10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended	March 31, 2016
o	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 0-10843

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 - Suite 210

Lowell, Massachusetts 01854

(978) 663-7598

(Address and telephone number of principal executive offices)

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  o.

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o.

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. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	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  o    No  x

As of May 13, 2016, the registrant had 3,800,601 shares of common stock issued and outstanding.

1

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (unaudited) as of March 31, 2016 and September 30, 2015	3
	Consolidated Statements of Operations (unaudited) for the three and six months ended March 31, 2016 and 2015	4
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended March 31, 2016 and 2015	5
	Consolidated Statement of Shareholders’ Equity (unaudited) for the six months ended March 31, 2016	6
	Consolidated Statements of Cash Flows (unaudited) for the six months ended March 31, 2016 and 2015	7
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 4.	Controls and Procedures	25
PART II. OTHER INFORMATION
Item 6.	Exhibits	26

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CSP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except par value)

	March 31, 2016			September 30, 2015
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,020		$	11,181
Accounts receivable, net of allowances of $307 and $331	21,690			18,468
Unbilled accounts receivable	1,090			1,420
Inventories, net	4,807			5,749
Refundable income taxes	—			43
Deferred income taxes	1,337			1,337
Other current assets	2,210			1,884
Total current assets	41,154			40,082
Property, equipment and improvements, net	1,631			1,564
Other assets:
Intangibles, net	351			416
Deferred income taxes	1,678			1,687
Cash surrender value of life insurance	3,276			3,064
Other assets	158			183
Total other assets	5,463			5,350
Total assets	$	48,248		$	46,996
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	15,415		$	13,776
Deferred revenue	2,192			2,931
Pension and retirement plans	721			675
Income taxes payable	281			—
Total current liabilities	18,609			17,382
Pension and retirement plans	9,700			10,009
Other long term liabilities	18			15
Total liabilities	28,327			27,406
Commitments and contingencies
Shareholders’ equity:
Common stock, $.01 par value per share; authorized, 7,500 shares; issued and outstanding 3,801 and 3,688 shares, respectively	38			37
Additional paid-in capital	12,503			12,249
Retained earnings	15,642			15,689
Accumulated other comprehensive loss	(8,262		)	(8,385		)
Total shareholders’ equity	19,921			19,590
Total liabilities and shareholders’ equity	$	48,248		$	46,996

See accompanying notes to unaudited consolidated financial statements.

3

CSP INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except for per share data)

	For the three months ended						For the six months ended
	March 31, 2016			March 31, 2015			March 31, 2016			March 31, 2015
Sales:
Product	$	20,972		$	14,195		$	37,975		$	29,848
Services	6,167			4,682			12,840			9,459
Total sales	27,139			18,877			50,815			39,307
Cost of sales:
Product	17,054			11,380			31,290			24,513
Services	3,752			3,454			8,002			6,796
Total cost of sales	20,806			14,834			39,292			31,309
Gross profit	6,333			4,043			11,523			7,998
Operating expenses:
Engineering and development	790			826			1,589			1,679
Selling, general and administrative	4,665			3,856			8,713			7,879
Total operating expenses	5,455			4,682			10,302			9,558
Operating income (loss)	878			(639		)	1,221			(1,560		)
Other income (expense):
Foreign exchange loss	(103		)	(108		)	(63		)	(129		)
Other expense, net	(14		)	(21		)	(26		)	(33		)
Total other expense	(117		)	(129		)	(89		)	(162		)
Income (loss) before income taxes	761			(768		)	1,132			(1,722		)
Income tax expense (benefit)	258			(93		)	346			(610		)
Net income (loss)	$	503		$	(675	)	$	786		$	(1,112	)
Net income (loss) attributable to common stockholders	$	480		$	(649	)	$	756		$	(1,072	)
Net income (loss) per share – basic	$	0.13		$	(0.19	)	$	0.21		$	(0.31	)
Weighted average shares outstanding – basic	3,609			3,525			3,589			3,507
Net income (loss) per share – diluted	$	0.13		$	(0.19	)	$	0.20		$	(0.31	)
Weighted average shares outstanding – diluted	3,730			3,525			3,728			3,507

See accompanying notes to unaudited consolidated financial statements.

4

CSP INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

	For the three months ended					For the six months ended
	March 31, 2016		March 31, 2015			March 31, 2016		March 31, 2015
Net income (loss)	$	503	$	(675	)	$	786	$	(1,112	)
Other comprehensive income (loss):
Foreign currency translation gain (loss) adjustments	125		(229		)	123		(117		)
Other comprehensive income	125		(229		)	123		(117		)
Total comprehensive income (loss)	$	628	$	(904	)	$	909	$	(1,229	)

See accompanying notes to unaudited consolidated financial statements.

5

CSP INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Six Months Ended March 31, 2016:

(Amounts in thousands, except per share data)

	Shares		Amount		Additional Paid-in Capital		Retained Earnings			Accumulated other comprehensive loss			Total Shareholders’ Equity
Balance as of September 30, 2015	3,688		$	37	$	12,249	$	15,689		$	(8,385	)	$	19,590
Net Income	—		—		—		786			—			786
Other comprehensive income	—		—		—		—			123			123
Stock-based compensation	—		—		181		—			—			181
Restricted stock cancellation	(6	)	—		—		—			—			—
Restricted stock issuance	105		1		—		—			—			1
Issuance of shares under employee stock purchase plan	14		—		73		—			—			73
Cash dividends on common stock ($0.22 per share)	—		—		—		(833		)	—			(833		)
Balance as of March 31, 2016	3,801		$	38	$	12,503	$	15,642		$	(8,262	)	$	19,921

See accompanying notes to unaudited consolidated financial statements.

6

CSP INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	For the six months ended
	March 31, 2016			March 31, 2015
Cash flows provided by (used in) operating activities:
Net income (loss)	$	786		$	(1,112	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	286			266
Amortization of intangibles	65			65
Foreign exchange (gain) loss	63			129
Non-cash changes in accounts receivable	136			37
Non-cash changes in inventory	226			38
Stock-based compensation expense on stock options and restricted stock awards	181			188
Deferred income taxes	23			(21		)
Increase in cash surrender value of life insurance	(50		)	(23		)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(3,008		)	(3,267		)
(Increase) decrease in inventories	699			(741		)
(Increase) decrease in refundable income taxes	44			(619		)
Increase in other current assets	(310		)	(296		)
(Increase) decrease in other assets	25			(59		)
Increase in accounts payable and accrued expenses	1,530			785
Decrease in deferred revenue	(715		)	(1,017		)
Decrease in pension and retirement plans liability	(164		)	(36		)
Increase in income taxes payable	268			6
Increase in other long term liabilities	4			3
Net cash provided by (used in) operating activities	89			(5,674		)
Cash flows used in investing activities:
Life insurance premiums paid	(161		)	(109		)
Purchases of property, equipment and improvements	(345		)	(223		)
Net cash used in investing activities	(506		)	(332		)
Cash flows provided by (used in) financing activities:
Dividends paid	(833		)	(808		)
Proceeds from issuance of shares under equity compensation plans	73			105
Net cash used in financing activities	(760		)	(703		)
Effects of exchange rate on cash	16			(717		)
Net decrease in cash and cash equivalents	(1,161		)	(7,426		)
Cash and cash equivalents, beginning of period	11,181			16,448
Cash and cash equivalents, end of period	$	10,020		$	9,022
Supplementary cash flow information:
Cash paid for income taxes	$	28		$	52
Cash paid for interest	$	85		$	85

See accompanying notes to unaudited consolidated financial statements.

7

CSP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2016 AND 2015

Organization and Business

CSP Inc. was founded in 1968 and is based in Lowell, Massachusetts. To meet the diverse requirements of its industrial, commercial and defense customers worldwide, CSP Inc. and its subsidiaries (collectively “we”, “us”, “our”,

“CSPI” or the “Company”) develop and market IT integration solutions and high-performance cluster computer systems. The Company operates in two segments, its High Performance Products (“HPP”) segment (formerly the “High Performance Products and Solutions” segment) and its Technology Solutions (“TS”) segment (formerly the "Information Technology Solutions" segment).

1.    Basis of Presentation

The accompanying consolidated financial statements have been prepared by the Company, without audit, and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All adjustments were of a normal recurring nature. Certain information and footnote disclosures normally included in the annual consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States, have been omitted.

Accordingly, the Company believes that although the disclosures are adequate to make the information presented not misleading, the unaudited consolidated financial statements should be read in conjunction with the footnotes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

2.    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, including estimates and assumptions related to reserves for bad debt, reserves for inventory obsolescence, the impairment assessment of intangible assets, the calculation of estimated selling price and post-delivery support obligations used for revenue recognition and the calculation of income tax liabilities. Actual results may differ from those estimates under different assumptions or conditions.

