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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000356037-00-000014.txt : 20000418
<SEC-HEADER>0000356037-00-000014.hdr.sgml : 20000418
ACCESSION NUMBER:		0000356037-00-000014
CONFORMED SUBMISSION TYPE:	10-Q/A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20000229
FILED AS OF DATE:		20000417

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CSP INC /MA/
		CENTRAL INDEX KEY:			0000356037
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER PERIPHERAL EQUIPMENT, NEC [3577]
		IRS NUMBER:				042441294
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		10-Q/A
		SEC ACT:		
		SEC FILE NUMBER:	000-10843
		FILM NUMBER:		603096

	BUSINESS ADDRESS:	
		STREET 1:		40 LINNELL CIRCLE
		CITY:			BILLERICA
		STATE:			MA
		ZIP:			01821
		BUSINESS PHONE:		5086637598

	MAIL ADDRESS:	
		STREET 2:		40 LINNELL CIRCLE
		CITY:			BILLERICA
		STATE:			MA
		ZIP:			01821
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q/A
<SEQUENCE>1
<DESCRIPTION>FORM 10-Q/A AMENDMENT 1
<TEXT>

<HTML>
<HEAD>
<TITLE>SECURITIES AND EXCHANGE COMMISSION</TITLE>
</HEAD>
<BODY>

<B><FONT SIZE=4><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UNITED STATES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECURITIES AND EXCHANGE COMMISSION<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;</FONT>Washington, D.C. 10549<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT SIZE=4>___________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=5>FORM 10-Q/A</P>
</FONT><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment Number 1</P>
</B><FONT FACE="Courier">
</FONT><FONT SIZE=3><P>(Mark One)</P>

<B><P>[X]&nbsp;Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934<BR>
</B>For the quarterly period ended<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;February 29, 2000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">or</P>

<B><P>[&nbsp;&nbsp;]&nbsp;&nbsp;Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934<BR>
</B>For the transition period from<U> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P><DIR>
<DIR>

</U><P>&#9;</P>

<P>&nbsp;</P></DIR>
</DIR>

<B><P>Commission File Number<U>: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;0-10843&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</P>
</B></U>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><B><U><FONT SIZE=5>CSP Inc.&nbsp;<BR>
</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=3>(Exact name of registrant as specified in its
charter)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Massachusetts&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;04-2441294&nbsp;&nbsp;<BR>
</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>(State or other jurisdiction of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I.R.S. Employer<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;incorporation or organization)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Identification No.)</P>

<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>40 Linnell Circle, Billerica, Massachusetts&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;01821-3901<BR>
</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>(Address of principal executive offices)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Zip Code)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>(978) 663-7598&nbsp;             <BR>
</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>(Registrant's
telephone number, including area code)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>None&nbsp;</B></U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>(Former name, former address, former fiscal year, if changed since last report)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 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.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[X]&nbsp;&nbsp;Yes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;[&nbsp;&nbsp;]&nbsp;&nbsp;No</P>

<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPLICABLE ONLY TO CORPORATE
ISSUERS:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.</P>

<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Outstanding April  11, 2000</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common Stock, $.01 par value&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;        3,587,415 shares</B> </P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This amendment is being filed to correct Part I, Item I, Financial Statements.  We are amending Part I, Item 1, Financial Statements, solely to correct a typographical error in Note 4 to the Financial Statements.  For
convenience, the entire text of the Financial Statements is set forth below.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As originally filed, Note 4, "Stock Repurchase", stated that at February 29, 2000, the Company had repurchased 480,996 or 65% of the total shares authorized to be purchased.  The figure of 480,996 was stated in error.  The
correct number was 482,823 or 65% of the total shares authorized to be purchased.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result, the number of shares repurchased by the Company during the second fiscal quarter, when the cumulative total of shares purchased increased from 481,645 to 482,823, was 1,178 shares.</P>

