			44			—			43			43
Changes in actuarial assumptions	—			(138		)	(138		)	—			135			135
Foreign exchange impact	—			—			—			—			—			—
Benefits paid	—			—			—			—			—			—
Projected benefit obligation at end of year	$	—		$	985		$	985		$	—		$	1,045		$	1,045
Changes in fair value of plan assets:
Fair value of plan assets at beginning of year	—			—			—			—			—			—
Actual gain/(loss) on plan assets	—			—			—			—			—			—
Company contributions	—			—			—			—			—			—
Foreign exchange impact	—			—			—			—			—			—
Benefits paid from plan assets	—			—			—			—			—			—
Fair value of plan assets at end of year	$	—		$	—		$	—		$	—		$	—		$	—
Funded status	$	—		$	(985	)	$	(985	)	$	—		$	(1,045	)	$	(1,045	)
Unamortized net loss	—			—			—			—			—			—
Net amount recognized	$	—		$	(985	)	$	(985	)	$	—		$	(1,045	)	$	(1,045	)

Schedule of Amounts Recognized in Balance Sheet [Table Text Block]

The amounts recognized in the consolidated balance sheet consist of:

	Years Ended September 30
	2015									2014
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Accrued benefit liability	$	(8,678	)	$	(1,022	)	$	(9,700	)	$	(8,825	)	$	(1,228	)	$	(10,053	)
Deferred tax	(490		)	24			(466		)	(531		)	22			(509		)
Accumulated other comprehensive income	5,623			11			5,634			5,419			14			5,433
Net amount recognized	$	(3,545	)	$	(987	)	$	(4,532	)	$	(3,937	)	$	(1,192	)	$	(5,129	)
Post Retirement:
Accrued benefit liability	$	—		$	(985	)	$	(985	)	$	—		$	(1,045	)	$	(1,045	)
Deferred tax	—			165			165			—			145			145
Accumulated other comprehensive income	—			(73		)	(73		)	—			(4		)	(4		)
Net amount recognized	$	—		$	(893	)	$	(893	)	$	—		$	(904	)	$	(904	)
Total pension and post retirement:
Accrued benefit liability	$	(8,678	)	$	(2,007	)	$	(10,685	)	$	(8,825	)	$	(2,273	)	$	(11,098	)
Deferred tax	(490		)	189			(301		)	(531		)	167			(364		)
Accumulated other comprehensive income	5,623			(62		)	5,561			5,419			10			5,429
Net amount recognized	$	(3,545	)	$	(1,880	)	$	(5,425	)	$	(3,937	)	$	(2,096	)	$	(6,033	)
Accumulated Benefit Obligation:
Pension	$	(17,866	)	$	(1,022	)	$	(18,888	)	$	(18,798	)	$	(1,228	)	$	(20,026	)
Post Retirement	—			(985		)	(985		)	—			(1,045		)	(1,045		)
Total accumulated benefit obligation	$	(17,866	)	$	(2,007	)	$	(19,873	)	$	(18,798	)	$	(2,273	)	$	(21,071	)

Schedule of Accrued Liabilities [Table Text Block]

Accrued benefit liability reported as:

	September 30,
	2015		2014
	(Amounts in thousands)
Current accrued benefit liability	$	675	$	658
Non-current accrued benefit liability	10,009		10,440
Total accrued benefit liability	$	10,684	$	11,098

Schedule of Expected Benefit Payments [Table Text Block]

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (amounts in thousands):

Fiscal year ending September 30:	(Amounts in thousands)
2016	$	682
2017	673
2018	642
2019	694
2020	717
Thereafter	4,223

Schedule of Allocation of Plan Assets [Table Text Block]

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

	Fair Values as of
	September 30, 2015								September 30, 2014
	Fair Value Measurements Using Inputs Considered as								Fair Value Measurements Using Inputs Considered as
Asset Category	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(Thousands)
Cash on deposit	$	324	$	324	$	—	$	—	$	352	$	352	$	—	$	—
Pooled Funds	8,977		—		8,977		—		9,742		—		9,742		—
Total Plan Assets	$	9,301	$	324	$	8,977	$	—	$	10,094	$	352	$	9,742	$	—

Projected Benefit Obligations

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Assumptions Used [Table Text Block]

The following table provides the weighted average actuarial assumptions used to determine the actuarial present value of projected benefit obligations at:

	Domestic				International
	September 30,				September 30,
	2015		2014		2015		2014
Discount rate:	4.25	%	4.25	%	3.10	%	3.25	%
Expected return on plan assets:					4.20	%	4.40	%
Rate of compensation increase:					1.00	%	1.00	%

Net Periodic Benefit Cost

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Assumptions Used [Table Text Block]

The following table provides the weighted average actuarial assumptions used to determine net periodic benefit cost for years ended:

	Domestic				International
	September 30,				September 30,
	2015		2014		2015		2014
Discount rate:	4.25	%	5.00	%	3.25	%	4.40	%
Expected return on plan assets:					4.40	%	4.90	%
Rate of compensation increase:					1.00	%	1.00	%

XML

Commitments and Contingencies (Tables)

12 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

The Company was obligated under non-cancelable operating leases as follows:

Fiscal year ending September 30:	(Amounts in thousands)
2016	$	868
2017	789
2018	724
2019	653
2020	399
	$	3,433

XML

Segment Information (Tables)

12 Months Ended

Sep. 30, 2015

Revenue, Major Customer [Line Items]