3.    Earnings Per Share of Common Stock

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

8

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

	For the three months ended					For the six months ended
	March 31, 2016		March 31, 2015			March 31, 2016		March 31, 2015
	(Amounts in thousands except per share data)
Net income (loss)	$	503	$	(675	)	$	786	$	(1,112	)
Less: net income (loss) attributable to nonvested common stock	23		(26		)	30		(40		)
Net income (loss) attributable to common stockholders	$	480	$	(649	)	$	756	$	(1,072	)
Weighted average total shares outstanding – basic	3,782		3,662			3,732		3,637
Less: weighted average non-vested shares outstanding	173		137			143		130
Weighted average number of common shares outstanding – basic	3,609		3,525			3,589		3,507
Potential common shares from non-vested stock awards and the assumed exercise of stock options	121		—			139		—
Weighted average common shares outstanding – diluted	3,730		3,525			3,728		3,507
Net income (loss) per share – basic	$	0.13	$	(0.19	)	$	0.21	$	(0.31	)
Net income (loss) per share – diluted	$	0.13	$	(0.19	)	$	0.20	$	(0.31	)

All anti-dilutive securities, including certain stock options, are excluded from the diluted income (loss) per share computation. For the six months ended March 31, 2016 and 2015, 33,000 and 35,000 shares subject to stock options, respectively, were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive as their exercise price exceeded fair value. Additionally, 130,000 shares subject to non-vested restricted stock awards were excluded from the diluted income per share calculation as there was a net loss for the six months ended March 31, 2015 and their inclusion would have been anti-dilutive. For the three months ended March 31, 2016 and 2015, 30,000 and 35,000 shares subject to stock options, respectively, were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive as their exercise price exceeded fair value. Additionally, 137,000 shares subject to non-vested restricted stock awards were excluded from the diluted income per share calculation as there was a net loss for the three months ended March 31, 2015 and their inclusion would have been anti-dilutive.

4.    Inventories

Inventories consist of the following:

	March 31, 2016		September 30, 2015
	(Amounts in thousands)
Raw materials	$	1,618	$	1,788
Work-in-process	530		387
Finished goods	2,659		3,574
Total	$	4,807	$	5,749

9

Draft 5                        Preliminary & Tentative        For Discussion Purposes Only

Finished goods includes inventory of approximately $0.3 million and $0.1 million as of March 31, 2016 and September 30, 2015, respectively, that have been shipped, but for which all revenue recognition criteria have not been met.

Total inventory balances in the table above are shown net of reserves for obsolescence of approximately $4.3 million and $4.1 million as of March 31, 2016 and September 30, 2015, respectively.

5.    Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:

	March 31, 2016			September 30, 2015
	(Amounts in thousands)
Cumulative effect of foreign currency translation	$	(2,702	)	$	(2,825	)
Cumulative unrealized loss on pension liability	(5,560		)	(5,560		)
Accumulated other comprehensive loss	$	(8,262	)	$	(8,385	)

6.    Pension and Retirement Plans

The Company has defined benefit and defined contribution plans in the United Kingdom, Germany and the U.S. In the United Kingdom and Germany, the Company provides defined benefit pension plans and defined contribution plans for the majority of its employees. In the U.S., the Company provides benefits through supplemental retirement plans to certain current and former employees. The domestic supplemental retirement plans have life insurance policies which are not plan assets but were purchased by the Company as a vehicle to fund the costs of the plan. Domestically, the Company also provides for officer death benefits through post-retirement plans to certain officers.  All of the Company’s defined benefit plans are closed to newly hired employees and have been for the two years ended September 30, 2015 and 2014 and for the six months ended March 31, 2016.

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.

The Company's pension plan in the United Kingdom is the only plan with plan assets. The plan assets consist of an investment in a commingled fund which in turn comprises a diversified mix of assets including corporate equity securities, government securities and corporate debt securities.

10

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

	For the Three Months Ended March 31,
	2016									2015
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Service cost	$	9		$	—		$	9		$	13		$	—		$	13
Interest cost	146			11			157			155			13			168
Expected return on plan assets	(92		)	—			(92		)	(104		)	—			(104		)
Amortization of:
Prior service gain	—			—			—			—			—			—
Amortization of net gain	44			(1		)	43			49			(1		)	48
Net periodic benefit cost	$	107		$	10		$	117		$	113		$	12		$	125
Post Retirement:
Service cost	$	—		$	7		$	7		$	—		$	9		$	9
Interest cost	—			11			11			—			11			11
Amortization of net gain	—			(20		)	(20		)	—			(13		)	(13		)
Net periodic cost (benefit)	$	—		$	(2	)	$	(2	)	$	—		$	7		$	7
	For the Six Months Ended March 31,
	2016									2015
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Service cost	$	18		$	—		$	18		$	28		$	—		$	28
Interest cost	297			22			319			320			26			346
Expected return on plan assets	(190		)	—			(190		)	(212		)	—			(212		)
Amortization of:
Prior service gain	—			—			—			—			—			—
Amortization of net gain	89			(2		)	87			102			(2		)	100
Net periodic benefit cost	$	214		$	20		$	234		$	238		$	24		$	262
Post Retirement:
Service cost	$	—		$	14		$	14		$	—		$	17		$	17
Interest cost	—			21			21			—			22			22
Amortization of net gain	—			(40		)	(40		)	—			(25		)	(25		)
Net periodic cost (benefit)	$	—		$	(5	)	$	(5	)	$	—		$	14		$	14

11

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

	Fair Values as of
	March 31, 2016								September 30, 2015
	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
	(Amounts in thousands)
Cash on deposit	$	227	$	227	$	—	$	—	$	324	$	324	$	—	$	—
Pooled Funds	8,547		—		8,547		—		8,977		—		8,977		—
Total Plan Assets	$	8,774	$	227	$	8,547	$	—	$	9,301	$	324	$	8,977	$	—

7.    Segment Information

The following table presents certain operating segment information.

				Technology Solutions Segment
For the three months ended March 31,	High Performance Products Segment			Germany		United Kingdom			U.S.			Total		Consolidated Total
	(Amounts in thousands)
2016
Sales:
Product	$	2,861		$	1,389	$	1,352		$	15,370		$	18,111	$	20,972
Service	597			4,027		262			1,281			5,570		6,167
Total sales	3,458			5,416		1,614			16,651			23,681		27,139
Income (loss) from operations	(501		)	718		(1		)	662			1,379		878
Assets	15,353			12,311		2,791			17,793			32,895		48,248
Capital expenditures	17			52		31			55			138		155
Depreciation and amortization	60			42		33			56			131		191
2015
Sales:
Product	$	2,527		$	1,796	$	891		$	8,981		$	11,668	$	14,195
Service	130			3,690		213			649			4,552		4,682
Total sales	2,657			5,486		1,104			9,630			16,220		18,877
Income (loss) from operations	(647		)	170		(93		)	(69		)	8		(639		)
Assets	15,595			12,555		3,118			10,859			26,532		42,127
Capital expenditures	25			95		—			—			95		120
Depreciation and amortization	60			44		10			45			99		159

12

				Technology Solutions Segment
For the six months ended March 31,	High Performance Products Segment			Germany		United Kingdom			U.S.			Total			Consolidated Total
	(Amounts in thousands)
2016
Sales:
Product	$	4,811		$	3,291	$	3,345		$	26,528		$	33,164		$	37,975
Service	1,464			8,799		452			2,125			11,376			12,840
Total sales	6,275			12,090		3,797			28,653			44,540			50,815
Income (loss) from operations	(924		)	1,181		(48		)	1,012			2,145			1,221
Assets	15,353			12,311		2,791			17,793			32,895			48,248
Capital expenditures	165			119		33			28			180			345
Depreciation and amortization	117			82		38			114			234			351
2015
Sales:
Product	$	4,979		$	3,940	$	2,461		$	18,468		$	24,869		$	29,848
Service	360			7,218		496			1,385			9,099			9,459
Total sales	5,339			11,158		2,957			19,853			33,968			39,307
Income (loss) from operations	(1,504		)	249		(25		)	(280		)	(56		)	(1,560		)
Assets	15,595			12,555		3,118			10,859			26,532			42,127
Capital expenditures	46			176		1			—			177			223
Depreciation and amortization	131			91		17			92			200			331

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

The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the three and six months endedMarch 31, 2016, and 2015.

		For the three months ended March 31,								For the six months ended March 31,
		2016				2015				2016				2015
		Customer Revenues		% of Total Revenues		Customer Revenues		% of Total Revenues		Customer Revenues		% of Total Revenues		Customer Revenues		% of Total Revenues
	(dollars in millions)
Customer A		$	5.6	20	%	$	2.4	13	%	$	8.4	17	%	$	4.7	12	%
Customer B		$	3.8	14	%	$	3.7	20	%	$	7.6	15	%	$	6.6	17	%

In addition, accounts receivable from Customer A totaled approximately $3.9 million, or 17%, and approximately $1.1 million, or 6%, of total consolidated accounts receivable as of March 31, 2016 and September 30, 2015, respectively. Accounts receivable from Customer B totaled approximately $5.1 million or 33%, and approximately $7.9 million, or 39%, of total consolidated accounts receivable as of March 31, 2016 and September 30, 2015, respectively. We believe that the Company is not exposed to any significant credit risk with respect to the accounts receivable with these customers as of March 31, 2016. No other customers accounted for 10% or more of total consolidated accounts receivable as of March 31, 2016 or September 30, 2015.

13

Draft 5                        Preliminary & Tentative        For Discussion Purposes Only

8.Dividends

On February 16, 2016, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on March 11, 2016 to shareholders of record as of February 26, 2016, the record date.

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

9.    Recent 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 August 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 on 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 on 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 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 on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This updated, Topic 842, affects any entity that enters into a lease (as that term is defined in this Update), with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The amendments in this Topic are effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods

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within those annual periods. The Company has not yet assessed the potential impact of implementing this ASU on our consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-08 (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) to clarify the implementation guidance on principal versus agent considerations. The amendments in this update provides additional guidance on indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customer and does not change the core principle of previously issued guidance. The amendments in this Topic are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company does not expect the implementation of this ASU to have a material impact on our consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09 (Topic 718), Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Additionally, the amendments eliminate the guidance in Topic 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. This should not result in a change in practice because the guidance that is being superseded was never effective. 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 Company has not yet assessed the potential impact of implementing this ASU on the disclosures on our consolidated financial statements.

