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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000356037-01-500012.txt : 20010411
<SEC-HEADER>0000356037-01-500012.hdr.sgml : 20010411
ACCESSION NUMBER:		0000356037-01-500012
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010228
FILED AS OF DATE:		20010410

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CSP INC /MA/
		CENTRAL INDEX KEY:			0000356037
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
		IRS NUMBER:				042441294
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		
		SEC FILE NUMBER:	000-10843
		FILM NUMBER:		1599092

	BUSINESS ADDRESS:	
		STREET 1:		43 MANNING ROAD
		CITY:			BILLERICA
		STATE:			MA
		ZIP:			01821
		BUSINESS PHONE:		9786637598

	MAIL ADDRESS:	
		STREET 1:		43 MANNING ROAD
		CITY:			BILLERICA
		STATE:			MA
		ZIP:			01821
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>feb0110q.htm
<DESCRIPTION>FORM 10Q QTR ENDED 2/28/01
<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</P>
</B></FONT><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 28, 2001&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><B><U><FONT SIZE=5>CSP Inc.</B></U><BR>
<B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;
</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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>04-2441294</B></U><BR>
<B>&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>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&nbsp;<U>43 Manning Road, 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</B></U><BR>
<B>&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>

<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;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 10, 2001</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, 512,906 shares</B> </P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=555>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=26><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=26>
<B><FONT SIZE=3><P ALIGN="CENTER">INDEX</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=26><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P ALIGN="CENTER">PAGE</B></FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<B><U><FONT SIZE=3><P ALIGN="CENTER">NUMBER</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>PART I.</B></FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>FINANCIAL INFORMATION:</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>Item 1.</B></FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>Financial Statements</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Consolidated Balance Sheets</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">3</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Consolidated Statements of Operations</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">4</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Consolidated Statements of Comprehensive Income (Loss)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">5</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Consolidated Statements of Cash Flows</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">6</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Notes to Consolidated Financial Statements</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">7</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>Item 2.</B></FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>Management's Discussion and Analysis of Financial</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;Condition and Results of Operations</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">13</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>PART II.</B></FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>OTHER INFORMATION:</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Item 4.</FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Submission of Matters to  a vote of Security Holders</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">19</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Item 6.</FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Exhibits &amp; Reports on Form 8-K</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">19</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3>
<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 28,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">August 31,</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">2001</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">2000</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>
<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;&nbsp;<U>Assets</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;</B></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">$1,912</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$3,923</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">13,563</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,150</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">5,704</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6,841</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">7,300</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">5,793</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">1,554</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;Other current assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">867</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">800</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">30,900</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">27,611</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">1,501</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,201</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">633</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,471</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">--</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">1,122</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,122</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">846</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">939</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">1,549</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,549</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">4,150</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">6,244</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">$36,551</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$37,056</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>
<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;<U>Liabilities and Shareholders' Equity</B></U></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">$5,379</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$5,189</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">919</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">     813</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">6,298</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6,002</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">3,813</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,608</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 4,078</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 4,069 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">41</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">11,215</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">11,070</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">19,647</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;19,962</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">(1,602)</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,079)</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">29,301</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">29,994</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Less treasury stock, at cost, 571 and 491 shares</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">2,861</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">2,548</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">26,440</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">27,446</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">$36,551</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$37,056</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><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--//-For the six months ended--/</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=702>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 28,</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 29,</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 28,</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 29,</B></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2001</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">2001</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2000</B></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Sales:</B></FONT></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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Systems</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$2,213</FONT></TD>
<TD WIDTH="14%" 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">$4,784</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$6,247</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Service and system integration</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6,073</FONT></TD>
<TD WIDTH="14%" 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">13,831</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">25,889</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;E-Commerce software</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">619</FONT></TD>
<TD WIDTH="14%" 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">1,236</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">887</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other software</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;447</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;628    </U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;923</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">    1,071</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total sales</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,352</FONT></TD>
<TD WIDTH="14%" 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">20,774</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">34,094</FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cost of Sales:</B></FONT></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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Systems</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,066</FONT></TD>
<TD WIDTH="14%" 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">2,267</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,627</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Service and system integration</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">5,126</FONT></TD>
<TD WIDTH="14%" 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">11,737</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">21,508</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;E-Commerce software</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">294</FONT></TD>
<TD WIDTH="14%" 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">502</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">445</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other software</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;106</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;207    </U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;248</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">    370</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of sales</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">6,592</U></FONT></TD>
<TD WIDTH="14%" 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">14,754</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">24,950</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Gross profit</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,760</FONT></TD>
<TD WIDTH="14%" 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">6,020</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,144</FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Operating expenses:</B></FONT></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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Engineering and development</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">892</FONT></TD>
<TD WIDTH="14%" 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">1,966</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,050</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Selling, general &amp; administration</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">2,371</U></FONT></TD>
<TD WIDTH="14%" 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">4,691</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">6,681</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,263</U></FONT></TD>
<TD WIDTH="14%" 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">6,657</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">8,731</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Operating profit (loss)</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(503)</FONT></TD>
<TD WIDTH="14%" 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">(637)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">413</FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Other income(expense):</B></FONT></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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Loss on disposal of French operation</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(12)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(339)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Gain on sale of property</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,545</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,545</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other income</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;78</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp; 64</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;157</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;    142</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense), net</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,611</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">64</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,363</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">142</FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Income before income taxes</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,108</FONT></TD>
<TD WIDTH="14%" 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">726</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">555</FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Income tax expense </FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">493</U></FONT></TD>
<TD WIDTH="14%" 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">323</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT"> 260</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" 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="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$615</U></FONT></TD>
<TD WIDTH="14%" 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">$403</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$295</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income per share - basic</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.17</U></FONT></TD>
<TD WIDTH="14%" 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">$0.11</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.08</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average shares outstanding - basic</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,517</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;3,567</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,558</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;3,566</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income per share - diluted</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.17</U></FONT></TD>
<TD WIDTH="14%" 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">$0.11</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.08</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average shares outstanding - diluted</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,518</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;3,825</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,560</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;3,809</U></FONT></TD>
</TR>
<TR><TD WIDTH="43%" 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>
<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">
</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;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;CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)<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;(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;(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;<B>/--For the three months ended--/ /--For the six months ended--/</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=702>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 28,</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 29,</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 28,</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">February 29,</B></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2001</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2000</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2001</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2000</B></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$615</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$625</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$403</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$295</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Other comprehensive income (loss):</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange translation</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">307</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(293)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">195</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(391)<BR>
</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain (loss) on investments, net</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(674)</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(21)</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(718)</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;53</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Comprehensive income (loss)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$248</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$311</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">($120)</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">($43)</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=3 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP" COLSPAN=5 HEIGHT=17>
<FONT SIZE=3><P>See accompanying notes to consolidated financial statements.</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=4 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" COLSPAN=2 HEIGHT=17><P></P></TD>
</TR>
</TABLE>