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]

The following table details the Company's sales by operating segment for fiscal years September 30, 2015 and 2014. The Company's sales by geographic area based on the location of where the products were shipped or services rendered are as follows:

2015	Americas			Europe			Asia			Total			% of Total
	(Amounts in thousands)
HPP	$	10,774		$	1,135		$	2,039		$	13,948		16	%
TS	47,659			26,713			986			75,358			84	%
Total	$	58,433		$	27,848		$	3,025		$	89,306		100	%
% of Total	66		%	31		%	3		%	100		%
2014
HPP	$	10,918		$	992		$	2,625		$	14,535		17	%
TS	42,643			27,403			38			70,084			83	%
Total	$	53,561		$	28,395		$	2,663		$	84,619		100	%
% of Total	63		%	34		%	3		%	100		%

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block]

Long-lived assets by geographic location at September 30, 2015 and 2014 were as follows:

	September 30, 2015		September 30, 2014
	(Amounts in thousands)
North America	$	1,494	$	1,429
Europe	486		589
Totals	$	1,980	$	2,018

Schedule of Deferred Tax Assets by Geographic Location [Table Text Block]

Deferred tax assets by geographic location at September 30, 2015 and 2014 were as follows:

	September 30, 2015		September 30, 2014
	(Amounts in thousands)
North America	$	2,254	$	2,300
Europe	770		822
Totals	$	3,024	$	3,122

Operating Segments

Revenue, Major Customer [Line Items]

Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block]

The following table presents certain operating segment information.

			TS Segment
For the Years Ended September 30,	HPP Segment		Germany		United Kingdom			U.S.		Total			Consolidated Total
	(Amounts in thousands)
2015
Sales:
Product	$	9,894	$	7,808	$	4,025		$	44,720	$	56,553		$	66,447
Service	4,054		15,043		1,114			2,648		18,805			22,859
Total sales	13,948		22,851		5,139			47,368		75,358			89,306
Profit (loss) from operations	485		549		(817		)	9		(259		)	226
Assets	16,668		14,557		2,720			13,051		30,328			46,996
Capital expenditures	156		216		3			349		568			724
Depreciation and amortization	247		172		34			193		399			646
2014
Sales:
Product	$	9,151	$	9,273	$	2,131		$	38,322	$	49,726		$	58,877
Service	5,384		15,790		1,299			3,269		20,358			25,742
Total sales	14,535		25,063		3,430			41,591		70,084			84,619
Profit (loss) from operations	1,352		466		(187		)	52		331			1,683
Assets	16,966		13,499		3,464			12,378		29,341			46,307
Capital expenditures	216		211		90			73		374			590
Depreciation and amortization	225		185		32			192		409			634

Revenues in Excess of 10 Percent of Total Revenues

Revenue, Major Customer [Line Items]

Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block]

The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the years ended September 30, 2015 and 2014.

	For the year ended
	September 30, 2015				September 30, 2014
	Amount		% of Revenues		Amount		% of Revenues
	(Amounts in millions)
Customer A	$	17.1	19	%	$	15.2	18	%
Customer B	$	14.3	16	%	$	15.7	19	%

XML

Summary of Significant Accounting Policies (Detail) shares in Thousands	12 Months Ended
	Sep. 30, 2015 USD ($) ft² shares	Sep. 30, 2014 USD ($) shares
Leased space | ft²	13,515
Operating Leases, Future Minimum Payments, Due Thereafter	$ 943,000
Research and Development Expense (in Dollars)	$ 2,826,000	$ 3,484,000
Number of Years Defined Benefit Plans are Closed to Newly Hired Employees	2 years
Number of Years Supplementary Retirement Plans are Closed to Newly Hired Employees	2 years
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | shares	26	51
Stock-based compensation expense on stock options and restricted stock awards	$ 375,000	$ 361,000
Minimum
Finite-Lived Intangible Asset, Useful Life	3 years
Property, Plant and Equipment, Useful Life	3 years
Hardware Warranty Included in Product Sales	90 days
Maximum
Finite-Lived Intangible Asset, Useful Life	10 years
Property, Plant and Equipment, Useful Life	7 years
Hardware Warranty Included in Product Sales	3 years

XML

Summary of Significant Accounting Policies (Detail) - Basic and diluted earnings per share computations for the Companys reported net income attributable to common stockholders - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Accounting Policies [Abstract]
Net loss	$ (210)	$ 1,334
Less: Net income attributable to nonvested common stock (in Dollars)	0	50
Net income attributable to common stockholders	$ (210)	$ 1,284
Weighted average total shares outstanding - basic	3,548	3,582
Less: weighted average non-vested shares outstanding	0	134
Weighted average number of common shares outstanding - basic	3,548	3,448
Potential common shares from non-vested stock awards and the assumed exercise of stock options	0	51
Weighted average common shares outstanding - diluted	3,548	3,499
Net income per share - basic (in Dollars per share)	$ (0.06)	$ 0.37
Net income per share - diluted (in Dollars per share)	$ (0.06)	$ 0.37

XML

Acquisition (Details) - USD ($) $ in Thousands		12 Months Ended
	Nov. 04, 2013	Sep. 30, 2015	Sep. 30, 2014
Business Acquisition [Line Items]
Business Combination, Bargain Purchase, Gain Recognized, Amount		$ 0	$ 462
Payments to Acquire Businesses, Net of Cash Acquired		0	500
Myricom, Inc [Member]
Business Acquisition [Line Items]
Business Combination, Bargain Purchase, Gain Recognized, Amount	$ 462	$ 100	$ 200
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities	93
Payments to Acquire Businesses, Net of Cash Acquired	$ 500