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

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. In addition, 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 our Annual Report on Form 10-K for the year ended September 30, 2015. 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. Except as required by law, we do not undertake any obligation to publicly update or revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise. This management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this filing and in our Annual Report on Form 10-K for the year ended September 30, 2015.

Markets for our products and services are characterized by rapidly changing technology, new product introductions and short product life cycles. These changes can adversely affect our business and operating results. Our success will depend on our ability to enhance our existing products and services and to develop and introduce, on a timely and cost effective basis, new products that keep pace with technological developments and address increasing customer requirements. The inability to meet these demands could adversely affect our business and operating results.

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, income taxes, deferred compensation and retirement plans, as well as estimated selling prices used for revenue recognition 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. A description of our critical accounting policies is contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015 in the “Critical Accounting Policies” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

Overview of the three months ended March 31, 2016

     Our revenue increased by approximately $8.3 million, or 44%, to $27.1 million for the three months ended March 31, 2016 as compared to $18.9 million for the three months ended March 31, 2015. The increase in revenue is the result of increases of $7.5 million and $0.8 million in our TS and HPP segments, respectively. Our gross profit margin percentage increased overall from 21% of revenues for the three months ended March 31, 2015 to 23% for the three months ended March 31, 2016. The 2%increase in our gross margin percentage is attributed to gross margin increases in our HPP and TS segments. The increase in our HPP segment gross margin percentage is primarily the result of an increase in service revenues as a percentage of total HPP revenues for the comparative periods in 2016 and 2015. The increase in our TS segment gross margin percentage is due to higher margins on service revenues delivered by our German division. Operating income increased by $1.5 million to $0.9 million for the three month period ended March 31, 2016 as compared to an operating loss of $0.6 million for the three month period ended March 31, 2015 as a result of a higher gross profit, which was partially offset by $0.8 million of higher operating expenses.

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

	March 31, 2016			% of sales		March 31, 2015			% of sales
	(Dollar amounts in thousands)
Sales	$	27,139		100	%	$	18,877		100	%
Costs and expenses:
Cost of sales	20,806			77	%	14,834			79	%
Engineering and development	790			3	%	826			4	%
Selling, general and administrative	4,665			17	%	3,856			20	%
Total costs and expenses	26,261			97	%	19,516			103	%
Operating income (loss)	878			3	%	(639		)	(3	)%
Other income (expense)	(117		)	—	%	(129		)	(1	)%
Income (loss) before income taxes	761			3	%	(768		)	(4	)%
Income tax expense (benefit)	258			1	%	(93		)	—	%
Net income (loss)	$	503		2	%	$	(675	)	(4	)%

Revenues

     Our revenues increased by approximately $8.3 million to $27.1 million for the three months ended March 31, 2016 as compared to $18.9 million of revenues for the three months ended March 31, 2015. The TS segment revenue increased by $7.5 million and the HPP segment revenue increased by $0.8 million.

HPP segment revenue change by product line was as follows for the three months ended March 31, 2016 and 2015:

					Increase
	2016		2015		$		%
	(Dollar amounts in thousands)
Products	$	2,861	$	2,527	$	334	13	%
Services	597		130		467		359	%
Total	$	3,458	$	2,657	$	801	30	%

The increase in HPP service revenues is primarily attributed to recognizing approximately $0.5 million of royalties related to the equivalent number of high-speed processing boards used in one half aircraft during the three months ended March 31, 2016 as compared to less than $0.1 million of royalty revenues for the three month period ended March 31, 2015. The increase in product revenues is primarily attributed to higher Myricom product line sales for the three months ended March 31, 2016 as compared to the three months ended March 31, 2015. We expect to recognize royalty revenue related to the equivalent number of high-speed processing boards used in four planes during the third and fourth quarters of fiscal year 2016.

TS segment revenue change by product line was as follows for the three months ended March 31, 2016 and 2015:

					Increase
	2016		2015		$		%
	(Dollar amounts in thousands)
Products	$	18,111	$	11,668	$	6,443	55	%
Services	5,570		4,552		1,018		22	%
Total	$	23,681	$	16,220	$	7,461	46	%

The $7.5 million increase in TS segment revenues during the three months ended March 31, 2016 as compared to the three months ended March 31, 2015, was the result of increases of $7.0 million and $0.5 million, in our divisions located in the U.S. and the U.K., respectively. Our German division recognized an increase in service revenues of $0.3 million that was

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offset by a decrease in product revenues of $0.4 million. Product revenues increased as a result of $6.4 million and $0.5 million in our U.S. and U.K. divisions, respectively, partially offset a by a $0.4 million decrease in product revenue at our German division. Our services revenues increased at our U.S. and German divisions by $0.6 million and $0.3 million, respectively.

      Our revenues by geographic area based on the customer location to which the products were shipped or services rendered was as follows for the three months ended March 31, 2016 and March 31, 2015:

									Increase (decrease)
	2016		%		2015		%		$			%
	(Dollar amounts in thousands)
Americas	$	18,886	70	%	$	11,547	61	%	$	7,339		64	%
Europe	6,509		24	%	6,673		35	%	(164		)	(2	)%
Asia	1,744		6	%	657		4	%	1,087			165	%
Totals	$	27,139	100	%	$	18,877	100	%	$	8,262		44	%

Gross Margins

     Our gross margin ("GM") increased by $2.3 million, or 2% of revenues, to $6.3 million for the three months ended March 31, 2016 as compared to a gross margin of $4.0 million for the three months ended March 31, 2015 as follows:

	2016				2015				Increase
	GM$		GM%		GM$		GM%		GM$		GM%
	(Dollar amounts in thousands)
HPP	$	1,898	55	%	$	1,267	48	%	$	631	7	%
TS	4,435		19	%	2,776		17	%	1,659		2	%
Total	$	6,333	23	%	$	4,043	21	%	$	2,290	2	%

The impact of product mix within our HPP segment on gross margin for the three months ended March 31, 2016 and 2015 was as follows:

	2016				2015				Increase (decrease)
	GM$		GM%		GM$		GM%		GM$		GM%
	(Dollar amounts in thousands)
Product	$	1,358	47	%	$	1,147	45	%	$	211	2	%
Services	540		90	%	120		92	%	420		(2	)%
Total	$	1,898	55	%	$	1,267	48	%	$	631	7	%

The overall HPP segment gross margin as a percentage of sales increased to 55% for the three month period ended March 31, 2016 as compared to 48% for the three month period ended March 31, 2015. The 7% increase in gross margin as a percentage of sales for product sales in the HPP segment was primarily attributed to a favorable mix of higher margin service revenues in the HPP segment during the three months ended March 31, 2016 as compared to the three months ended March 31, 2015.

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The impact of product mix within our TS segment on gross margin for the three months ended March 31, 2016 and 2015 was as follows:

	2016				2015				Increase
	GM$		GM%		GM$		GM%		GM$		GM%
	(Dollar amounts in thousands)
Product	$	2,560	14	%	$	1,668	14	%	$	892	—	%
Services	1,875		34	%	1,108		24	%	767		10	%
Total	$	4,435	19	%	$	2,776	17	%	$	1,659	2	%

     The gross margin as a percentage of sales for our TS segment product revenues was flat for the three months ended March 31, 2016 as compared to the prior year period and the increase in services margins as a percentage of sales is primarily attributed to our German division. The improvement in gross margins for our German division is attributed to a favorable mix of service projects and improved utilization of our internal engineering staff that delivers those services.

Engineering and Development Expenses

The engineering and development expenses incurred exclusively by our HPP segment were $0.8 million for the three months ended March 31, 2016 and 2015, respectively. The current year expenses are primarily for Myricom engineering expenses incurred in connection with the development of new Myricom products.

Selling, General and Administrative Expenses

The following table details our selling, general and administrative (“SG&A”) expense by operating segment for the three months ended March 31, 2016 and 2015:

	For the three months ended March 31,
	2016		% of Total		2015		% of Total		$ Increase		% Increase
	(Dollar amounts in thousands)
By Operating Segment:
HPP segment	$	1,609	34	%	$	1,088	28	%	$	521	48	%
TS segment	3,056		66	%	2,768		72	%	288		10	%
Total	$	4,665	100	%	$	3,856	100	%	$	809	21	%

SG&A expenses increased by $0.8 million or 21% for the three months ended March 31, 2016 as compared to the three months ended March 31, 2015. The increase in HPP segment expenses and TS segment expenses is primarily attributed to higher commissions on product revenues and other variable compensation expenses.

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Other Income/Expenses

The following table details our other income (expense) for the three months ended March 31, 2016 and 2015:

	For the three months ended,
	March 31, 2016			March 31, 2015			Increase
	(Amounts in thousands)
Interest expense	$	(21	)	$	(21	)	$	—
Interest income	1			1			—
Foreign exchange gain (loss)	(103		)	(108		)	5
Other expense, net	6			(1		)	7
Total other income (expense), net	$	(117	)	$	(129	)	$	12

Other income (expense) was flat for the three months ended March 31, 2016 as compared to the three months ended March 31, 2015

Income Taxes

For the three months ended March 31, 2016, the Company recognized an income tax expense of $258,000, which is primarily due to increased profit in Germany of $546,000, and a profit in the U.S. of $83,000. There was a profit of $77,000 in the UK, but we had no tax expense for the quarter due to pension contributions. The Company's tax rate was 34% for the quarter ended March 31, 2016.