<FONT SIZE=3>
</FONT><FONT FACE="Courier"><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;&nbsp;&nbsp;&nbsp;&nbsp;<B>/-For the three months--/&nbsp;&nbsp;/--For the six months--/</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ended&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;ended</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=696>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" 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="12%" 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>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">28, 2001</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">29, 2000</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">28, 2001</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">29, 2000</B></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash flows from operating activities:</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$615</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$625</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$403</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$295</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Adjustments to reconcile net income to net cash</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;Used in operating activities:</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">262</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">334</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">517</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">680</P>
<P ALIGN="RIGHT"></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of property, net</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(1,545)</FONT></TD>
<TD WIDTH="12%" 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">(1,318)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred compensation and retirement plans</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">66</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">46</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">205</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">30</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">51</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">42</FONT></TD>
<TD WIDTH="12%" 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">(21)</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in current assets and liabilities:</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) decrease in accounts receivable, net</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(237)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(2,244)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,137</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(4,628)</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase) in inventories</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(1,281)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(245)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(1,507)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(128)</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in other current assets</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">25</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">235</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(67)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">272</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in accounts payable</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and accrued expenses</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,397</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(162)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">190</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,027</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase in income taxes payable</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;300</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;1,033  </U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;106</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;  421</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net cash provided by (used) in operating activities</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;(347)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;(336)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(334)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,052)</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash flows from investing activities:</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of available-for-sale securities</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(82)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(68)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(160)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(147)</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of held-to-maturity securities</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(16,112)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(19,622)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(26,423)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(28,364)</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of available-for-sale securities</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">85</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">98</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">217</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">145</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maturities of held-to-maturity securities</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">14,224</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">18,839</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">21,905</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">27,713</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of property, net of expenses</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,097</FONT></TD>
<TD WIDTH="12%" 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">3,097</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, equipment and improvements</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;(51)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;(285)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;(340)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;(396)</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net cash used in investing activities</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,161</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,038)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,704)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,049)</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash flows from financing activities:</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from stock options</FONT></TD>
<TD WIDTH="12%" 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">184</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">37</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">184</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax benefit related to exercise of stock options</FONT></TD>
<TD WIDTH="12%" 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">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">102</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of shares under employee</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stock purchase plan</FONT></TD>
<TD WIDTH="12%" 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">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">36</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of treasury stock</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;(127)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;(313)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(179)</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net cash provided by (used in) financing activities</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(127)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">178</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(168)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">41</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Effects of exchange rate on cash</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;307</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;(314)  </U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;195</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">  (338)</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net increase (decrease) in cash</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">994</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(1,510)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(2,011)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(2,398)</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash and cash equivalents, beginning of period</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;918</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;2,861</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;3,923</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,749</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash and cash equivalents, end of period</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,912</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,351</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,912</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,351</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Supplementary cash flow information:</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income taxes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$302</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$333</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$494</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$626</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;$97</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;63</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;$97</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">  $80</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;Non-cash distribution of dividends </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$718</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=6><P></P></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 31, 2000.</P>
<B>
<P>1.&nbsp;&nbsp;&nbsp;Basis of Presentation and Principles of Consolidation:</P>

</B><P>The Company's financial statements include of the accounts of its wholly owned subsidiaries which consist of CSP MultiComputer Division, MODCOMP Inc. and Scanalytics, Inc.  CSP MultiComputer Division operations are included in the Systems segment.
 Scanaltyics Inc. operations are included in the Other Software segment.  MODCOMP Inc. operations are included in each of the segments based on the nature of the activity performed by MODCOMP. </P>

<B><P>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reclassifications:</P>
</B>
<P>Certain reclassifications were made to the 2000 financial statements to conform to the 2001 presentation.</P>