<B><P>&nbsp;</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONSOLIDATED BALANCE SHEETS<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Amounts in thousands, except par value)</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=690>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">February 29,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">August 27,</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">(Unaudited)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">(Audited)</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Current assets:</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Cash and cash equivalents</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$1,351</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$3,749</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Short-term investments</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,701</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,046</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Accounts receivable, net</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">12,023</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,395</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<P>&nbsp;&nbsp;&nbsp;Inventories</TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">5,933</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">5,805</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,104</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,104</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Prepaid expenses</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,273</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,545</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">32,385</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">29,644</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Property, equipment and improvements, net</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,336</P>
<P ALIGN="RIGHT"></P>
<P ALIGN="RIGHT">&nbsp;</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,497</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Other assets:</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Long-term investments&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">468</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">470</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Land held for future development</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">163</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">163</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">735</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">735</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Goodwill, net</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,103</P>
<P ALIGN="RIGHT"></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,226</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,399</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,378</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,868</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,972</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$39,589</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$37,113</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Liabilities and Shareholders' Equity</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Current liabilities:</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;Accounts payable and accrued expenses</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$8,155</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$6,128</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;Income taxes payable</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">468      </U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">     47</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">8,623</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6,175</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Deferred compensation and retirement plans</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,603</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,573</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Commitments and contingencies</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Shareholders' equity:</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Common stock, $.01 par; authorized, 7,500 shares; issued 4,051</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and 4,020 shares</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">41</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">40</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Additional paid-in capital</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">11,031</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,812</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Retained earnings</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">19,582</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;19,287</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(794)</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(456)</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">29,860</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">29,683</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Less treasury stock, at cost, 483 and 449 shares</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">2,497</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">2,318</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">27,363</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">27,365</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$39,589</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$37,113</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>See accompanying notes to consolidated financial statements.</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
</TABLE>

<B><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONSOLIDATED STATEMENTS OF
OPERATIONS<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;(Amounts in thousands, except for per share data)<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Unaudited)</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>/--For the three months ended-/&nbsp;&nbsp;&nbsp;/-For the six months ended-/</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=708>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>February 29,</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 26,</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>February 29,</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 26,</B></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2000</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2000</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Sales:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Systems</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$3,988</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$4,376</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$6,247</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$9,420</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Service and system integration</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">13,264</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,252</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">25,889</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">16,136</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;E-Commerce software</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">480</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">220</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">887</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">346</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other software</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">628</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">737    </U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,071</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,198    </U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total sales</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">18,360</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">15,585</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">34,094</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">27,100</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cost of Sales:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Systems</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,522</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,999</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,627</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,963</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Service and system integration</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,748</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">8,141</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">21,508</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">12,099</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;E-Commerce software</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">284</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">66</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">445</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">126</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other software</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">207</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">197</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">370</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">292     </U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of sales</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">12,761</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">10,403</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">24,950</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">16,480</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Gross profit</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">5,599</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">5,182</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,144</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,620</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Operating expenses:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Engineering and development</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">957</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">976</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,050</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,105</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Selling, general &amp; administration</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,492</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,498</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">6,681</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">6,846</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">4,449</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">4,474</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">8,731</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">8,951</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Operating income </B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,150</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">708</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">413</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,669</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Other income</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">64</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">143</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">142</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">229    </U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Income before income taxes</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,214</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">851</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">555</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,898</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Provision for income taxes</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">589</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">416 </U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">260</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">987</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Net income</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$625</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$435</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$295</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$911</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income per share - basic</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.18</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.12</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.08</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.25</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average shares outstanding - basic</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,567</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,597</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,566</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,589</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income per share - diluted</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.16</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.12</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.08</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.25</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average shares outstanding - diluted</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,825</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,664</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,809</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,645</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
</TABLE>