Overview of the six months ended March 31, 2016

Our revenue increased by approximately $11.5 million, or 29%, to $50.8 million for the six months ended March 31, 2016 as compared to $39.3 million for the six months ended March 31, 2015. Revenues increased by $10.6 million and $0.9 million in our TS and HPP segments, respectively. We recognized approximately $1.1 million of royalties related to the equivalent number of high-speed processing boards used in one and one half aircraft during the six months ended March 31, 2016 as compared $0.1 million of royalty revenues for the six month period ended March 31, 2015, and revenues in our TS segment increased by $10.6 million on increases of $8.3 million and $2.3 million in product and service revenues, respectively, in the six months ended March 31, 2016. Our gross profit margin percentage increased overall, from 20% of revenues for the six months ended March 31, 2015 to 23% for the six months ended March 31, 2016. Our operating income increased by approximately $2.8 million to $1.2 million for the six month period ended March 31, 2016 as compared to $1.6 million of operating loss for the six months ended March 31, 2015 as a result of a higher gross profit, which was partially offset by $0.7 million of higher operating expenses.

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

	March 31, 2016			% of sales		March 31, 2015			% of sales
	(Dollar amounts in thousands)
Sales	$	50,815		100	%	$	39,307		100	%
Costs and expenses:
Cost of sales	39,292			77	%	31,309			80	%
Engineering and development	1,589			3	%	1,679			4	%
Selling, general and administrative	8,713			17	%	7,879			20	%
Total costs and expenses	49,594			97	%	40,867			104	%
Operating (loss) income	1,221			2	%	(1,560		)	(4	)%
Other expense	(89		)	—	%	(162		)	—	%
(Loss) Income before income taxes	1,132			2	%	(1,722		)	(4	)%
Income tax (benefit) expense	346			1	%	(610		)	(1	)%
Net income (loss)	$	786		1	%	$	(1,112	)	(3	)%

Revenues

     Our revenues increased by $11.5 million to $50.8 million for the six months ended March 31, 2016 as compared $39.3 million of revenues for the the six months ended March 31, 2015. The revenue from our HPP and TS segments increased by $0.9 million and $10.6 million, respectively. The $10.6 million increase in our TS segment revenue resulted from increases of $8.8 million, $0.9 million and $0.8 million in our divisions located in the U.S., Germany, and the U.K., respectively.

HPP segment revenue change by product line was as follows for the six months ended March 31, 2016 and 2015:

	(Dollar amounts in Thousands)					Increase (decrease)
		2016		2015		$			%
Products		$	4,811	$	4,979	$	(168	)	(3	)%
Services		1,464		360		1,104			307	%
Total		$	6,275	$	5,339	$	936		18	%

The increase in HPP services revenues for the six months ended March 31, 2016 compared to the six months ended March 31, 2015 was the result of recognizing approximately $1.1 million of royalties related to the equivalent number of high-speed processing boards used in one and one half aircraft during the six months ended March 31, 2016 as compared to $0.1 million of royalty revenues for the six month period ended March 31, 2015. We expect to recognize royalty revenue related to the equivalent number of high-speed processing boards used in four planes during the third and fourth quarters of fiscal year 2016.

TS segment revenue change by product line was as follows for the six months ended March 31, 2016 and 2015:

	(Dollar amounts in Thousands)					Increase
		2016		2015		$		%
Products		$	33,164	$	24,869	$	8,295	33	%
Services		11,376		9,099		2,277		25	%
Total		$	44,540	$	33,968	$	10,572	31	%

The increase in TS segment revenues, for the six months ended March 31, 2016 compared to the six months ended March 31, 2015 was the result of increases of $0.9 million, $0.8 million and $8.8 million in our German, U.K. and U.S. divisions, respectively. The increases in TS segment product revenues of $8.1 million and $0.9 million from our U.S. and U.K.

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divisions, respectively was partially offset by a decrease of $0.6 million in our German division over the comparable period in 2015. The increase in services revenue resulted from increases of $1.6 million and $0.7 million in Germany and the U.S., respectively.

Our revenues by geographic area based on the customer location to which the products were shipped or services rendered was as follows for the six months ended March 31, 2016 and 2015:

	For the six Months Ended March 31,								Increase
	2016		%		2015		%		$		%
	(Dollars in thousands)
Americas	$	33,180	65	%	$	24,165	61	%	$	9,015	37	%
Europe	15,505		31	%	14,105		36	%	1,400		10	%
Asia	2,130		4	%	1,037		3	%	1,093		105	%
Totals	$	50,815	100	%	$	39,307	100	%	$	11,508	29	%

Gross Margins

     Our gross margin increased by $3.5 million or 3% of revenues to $11.5 million for the six months ended March 31, 2016 as compared to a gross margin of $8.0 million for the for the six months ended March 31, 2015 as follows:

	2016				2015				Increase
	(Dollars in thousands)
	GM$		GM%		GM$		GM%		GM$		GM%
HPP	$	3,491	56	%	$	2,498	47	%	$	993	9	%
TS	8,032		18	%	5,500		16	%	2,532		2	%
Total	$	11,523	23	%	$	7,998	20	%	$	3,525	3	%

The impact of product mix within our HPP segment on gross margin for the six months ended March 31 was as follows:

	2016				2015				Increase
	(Dollars in thousands)
	GM$		GM%		GM$		GM%		GM$			GM%
Product	$	2,103	44	%	$	2,180	44	%	$	(77	)	—	%
Services	1,388		95	%	318		88	%	1,070			7	%
Total	$	3,491	56	%	$	2,498	47	%	$	993		9	%

The overall HPP segment gross margin as a percentage of sales increased to 56% for the six month period ended March 31, 2016 as compared to 47% for the six month period ended March 31, 2015. The 9% increase in gross margin as a percentage of sales for product sales in the HPP segment was primarily attributed to a favorable mix of higher margin service revenues in the HPP segment during the six months ended March 31, 2016 as compared to the six months ended March 31, 2015. In particular, the increase in our HPP segment gross margins is primarily attributed to recognizing approximately $1.1 million of royalties related to the equivalent number of high-speed processing boards used in one and one half aircraft during the six months ended March 31, 2016 as compared to $0.1 million of royalty revenues for the six month period ended March 31, 2015.

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The impact of product mix within our TS segment on gross margin for the six months ended March 31, 2016 and 2015 was as follows:

($ in thousands)	2016				2015				Increase
	GM$		GM%		GM$		GM%		GM$		GM%
	(Dollars in thousands)
Products	$	4,582	14	%	$	3,155	13	%	$	1,427	1	%
Services	3,450		30	%	2,345		26	%	1,105		4	%
Total	$	8,032	18	%	$	5,500	16	%	$	2,532	2	%

     The gross margin as a percentage of sales for TS segment product revenues increased slightly for the six months ended March 31, 2016 as compared to the prior year period and the increase in services margins as a percentage of sales is primarily attributed to our German division. The improvement in gross margins for our German division is attributed to a favorable mix of service projects and improved utilization of our internal engineering staff that delivers those services.

Engineering and Development Expenses

The engineering and development expenses decreased by $0.1 million to $1.6 million for the six months ended March 31, 2016 as compared to $1.7 million for the six months ended March 31, 2015. The current year expenses are primarily for Myricom engineering expenses incurred in connection with the development of new Myricom products.

Selling, General and Administrative Expenses

The following table details our SG&A expense by operating segment for the six months ended March 31, 2016 and 2015:

	For the six Months Ended March 31,
	2016		% of Total		2015		% of Total		$ Increase		% Increase
	(Dollar amounts in thousands)
By Operating Segment:
HPP segment	$	2,826	32	%	$	2,323	29	%	$	503	22	%
TS segment	5,887		68	%	5,556		71	%	331		6	%
Total	$	8,713	100	%	$	7,879	100	%	$	834	11	%

The $0.5 million or 22% of increased HPP segment expenses is primarily attributed to higher commissions on the sale of Myricom products and increases in other variable compensation expense. The $0.3 million or 6%increase of increased TS segment expenses is attributed to higher commissions and variable compensation costs for the TS-US division partially offset by the lower sales and marketing costs for our German and U.K. divisions resulting from a restructuring of personnel and compensation plans.

Other Income/Expenses

The following table details our other income (expense) for the six months ended March 31, 2016 and 2015:

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	For the six months ended,
	March 31, 2016			March 31, 2015			Increase (decrease)
	(Amounts in thousands)
Interest expense	$	(43	)	$	(42	)	$	(1	)
Interest income	2			4			(2		)
Foreign exchange loss	(63		)	(129		)	66
Other income, net	15			5			10
Total other expense, net	$	(89	)	$	(162	)	$	73

The decrease in the foreign exchange loss for the six month period ended March 31, 2016 as compared to the six month period ended March 31, 2015 was primarily driven by a decrease of approximately $0.1 million in losses on foreign currency holdings in the current period as compared to a year earlier.

Income Taxes

For the six months ended March 31, 2016, the Company recognized an income tax expense of $346,000, which is primarily related to profits of $991,000 in Germany and a profit in the U.S. of $61,000. The UK had a profit of $79,000 for the six month period, but no tax expense was recorded due to pension contributions. The Company tax rate for the six month period was 31%.