<B><P>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue Recognition:</P>
</B>
<P>CSPI sells its software offerings and recognizes its revenue as follow:</P>

<P>The Company recognizes revenue from the sale of software products in accordance with the AICPA Statement of Position (&quot;SOP&quot;) 97-2, as amended by SOP 98-9.  The Company recognizes revenue from software license sales when all services,
including customization and training, are delivered.</P>

<P>For software licenses sold separately without modification and training, revenue is recognized upon delivery.</P>

<P>The Company generally recognizes revenue from software licenses when persuasive evidence of an arrangement exists, delivery of the product has occurred, no significant Company obligations with regard to customization or implementation remain, the fee
is fixed or determinable, and collectiblity is probable.  If collectibility is not considered probable, revenue is recognized when the fee becomes due and payable by the customer.</P>

<P>Revenue derived from consulting services rendered in connection with the integration of third party hardware and third party software is generally recognized when the services have been completed.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<B><P>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments:</P>
</B>
<P>At February 28, 2001 and August 31, 2000, investments consisted of the following:</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=655>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2>
<P>(Amounts in thousands)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Contractual Maturities</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Amortized Cost</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">Gross Unrealized Gains</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">Gross Unrealized Losses</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Fair Value</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<B><FONT SIZE=2><P>February 28, 2001</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Marketable equity securities</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">--</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$602</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$89</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$691</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Bonds and municipal revenue notes</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">3/2/01-5/1/02</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">6,554</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">6,554</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Money market funds and commercial paper</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">3/9/01-3/20/01</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">6,618</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">6.618</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Investment in Vertical Buyer</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">--</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">1,282</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">(1,122)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">160</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>U.S. treasury bills</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">8/15/02-2/15/08</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;173</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;173</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>   Total</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$15,229</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$89</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">($1,122)</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$14,196</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<B><FONT SIZE=2><P>August 31, 2000</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Marketable equity securities</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">--</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$659</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$135</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$794</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Bonds and municipal revenue notes</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">12/1/00-5/1/02</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">4,473</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">4,473</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Money market funds and commercial paper</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">9/8/00-10/3/00</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">4,183</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">4,183</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Investment in Vertical Buyer</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">--</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">2,000</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">2,000</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>U.S. treasury bills</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">8/15/02-2/15/08</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;171</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;171</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>   Total</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$11,486</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$135</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$11,621</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">Short-term</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">Long-term</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">Total</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<B><FONT SIZE=2><P>February 28, 2001</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Held-to-maturity</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$12,872</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$473</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$13,345</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Available-for-sale</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;691</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;160</U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;851</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$13,563</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$633</U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$14,196</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">Short-term</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">Long-term</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4>
<FONT SIZE=2><P ALIGN="CENTER">Total</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<B><FONT SIZE=2><P>August 31, 2000</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4><P></P></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Held-to-maturity</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$8,356</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$2,471</FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4>
<FONT SIZE=2><P ALIGN="RIGHT">$10,827</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4>
<FONT SIZE=2><P>Available-for-sale</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;794</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;794</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$9,150</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$2,471</U></FONT></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4>
<U><FONT SIZE=2><P ALIGN="RIGHT">$11,621</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=4><P></P></TD>
<TD WIDTH="22%" VALIGN="TOP" COLSPAN=2 HEIGHT=4><P></P></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P>Net unrealized gains (losses) on available-for-sale investments are reported as a separate component of stockholders' equity until realized.  Gross unrealized losses increased by $1,124,000 and $1,168,000 for the three and six-month periods ended
February 28, 2001.</P>
<P>Assets of $876,000 and $925,000 at February 28, 2001 and August 31, 2000, respectively, which are held in a rabbi trust and generally are available only to pay certain retirement benefits of a former employee, are included in the above table.</P>
<P>During fiscal year 2000, the Company invested $2 million in Vertical Buyer Inc., which is a holding company for a network of internet sites formed to capitalize on business to business e-commerce opportunities initially in the global commercial
lighting and electrical markets. On October 11, 2000, the Company distributed 1 share of Vertical Buyer Inc. common stock for every 5 shares of CSPI stock owned for shareholders of record on July 7, 2000.  A total of 717,657 shares valued at  $717,657
were distributed.  The Company is accounting for this investment under the cost method based on its current ownership percentage.</P>

<B><P>5.&nbsp;&nbsp;&nbsp;&nbsp;Inventories:</P>
</B>
<P>Inventories consist of the following (in thousands):</P>
</FONT>
<P ALIGN="LEFT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=318>
<TR><TD WIDTH="37%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="33%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">February 28</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">August 31</FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="33%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>2001</U></FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>2000</U></FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="33%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">
<FONT SIZE=3><P>Raw materials</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$2,796  </FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Courier"><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=3>$2,340</FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">
<FONT SIZE=3><P>Work in process</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,666</FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">732</FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">
<FONT SIZE=3><P>Finished goods</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;2,838</U></FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>2,721</U></FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="33%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>$7,300</U></FONT></TD>
<TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>$5,793</U></FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="33%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="33%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>
</P>