XML

Acquisition Acquisition Purchase Price Allocation (Details) - USD ($) $ in Thousands		12 Months Ended
	Nov. 04, 2013	Sep. 30, 2015	Sep. 30, 2014
Business Acquisition [Line Items]
Payments to Acquire Businesses, Net of Cash Acquired		$ 0	$ 500
Business Combination, Bargain Purchase, Gain Recognized, Amount		0	462
Myricom, Inc [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory	$ 1,030
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Equipment	17
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	260
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	1,307
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities	(93)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net	1,214
Payments to Acquire Businesses, Net of Cash Acquired	500
Bargain purchase gain before tax	714
Deferred tax on bargain purchase gain	(252)
Business Combination, Bargain Purchase, Gain Recognized, Amount	$ 462	$ 100	$ 200

XML

Inventories (Detail) - USD ($) $ in Millions	Sep. 30, 2015	Sep. 30, 2014
Inventory Disclosure [Abstract]
Other Inventory, Capitalized Costs, Gross	$ 0.1	$ 0.4
Inventory Valuation Reserves	$ 4.1	$ 4.7

XML

Inventories (Detail) - Inventories - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 1,788	$ 2,377
Work-in-process	387	229
Finished goods	3,574	3,840
Total	$ 5,749	$ 6,446

XML

Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, accumulated other comprehensive loss	$ (7,924)	$ (5,865)
Change in Period	(398)	(2,503)
Tax effect of change in period	(63)	444
Balance, accumulated other comprehensive loss	(8,385)	(7,924)
Effect of Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, accumulated other comprehensive loss	(2,495)	(2,156)
Change in Period	(330)	(339)
Tax effect of change in period	0	0
Balance, accumulated other comprehensive loss	(2,825)	(2,495)
Minimum Pension Liability
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance, accumulated other comprehensive loss	(5,429)	(3,709)
Change in Period	(68)	(2,164)
Tax effect of change in period	(63)	444
Balance, accumulated other comprehensive loss	$ (5,560)	$ (5,429)

XML

Accumulated Other Comprehensive Loss - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Other Income and Expenses [Abstract]
Amortization of net (gain) loss included in net periodic pension cost	$ 140	$ (58)

XML

Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Valuation Allowance, Deferred Tax Asset, Change in Amount	$ (414)
Income tax expense	$ 226	$ 121
Effective Income Tax Rate, Continuing Operations	1414.10%	12.10%
Deferred Tax Assets, Valuation Allowance	$ 3,048	$ 2,634
Undistributed Earnings of Foreign Subsidiaries	2,500	3,200
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	100
State
Operating Loss Carryforwards	400	$ 500
U.K.
Operating Loss Carryforwards	$ 10,500

XML

Income Taxes (Detail) - Components of income before income tax and income tax expense (benefit) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Income (loss) before income tax:
U.S.	$ 576	$ 1,460
Foreign	(560)	(5)
Income before income taxes	16	1,455
Current:
Federal	(4)	(135)
State	24	14
Foreign	152	37
Current Income Tax Expense (Benefit)	172	(84)
Deferred:
Federal	(36)	159
State	67	16
Foreign	23	30
Deferred Income Tax Expense (Benefit)	54	205
Income tax expense (benefit)	$ 226	$ 121

XML

Income Taxes (Detail) - Reconciliation of “expected” income tax expense (benefit) to “actual” income tax expense (benefit) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Computed “expected” tax expense (in Dollars)	$ 5	$ 338
Computed “expected” tax expense	34.00%	34.00%
Increases (reductions) in taxes resulting from:
State income taxes, net of federal tax benefit (in Dollars)	$ 79	$ 25
State income taxes, net of federal tax benefit	492.80%	2.50%
Foreign operations (in Dollars)	$ 359	$ 99
Foreign operations	2243.80%	10.00%
Permanent differences (in Dollars)	$ 14	$ 61
Permanent differences	89.30%	6.10%
Stock-based compensation (in Dollars)	$ 1	$ (1)
Stock-based compensation	4.30%	(0.10%)
Foreign net operating loss (in Dollars)	$ 0	$ (16)
Foreign net operating loss	0.00%	(1.60%)
Uncertain tax liability adjustment (in Dollars)	$ (54)	$ (336)
Uncertain tax liability adjustment	(337.50%)	(33.90%)
Research & Development Credit (in Dollars)	$ (91)	$ (27)
Research & Development Credit	(568.80%)	(2.70%)
Other items (in Dollars)	$ (87)	$ (22)
Other items	(543.80%)	(2.20%)
Income tax expense (benefit)	$ 226	$ 121
Income tax expense	1414.10%	12.10%

XML

Income Taxes (Detail) - Deferred tax assets (liabilities) - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Deferred tax assets:
Pension	$ 2,023	$ 2,084
Intangibles	409	517
Other reserves and accruals	618	547
Inventory reserves and other	724	632
State credits, net of federal benefit	253	33
Federal and state net operating loss carryforwards	71	18
Foreign net operating loss carryforwards	2,093	1,940
Foreign tax credits	7	7
Depreciation and amortization	(126)	(22)
Gross deferred tax assets	6,072	5,756
Less: valuation allowance	(3,048)	(2,634)
Realizable deferred tax asset	3,024	3,122
Gross deferred tax liabilities	0	0
Net deferred tax assets	$ 3,024	$ 3,122