Liquidity and Capital Resources

Our primary source of liquidity is our cash and cash equivalents, which decreased by $1.2 million to $10.0 million as of March 31, 2016 from $11.2 million as of September 30, 2015.

Significant sources of cash for the six months ended March 31, 2016 included net income of approximately $0.8 million, and increases of $1.5 million and $0.3 million in accounts payable and accrued expenses and income taxes payable, respectively, and a decrease of $0.7 million in inventory.

Significant uses of cash for the six months ended March 31, 2016 included an increase in accounts receivable of approximately $3.0 million, and a decrease in deferred revenue of approximately $0.7 million and dividends paid of approximately $0.8 million.

Cash held by our foreign subsidiaries located in Germany and the United Kingdom totaled approximately $3.9 million as of March 31, 2016 as compared to $3.3 million as of September 30, 2015. 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.

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.

24

Item 4.         Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2016. 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 Securities Exchange Act of 1934, as amended, or 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 our 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 March 31, 2016, 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 4 below had been remediated by the changes we made in response to that material weakness.

Internal Controls over Financial Reporting

For the period ended September 30, 2015, management 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 able to be prevented or detected in a timely basis.

The material weakness was related to our controls over the revenue recognition process, specifically that

revenue recognition criteria has 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.

Changes in Internal Controls over Financial Reporting

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 of 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 improve accounting operations in our European divisions and continued to assess the effectiveness of changes described above during the six months ended, March 31, 2016.

25

PART II.   OTHER INFORMATION

Item 6.          Exhibits

Number	Description
31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	Interactive Data Files regarding (a) our Consolidated Balance Sheets as of March 31, 2016 and September 30, 2015, (b) our Consolidated Statements of Operations for the three and six months ended March 31, 2016 and 2015, (c) our Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2016 and 2015, (d) our Consolidated Statement of Shareholders’ Equity for the six months ended March 31, 2016, (e) our Consolidated Statements of Cash Flows for the six months ended March 31, 2016 and 2015 and (f) the Notes to such Consolidated Financial Statements.

*Filed Herewith

26

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CSP INC.
Date: May 13, 2016	By:	/s/ Victor Dellovo
		Victor Dellovo
		Chief Executive Officer,
		President and Director
Date: May 13, 2016	By:	/s/ Gary W. Levine
		Gary W. Levine
		Chief Financial Officer

27

Exhibit Index

Number	Description
31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	Interactive Data Files regarding (a) our Consolidated Balance Sheets as of March 31, 2016 and September 30, 2015, (b) our Consolidated Statements of Operations for the three and six months ended March 31, 2016 and 2015, (c) our Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2016 and 2015, (d) our Consolidated Statement of Shareholders’ Equity for the six months ended March 31, 2016 (e) our Consolidated Statements of Cash Flows for the six months ended March 31, 2016 and 2015 and (f) the Notes to such Consolidated Financial Statements.

*Filed Herewith

28

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 quarterly report on Form 10-Q 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.

Date: May 13, 2016

 /s/ Victor Dellovo

Victor Dellovo

Chief Executive Officer;

President and Director

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 quarterly report on Form 10-Q 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.

Date: May 13, 2016

 /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 Quarterly Report on Form 10-Q of CSP Inc. (the “Company”) for the three months ended March 31, 2016, 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.

Date: May 13, 2016	By:	/s/ Victor Dellovo
		Victor Dellovo
		Chief Executive Officer;
		President and Director
Date: May 13, 2016	By:	/s/ Gary W. Levine
		Gary W. Levine
		Chief Financial Officer

XML

Document And Entity Information - shares	6 Months Ended
	Mar. 31, 2016	May. 13, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	CSP INC /MA/
Document Type	10-Q
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		3,800,601
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	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Sep. 30, 2015
Current assets:
Cash and cash equivalents	$ 10,020	$ 11,181
Accounts receivable, net of allowances of $307 and $331	21,690	18,468
Insurance Settlements Receivable, Current	1,090	1,420
Inventories, net	4,807	5,749
Refundable income taxes	0	43
Deferred income taxes	1,337	1,337
Other current assets	2,210	1,884
Total current assets	41,154	40,082
Property, equipment and improvements, net	1,631	1,564
Other assets:
Intangibles, net	351	416
Deferred income taxes	1,678	1,687
Cash surrender value of life insurance	3,276	3,064
Other assets	158	183
Total other assets	5,463	5,350
Total assets	48,248	46,996
Current liabilities:
Accounts payable and accrued expenses	15,415	13,776
Deferred revenue	2,192	2,931
Pension and retirement plans	721	675
Income taxes payable	281	0
Total current liabilities	18,609	17,382
Pension and retirement plans	9,700	10,009
Other long term liabilities	18	15
Total liabilities	$ 28,327	$ 27,406
Commitments and contingencies
Shareholders’ equity:
Common stock, $.01 par value per share; authorized, 7,500 shares; issued and outstanding 3,801 and 3,688 shares, respectively	$ 38	$ 37
Additional paid-in capital	12,503	12,249
Retained earnings	15,642	15,689
Accumulated other comprehensive loss	(8,262)	(8,385)
Total shareholders’ equity	19,921	19,590
Total liabilities and shareholders’ equity	$ 48,248	$ 46,996

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2016	Sep. 30, 2015
Statement of Financial Position [Abstract]
Allowances (in Dollars)	$ 307	$ 331
Common stock par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	7,500	7,500
Common stock, shares issued	3,801	3,688
Common stock, shares outstanding	3,801	3,688

XML

Unaudited Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Sales:
Product	$ 20,972	$ 14,195	$ 37,975	$ 29,848
Services	6,167	4,682	12,840	9,459
Total sales	27,139	18,877	50,815	39,307
Cost of sales:
Product	17,054	11,380	31,290	24,513
Services	3,752	3,454	8,002	6,796
Total cost of sales	20,806	14,834	39,292	31,309
Gross profit	6,333	4,043	11,523	7,998
Operating expenses:
Engineering and development	790	826	1,589	1,679
Selling, general and administrative	4,665	3,856	8,713	7,879
Total operating expenses	5,455	4,682	10,302	9,558
Operating income (loss)	878	(639)	1,221	(1,560)
Other income (expense):
Foreign exchange loss	(103)	(108)	(63)	(129)
Other expense, net	(14)	(21)	(26)	(33)
Total other expense	(117)	(129)	(89)	(162)
Income (loss) before income taxes	761	(768)	1,132	(1,722)
Income tax expense (benefit)	258	(93)	346	(610)
Net income (loss)	503	(675)	786	(1,112)
Net income (loss) attributable to common stockholders	$ 480	$ (649)	$ 756	$ (1,072)
Net income (loss) per share – basic (in Dollars per share)	$ 0.13	$ (0.19)	$ 0.21	$ (0.31)
Weighted average shares outstanding – basic (in Shares)	3,609	3,525	3,589	3,507
Net income (loss) per share – diluted (in Dollars per share)	$ 0.13	$ (0.19)	$ 0.20	$ (0.31)
Weighted average shares outstanding – diluted (in Shares)	3,730	3,525	3,728	3,507

XML

Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 503	$ (675)	$ 786	$ (1,112)
Other comprehensive income (loss):
Foreign currency translation gain (loss) adjustments	125	(229)	123	(117)
Other comprehensive income	125	(229)	123	(117)
Total comprehensive income (loss)	$ 628	$ (904)	$ 909	$ (1,229)

XML

Unaudited Consolidated Statement of Shareholders' Equity - 6 months ended Mar. 31, 2016 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Sep. 30, 2015	$ 19,590	$ 37	$ 12,249	$ 15,689	$ (8,385)
Balance (in Shares) at Sep. 30, 2015	3,688	3,688
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ 786			786
Other comprehensive income	123				123
Stock-based compensation	181		181
Restricted Stock Award, Forfeitures		(6)
Restricted stock issuance	1	$ 1
Restricted stock issuance (in Shares)		105
Cash dividends on common stock ($0.22 per share)	(833)			(833)
Balance at Mar. 31, 2016	$ 19,921	$ 38	12,503	$ 15,642	$ (8,262)
Balance (in Shares) at Mar. 31, 2016	3,801	3,801
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Issued During Period, Shares, Employee Stock Purchase Plans		14
Stock Issued During Period, Value, Employee Stock Purchase Plan	$ 73		$ 73

XML

Unaudited Consolidated Statement of Shareholders' Equity (Parentheticals) - $ / shares	1 Months Ended	6 Months Ended
	Dec. 17, 2013	Mar. 31, 2016
Statement of Stockholders' Equity [Abstract]
Dividends per share	$ 0.11	$ 0.22

XML

Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Cash Flows [Abstract]
Proceeds from Stock Options Exercised	$ 73	$ 105
Cash flows provided by (used in) operating activities:
Net income (loss)	786	(1,112)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	286	266
Amortization of intangibles	65	65
Foreign exchange (gain) loss	63	129
Non-cash changes in accounts receivable	136	37
Non-cash changes in inventory	226	38
Stock-based compensation expense on stock options and restricted stock awards	181	188
Deferred income taxes	23	(21)
Increase in cash surrender value of life insurance	(50)	(23)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(3,008)	(3,267)
(Increase) decrease in inventories	699	(741)
(Increase) decrease in refundable income taxes	44	(619)
Increase in other current assets	(310)	(296)
(Increase) decrease in other assets	25	(59)
Increase in accounts payable and accrued expenses	1,530	785
Decrease in deferred revenue	(715)	(1,017)
Decrease in pension and retirement plans liability	(164)	(36)
Increase in income taxes payable	268	6
Increase in other long term liabilities	4	3
Net cash provided by (used in) operating activities	89	(5,674)
Cash flows used in investing activities:
Life insurance premiums paid	(161)	(109)
Purchases of property, equipment and improvements	(345)	(223)
Net cash used in investing activities	(506)	(332)
Dividends, Common Stock	(833)	(808)
Cash flows provided by (used in) financing activities:
Net cash used in financing activities	(760)	(703)
Effects of exchange rate on cash	16	(717)
Net decrease in cash and cash equivalents	(1,161)	(7,426)
Cash and cash equivalents, beginning of period	11,181	16,448
Cash and cash equivalents, end of period	10,020	9,022
Supplementary cash flow information:
Cash paid for income taxes	28	52
Cash paid for interest	$ 85	$ 85

XML

Basis of Presentation

6 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared by the Company, without audit, and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All adjustments were of a normal recurring nature. Certain information and footnote disclosures normally included in the annual consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States, have been omitted.