<B><FONT SIZE=3>
<P>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Repurchase:</P>
</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 28, 2001, the Company has repurchased 570,875 or 77% of the total shares authorized to be purchased.  </P>
</FONT><B>
<P>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Earnings Per Share Reconciliation:</P>
</B><FONT FACE="Courier">
</FONT><FONT SIZE=3><P>The reconciliation of the numerators and denominators of the basic and diluted net income per common share computations for the Company's reported net income 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/--Three Months Ended---//---Six Months Ended-----/</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=661>
<TR><TD WIDTH="46%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 28,</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P>February 29,</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">February 28,</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P>February 29,</FONT></TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=3><P>(In thousands, except per share amounts)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2001</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2001</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=3><P>Basic net income</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$615</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$625</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$403</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$295</U></FONT></TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=3><P>Weighted average number of shares outstanding</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- basic</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,517</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,567</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,558</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,566</FONT></TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=3><P>Incremental shares from the assumed  exercise</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; of stock options</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">    258</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">     243</U></FONT></TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=3><P>Weighted average number of shares  outstanding</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- dilutive</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,518</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,825</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,560</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,809</U></FONT></TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP">
<FONT SIZE=3><P>Net income per share - basic</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.17</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.18</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.11</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.08</U></FONT></TD>
</TR>
<TR><TD WIDTH="46%" VALIGN="TOP" HEIGHT=18>
<FONT SIZE=3><P>Net income per share - diluted</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=18>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.17</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=18>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.16</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=18>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.11</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=18>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.08</U></FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P>Options to purchase 381,026 shares of common stock were outstanding during the three and six-month periods ended February 28, 2001, respectively, but were not included in the calculation of diluted net income per share because the option exercise
price was greater than the average market price of the common shares during those periods.  </P>
<B>
<P>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated Other Comprehensive Income:</P>
</B>
<P>The components of Accumulated Other Comprehensive Income are 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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)</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Unrealized</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Accumulated</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Gain(loss)</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Foreign</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Other</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">On</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Translation</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Comprehensive</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Investments</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Adjustment</U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Income</U></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>Balance August 27, 1999</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$168</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">($624)</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">($456)</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Change in period</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;74</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;(98)</U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;(24)</U></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>Balance November 30, 1999</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">242</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(722)</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(480)</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Change in period</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(21)</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(293)</U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(314)</U></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>Balance February 29, 2000</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$221</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">($1,015)</U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">($794)</U></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>Balance August 31, 2000</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$135</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">($1,214)</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">($1,079)</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Change in period</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;(44)</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(112)</U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(156)</U></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>Balance November 30, 2000</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;91</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(1,326)</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(1,235)</FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Change in period</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;(674)</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;307</U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;(367)</U></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">
<FONT SIZE=3><P>Balance February 28, 2001</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">($583)</U></FONT></TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">($1,019)</U></FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">($1,602)</U></FONT></TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="41%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<B><FONT SIZE=3>
<P>&nbsp;</P>
<P>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Segment Information:</P>

</B><P>The following table presents certain operating segment information (Amounts in thousands).</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<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="15%" 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="15%" 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="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Total</U></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="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3><P>Quarter Ended 2/28/01</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="15%" 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">$2,213</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$6,073</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$619</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$447</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$9,352</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">(342)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">81</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">(22)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(503)</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">22,115</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">11,310</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,111</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,565</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">36,101</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">33</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">16</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">--</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">51</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">95</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">104</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">10</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">7</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">216</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="15%" VALIGN="TOP">&nbsp;</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="15%" 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="15%" 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="15%" 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="15%" 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="15%" 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="15%" 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="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3><P>Six Months Ended 2/28/01</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="15%" 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">$4,784</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$13,831</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,236</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$923</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$20,774</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">(524)</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">315</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(380)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(48)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(637)</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">22,115</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">11,310</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,111</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,565</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">36,101</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">274</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">55</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">6</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">340</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">215</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">178</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">16</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">15</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">424</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="15%" 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="15%" 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="15%" 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="15%" 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="15%" 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="15%" 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="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">557</FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P>Each segment is broken down by related business activities, which crosses 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 loss on disposal of French operation, gain on sale of property, investment income and interest expense.</P>

<P>In calculating profit from operations for individual operating segments, sales and administration expenses incurred at the operating level for CSP and Scanalytics are allocated to the Systems and Other Software segments, respectively.  Sales and
administrative expenses incurred at the operating level for MODCOMP are allocated to the E-Commerce segment based upon employee headcount and the remaining balance is allocated to the Systems and System and Service Integration segments based upon sales
revenue.</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>

<B><P>10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sale of French Operation:</P>
</B></FONT><FONT FACE="Courier">
</FONT><FONT SIZE=3><P>In November 2000, the Company sold the remaining assets of MODCOMP's France subsidiary to Eurilogic and incurred additional expenses for the disposal of assets, primarily leasehold improvements and severance costs totaling a net
loss on disposal of $339,000 for the six months ended February 28, 2001.  The Company has sublet the French facility but remains contingently liable for the remaining lease obligations which amount to approximately $1.1 million and extend through March
10, 2005. </P>

<P>&nbsp;</P>
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<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;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL<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;CONDITION AND
RESULTS OF OPERATIONS</P>
</B>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A summary of the period to period changes in principal items included in the Statements of Operations is shown in Schedules I and II (pages 20 and 21).</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The discussion below contains certain forward-looking statements related to, among others, but not limited to, statements concerning future revenues and future business plans.  Actual results may vary
from those contained in such forward-looking statements.</P>