XML

Income Taxes (Detail) - A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Mar. 31, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Balance, beginning of year	$ 589	$ 249	$ 589
Increases in tax positions in the current year		0	0
Settlements		(72)	(362)
Lapse in statute of limitations	$ 0		0
Accrued penalties and interest		18	22
Balance, end of period		$ 195	$ 249

XML

Property, Equipment and Improvements, Net (Detail) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Property, Plant and Equipment [Abstract]
Depreciation, Depletion and Amortization	$ 516	$ 510

XML

Property, Equipment and Improvements, Net (Detail) - Property, equipment and improvements, net - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 8,684	$ 8,398
Less accumulated depreciation and amortization	(7,120)	(6,926)
Property, equipment and improvements, net	1,564	1,472
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	440	399
Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	8,170	7,933
Automobiles
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 74	$ 66

XML

Acquired Intangible Assets (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Mar. 31, 2014	Sep. 30, 2015	Sep. 30, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of Intangible Assets	$ 130	$ 130	$ 124

XML

Acquired Intangible Assets (Detail) - Intangible assets - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Impaired Intangible Assets [Abstract]
Gross	$ 1,173	$ 1,173
Accumulated Amortization	757	628
Net	$ 416	$ 545
Customer list
Impaired Intangible Assets [Abstract]
Weighted Average Remaining Amortization Period	4 years	5 years
Gross	$ 910	$ 910
Accumulated Amortization	591	500
Net	$ 319	$ 410
Non-Compete agreements
Impaired Intangible Assets [Abstract]
Weighted Average Remaining Amortization Period	0 years	0 years
Gross	$ 93	$ 93
Accumulated Amortization	93	93
Net	$ 0	$ 0
Developed Technology
Impaired Intangible Assets [Abstract]
Weighted Average Remaining Amortization Period	1 year	2 years
Gross	$ 30	$ 30
Accumulated Amortization	19	9
Net	$ 11	$ 21
Trade Name
Impaired Intangible Assets [Abstract]
Weighted Average Remaining Amortization Period	3 years	4 years
Gross	$ 140	$ 140
Accumulated Amortization	54	26
Net	$ 86	$ 114

XML

Acquired Intangible Assets (Detail) - Annual amortization expense related to intangible assets - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
2016	$ 129
2017	120
2018	119
2019	11
2020	9
Thereafter	28
Total	$ 416	$ 545

XML

Accounts Payable and Accrued Expenses (Detail) - Accounts payable and accrued expenses consist of the following - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Payables and Accruals [Abstract]
Accounts payable	$ 10,559	$ 6,748
Commissions	248	118
Compensation and fringe benefits	1,426	1,594
Professional fees and shareholders' reporting costs	499	485
Taxes, other than income	25	217
Warranty	125	213
Other	894	376
Accounts payable and accrued expenses	$ 13,776	$ 9,751

XML

Stock Options and Awards (Detail) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2007	Dec. 31, 2003	Dec. 31, 1997
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	327,673
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Share-Based Compensation Arrangement by Share-Based Payment Award Expiration	10 years
Stock-based compensation expense	$ 375	$ 361
Granted, number of shares	0	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	57,500	107,750
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Total Intrinsic Value (in Dollars)	$ 3	$ 9
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized (in Dollars)	$ 523
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	2 years 100 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value (in Dollars)	$ 399	$ 180
The 1997 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized					199,650
The 2003 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized				200,000
The 2007 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			250,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	27,673
The 2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	300,000
Management
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, number of shares		54,250
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	11,000
Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	6 months
Share-Based Compensation Arrangement by Share-Based Payment Award Expiration	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	16,000	16,000
Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	30,500	37,500
Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	12,000	22,500
Stock Incentive Plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award Expiration	10 years
Nonvested Stock Awards | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Nonvested Stock Awards | Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Nonvested Stock Awards | Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years

XML

Stock Options and Awards (Detail) - Stock-based compensation expense - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 375	$ 361
Cost of sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	2	0
Engineering and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	22	25
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 351	$ 336

XML

Stock Options and Awards (Detail) - Summary data of stock option award activity - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Outstanding, number of shares	92,126	107,676
Outstanding, weighted average exercise price (in Dollars per share)	$ 7.66	$ 7.56
Granted, number of shares	0	0
Granted, weighted average exercise price (in Dollars per share)	$ 0.00	$ 0.00
Expired, number of shares	(35,125)	(12,500)
Expired, weighted average exercise price (in Dollars per share)	$ 9.72	$ 7.48
Forfeited, number of shares	0	0
Forfeited, weighted average exercise price (in Dollars per share)	$ 0.00	$ 0.00
Exercised, number of shares	(1,875)	(3,050)
Exercised, weighted average exercise price (in Dollars per share)	$ 5.26	$ 5.02
Outstanding, number of shares	55,126	92,126
Outstanding, weighted average exercise price (in Dollars per share)	$ 6.43	$ 7.66
Outstanding, weighted average remaining contractual term	1 year 326 days
Outstanding, aggregate intrinsic value (in Dollars)	$ 32
Exercisable at September 30, 2015	54,813
Exercisable at September 30, 2013 (in Dollars per share)	$ 6.45
Exercisable at September 30, 2015	1 year 315 days
Exercisable at September 30, 2013 (in Dollars)	$ 32
Vested and expected to vest at September 30, 2015	55,126
Vested and expected to vest at September 30, 2013 (in Dollars per share)	$ 6.43
Vested and expected to vest at September 30, 2015	1 year 326 days
Vested and expected to vest at September 30, 2013 (in Dollars)	$ 32