Accordingly, the Company believes that although the disclosures are adequate to make the information presented not misleading, the unaudited consolidated financial statements should be read in conjunction with the footnotes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015.

XML

Use of Estimates

6 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

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, including estimates and assumptions related to reserves for bad debt, reserves for inventory obsolescence, the impairment assessment of intangible assets, the calculation of estimated selling price and post-delivery support obligations used for revenue recognition and the calculation of income tax liabilities. Actual results may differ from those estimates under different assumptions or conditions.

XML

Earnings Per Share of Common Stock

6 Months Ended

Mar. 31, 2016

Earnings Per Share [Abstract]

Earnings Per Share of Common Stock

Earnings Per Share of Common Stock

Basic net income (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) 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 (loss) 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 (loss) attributable to common stockholders are as follows:

	For the three months ended					For the six months ended
	March 31, 2016		March 31, 2015			March 31, 2016		March 31, 2015
	(Amounts in thousands except per share data)
Net income (loss)	$	503	$	(675	)	$	786	$	(1,112	)
Less: net income (loss) attributable to nonvested common stock	23		(26		)	30		(40		)
Net income (loss) attributable to common stockholders	$	480	$	(649	)	$	756	$	(1,072	)
Weighted average total shares outstanding – basic	3,782		3,662			3,732		3,637
Less: weighted average non-vested shares outstanding	173		137			143		130
Weighted average number of common shares outstanding – basic	3,609		3,525			3,589		3,507
Potential common shares from non-vested stock awards and the assumed exercise of stock options	121		—			139		—
Weighted average common shares outstanding – diluted	3,730		3,525			3,728		3,507
Net income (loss) per share – basic	$	0.13	$	(0.19	)	$	0.21	$	(0.31	)
Net income (loss) per share – diluted	$	0.13	$	(0.19	)	$	0.20	$	(0.31	)

All anti-dilutive securities, including certain stock options, are excluded from the diluted income (loss) per share computation. For the six months ended March 31, 2016 and 2015, 33,000 and 35,000 shares subject to stock options, respectively, were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive as their exercise price exceeded fair value. Additionally, 130,000 shares subject to non-vested restricted stock awards were excluded from the diluted income per share calculation as there was a net loss for the six months ended March 31, 2015 and their inclusion would have been anti-dilutive. For the three months ended March 31, 2016 and 2015, 30,000 and 35,000 shares subject to stock options, respectively, were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive as their exercise price exceeded fair value. Additionally, 137,000 shares subject to non-vested restricted stock awards were excluded from the diluted income per share calculation as there was a net loss for the three months ended March 31, 2015 and their inclusion would have been anti-dilutive.

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Inventories

6 Months Ended

Mar. 31, 2016

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following:

	March 31, 2016		September 30, 2015
	(Amounts in thousands)
Raw materials	$	1,618	$	1,788
Work-in-process	530		387
Finished goods	2,659		3,574
Total	$	4,807	$	5,749

Finished goods includes inventory of approximately $0.3 million and $0.1 million as of March 31, 2016 and September 30, 2015, respectively, that have been shipped, but for which all revenue recognition criteria have not been met.

Total inventory balances in the table above are shown net of reserves for obsolescence of approximately $4.3 million and $4.1 million as of March 31, 2016 and September 30, 2015, respectively.

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Accumulated Other Comprehensive Loss

6 Months Ended

Mar. 31, 2016

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:

	March 31, 2016			September 30, 2015
	(Amounts in thousands)
Cumulative effect of foreign currency translation	$	(2,702	)	$	(2,825	)
Cumulative unrealized loss on pension liability	(5,560		)	(5,560		)
Accumulated other comprehensive loss	$	(8,262	)	$	(8,385	)

XML

Pension and Retirement Plans

6 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Pension and Retirement Plans

Pension and Retirement Plans

The Company has defined benefit and defined contribution plans in the United Kingdom, Germany and the U.S. In the United Kingdom and Germany, the Company provides defined benefit pension plans and defined contribution plans for the majority of its employees. In the U.S., the Company provides benefits through supplemental retirement plans to certain current and former employees. The domestic supplemental retirement plans have life insurance policies which are not plan assets but were purchased by the Company as a vehicle to fund the costs of the plan. Domestically, the Company also provides for officer death benefits through post-retirement plans to certain officers.  All of the Company’s defined benefit plans are closed to newly hired employees and have been for the two years ended September 30, 2015 and 2014 and for the six months ended March 31, 2016.

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.

The Company's pension plan in the United Kingdom is the only plan with plan assets. The plan assets consist of an investment in a commingled fund which in turn comprises a diversified mix of assets including corporate equity securities, government securities and corporate debt securities.

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

	For the Three Months Ended March 31,
	2016									2015
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Service cost	$	9		$	—		$	9		$	13		$	—		$	13
Interest cost	146			11			157			155			13			168
Expected return on plan assets	(92		)	—			(92		)	(104		)	—			(104		)
Amortization of:
Prior service gain	—			—			—			—			—			—
Amortization of net gain	44			(1		)	43			49			(1		)	48
Net periodic benefit cost	$	107		$	10		$	117		$	113		$	12		$	125
Post Retirement:
Service cost	$	—		$	7		$	7		$	—		$	9		$	9
Interest cost	—			11			11			—			11			11
Amortization of net gain	—			(20		)	(20		)	—			(13		)	(13		)
Net periodic cost (benefit)	$	—		$	(2	)	$	(2	)	$	—		$	7		$	7
	For the Six Months Ended March 31,
	2016									2015
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Service cost	$	18		$	—		$	18		$	28		$	—		$	28
Interest cost	297			22			319			320			26			346
Expected return on plan assets	(190		)	—			(190		)	(212		)	—			(212		)
Amortization of:
Prior service gain	—			—			—			—			—			—
Amortization of net gain	89			(2		)	87			102			(2		)	100
Net periodic benefit cost	$	214		$	20		$	234		$	238		$	24		$	262
Post Retirement:
Service cost	$	—		$	14		$	14		$	—		$	17		$	17
Interest cost	—			21			21			—			22			22
Amortization of net gain	—			(40		)	(40		)	—			(25		)	(25		)
Net periodic cost (benefit)	$	—		$	(5	)	$	(5	)	$	—		$	14		$	14

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

	Fair Values as of
	March 31, 2016								September 30, 2015
	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
	(Amounts in thousands)
Cash on deposit	$	227	$	227	$	—	$	—	$	324	$	324	$	—	$	—
Pooled Funds	8,547		—		8,547		—		8,977		—		8,977		—
Total Plan Assets	$	8,774	$	227	$	8,547	$	—	$	9,301	$	324	$	8,977	$	—

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Segment Information

6 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

The following table presents certain operating segment information.

				Technology Solutions Segment
For the three months ended March 31,	High Performance Products Segment			Germany		United Kingdom			U.S.			Total		Consolidated Total
	(Amounts in thousands)
2016
Sales:
Product	$	2,861		$	1,389	$	1,352		$	15,370		$	18,111	$	20,972
Service	597			4,027		262			1,281			5,570		6,167
Total sales	3,458			5,416		1,614			16,651			23,681		27,139
Income (loss) from operations	(501		)	718		(1		)	662			1,379		878
Assets	15,353			12,311		2,791			17,793			32,895		48,248
Capital expenditures	17			52		31			55			138		155
Depreciation and amortization	60			42		33			56			131		191
2015
Sales:
Product	$	2,527		$	1,796	$	891		$	8,981		$	11,668	$	14,195
Service	130			3,690		213			649			4,552		4,682
Total sales	2,657			5,486		1,104			9,630			16,220		18,877
Income (loss) from operations	(647		)	170		(93		)	(69		)	8		(639		)
Assets	15,595			12,555		3,118			10,859			26,532		42,127
Capital expenditures	25			95		—			—			95		120
Depreciation and amortization	60			44		10			45			99		159

				Technology Solutions Segment
For the six months ended March 31,	High Performance Products Segment			Germany		United Kingdom			U.S.			Total			Consolidated Total
	(Amounts in thousands)
2016
Sales:
Product	$	4,811		$	3,291	$	3,345		$	26,528		$	33,164		$	37,975
Service	1,464			8,799		452			2,125			11,376			12,840
Total sales	6,275			12,090		3,797			28,653			44,540			50,815
Income (loss) from operations	(924		)	1,181		(48		)	1,012			2,145			1,221
Assets	15,353			12,311		2,791			17,793			32,895			48,248
Capital expenditures	165			119		33			28			180			345
Depreciation and amortization	117			82		38			114			234			351
2015
Sales:
Product	$	4,979		$	3,940	$	2,461		$	18,468		$	24,869		$	29,848
Service	360			7,218		496			1,385			9,099			9,459
Total sales	5,339			11,158		2,957			19,853			33,968			39,307
Income (loss) from operations	(1,504		)	249		(25		)	(280		)	(56		)	(1,560		)
Assets	15,595			12,555		3,118			10,859			26,532			42,127
Capital expenditures	46			176		1			—			177			223
Depreciation and amortization	131			91		17			92			200			331

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

The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the three and six months endedMarch 31, 2016, and 2015.