<B><I><P>Results of Operations - 2001 Compared to 2000</P>

</FONT><P>Revenue</P>
</B></I><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSPI considers its products to be in four segment classifications.  Each segment is broken down by related business activities, which crosses 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, System and Service Integration which includes maintenance of the Company and other systems
sold and integration and sale of third party hardware products and services, E-Commerce software which includes WAP66&trade; and ViewMax&reg;, and Other Software products which are developed by the Company primarily in the Scanalytics operation.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table details the Company's sales by operating segment for the three and six months ended February 28, 2001 and February 29, 2000.</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=600>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">February 28,</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">February 29,</B></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><U><FONT SIZE=3><P>Sales Revenue:</B></U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2001</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2000</B></U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><I><FONT SIZE=3><P>For the three months ended:</B></I></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=10><P></P></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=3><P>Operating Segment:</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Systems</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$2,213</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">24%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$3,988</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">22%</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>System and Service Integration</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6,073</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">65%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">13,264</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">72%</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>E-Commerce Software</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">619</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">480</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3%</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Other Software</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;447</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;5%</U></FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;628</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;3%</U></FONT></TD>
<TD WIDTH="7%" 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="17%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$9,352</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$18,360</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><I><FONT SIZE=3><P>For the six months ended:</B></I></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=10><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=10><P></P></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<B><FONT SIZE=3><P>Operating Segment:</B></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Systems</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$4,784</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">23%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$6,247</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">18%</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>System and Service Integration</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">13,831</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">67%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">25,889</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">76%</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>E-Commerce Software</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,236</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">887</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3%</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Other Software</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;923</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;4%</U></FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;1,071</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;3%</U></FONT></TD>
<TD WIDTH="7%" 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="17%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$20,774</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$34,094</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company reported net sales of $9.4 million and $20.8 million for the three and six months ended February 28, 2001 compared to $18.4 million and $34.1 million for the same periods of
fiscal 2000.  This represented a decrease of 49% or $9.0 million for the three-month period and 39% or $13.3 million for the six-month period.  The reduction in revenue was due to the following factors: reduction in system and service integration sales
which represents 80% and 90% of the total decline for the three and six month periods compared to the last fiscal year comparative periods, sale of MODCOMP France which represents 24% or $2.2 million of the total decline for the three month period and 30%
or $4.0 million of the total decline for the six month period and the decline in foreign currency exchange rates versus the U.S. dollar which represents 7% or $287,000 for the three month period and 11% or $1.4 million for the six month period. &nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;System sales amounted to $2.2 million and $4.8 million (24% and 23% of total sales) for the three and six month periods ended February 28, 2001, representing a decline of 44% and 23%, respectively.  The
decline in system sales was due primarily to the decline in sales of the older Supercard product line not being offset by the shipment of the newer Series 2000 products. The SuperCard products are sold only to existing customers.  The SuperCard and Series
2000 product lines accounted for 9% and 75% of systems sales for the three months ended February 28, 2001 compared to 65% and 9% for the prior comparable quarter, and 11% and 63% of system sales for the six months ended February 28, 2001 compared to 48%
and 23%, respectively, for the prior comparable six month period.  The CSP MultiComputer Division introduced its newest product; a Linux based FastCluster&trade; system.  The system was designed to meet the high performance computing requirements of
mission critical military application and highly scalable data mining applications.  FastCluster&trade; is powered by the newest PowerPC processors, including those incorporating Altivec&trade; technology from Motorola.  Systems may be configured with 16
to 1,000 processor nodes interconnected with high speed Myrinet switches from Myricom, Inc.  The Company continues to ship its real-time process control classic product line to existing customers, which represented 14% and 24% of the three and six month
period system sales compared to 22% and 20% for the prior comparable periods. </P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales for System and Service Integration amounted to $6.1 million and $13.8 million (65% and 67% of total sales) for the three and six month periods ended February 28, 2001 a decrease from the prior
comparable periods of $7.2 million or 54% for the three months and $12.1 million or 47% for the six months.  The decrease was due to three factors: a decline in large system sales by MODCOMP Germany during the first quarter of fiscal 2001, during the
period ended November 30, 1999 there was a large non-recurring shipment to a telecommunications company, the change in foreign currency rates which represented 7% of the reduction, and the erosion of the real-time computer service business due to
customers switching from our products to newer technologies.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E-commerce software sales increased 29% and 39% for the three and six-month periods ended February 28, 2001 although it represented 6% of total sales for those periods compared to 3% for the prior
comparable periods.  This segment's growth has centered on s ViewMax&reg; Web-to-Host software and WAP66&trade; wireless access protocol portal server products. During the six-month period the Company had sales successes at Cornell University which
selected ViewMax to provide purchasing department employees with web access to information stored on the university's mainframe system.  MdinTouch chose ViewMax to provide physicians and other health professionals with secure and instant web access for
time-critical patient information using desktop computers or handheld devices such as a WAP phone or Palm VII PDA.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other software sales represented 5% and 4% of total sales for the three and six months ended February 28, 2001.  Other software sales revenue decreased 29% and 14% from the prior comparable three and six
month periods.  The other software sales are primarily from Scanalytics.  </P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;European sales account for 55% and 61% of total sales for the three and six months ended February 28, 2001 compared to 69% and 73% for the prior comparable periods.  European sales were primarily from
MODCOMP's subsidiaries in Germany and the United Kingdom.  The decrease from the prior year was primarily due to the large outsourcing orders in Germany in fiscal year 2000.  </P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table details the Company's sales by geographic region for the three and six months ended February 28, 2001 and February 29, 2000:</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;/-------For the three months ended--------/&nbsp;&nbsp;/---------For the six months
ended---------/</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=610>
<TR><TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">% of</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">% of</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">% of</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">% of</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2/28/01</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Total</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2/29/00</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Total</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2/28/01</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Total</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2/29/00</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Total</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P>Europe</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$5,096</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">55%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$12,661</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">69%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$12,736</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">61%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$24,792</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">73%</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P>North America</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4,214</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">45%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">5,698</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">31%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">7,906</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">38%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">9,152</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">27%</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P>Far East</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;42</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;132</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;150</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Totals</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$9,352</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$18,360</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$20,774</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$34,094</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>
</CENTER></P>