XML

Stock Options and Awards (Detail) - Summary data of nonvested stock award activity - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Sep. 30, 2015	Sep. 30, 2014
Summary data of nonvested stock award activity [Abstract]
Nonvested shares outstanding, number of nonvested shares			149,375	73,500
Nonvested shares outstanding, weighted average grant date fair value (in Dollars per share)			$ 6.92	$ 5.21
Nonvested shares outstanding, weighted average remaining contractual term	2 years 5 months 12 days	2 years 2 months 5 days	2 years 44 days
Nonvested shares outstanding, aggregate intrinsic value (in Dollars)			$ 1,191	$ 520
Activity in 2014:
Granted, number of nonvested shares			57,500	107,750
Granted, weighted average grant date fair value (in Dollars per share)			$ 5.05	$ 7.72
Vested, number of nonvested shares			(58,296)	(31,375)
Vested, weighted average grant date fair value (in Dollars per share)			$ 6.82	$ 5.64
Forfeited, number of nonvested shares			(18,122)	(500)
Forfeited, weighted average grant date fair valuem (in Dollars per share)			$ 7.38	$ 7.67
Activity in 2015:
Vested at September 30, 2015			170,888
Vested at September 30, 2013 (in Dollars per share)			$ 5.11
Vested at September 30, 2015			142 days
Vested at September 30, 2013 (in Dollars)			$ 935
Vested and expected to vest at September 30, 2015			301,345
Vested and expected to vest at September 30, 2013 (in Dollars per share)			$ 5.53
Vested and expected to vest at September 30, 2015			1 year 51 days
Vested and expected to vest at September 30, 2013 (in Dollars)			$ 1,648
Nonvested shares outstanding, number of nonvested shares			130,457	149,375
Nonvested shares outstanding, weighted average grant date fair value (in Dollars per share)			$ 6.08	$ 6.92
Nonvested shares outstanding, aggregate intrinsic value (in Dollars)			$ 714	$ 1,191

XML

Employee Stock Purchase Plan (Details) - shares	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of shares covered under the Employee Stock Purchase Plan (ESPP)			250,000
Purchase price per share as percentage of fair market value	95.00%
Issuance of shares under employee stock purchase plan (in shares)	31,163	13,507
Shares available for future issuance under the ESPP	205,330

XML

Pension and Retirement Plans (Detail) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Number of Years Defined Benefit Plans are Closed to Newly Hired Employees	2 years
Number of Years Supplementary Retirement Plans are Closed to Newly Hired Employees	2 years
Accumulated other comprehensive income	$ 5,561	$ 5,429
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year	(67)
Defined Benefit Plan, Estimated Future Employer Contributions in Next Fiscal Year	700
Defined Benefit Plan, Fair Value of Plan Assets	9,301	10,094
Contributions in Defined Contribution Plans	174	186
Domestic
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Loans, Gross, Insurance Policy	2,000	1,900
Accumulated other comprehensive income	$ (62)	$ 10

XML

Pension and Retirement Plans (Detail) - Weighted average actuarial assumptions used to determine projected benefit obligation	Sep. 30, 2015	Sep. 30, 2014
Domestic
Defined Benefit Plan Disclosure [Line Items]
Discount rate:	4.25%	4.25%
International
Defined Benefit Plan Disclosure [Line Items]
Discount rate:	3.10%	3.25%
Expected return on plan assets:	4.20%	4.40%
Rate of compensation increase:	1.00%	1.00%

XML

Pension and Retirement Plans (Detail) - Weighted average actuarial assumptions used to determine net periodic benefit cost	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Domestic
Defined Benefit Plan Disclosure [Line Items]
Discount rate:	4.25%	5.00%
International
Defined Benefit Plan Disclosure [Line Items]
Discount rate:	3.25%	4.40%
Expected return on plan assets:	4.40%	4.90%
Rate of compensation increase:	1.00%	1.00%