		For the three months ended March 31,								For the six months ended March 31,
		2016				2015				2016				2015
		Customer Revenues		% of Total Revenues		Customer Revenues		% of Total Revenues		Customer Revenues		% of Total Revenues		Customer Revenues		% of Total Revenues
	(dollars in millions)
Customer A		$	5.6	20	%	$	2.4	13	%	$	8.4	17	%	$	4.7	12	%
Customer B		$	3.8	14	%	$	3.7	20	%	$	7.6	15	%	$	6.6	17	%

In addition, accounts receivable from Customer A totaled approximately $3.9 million, or 17%, and approximately $1.1 million, or 6%, of total consolidated accounts receivable as of March 31, 2016 and September 30, 2015, respectively. Accounts receivable from Customer B totaled approximately $5.1 million or 33%, and approximately $7.9 million, or 39%, of total consolidated accounts receivable as of March 31, 2016 and September 30, 2015, respectively. We believe that the Company is not exposed to any significant credit risk with respect to the accounts receivable with these customers as of March 31, 2016. No other customers accounted for 10% or more of total consolidated accounts receivable as of March 31, 2016 or September 30, 2015.

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Dividend

6 Months Ended

Mar. 31, 2016

Equity [Abstract]

Dividend

Dividends

On February 16, 2016, the Company's board of directors declared a cash dividend of $0.11 per share which was paid on March 11, 2016 to shareholders of record as of February 26, 2016, the record date.

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

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Recent Accounting Pronouncements (Notes)

6 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

Recent 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 August 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 on 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 on 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 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 on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This updated, Topic 842, affects any entity that enters into a lease (as that term is defined in this Update), with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The amendments in this Topic are effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The Company has not yet assessed the potential impact of implementing this ASU on our consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-08 (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) to clarify the implementation guidance on principal versus agent considerations. The amendments in this update provides additional guidance on indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customer and does not change the core principle of previously issued guidance. The amendments in this Topic are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company does not expect the implementation of this ASU to have a material impact on our consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09 (Topic 718), Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Additionally, the amendments eliminate the guidance in Topic 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. This should not result in a change in practice because the guidance that is being superseded was never effective. 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 Company has not yet assessed the potential impact of implementing this ASU on the disclosures on our consolidated financial statements.

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Earnings Per Share of Common Stock (Tables)

6 Months Ended

Mar. 31, 2016

Earnings Per Share [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 (loss) attributable to common stockholders are as follows:

	For the three months ended					For the six months ended
	March 31, 2016		March 31, 2015			March 31, 2016		March 31, 2015
	(Amounts in thousands except per share data)
Net income (loss)	$	503	$	(675	)	$	786	$	(1,112	)
Less: net income (loss) attributable to nonvested common stock	23		(26		)	30		(40		)
Net income (loss) attributable to common stockholders	$	480	$	(649	)	$	756	$	(1,072	)
Weighted average total shares outstanding – basic	3,782		3,662			3,732		3,637
Less: weighted average non-vested shares outstanding	173		137			143		130
Weighted average number of common shares outstanding – basic	3,609		3,525			3,589		3,507
Potential common shares from non-vested stock awards and the assumed exercise of stock options	121		—			139		—
Weighted average common shares outstanding – diluted	3,730		3,525			3,728		3,507
Net income (loss) per share – basic	$	0.13	$	(0.19	)	$	0.21	$	(0.31	)
Net income (loss) per share – diluted	$	0.13	$	(0.19	)	$	0.20	$	(0.31	)

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Inventories (Tables)

6 Months Ended

Mar. 31, 2016

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

Inventories consist of the following:

	March 31, 2016		September 30, 2015
	(Amounts in thousands)
Raw materials	$	1,618	$	1,788
Work-in-process	530		387
Finished goods	2,659		3,574
Total	$	4,807	$	5,749

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Mar. 31, 2016

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss are as follows:

	March 31, 2016			September 30, 2015
	(Amounts in thousands)
Cumulative effect of foreign currency translation	$	(2,702	)	$	(2,825	)
Cumulative unrealized loss on pension liability	(5,560		)	(5,560		)
Accumulated other comprehensive loss	$	(8,262	)	$	(8,385	)

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Pension and Retirement Plans (Tables)

6 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

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

	Fair Values as of
	March 31, 2016								September 30, 2015
	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
	(Amounts in thousands)
Cash on deposit	$	227	$	227	$	—	$	—	$	324	$	324	$	—	$	—
Pooled Funds	8,547		—		8,547		—		8,977		—		8,977		—
Total Plan Assets	$	8,774	$	227	$	8,547	$	—	$	9,301	$	324	$	8,977	$	—

Schedule of Net Benefit Costs

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

	For the Three Months Ended March 31,
	2016									2015
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Service cost	$	9		$	—		$	9		$	13		$	—		$	13
Interest cost	146			11			157			155			13			168
Expected return on plan assets	(92		)	—			(92		)	(104		)	—			(104		)
Amortization of:
Prior service gain	—			—			—			—			—			—
Amortization of net gain	44			(1		)	43			49			(1		)	48
Net periodic benefit cost	$	107		$	10		$	117		$	113		$	12		$	125
Post Retirement:
Service cost	$	—		$	7		$	7		$	—		$	9		$	9
Interest cost	—			11			11			—			11			11
Amortization of net gain	—			(20		)	(20		)	—			(13		)	(13		)
Net periodic cost (benefit)	$	—		$	(2	)	$	(2	)	$	—		$	7		$	7
	For the Six Months Ended March 31,
	2016									2015
	Foreign			U.S.			Total			Foreign			U.S.			Total
	(Amounts in thousands)
Pension:
Service cost	$	18		$	—		$	18		$	28		$	—		$	28
Interest cost	297			22			319			320			26			346
Expected return on plan assets	(190		)	—			(190		)	(212		)	—			(212		)
Amortization of:
Prior service gain	—			—			—			—			—			—
Amortization of net gain	89			(2		)	87			102			(2		)	100
Net periodic benefit cost	$	214		$	20		$	234		$	238		$	24		$	262
Post Retirement:
Service cost	$	—		$	14		$	14		$	—		$	17		$	17
Interest cost	—			21			21			—			22			22
Amortization of net gain	—			(40		)	(40		)	—			(25		)	(25		)
Net periodic cost (benefit)	$	—		$	(5	)	$	(5	)	$	—		$	14		$	14

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Segment Information (Tables)

6 Months Ended

Mar. 31, 2016

Operating Segment Information

Segment Reporting Information [Line Items]

Schedule of Revenue by Major Customers by Reporting Segments

The following table presents certain operating segment information.

				Technology Solutions Segment
For the three months ended March 31,	High Performance Products Segment			Germany		United Kingdom			U.S.			Total		Consolidated Total
	(Amounts in thousands)
2016
Sales:
Product	$	2,861		$	1,389	$	1,352		$	15,370		$	18,111	$	20,972
Service	597			4,027		262			1,281			5,570		6,167
Total sales	3,458			5,416		1,614			16,651			23,681		27,139
Income (loss) from operations	(501		)	718		(1		)	662			1,379		878
Assets	15,353			12,311		2,791			17,793			32,895		48,248
Capital expenditures	17			52		31			55			138		155
Depreciation and amortization	60			42		33			56			131		191
2015
Sales:
Product	$	2,527		$	1,796	$	891		$	8,981		$	11,668	$	14,195
Service	130			3,690		213			649			4,552		4,682
Total sales	2,657			5,486		1,104			9,630			16,220		18,877
Income (loss) from operations	(647		)	170		(93		)	(69		)	8		(639		)
Assets	15,595			12,555		3,118			10,859			26,532		42,127
Capital expenditures	25			95		—			—			95		120
Depreciation and amortization	60			44		10			45			99		159

				Technology Solutions Segment
For the six months ended March 31,	High Performance Products Segment			Germany		United Kingdom			U.S.			Total			Consolidated Total
	(Amounts in thousands)
2016
Sales:
Product	$	4,811		$	3,291	$	3,345		$	26,528		$	33,164		$	37,975
Service	1,464			8,799		452			2,125			11,376			12,840
Total sales	6,275			12,090		3,797			28,653			44,540			50,815
Income (loss) from operations	(924		)	1,181		(48		)	1,012			2,145			1,221
Assets	15,353			12,311		2,791			17,793			32,895			48,248
Capital expenditures	165			119		33			28			180			345
Depreciation and amortization	117			82		38			114			234			351
2015
Sales:
Product	$	4,979		$	3,940	$	2,461		$	18,468		$	24,869		$	29,848
Service	360			7,218		496			1,385			9,099			9,459
Total sales	5,339			11,158		2,957			19,853			33,968			39,307
Income (loss) from operations	(1,504		)	249		(25		)	(280		)	(56		)	(1,560		)
Assets	15,595			12,555		3,118			10,859			26,532			42,127
Capital expenditures	46			176		1			—			177			223
Depreciation and amortization	131			91		17			92			200			331

Revenues in Excess of 10 Percent of Total Revenues

Segment Reporting Information [Line Items]

Schedule of Revenue by Major Customers by Reporting Segments

The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the three and six months endedMarch 31, 2016, and 2015.

