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

For the first quarter of fiscal 2004, sales increased to $11.8 million from $8.2 million for the year-earlier quarter. CSP Inc. narrowed its net loss to $(228,000), or $(0.06) per share, compared with a net loss of $(395,000), or $(0.11) per share, for the first quarter of fiscal 2003.

Chairman, President and CEO Alexander R. Lupinetti said "Our acquisition of Technisource Hardware last year coincided with a rebound in corporate IT spending in the United States, resulting in a significant increase in MODCOMP’s first-quarter sales compared with a year ago. In addition, sales at our MultiComputer Division were up modestly from the first quarter last year, reflecting initial activity associated with our previously announced contract from Lockheed Martin Systems Integration to produce 2000 SERIES MultiComputers for the design and development phase of the next-generation radar in the U.S. Navy’s E-2C Hawkeye aircraft."

"Our MultiComputer R&D initiatives, which focus on defense-related opportunities for our Linux-based technologies, generated exciting new products in the first quarter as we introduced the StarGate I/O Blade," said Lupinetti. "The initial release of a new generation of CSP MultiComputers, the StarGate I/O Blade expands the Company’s offerings in software-defined radio, radar, sonar and surveillance DSP by providing the high-speed data acquisition capabilities and rapid execution times necessary for the complex signal processing demands of these applications."

"The MODCOMP Division launched a significant new product during the first quarter as well," said Lupinetti. ":OpenXport™, our next-generation message broker server software, is a logical follow-up to our highly successful Xport product, which currently is deployed by some of the world’s largest financial services companies, including Barclays and JP Morgan Chase. Initial customer response to OpenXport has been most encouraging, and we expect this additional open-source software initiative to complement and reinforce MODCOMP’s core competency in low-cost, open-source enterprise integration solutions."

"CSP Inc. is off to a solid start in fiscal 2004," concluded Lupinetti. "The MultiComputer Division is benefiting from a significant defense contract win, and launching the StarGate I/O Blade secures our standing as a leader in open-source technologies for complex digital signal processing in defense applications. In addition, we expect our relationship with Lockheed Martin to generate incremental revenue for the Company as we go forward in fiscal 2004. At the same time, MODCOMP’s ability to offer cutting-edge integration solutions, superb customer support, and best-of-breed hardware from leading OEMs positions us to continue winning new business as corporate demand increases for IT solutions. As a result, we are maintaining a cautiously optimistic stance as we look ahead to the remainder of the fiscal year."

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, the company’s ability to generate incremental revenues associated with its contract with Lockheed Martin for the U.S. Navy’s E-2C Hawkeye aircraft, the company’s success in attracting customers for its StarGate I/O Blade and OpenXport products, the company’s ability to generate increased sales as a result of potential acceleration in corporate IT investment, the ability to capitalize on opportunities created by the trend toward open systems in IT, and improved prospects for sales growth. 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.

About CSP Inc.
Based in Billerica, Massachusetts and founded in 1968, CSP Inc. (NASDAQ: CSPI) and its subsidiaries develop and market Internet software for e-commerce solutions, image processing software, network management integration services, and high-performance computer systems. The MultiComputer Division supplies high-performance Linux cluster systems for a broad array of defense applications, including radar, sonar and surveillance signal processing. The Company’s MODCOMP, Inc. subsidiary, founded in 1970, is a leading provider of Internet software solutions and systems integration. MODCOMP works with third parties to develop customized application solutions in the e-commerce markets and has offices in the U.S., U.K., and Germany.

More information about CSP is available on the company's Web site at www.cspi.com

To learn more about MODCOMP, Inc., consult www.modcomp.com

More information about Scanalytics, Inc., is available at www.scanalytics.com

Also see the Financial Table, Consolidated statements of operations and Consolidated balance sheet.