<B><I><P>Cost of Sales</P>
</B></I><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales as a percentage of revenue remained stable at 70% for the three months ended February 28, 2001 compared to the prior year comparable quarter and decreased to 71% for
the six months ended February 28, 2001 compared to 73% for the comparable six month period.  The decrease in cost of sales resulted primarily from the significant revenue decline in the system and service integration segment that has higher costs due to
the large component of third party products.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table details the Company's sales and gross margin by operating segment for the three and six months ended February 28, 2001 and February 29, 2000 (amounts in thousands):</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=589>
<TR><TD WIDTH="28%" VALIGN="TOP">
<B><U><FONT SIZE=3>
<P>&nbsp;</P>
<P>&nbsp;</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Systems</B></U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">System and Service<U> Integration</B></U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">E-</P>
<P ALIGN="CENTER">Commerce</P>
<U><P ALIGN="CENTER">Software</B></U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER"></P>
</U><P ALIGN="CENTER">Other</P>
<U><P ALIGN="CENTER">Software</B></U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Total</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<B><U><FONT SIZE=3><P>Qtr Ended 2/28/01</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$2,213</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$6,073</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$619</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$447</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$9,352</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Cost of sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">1,066</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">5,126</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">294</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">106</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">6,592</U></FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Gross margin $</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,147</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">947</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">325</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">341</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,760</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Gross margin %</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">52%</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">16%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">52%</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">76%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">30%</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<B><U><FONT SIZE=3><P>Qtr Ended 2/29/00</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$3,988</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$13,264</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$480</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$628</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$18,360</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Cost of sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">1,522</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">10,748</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">284</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">207</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">12,761</U></FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Gross margin $</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,466</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,516</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">196</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">421</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">5,599</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Gross margin %</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">62%</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">19%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">41%</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">67%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">30%</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<B><U><FONT SIZE=3><P>YTD Ended 2/28/01</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$4,784</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$13,831</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,236</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$923</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$20,774</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Cost of sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">2,267</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">11,737</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">502</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">248</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">14,754</U></FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Gross margin $</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,517</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,094</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">734</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">675</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6,020</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Gross margin %</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">53%</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">15%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">59%</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">73%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">29%</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<B><U><FONT SIZE=3><P>YTD Ended 2/29/00</B></U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$6,247</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$25,889</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$887</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,071</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$34,094</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Cost of sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">2,627</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">21,508</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">445</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">370</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">24,950</U></FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=13><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=13><P></P></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Gross margin $</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,620</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4,381</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">442</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">701</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">9,144</FONT></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Gross margin %</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">58%</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">17%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">50%</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">65%</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">27%</FONT></TD>
</TR>
</TABLE>

<B><I>
<P>Engineering and Development</P>
</B></I><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Engineering and development decreased 7% and 4% for the three and six months ended February 28, 2001 compared to the same periods of fiscal 2000.  The engineering and development
decrease was primarily due to staff reductions both in the systems and other software segments.  The increases in the system and service integration expense related to outside consultants and the addition of staff to assist in software development and bug
fixes.</P>