		For the three months ended March 31,								For the six months ended March 31,
		2016				2015				2016				2015
		Customer Revenues		% of Total Revenues		Customer Revenues		% of Total Revenues		Customer Revenues		% of Total Revenues		Customer Revenues		% of Total Revenues
	(dollars in millions)
Customer A		$	5.6	20	%	$	2.4	13	%	$	8.4	17	%	$	4.7	12	%
Customer B		$	3.8	14	%	$	3.7	20	%	$	7.6	15	%	$	6.6	17	%

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Earnings Per Share of Common Stock (Detail) - shares	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted Average Number Diluted Shares Outstanding Adjustment	30,000	35,000	33,000	35,000
Anti-dilutive securities excluded from diluted income per share calculation		137,000		130,000

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Earnings Per Share of Common Stock (Detail) - Basic and diluted earnings per share computations - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Earnings Per Share [Abstract]
Net income (loss)	$ 503	$ (675)	$ 786	$ (1,112)
Less: Net income attributable to nonvested common stock (in Dollars)	23	(26)	30	(40)
Net income attributable to common stockholders (in Dollars)	$ 480	$ (649)	$ 756	$ (1,072)
Weighted average total shares outstanding – basic	3,782	3,662	3,732	3,637
Less: weighted average non-vested shares outstanding	173	137	143	130
Weighted average number of common shares outstanding – basic	3,609	3,525	3,589	3,507
Potential common shares from non-vested stock awards and the assumed exercise of stock options	121	0	139	0
Weighted average common shares outstanding – diluted	3,730	3,525	3,728	3,507
Net income (loss) per share – basic (in Dollars per share)	$ 0.13	$ (0.19)	$ 0.21	$ (0.31)
Net income (loss) per share – diluted (in Dollars per share)	$ 0.13	$ (0.19)	$ 0.20	$ (0.31)

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Inventories (Detail) - USD ($) $ in Millions	Mar. 31, 2016	Sep. 30, 2015
Inventory Disclosure [Abstract]
Finished goods inventory that has been shipped, but for which all revenue recognition criteria has not been met	$ 0.3	$ 0.1
Reservce for obsolescence	$ 4.0	$ 4.0

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Inventories (Detail) - Inventories - USD ($) $ in Thousands	Mar. 31, 2016	Sep. 30, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 1,618	$ 1,788
Work-in-process	530	387
Finished goods	2,659	3,574
Total	$ 4,807	$ 5,749

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Accumulated Other Comprehensive Loss (Detail) - Components of Accumulated Other Comprehensive Loss - USD ($) $ in Thousands	Mar. 31, 2016	Sep. 30, 2015
Equity [Abstract]
Cumulative effect of foreign currency translation	$ (2,702)	$ (2,825)
Cumulative unrealized loss on pension liability	(5,560)	(5,560)
Accumulated other comprehensive loss	$ (8,262)	$ (8,385)

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Pension and Retirement Plans (Detail)	6 Months Ended	12 Months Ended
	Mar. 31, 2016	Sep. 30, 2015	Sep. 30, 2014
Compensation and Retirement Disclosure [Abstract]
Number of years defined benefit plans are closed to newly hired employees	2 years	2 years	2 years

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Pension and Retirement Plans (Detail) - Components of net periodic benefit costs - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Pension:
Pension:
Service cost	$ 9	$ 13	$ 18	$ 28
Interest cost	157	168	319	346
Expected return on plan assets	(92)	(104)	(190)	(212)
Amortization of:
Prior service gain	0	0	0	0
Amortization of net gain	43	48	87	100
Net periodic benefit cost	117	125	234	262
Post Retirement:
Pension:
Service cost	7	9	14	17
Interest cost	11	11	21	22
Amortization of:
Amortization of net gain	(20)	(13)	(40)	(25)
Net periodic benefit cost	(2)	7	(5)	14
Foreign | Pension:
Pension:
Service cost	9	13	18	28
Interest cost	146	155	297	320
Expected return on plan assets	(92)	(104)	(190)	(212)
Amortization of:
Prior service gain	0	0	0	0
Amortization of net gain	44	49	89	102
Net periodic benefit cost	107	113	214	238
Foreign | Post Retirement:
Pension:
Service cost	0	0	0	0
Interest cost	0	0	0	0
Amortization of:
Amortization of net gain	0	0	0	0
Net periodic benefit cost	0	0	0	0
U.S. | Pension:
Pension:
Service cost	0	0	0	0
Interest cost	11	13	22	26
Expected return on plan assets	0	0	0	0
Amortization of:
Prior service gain	0	0	0	0
Amortization of net gain	(1)	(1)	(2)	(2)
Net periodic benefit cost	10	12	20	24
U.S. | Post Retirement:
Pension:
Service cost	7	9	14	17
Interest cost	11	11	21	22
Amortization of:
Amortization of net gain	(20)	(13)	(40)	(25)
Net periodic benefit cost	$ (2)	$ 7	$ (5)	$ 14

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Pension and Retirement Plans Fair value of the assets held by the UK pension plan by asset catagory (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Sep. 30, 2015
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 8,774	$ 9,301
Cash On Deposit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	227	324
Pooled Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	8,547	8,977
Level 1
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	227	324
Level 1 | Cash On Deposit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	227	324
Level 1 | Pooled Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	8,547	8,977
Fair Value, Inputs, Level 2 [Member] | Cash On Deposit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fair Value, Inputs, Level 2 [Member] | Pooled Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	8,547	8,977
Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fair Value, Inputs, Level 3 [Member] | Cash On Deposit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fair Value, Inputs, Level 3 [Member] | Pooled Funds [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 0	$ 0

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Segment Information (Detail) - The following table presents certain operating segment information - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015	Sep. 30, 2015
Sales:
Product	$ 20,972	$ 14,195	$ 37,975	$ 29,848
Service	6,167	4,682	12,840	9,459
Total sales	27,139	18,877	50,815	39,307
Income (loss) from operations	878	(639)	1,221	(1,560)
Assets	48,248	42,127	48,248	42,127	$ 46,996
Capital expenditures	155	120	345	223
Depreciation and amortization	191	159	351	331
High Performance Products Segment
Sales:
Product	2,861	2,527	4,811	4,979
Service	597	130	1,464	360
Total sales	3,458	2,657	6,275	5,339
Income (loss) from operations	(501)	(647)	(924)	(1,504)
Assets	15,353	15,595	15,353	15,595
Capital expenditures	17	25	165	46
Depreciation and amortization	60	60	117	131
Germany
Sales:
Product	1,389	1,796	3,291	3,940
Service	4,027	3,690	8,799	7,218
Total sales	5,416	5,486	12,090	11,158
Income (loss) from operations	718	170	1,181	249
Assets	12,311	12,555	12,311	12,555
Capital expenditures	52	95	119	176
Depreciation and amortization	42	44	82	91
United Kingdom
Sales:
Product	1,352	891	3,345	2,461
Service	262	213	452	496
Total sales	1,614	1,104	3,797	2,957
Income (loss) from operations	(1)	(93)	(48)	(25)
Assets	2,791	3,118	2,791	3,118
Capital expenditures	31	0	33	1
Depreciation and amortization	33	10	38	17
U.S.
Sales:
Product	15,370	8,981	26,528	18,468
Service	1,281	649	2,125	1,385
Total sales	16,651	9,630	28,653	19,853
Income (loss) from operations	662	(69)	1,012	(280)
Assets	17,793	10,859	17,793	10,859
Capital expenditures	55	0	28	0
Depreciation and amortization	56	45	114	92
Total
Sales:
Product	18,111	11,668	33,164	24,869
Service	5,570	4,552	11,376	9,099
Total sales	23,681	16,220	44,540	33,968
Income (loss) from operations	1,379	8	2,145	(56)
Assets	32,895	26,532	32,895	26,532
Capital expenditures	138	95	180	177
Depreciation and amortization	$ 131	$ 99	$ 234	$ 200

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Segment Information (Detail) - Major customers - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015	Sep. 30, 2015
Segment Reporting Information [Line Items]
Segment Reporting, Disclosure of Major Customers			0.1	.1
Customer A
Segment Reporting Information [Line Items]
Amount (in Dollars)	$ 5.6	$ 2.4	$ 8.4	$ 4.7
% of Total Revenues	20.00%	13.00%	17.00%	12.00%
Customer B
Segment Reporting Information [Line Items]
Amount (in Dollars)	$ 3.8	$ 3.7	$ 7.6	$ 6.6
% of Total Revenues	14.00%	20.00%	15.00%	17.00%
Accounts Receivable, Gross	$ 5.0		$ 5.0		$ 8.0
concentration risk, percentage, accounts receivable	33.00%		33.00%		39.00%

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Dividend (Detail) - $ / shares	1 Months Ended	6 Months Ended
	Dec. 17, 2013	Mar. 31, 2016
Equity [Abstract]
Dividends per share	$ 0.11	$ 0.22