XML

Pension and Retirement Plans (Detail) - Components of net periodic benefit costs - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Defined Benefit Plan Disclosure [Line Items]
Increase (decrease) in minimum liability included in other comprehensive income (loss)	$ 68	$ 2,164
U.S.
Defined Benefit Plan Disclosure [Line Items]
Increase (decrease) in minimum liability included in other comprehensive income (loss)	(95)	296
Foreign
Defined Benefit Plan Disclosure [Line Items]
Increase (decrease) in minimum liability included in other comprehensive income (loss)	163	1,868
Pension
Defined Benefit Plan Disclosure [Line Items]
Service cost	56	45
Interest cost	686	839
Expected return on plan assets	(423)	(472)
Prior service gains	0	0
Amortization of net (gain)/loss	190	84
Net periodic benefit cost	509	496
Increase (decrease) in minimum liability included in other comprehensive income (loss)	157	1,888
Pension | U.S.
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0
Interest cost	52	69
Expected return on plan assets	0	0
Prior service gains	0	0
Amortization of net (gain)/loss	(3)	(9)
Net periodic benefit cost	49	60
Increase (decrease) in minimum liability included in other comprehensive income (loss)	(6)	20
Pension | Foreign
Defined Benefit Plan Disclosure [Line Items]
Service cost	56	45
Interest cost	634	770
Expected return on plan assets	(423)	(472)
Prior service gains	0	0
Amortization of net (gain)/loss	193	93
Net periodic benefit cost	460	436
Increase (decrease) in minimum liability included in other comprehensive income (loss)	163	1,868
Post Retirement
Defined Benefit Plan Disclosure [Line Items]
Service cost	34	10
Interest cost	44	43
Expected return on plan assets	0	0
Prior service gains	0	0
Amortization of net (gain)/loss	(50)	(142)
Net periodic benefit cost	28	(89)
Increase (decrease) in minimum liability included in other comprehensive income (loss)	(89)	276
Post Retirement | U.S.
Defined Benefit Plan Disclosure [Line Items]
Service cost	34	10
Interest cost	44	43
Expected return on plan assets	0	0
Prior service gains	0	0
Amortization of net (gain)/loss	(50)	(142)
Net periodic benefit cost	28	(89)
Increase (decrease) in minimum liability included in other comprehensive income (loss)	(89)	276
Post Retirement | Foreign
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0
Interest cost	0	0
Expected return on plan assets	0	0
Prior service gains	0	0
Amortization of net (gain)/loss	0	0
Net periodic benefit cost	0	0
Increase (decrease) in minimum liability included in other comprehensive income (loss)	$ 0	$ 0

XML

Pension and Retirement Plans (Detail) - Changes of the benefit obligation, the plan assets and funded status of the plans - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 10,094
Fair value of plan assets	9,301	$ 10,094
Net amount recognized	10,685	11,098
U.S.
Defined Benefit Plan Disclosure [Line Items]
Net amount recognized	2,007	2,273
Foreign
Defined Benefit Plan Disclosure [Line Items]
Net amount recognized	8,678	8,825
Pension
Defined Benefit Plan Disclosure [Line Items]
Service cost	56	45
Interest cost	686	839
Net amount recognized	9,700	10,053
Pension | U.S.
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0
Interest cost	52	69
Net amount recognized	1,022	1,228
Pension | Foreign
Defined Benefit Plan Disclosure [Line Items]
Service cost	56	45
Interest cost	634	770
Net amount recognized	8,678	8,825
Post Retirement
Defined Benefit Plan Disclosure [Line Items]
Service cost	34	10
Interest cost	44	43
Net amount recognized	985	1,045
Post Retirement | U.S.
Defined Benefit Plan Disclosure [Line Items]
Service cost	34	10
Interest cost	44	43
Net amount recognized	985	1,045
Post Retirement | Foreign
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0
Interest cost	0	0
Net amount recognized	0	0
Change in projected benefit obligation (“PBO”) | Pension
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	20,147	18,022
Service cost	56	45
Interest cost	687	839
Changes in actuarial assumptions	296	2,346
Foreign exchange impact	(1,534)	(389)
Benefits paid	(651)	(716)
Projected benefit obligation	19,001	20,147
Change in projected benefit obligation (“PBO”) | Pension | U.S.
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	1,228	1,371
Service cost	0	0
Interest cost	52	69
Changes in actuarial assumptions	(8)	10
Foreign exchange impact	0	0
Benefits paid	(250)	(222)
Projected benefit obligation	1,022	1,228
Change in projected benefit obligation (“PBO”) | Pension | Foreign
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	18,919	16,651
Service cost	56	45
Interest cost	635	770
Changes in actuarial assumptions	304	2,336
Foreign exchange impact	(1,534)	(389)
Benefits paid	(401)	(494)
Projected benefit obligation	17,979	18,919
Change in projected benefit obligation (“PBO”) | Post Retirement
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	1,045	857
Service cost	34	10
Interest cost	44	43
Changes in actuarial assumptions	(138)	135
Foreign exchange impact	0	0
Benefits paid	0	0
Projected benefit obligation	985	1,045
Change in projected benefit obligation (“PBO”) | Post Retirement | U.S.
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	1,045	857
Service cost	34	10
Interest cost	44	43
Changes in actuarial assumptions	(138)	135
Foreign exchange impact	0	0
Benefits paid	0	0
Projected benefit obligation	985	1,045
Change in projected benefit obligation (“PBO”) | Post Retirement | Foreign
Defined Benefit Plan Disclosure [Line Items]
Projected benefit obligation	0	0
Service cost	0	0
Interest cost	0	0
Changes in actuarial assumptions	0	0
Foreign exchange impact	0	0
Benefits paid	0	0
Projected benefit obligation	0	0
Changes in fair value of plan assets:
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	10,094	9,473
Fair value of plan assets	9,301	10,094
Changes in fair value of plan assets: | Pension
Defined Benefit Plan Disclosure [Line Items]
Actual gain (loss) on plan assets	(117)	718
Company contributions	649	615
Foreign exchange impact	(673)	4
Benefits paid	(652)	(716)
Funded status	(9,700)	(10,053)
Net amount recognized	(9,700)	(10,053)
Changes in fair value of plan assets: | Pension | U.S.
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Actual gain (loss) on plan assets	0	0
Company contributions	251	222
Foreign exchange impact	0	0
Benefits paid	(251)	(222)
Fair value of plan assets	0	0
Funded status	(1,022)	(1,228)
Net amount recognized	(1,022)	(1,228)
Changes in fair value of plan assets: | Pension | Foreign
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	10,094	9,473
Actual gain (loss) on plan assets	(117)	718
Company contributions	398	393
Foreign exchange impact	(673)	4
Benefits paid	(401)	(494)
Fair value of plan assets	9,301	10,094
Funded status	(8,678)	(8,825)
Net amount recognized	(8,678)	(8,825)
Changes in fair value of plan assets: | Post Retirement
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Actual gain (loss) on plan assets	0	0
Company contributions	0	0
Foreign exchange impact	0	0
Benefits paid	0	0
Fair value of plan assets	0	0
Funded status	(985)	(1,045)
Net amount recognized	(985)	(1,045)
Changes in fair value of plan assets: | Post Retirement | U.S.
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Actual gain (loss) on plan assets	0	0
Company contributions	0	0
Foreign exchange impact	0	0
Benefits paid	0	0
Fair value of plan assets	0	0
Funded status	(985)	(1,045)
Net amount recognized	(985)	(1,045)
Changes in fair value of plan assets: | Post Retirement | Foreign
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Actual gain (loss) on plan assets	0	0
Company contributions	0	0
Foreign exchange impact	0	0
Benefits paid	0	0
Fair value of plan assets	0	0
Funded status	0	0
Net amount recognized	$ 0	$ 0