<P>&#9;The following table details engineering and development expenses by operating segment and subsidiary for the three and six month periods ended February 28, 2001 and February 29, 2000 (amounts in thousands):</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;/----------Three months ended--------/&nbsp;&nbsp;&nbsp;&nbsp;/----------Six months ended ---------/</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=672>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Feb 28</B></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Feb 29</B></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Feb 28</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Feb 29</B></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<B><U><FONT SIZE=3><P>Engineering &amp; Development Expense:</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2001</B></U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2000</B></U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2001</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2000</B></U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<B><FONT SIZE=3><P>By Operating Segment:</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>Systems</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$432</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">49%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$550</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">58%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$994</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">51%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,076</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">52%</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>System and Service Integration</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">192</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">21%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">105</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">11%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">500</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">25%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">302</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">15%</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>E-Commerce Software</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">166</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">19%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">177</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">18%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">272</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">14%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">409</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">20%</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>Other Software</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">102</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">11%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">125</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">13%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">200</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">10%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">263</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">13%</U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>     Total</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$892</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$957</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,966</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$2,050</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<B><I><P>Selling, General and Administrative</P>
</B></I><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expense decreased $1.1 million or 32% to $2.4 million for the quarter ended February 28, 2001 compared to $3.5 million for the comparable quarter
of fiscal 2000.  Selling, general and administrative expense decreased $2.0 million or 30% to $4.7 million for the six months ended February 28, 2001 compared to $6.7 million for the comparable period of fiscal 2000.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth selling, general and administrative expense by Company subsidiary for the three and six months ended February 28, 2001 and February 29, 2000:</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;/---------Three months ended--------/&nbsp; &nbsp;/----------Six months ended ---------/</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=673>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Feb 28</B></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Feb 29</B></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Feb 28</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">Feb 29</B></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><FONT SIZE=3><P ALIGN="CENTER">% of</B></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<B><U><FONT SIZE=3><P>S, G &amp; A expense</B></U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2001</B></U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2000</B></U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2001</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">2000</B></U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><U><FONT SIZE=3><P ALIGN="CENTER">Total</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<B><FONT SIZE=3><P>By Operating Segment:</B></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>Systems</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,057</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">45%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,430</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">41%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$2,047</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">44%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$2,525</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">38%</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>System and Service Integration</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">674</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">28%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,228</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">35%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,279</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">27%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,348</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">35%</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>E-Commerce Software</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">379</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">16%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">542</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">16%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">842</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">18%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,150</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">17%</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>Other Software</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;261</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;11%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;292</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;8%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;523</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;11%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">658</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;10%</U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>     Total</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$2,371</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$3,492</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$4,691</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$6,681</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<B><FONT SIZE=3><P>By Subsidiary:</B></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>MODCOMP</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,101</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">46%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,850</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">53%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$2,229</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">48%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$3,644</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">54%</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>CSP MultiComputer Division</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,010</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">43%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,350</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">39%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,941</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">41%</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,379</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">36%</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>Scanalytics</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;260</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">11%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">292</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">   8%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;521</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">11%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">658</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">10%</U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT SIZE=3><P>     Total</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$2,371</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$3,492</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$4,691</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$6,681</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MODCOMP's selling, general and administrative expense for the three and six months ended February 28, 2001 decreased $749,000 or 40% and $1.4 million or 39%, respectively, from the
comparable periods of the prior year.  Approximately $441,000 and $796,000 of the three and six month period decline, respectively, is attributable to the disposal of the French operation.  MODCOMP France's selling, general and administrative expense for
the three and six months ended February 28, 2001 was $0 and $36,000, respectively, compared to $441,000 and $832,000 for the same periods of fiscal year 2000.  In addition MODCOMP Germany's selling, general and administrative expenses for the three and
six months ended February 28, 2001 declined approximately $214,000 or 31% and $324,000 or 29% from the prior comparable periods.  MODCOMP America's expense for the three months ended February 28, 2001 increased $44,000 or 9%.  MODCOMP America's expense
for the six months ended February 28, 2001 declined approximately $64,000 or 6% which was due to reductions in personnel.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP MultiComputer division selling, general and administrative expense for the three and six months ended February 28, 2001 decreased $340,000 or 25% and $438,000 or 18% from the prior comparable
periods.  Approximately $192,000 of the decline for the three and six month periods relates to a reduction in bonus expense.  Approximately $44,000 and $109,000 of this decrease for the three and six month periods ended February 28, 2001 is due to a
reduction in labor expenses related to attrition. During the quarter CSP Inc. moved its operation to a new facility. The cost of the move was approximately $25,000 which was expensed in the current year.  Approximately  $2,000 and $53,000 of the three and
six month decrease is due to a decline in outside consulting fees related to the restructure of the MODCOMP foreign operation completed in fiscal year 2000. Approximately $44,000 and $87,000 of the three and six month decline relates to a reduction in
depreciation expense as a result of an increase in fully depreciated assets.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Scanalytics, Inc. selling, general and administrative expense for the three and six months ended February 28, 2001 decreased $32,000 or 11% and $137,000 or 21% from the prior year.  This decline is
mainly attributable to a decrease in labor expense due to a reduction in headcount.</P>

</FONT><B><I><P>Other Income/Expenses</P>
</B></I><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income/expenses, exclusive of the loss on disposal of French operation and the gain on sale of property, increased 21% and 11% for the three and six month periods ended
February 28, 2001 compared to the prior comparable periods.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 2000, the Company sold substantially all of the assets and transferred the personnel of MODCOMP's French subsidiary to France-based-Eurilogic.  A loss on disposal of French operation of $240,000
was recognized as other expense in the fourth quarter of fiscal year 2000.  In November 2000, the Company sold the remaining assets of the French operation to Eurilogic and incurred additional expenses for the disposal of assets, primarily leasehold
improvements and severance costs of $327,000 for the period ended November 30, 2000.  In the three-month period ended February 28, 2001 additional expenses of $12,000 for legal and statutory expenses which exceed the estimated accruals were recorded
during the quarter.  The decision to sell the assets and transfer its personnel was based on the fact that the French legacy business no longer represented a good strategic fit with CSPI and had incurred a loss.  The sale allowed CSPI to exit the business
without incurring restructuring costs that could have exceeded $2 million.  </P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company sold its Massachusetts headquarters for $3.3 million during the quarter and netted a pretax gain of approximately $1.5 million. </P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has an effective tax rate of 45%.  The Company's effective tax rate has declined from 47% for last fiscal year, due in part to the reduction in the Germany statutory rate and MODCOMP's
reorganization.  </P>
<B><I>
</FONT><P>Liquidity and Capital Resources</P>
</B></I><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Working capital at February 28, 2001 increased to $24.2 million compared to $21.6 million at August 31, 2000.  </P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's consolidated capital expenditures were $51,000 and $340,000 for the three and six months ended February 28, 2001 compared to $285,000 and $396,000 in the prior comparable periods.  The
majority of the expenditures for the current year relate to leasehold improvements at the new corporate facility.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management believes that the Company's available cash and cash generated from operations and investments will be sufficient to provide for the Company's working capital and capital expenditure
requirements for the foreseeable future.</P>

