Gary Levine
Chief Financial Officer 
CSP Inc.
Tel: (978) 663-7598 ext. 1200 
Fax: (978) 663- 0150
glevine@cspi.com

For the second quarter of fiscal 2003 ended March 31, 2003, CSP Inc. reported sales of $6.4 million compared with $6.2 million for the year-earlier quarter. The Company reported a loss of $204,000, or $(0.06) per share, compared with a net loss of $907,000, or $(0.26) per share, for the second quarter of fiscal 2002. The significant year-over-year decrease in our net loss is primarily attributable to other income related to foreign exchange as well as our expense control initiatives.

For the six-month period ended March 31, 2003, the Company reported a net loss of $599,000 or $(0.17) per share. This compares with net loss of $1.9 million or $(.53) per share, for the six months ended March 31, 2002. The Company reported sales of $14.6 million for the six months ended March 31, 2003, compared with sales of $12.7 million in the year-earlier six-month period.

Comments on the Second-Quarter

Stated Chairman, President and Chief Executive Officer, Alexander R. Lupinetti, "We reported a slight increase in revenues on a year-over-year basis amid an environment of constrained IT spending and continued delays in certain defense programs. At the same time, we saw interest build in our IT services solutions, and our two newest multicomputer products were deployed in important military applications."

"During the quarter, MODCOMP completed a key services and integration project for the state of Florida as part of our services strategy," continued Lupinetti. "MODCOMP converted an existing -- SCO-UNIX-based system running an Informix® database to an open architecture running the Linux operating system with mySQL database. MODCOMP also delivered 35 Linux-based SCADA (Supervisory Control and Data Acquisition) systems as part of the project."

Continued Lupinetti, "At our MultiComputer Division, we announced the first deliveries of our 2842 MultiComputers, which are high-performance processing modules for the 2000 SERIES and FastCluster product lines. Hundreds of 2842 MultiComputers can be networked together to provide a state-of-the-art solution for very large database needs as well as for complex signal processing applications requiring large system memory. For example, our Linux-based FastCluster MultiComputer Systems with 2842 modules are being deployed in a Sonar Accoustic Post Processing System (SAPPS) by the Royal Swedish Navy. The SAPPS is being used to analyze the acoustic and electromagnetic signatures of ships and submarines."

"Also during the quarter, our new Jumpgate-I multicomputer product was acquired by the U.S. military for advanced software-defined radio applications," said Lupinetti. "The Jumpgate-I, which was launched in December, 2002, is a new multicomputer board design with an architecture that is ideally suited for applications that demand high density packaging, powerful I/O capabilities and superior computational throughput."

Outlook

"Visibility is very limited due to the weak global economy and uncertain geopolitical climate. Nonetheless, we remain encouraged by our robust pipeline for MODCOMP's network security and IT outsourcing services and solutions. We also are hopeful that customer interest in our Linux-based multicomputer systems will translate into sustainable long-term growth for that business. Armed with a strong balance sheet that includes $14.6 million in cash and short-term investments, we plan to invest in our technologies and position the company for growth when the economy rebounds," concluded Lupinetti.

Safe Harbor Statement
The Company wishes to take advantage of the 'Safe Harbor' provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-looking under the Act. Such forward-looking statements may include, but are not limited to, statements regarding limited visibility, the robust pipeline for MODCOMP's network security and IT outsourcing solutions, expectations for the CSP's future MultiComputer sales, investment in the Company's technologies, and the long- term growth of the Company. The Company cautions that numerous factors could cause actual results to differ materially from any forward-looking statements made by the Company. Such risks include general economic conditions, market factors, competitive factors and pricing pressures, and others described in the Company's filings with the SEC. Please refer to the section on forward- looking statements included in the Company's filings with the Securities and Exchange Commission.