<FONT SIZE=3><P>See accompanying notes to consolidated financial statements.</P>
</FONT><FONT FACE="Courier">
<P>&nbsp;</P>
<P>&nbsp;</P>
</FONT><B><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Amounts in thousands)<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Unaudited)</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&nbsp;&nbsp;&nbsp;/---Three months ended---/&nbsp;&nbsp;&nbsp;&nbsp;/--Six Months Ended--/</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=696>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February</B></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February</B></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">29, 2000</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">26, 1999</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">29, 2000</B></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">26, 1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash flows from operating activities:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$625</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$435</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$295</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$911</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Adjustments to reconcile net income to net cash</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;used in operating activities:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">334</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">154</P>
<P ALIGN="RIGHT"></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">680</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">609</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred compensation and retirement plans</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">46</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">30</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">202</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(94)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(138)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">42</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">169</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(21)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in current assets and liabilities:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in accounts receivable, net</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(2,244)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(3,976)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(4,628)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(4,060)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) decrease in inventories</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(245)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">298</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(128)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">816</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in prepaid expenses</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">235</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(44)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">272</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(219)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in accounts payable and</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and accrued expenses</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(162)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,859</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,027</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,802</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in income taxes payable</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,033</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(727)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;421</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(885)</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net cash (used in) provided by operating activities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(336)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;74</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,052)</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;41</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash flows from investing activities:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of available-for-sale securities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(68)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(180)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(147)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(180)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of held-to-maturity securities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(19,622)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(6,468)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(28,364)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(12,895)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of available-for-sale securities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">98</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">147</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">145</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">147</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maturities of held-to-maturity securities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">18,839</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,312</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">27,713</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">12,758</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, equipment and improvements</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;(285)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(371)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;(396)</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(512)  </U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net cash (used in) provided by investing activities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,038)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;440</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,049)</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(682)</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash flows from financing activities:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of shares under employee</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stock purchase plan</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">81</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">36</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">81</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from stock options</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">184</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">36</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">184</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">36</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of treasury stock</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(6)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">--</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(179)</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">--</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net cash provided by financing activities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">178</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">117</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">41</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">117</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Effects of exchange rate on cash</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(314)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(183)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(338)</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(109)       </U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net increase (decrease) in cash</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(1,510)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">448</P>
<P ALIGN="RIGHT"></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(2,398)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(633)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash and cash equivalents, beginning of period</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">2,861</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">2,832</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,749</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,913</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash and cash equivalents, end of period</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,351</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$3,280</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,351</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$3,280</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Supplementary cash flow information:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income taxes, net</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$333</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$2,527</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$626</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$2,602</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$63</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">  $47</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$80</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">   $47</U></FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3><P>See accompanying notes to consolidated financial statements.</P>
<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P>
</B></FONT><FONT FACE="Courier">
</FONT><FONT SIZE=3><P>The accompanying 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 financial statements, which are prepared in accordance with generally accepted accounting principles, have been
condensed or omitted.  Accordingly, the Company believes that although the disclosures are adequate to make the information presented not misleading, the 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 August 27, 1999.</P>

<OL>

<B><LI>Change in Fiscal Year:</LI>

</B><P>The Company has changed its fiscal year from the last Friday in August in Fiscal 1999 to the last day in August for Fiscal 2000.  In Fiscal 1999 each quarter was 13 weeks in length ending on the last Friday of the quarter.  Beginning in Fiscal 2000
each quarter will end on the last day of the last month of the quarter.  Fiscal Year 2000 will be 53 weeks in length compared to 52 weeks in Fiscal 1999.  The effect of the change is not expected to have a material effect on the Company's financial
statements for Fiscal 2000. </P>

<B><LI>Reclassifications:</LI>
</B>
<P>Certain reclassifications were made to the 1999 financial statements to conform to the 2000 presentation.</P>

<B><LI>Inventories:</LI>
</B>
<P>Inventories consist of the following (in thousands):</P>
</FONT>
<P ALIGN="LEFT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=351>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 29,</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">August 27,</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">2000</U></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">1999</U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Raw materials</FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$1,641</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT FACE="Courier"><P>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=3>$1,422</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Work in process</FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;268</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;227</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Finished goods</FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>4,024</U></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>4,156</U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>$5,933</U></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>$5,805</U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>
</P>

<FONT SIZE=3>
<B><LI>Stock Repurchase:</LI>
</B>
<P>On October 9, 1986 the Board of Directors authorized the Company to repurchase up to 344,892 additional shares of the outstanding stock at market price.  On September 28, 1995 the Board of Directors authorized the Company to repurchase up to 199,650
additional shares of the outstanding stock at market price.  The timing of stock purchases are made at the discretion of management.  On October 19, 1999 the Board of Directors authorized the Company to repurchase up to 200,000 additional shares of the
outstanding stock at market price.  At February 29, 2000, the Company has repurchased 482,823 or 65% of the total shares authorized to be purchased.  </P>

<P>&nbsp;</P>
<B><LI>Earnings Per Share Reconciliation</LI>
</B>
<P>The reconciliation of the numerators and denominators of the basic and diluted net income (loss) per common share computations for the Company's reported net income (loss) is as follows:</P>
<P>                                                                   /-------Three months ended------/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/------Six months ended-----/</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=655>
<TR><TD WIDTH="39%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 29,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 26,</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 29,</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 26,</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>(In thousands, except per share</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Basic net income</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$625</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$435</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$295</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$911</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Weighted average number of shares</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Outstanding - basic</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,567</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,597</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,566</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,589</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Incremental shares from the assumed</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">     </U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">    </U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercise of stock options</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">258</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">67</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">243</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">56</U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Weighted average number of shares</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Outstanding - dilutive</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,825</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,664</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,809</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,645</U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Net income per share - basic</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.18</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.12</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.08</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.25</U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Net income per share - diluted</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.16</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.12</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.08</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.25</U></FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P>&nbsp;</P>
<B><LI>Comprehensive Income:</LI>
</B>
<P>The Company's comprehensive income (loss) is as follows:</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/----Three months ended-----/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/------Six months ended--------/</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=649>
<TR><TD WIDTH="40%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 29,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 26,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 29,</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 26,</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$625</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$435</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$295</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$911</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>Other comprehensive income (loss):</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Foreign translation adjustment</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(293)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(184)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(391)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(109)</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>   Unrealized gain (loss) on investments</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;(21)</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;(43)      </U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;53   </U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;28</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total comprehensive income (loss)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$311</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$208</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">($43)</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$830</U></FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P>&nbsp;</P>
<P>&nbsp;</P>
<B><LI>Segment Information:</LI>