XML

Pension and Retirement Plans (Detail) - Amounts recognized in the consolidated balance sheet - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability	$ (10,685)	$ (11,098)
Deferred tax	(301)	(364)
Accumulated other comprehensive income	5,561	5,429
Net amount recognized	(5,425)	(6,033)
Accumulated benefit obligation	(19,873)	(21,071)
Foreign
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability	(8,678)	(8,825)
Deferred tax	(490)	(531)
Accumulated other comprehensive income	5,623	5,419
Net amount recognized	(3,545)	(3,937)
Accumulated benefit obligation	(17,866)	(18,798)
U.S.
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability	(2,007)	(2,273)
Deferred tax	189	167
Accumulated other comprehensive income	(62)	10
Net amount recognized	(1,880)	(2,096)
Accumulated benefit obligation	(2,007)	(2,273)
Pension
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability	(9,700)	(10,053)
Deferred tax	(466)	(509)
Accumulated other comprehensive income	5,634	5,433
Net amount recognized	(4,532)	(5,129)
Accumulated benefit obligation	(18,888)	(20,026)
Pension | Foreign
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability	(8,678)	(8,825)
Deferred tax	(490)	(531)
Accumulated other comprehensive income	5,623	5,419
Net amount recognized	(3,545)	(3,937)
Accumulated benefit obligation	(17,866)	(18,798)
Pension | U.S.
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability	(1,022)	(1,228)
Deferred tax	24	22
Accumulated other comprehensive income	11	14
Net amount recognized	(987)	(1,192)
Accumulated benefit obligation	(1,022)	(1,228)
Post Retirement
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability	(985)	(1,045)
Deferred tax	165	145
Accumulated other comprehensive income	(73)	(4)
Net amount recognized	(893)	(904)
Accumulated benefit obligation	(985)	(1,045)
Post Retirement | Foreign
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability	0	0
Deferred tax	0	0
Accumulated other comprehensive income	0	0
Net amount recognized	0	0
Accumulated benefit obligation	0	0
Post Retirement | U.S.
Defined Benefit Plan Disclosure [Line Items]
Accrued benefit liability	(985)	(1,045)
Deferred tax	165	145
Accumulated other comprehensive income	(73)	(4)
Net amount recognized	(893)	(904)
Accumulated benefit obligation	$ (985)	$ (1,045)

XML

Pension and Retirement Plans (Detail) - Accrued benefit liability - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Pension and Other Postretirement Defined Benefit Plans, Liabilities [Abstract]
Current accrued benefit liability	$ 675	$ 658
Non-current accrued benefit liability	10,009	10,440
Total accrued benefit liability	$ 10,684	$ 11,098

XML

Pension and Retirement Plans (Detail) - Future benefit payments $ in Thousands	Sep. 30, 2015 USD ($)
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract]
2015	$ 682
2016	673
2017	642
2018	694
2019	717
Thereafter	$ 4,223

XML

Pension and Retirement Plans (Detail) - Fair value of the assets held by the UK pension plan by asset category - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	$ 9,301	$ 10,094
Fair Value Measurements Using Inputs Considered as Level I
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	324	352
Fair Value Measurements Using Inputs Considered as Level II
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	8,977	9,742
Fair Value Measurements Using Inputs Considered as Level III
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	0	0
Cash on deposit
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	324	352
Cash on deposit | Fair Value Measurements Using Inputs Considered as Level I
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	324	352
Cash on deposit | Fair Value Measurements Using Inputs Considered as Level II
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	0	0
Cash on deposit | Fair Value Measurements Using Inputs Considered as Level III
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	0	0
Pooled Funds
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	8,977	9,742
Pooled Funds | Fair Value Measurements Using Inputs Considered as Level I
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	0	0
Pooled Funds | Fair Value Measurements Using Inputs Considered as Level II
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	8,977	9,742
Pooled Funds | Fair Value Measurements Using Inputs Considered as Level III
Defined Benefit Plan Disclosure [Line Items]
Plan assets fair value	$ 0	$ 0

