CSP (US:CSPI)2021-12-07 16:00Revenue Performance - Revenue decreased by approximately $12.6 million, or 20%, to $49.2 million for the fiscal year ended September 30, 2021, compared to $61.8 million for the fiscal year ended September 30, 2020[154]. - The TS segment revenue decreased by approximately $11.3 million, with a decrease of $11.9 million in the U.S. division, partially offset by an increase of $0.6 million in the U.K. division[161]. - The HPP segment revenue decreased by approximately $1.3 million, or 21%, primarily due to decreased product revenue of $0.3 million and decreased service revenue of $1.0 million[161]. - The Americas accounted for 92% of total revenues in 2021, with a revenue decrease of $13.9 million compared to the prior year[166]. Profitability Metrics - Gross profit margin percentage increased from 28% of revenues for the fiscal year ended September 30, 2020, to 33% for the fiscal year ended September 30, 2021[154]. - The gross margin decreased by approximately $1.1 million to $16.1 million for fiscal year 2021, while the gross margin as a percentage of revenue increased to 33%[167]. - The TS segment's gross margin was $13.4 million, or 30%, while the HPP segment's gross margin was $2.7 million, or 59%[169]. - TS segment gross margin increased to 30% in fiscal year 2021 from 24% in fiscal year 2020, attributed to a significant increase in service revenue[170]. - HPP segment gross margin decreased to 59% in fiscal year 2021 from 62% in fiscal year 2020, primarily due to a $0.6 million decrease in high margin Multicomputer royalty revenues[171]. Operating Loss and Income - Operating loss was approximately $1.4 million for the fiscal year ended September 30, 2021, consistent with the operating loss of approximately $1.4 million for the fiscal year ended September 30, 2020[155]. - Other income, net was $2.0 million for the fiscal year ended September 30, 2021, compared to $0.4 million for the prior year, due to a one-time gain on debt forgiveness of $2.2 million[156]. - Other income increased by $1.678 million to $2.040 million in fiscal year 2021, driven by a $2.2 million gain on debt forgiveness[176]. - The company recorded an income tax provision of approximately $444 thousand, reflecting an effective tax rate of 39% for the year ended September 30, 2021[158]. - The company recorded an income tax provision of approximately $444 thousand for the year ended September 30, 2021, reflecting an effective tax rate of 39%[181]. Expenses - Total selling, general and administrative (SG&A) expenses decreased by $1.169 million to $14.624 million in fiscal year 2021, with TS segment SG&A decreasing by $1.057 million[174]. - Engineering and development expenses in the HPP segment increased slightly by $0.1 million to $2.9 million for fiscal year 2021, mainly for ARIA SDS cyber security product development[172]. Cash and Liquidity - Cash and cash equivalents increased by approximately $0.7 million to $20.0 million as of September 30, 2021[186]. - Significant sources of cash included a $1.5 million net change in accounts receivable and long-term receivable, and an increase of $10.8 million in accounts payable[187]. - The company maintained a line of credit with a capacity of up to $15.0 million, with $14.1 million available as of September 30, 2021[192]. - The company believes that available cash, cash equivalents, and line of credit will be sufficient for working capital and capital expenditure requirements for at least 12 months[195]. Accounting Policies - The company prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles, requiring estimates and judgments that affect reported amounts of assets, liabilities, revenues, and expenses[196]. - Significant accounting policies impacting financial statement preparation include revenue recognition, inventory valuation, and pension and retirement plans[197]. - Revenue recognition involves significant judgment, particularly in contracts with multiple components, where transaction prices are allocated based on estimated relative selling prices[200]. - The company recognizes revenue from third-party service contracts as either gross or net sales, depending on whether it acts as a principal or agent in the transaction[204]. - Estimated warranty costs for product sales are accrued at the time of shipment, based on prior actual warranty costs for similar products[206]. - Engineering and development expenses include payroll, employee benefits, and third-party development costs, with no internal software development costs capitalized[207]. - The company uses the asset and liability method for income taxes, recognizing deferred tax assets and liabilities based on enacted tax rates and assessing the recoverability of deferred tax assets[208]. - Intangible assets subject to amortization are evaluated annually, with impairment charges recorded if fair value is less than carrying value[211]. - Inventories are stated at the lower of cost or market, with write-downs for estimated obsolescence based on future demand and market conditions[212]. - The company does not believe inflation significantly impacted sales or revenues during fiscal years 2021 or 2020, although there has been a trend of increasing prices from integrated circuit vendors[218].