CSP INC /MA/ Fair Value Disclosure
18. Fair Value Disclosures
Under the fair value standards fair value is based on the exit price and defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement should reflect all the assumptions that market participants would use in pricing an asset or liability. A fair value hierarchy is established in the authoritative guidance outlined in three levels ranking from Level 1 to level 3 with Level 1 being the highest priority.
Level 1: observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly
Level 3: unobservable inputs (e.g., a reporting entity’s or other entity’s own data)
The Company had no assets or liabilities measured at fair value on a recurring (except our pension plan assets, see Note 13 Pension and Retirement Plan) or non-recurring basis as of September 30, 2025 or September 30, 2024.
To estimate fair value of the financial instruments below quoted market prices are used when available and classified within Level 1. If this data is not available, we use observable market-based inputs to estimate fair value, which are classified within Level 2. If the preceding information is unavailable, we use internally generated data to estimate fair value which is classified within Level 3.
As of September 30, 2025 | As of September 30, 2024 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | Fair Value Level | Reference | ||||||||||
(Amounts in thousands) | |||||||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | 27,418 | $ | 27,418 | $ | 30,585 | $ | 30,585 | 1 | Consolidated Balance Sheets | |||||
Accounts receivable, net | 12,000 | 12,000 | 14,494 | 14,494 | 1 | Note 2 | |||||||||
Financing receivables, net* | 14,904 | 14,904 | 7,306 | 7,306 | 3 | Note 3 | |||||||||
Liabilities: | |||||||||||||||
Accounts payable and accrued expenses and other long-term liabilities* | 4,832 | 4,832 | 3,840 | 3,840 | 3 | Note 9 | |||||||||
Line of Credit | 903 | 903 | 4,169 | 4,169 | 2 | Note 12 | |||||||||
*Original maturity over one year
Cash and cash equivalents
Carrying amount approximated fair value.
Accounts receivable and accounts payable with original maturity of less than one year
Fair value was not materially different from their carrying values as of September 30, 2025, and 2024
Financing receivables. net
Fair value was estimated by discounting future cash flows based on the current rate with similar terms.
Line of credit
The fair value of our line of credit is based on borrowing rates currently available to a market participant for loans with similar terms or maturity. The carrying amount of our outstanding revolving line of credit approximates fair value because the base interest rate charged varies with market conditions and the credit spread is commensurate with current market spreads for issuers of similar risk. No interest accrues under the inventory line of credit when advances are paid within terms.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 16, 2025 | Showing above |
| 2024 | Dec 20, 2024 | |
| 2023 | Dec 13, 2023 | |
| 2022 | Dec 8, 2022 | |
| 2021 | Dec 8, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.