XML

Lines of Credit (Detail)	12 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 1,000,000	$ 1,000,000
Interest rate terms	London Inter-Bank Offer Rate (“LIBOR”) plus 2.5%, with a floor of 4%	London Inter-Bank Offer Rate (“LIBOR”) plus 2.5%, with a floor of 4%
liquidity ratio	1.2
Minimum Net Worth Required for Compliance	$ 2.5
Ratio of Indebtedness to Net Capital	5.0
Short-term Debt	$ 2,900,000	$ 2,100,000
Line of Credit
Line of Credit Facility [Line Items]
Stated interest rate, percentage, minimum	4.00%	4.00%
Line of Credit | Prime Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate	5.00%	5.00%

XML

Commitments and Contingencies (Detail) - USD ($) shares in Thousands, $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
Operating Leases, Rent Expense (in Dollars)	$ 1.3	$ 1.3
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased	201

XML

Commitments and Contingencies (Detail) - Future minimum rental payments on non-cancelable operating leases $ in Thousands	Sep. 30, 2015 USD ($)
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2016	$ 868
2017	789
2018	724
2019	653
2020	399
Operating Leases, Future Minimum Payments Due	$ 3,433

XML

Segment Information (Detail) - The following table presents certain operating segment information. - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Sales:
Product	$ 66,447	$ 58,877
Service	22,859	25,742
Total sales	89,306	84,619
Profit (loss) from operations	226	1,683
Assets	46,996	46,307
Capital expenditures	724	590
Depreciation and amortization	646	634
HPP
Sales:
Product	9,894	9,151
Service	4,054	5,384
Total sales	13,948	14,535
Profit (loss) from operations	485	1,352
Assets	16,668	16,966
Capital expenditures	156	216
Depreciation and amortization	247	225
Germany [Member]
Sales:
Product	7,808	9,273
Service	15,043	15,790
Total sales	22,851	25,063
Profit (loss) from operations	549	466
Assets	14,557	13,499
Capital expenditures	216	211
Depreciation and amortization	172	185
UK [Member]
Sales:
Product	4,025	2,131
Service	1,114	1,299
Total sales	5,139	3,430
Profit (loss) from operations	(817)	(187)
Assets	2,720	3,464
Capital expenditures	3	90
Depreciation and amortization	34	32
U.S.
Sales:
Product	44,720	38,322
Service	2,648	3,269
Total sales	47,368	41,591
Profit (loss) from operations	9	52
Assets	13,051	12,378
Capital expenditures	349	73
Depreciation and amortization	193	192
Total Service and System Integration Segment [Member]
Sales:
Product	56,553	49,726
Service	18,805	20,358
Total sales	75,358	70,084
Profit (loss) from operations	(259)	331
Assets	30,328	29,341
Capital expenditures	568	374
Depreciation and amortization	$ 399	$ 409

XML

Segment Information (Detail) - The Company’s sales by operating segment - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	$ 89,306	$ 84,619
% of Total	100.00%	100.00%
Americas
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	$ 58,433	$ 53,561
% of Total	66.00%	63.00%
Europe
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	$ 27,848	$ 28,395
% of Total	31.00%	34.00%
Asia
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	$ 3,025	$ 2,663
% of Total	3.00%	3.00%
HPP
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	$ 13,948	$ 14,535
% of Total	16.00%	17.00%
HPP | Americas
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	$ 10,774	$ 10,918
HPP | Europe
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	1,135	992
HPP | Asia
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	2,039	2,625
TS
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	$ 75,358	$ 70,084
% of Total	84.00%	83.00%
TS | Americas
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	$ 47,659	$ 42,643
TS | Europe
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	26,713	27,403
TS | Asia
Segment Reporting, Revenue Reconciling Item [Line Items]
Sales	$ 986	$ 38

XML

Segment Information (Detail) - Long-lived assets by geographic location - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 1,980	$ 2,018
North America
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	1,494	1,429
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 486	$ 589

XML

Segment Information (Detail) - Deferred tax assets by geographic location - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014
Deferred tax assets	$ 3,024	$ 3,122
North America
Deferred tax assets	2,254	2,300
Europe
Deferred tax assets	$ 770	$ 822

XML

Segment Information (Detail) - Major customers - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Customer A
Revenue, Major Customer [Line Items]
Amount (in Dollars)	$ 17.1	$ 15.2
% of Revenues	19.00%	18.00%
Customer B
Revenue, Major Customer [Line Items]
Amount (in Dollars)	$ 14.3	$ 15.7
% of Revenues	16.00%	19.00%

XML

Dividend (Detail) - $ / shares										12 Months Ended
	Dec. 23, 2015	Aug. 12, 2015	May. 13, 2015	Feb. 11, 2015	Dec. 16, 2014	Aug. 06, 2014	May. 14, 2014	Feb. 11, 2014	Dec. 17, 2013	Sep. 30, 2015	Sep. 30, 2014
Subsequent Event [Line Items]
Common Stock, Dividends, Per Share, Declared		$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.11	$ 0.10	$ 0.44	$ 0.43
Subsequent Event [Member]
Subsequent Event [Line Items]
Common Stock, Dividends, Per Share, Declared	$ 0.11

XML

Related Party Transactions (Details)	12 Months Ended
	Sep. 30, 2015 USD ($) member	Sep. 30, 2014 USD ($)
Related Party Transactions [Abstract]
Members of CSP Inc.'s Board of Directors serving on related party company's board | member	2
Revenue from Related Parties	$ 313,637	$ 161,348
Accounts Receivable, Related Parties	$ 12,540	$ 29,260