<P>&nbsp;</P>
</FONT><B><I><P>Inflation and Changing Prices</P>
</B></I><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management does not believe that inflation and changing prices had significant impact on sales, revenues or income from continued operations during the three and six-month periods
ended February 28, 2001 or February 29, 2000.  There is no assurance that the Company's business will not be materially and adversely affected by inflation and changing prices in the future.</P>
</FONT><B><I>
<P>Factors That May Affect Future Performance</P>
</B></I><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This document contains forward-looking statements based on current expectations that involve a number of risks and uncertainties.  The factors that could cause actual results to
differ materially include the following: general economic conditions and growth rates in the peripheral and computer products, biological imaging software, and the instruments and machine code readers industries; competitive factors and pricing pressures;
changes in product mix; the timely development and acceptance of new products; inventory risks due to shifts in market demand; and component constraints and shortages.  In response to competitive pressures or new product introductions, the Company may
take certain pricing or marketing actions that could adversely affect the Company's operating results.  In addition, changes in the mix of old products may cause fluctuations in the Company's gross margin.  Due to the potential quarterly fluctuations in
operating results, the Company believes that quarter-to-quarter comparisons of its results of operations are not necessarily an indicator of future performance.</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Markets for the Company's products are characterized by rapidly changing technology, new product introductions and short product life cycles.  These changes can adversely affect the business and
operating results.  The Company's success will depend upon its ability to enhance its existing products and to develop and introduce, on a timely and cost effective basis, new products that keep pace with technological developments and address increasing
customer requirements.  The inability to meet these demands could adversely affect the Company's business and operating results.</P>
<B><I>
</B></I><P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<B><P>PART II.  OTHER INFORMATION</P>

<P>&nbsp;</P>
<P>Item 4.  Submissions of Matters to a vote of Security Holders</P>

</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<B><P>Item 6.  Exhibit and Reports on Form 8-K</P>
</B><DIR>
<DIR>

<P>(a)&nbsp;&nbsp;Reports on Form -K</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Form 8-K Other Events dated February 13, 2001</P></DIR>
</DIR>

<P>    </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>
</B>
<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>

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

<P>&nbsp;</P>
<P>Date:  April 10, 2001&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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;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;President
and Chairman</P>

<P>&nbsp;</P>
<P>Date:  April 10, 2001&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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;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;Chief
Financial Officer</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SCHEDULE I<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;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;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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PERCENTAGE OF SALES</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;(Dollars 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;(Unaudited)</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;</B>/---------For the
three months ended---------/&nbsp;&nbsp;/-------For the six months ended------/</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=667>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Feb 28</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Feb 29</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Feb 28</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Feb 29</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2001</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2001</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>Sales</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$9,352</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$18,360</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$20,774</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$34,094</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">100%</U></FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>Cost of sales</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6,592</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">70%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">12,761</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">70%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">14,754</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">71%</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">24,950</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">73%</FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>Engineering and </FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Development</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">892</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">9%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">957</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">5%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,966</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">9%</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,050</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6%</FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>Selling, general and</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administrative</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">2,371</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">25%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,492</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">19%</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">4,691</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">23%</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">6,681</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">20%</U></FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total costs and</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">9,855</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">105%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">17,210</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">94%</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">21,411</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">103%</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">33,681</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">99%</U></FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>Operating income (loss)</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(503)</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(5%)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,150</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(637)</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(3%)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">413</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1%</FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>Other income (expense)</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">1,611</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">17%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">64</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">--%</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">1,363</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">7%</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">142</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">--%</U></FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>Income before income taxes</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,108</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">12%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,214</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">7%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">726</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3%</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">555</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2%</FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>Income tax expense</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">493</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">5%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">589</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3%</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">323</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">2%</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">260</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">1%</U></FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$615</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">7%</U></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$625</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3%</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$403</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">2%</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$295</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">1%</U></FONT></TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="25%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SCHEDULE II<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;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;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;PERIOD TO PERIOD DOLLAR AND PERCENTAGE CHANGE</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;(Dollars 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;(Unaudited)</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;</B>/--For the three months ended--/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;    &nbsp;&nbsp;/--For the six months ended--/<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;February 28, 2001 vs. February 29, 2000 </P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=657>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">$</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">$</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Change</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Change</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Change</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Change</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Sales</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">($9,008)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(49%)</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">($13,320)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(39%)</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Cost of sales</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(6,169)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(48%)</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(10,196)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(41%)</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Engineering and </FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;development</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(65)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(7%)</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(84)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(34%)</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Selling, general and</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;administrative</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,121)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(32%)</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,990)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(30%)</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total costs and</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;expenses</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(7,355)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(43%)</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(12,270)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(36%)</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Operating profit (loss)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(1,653)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(144%)</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(1,050)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(254%)</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Other income (expense)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">1,547</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">2417%</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">1,221</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">860%</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Income before</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;income taxes</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(106)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(9%)</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">171</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">31%</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Income tax expense</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(96)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(16%)</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">63</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">24%</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(10)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(2%)</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">108</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">37%</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="28%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

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