</B><P>The following table presents certain operating segment information (Amounts in thousands).</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=649>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">System and</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Service</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">E-Commerce</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Other</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Systems</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Integration</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Software</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Software</U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Total</U></FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3><P>Quarter ended 2/29/00</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Net Sales</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$3,988</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$13,264</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$480</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$628</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$18,360</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Profit(loss) from operations</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">486</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,183</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(523)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,150</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">21,720</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">15,436</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">556</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,877</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">39,589</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">66</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">212</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">7</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">285</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Depreciation</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">180</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">82</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">7</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">272</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3><P>Quarter ended 2/26/99</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Net Sales</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$4,376</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$10,252</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$220</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$737</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$15,585</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Profit(loss) from operations</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">125</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">509</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(17)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">91</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">708</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">22,432</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">15,807</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">293</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,211</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">40,743</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">279</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">84</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">371</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Depreciation</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">75</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">43</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">10</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">130</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3>
<P>Six months ended 2/29/00</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Net Sales</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$6,247</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$25,889</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$887</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,071</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$34,094</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Profit(loss) from operations</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">19</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,731</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(1,117)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(220)</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">413</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">21,720</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">15,436</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">556</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,877</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">39,589</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">128</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">243</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">8</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">17</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">396</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Depreciation</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">377</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">158</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">5</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">17</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">557</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3><P>Six months ended 2/26/99</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Net Sales</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$9,420</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$16,136</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$346</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,198</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$27,100</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Profit(loss) from operations</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">976</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">880</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(254)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">67</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,669</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">22,432</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">15,807</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">293</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,211</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">40,743</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">319</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">177</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">12</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">512</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Depreciation</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">349</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">151</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">20</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">523</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P>Each segment is broken down by related business activities, which cross different business operations.  These segments are based on the different customer activity of the Company.  CSPI has four major segments: systems which includes company
manufactured hardware products, systems integration and services which includes maintenance of the Company and other systems sold and integration and sale of third party hardware products and services, E-Commerce software, and other software products
which are developed by the Company.</P>

<P>Profit from operations is sales less cost of sales, engineering and development, selling, general and administrative expenses but is not affected by either non-operating charges/income or by income taxes.  Non operating charges/income consists
principally of investment income and interest expense.</P>

<P>In calculating profit from operations for individual operating segments, substantial administration expenses incurred at the operating level are common to more than one segment and are allocated based on a sales basis except for those related to
E-Commerce software which is allocated based upon employee headcount.</P>

<P>All intercompany transactions have been eliminated.</P>

<P>Identifiable assets include deferred income tax assets and other financial instruments managed by the Company.  Capital expenditures common to more than one segment are allocated on a sales basis.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<B><LI>Subsequent Event:</LI></OL>

</B>
<P>On March 2, 2000 the Company made a $2 million investment in exchange for two million shares of VerticalBuyer, Inc. which represents a 11.7% ownership interest.  VerticalBuyer is a privately held holding company for a network of Internet sites formed
to capitalize on business to business e-commerce opportunities.  VerticalBuyer commenced initial operations in February 2000 in the global commercial lighting and electrical markets estimated to be approximately a $140 billion market.  The Company has
warrants to purchase an additional three million shares for $1 each.  The warrants are callable at $.001 per warrant.  The first 1,000,000 warrants are callable thirty days after the effective date of the registration.  The second 1,000,000 warrants are
callable thirty days after the stock has traded at $2 per share for twenty consecutive days.  The third 1,000,000 warrants are callable after the stock has traded at $3 per share for twenty consecutive days.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SIGNATURES</P>
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<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>

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<B><U><P>CSP Inc.</B></U><BR>
(Registrant)</P>

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<P>Date:  April 17, 2000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>By:  /s/  Alexander R. Lupinetti</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;Chief Executive Officer,<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;President and Chairman</P>

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<P>Date:  April 17, 2000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>By:  /s/  Gary W. Levine</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;Vice President of Finance,<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;Chief Financial Officer</P>

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