What changed in this filing

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Item 9A. Controls and Procedures

2025-03-11 compared with 2024-03-05 · 375 added, 174 removed, 710 unchanged (44% of the section changed)

2 unchanged sentences

As required by Rule 13a-15(b) under the Exchange Act, our management carried out an evaluation of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures”, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Annual Report.

This evaluation was carried out under the supervision and with the participation of various members of our management, including our Company’s Chief Executive Officer (principal executive officer), Vice President and Chief Financial Officer (principal financial officer) and Vice President and Chief Accounting Officer (principal accounting officer).

Based upon that evaluation, the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this Annual Report, to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

This evaluation was carried out under the supervision and with the participation of various members of our management, including our Company’s Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer).

Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this Annual Report, to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act.

Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, and effected by the Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP.

Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by the Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP.

Internal control over financial reporting includes maintaining records in reasonable detail that accurately and fairly reflect our transactions and disposition of assets;

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and providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control

over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that, owing to changes in conditions, controls may become inadequate, or that the degree of compliance with policies or procedures may deteriorate.

As previously disclosed in this Annual Report on Form 10-K, on October 6, 2023 we completed the acquisition of Data Solutions.

As previously disclosed in this Annual Report on Form 10-K, on July 31, 2024 we completed the acquisition of DSS.

SEC guidance permits management to omit an assessment of an acquired business’ internal control over financial reporting from management’s assessment of internal control over financial reporting for a period not to exceed one year from date of acquisition.

Management has excluded from its assessment of internal control over financial reporting the operations and related assets of Data Solutions, which the Company began consolidating in October 2023.

The operations and related assets of Data Solutions were included in the consolidated financial statements of the Company and constituted 17% and 2% of total assets and net assets, respectively as of December 31, 2023, and 4% and 6% of consolidated net sales and net income for the year ended December 31, 2023.

Management, with the participation of our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

Based on this evaluation, the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that the Company’s internal control over financial reporting was effective as of December 31, 2023.

The Company's independent registered public accounting firm, BDO USA, P.C., has audited the effectiveness of the Company's internal control over financial reporting as of December 31, 2023, as stated in their report, which is included herein.

Management has excluded from its assessment of internal control over financial reporting the operations and related assets of DSS, which the Company began consolidating in August 2024.

The operations and related assets of DSS were included in the consolidated financial statements of the Company and cons tituted 3% and 1% of total assets and net assets, respectively as of December 31, 2024 , and 3% and 4% of consolidated net sales and net income for the year ended December 31, 2024.

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting was effective as of December 31, 2024.

The Company's independent registered public accounting firm, Deloitte & Touche LLP, has audited the effectiveness of the Company's internal control over financial reporting as of December 31, 2024, as stated in their report, which is included herein.

Changes in Internal Control over Financial Reporting .

As required by Rule 13a-15(d) under the Exchange Act, our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, has evaluated our internal control over financial reporting to determine whether any changes to our internal control over financial reporting occurred during the fourth quarter of the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As required by Rule 13a-15(d) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated our internal control over financial reporting to determine whether any changes to our internal control over financial reporting occurred during the fourth quarter of the year ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Based on that evaluation, no such changes to our internal control over financial reporting occurred during the fourth quarter of the year ended December 31, 2024.

Other Information

During the three months ended December 31, 2023, n o n e of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K.

During the three months ended December 31, 2024 , none of our directors or officers (as defined in Rule 16a - 1 (f) of the Exchange Act) informed us of the adoption or termination of a “Rule 10b5 - 1 trading arrangement,” as defined in Item 408 of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Directors, Executive Officers and Corporate Governance

The information required hereunder, with the exception of the information relating to the Company’s Code of Ethical Conduct that is presented in Part I under the heading “Available Information,” is incorporated by reference herein from our Definitive Proxy Statement for the 2023 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A

within 120 days of the end of the fiscal year to which this Annual Report relates (the “Definitive Proxy Statement”) under the sections captioned “Election of Directors” and “Corporate Governance.”

The information required hereunder, with the exception of the information relating to the Company’s Code of Ethics and Business Conduct that is presented in Part I under the heading “Available Information,” is incorporated by reference herein from our Definitive Proxy Statement for the 2025 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A within 120 days of the end of the fiscal year to which this Annual Report relates (the “Definitive Proxy Statement”) under the sections captioned “Election of Directors” and “Corporate Governance.”

Executive Compensation

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Exhibits, Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report:

The following documents are filed as part of this Annual Report:

Consolidated Financial Statements (See Index to Consolidated Financial Statements on page F-1 of this Annual Report);

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October 10, 2023

Membership Purchase Agreement, dated July 31, 2024, by and among Climb Global Solutions DSS, LLC, The Douglas Stewart Company, Inc., Robert Bernier and Chuck Hulan.

August 6, 2024

Form of Amended and Restated Certificate of Incorporation of the Company.

July 18, 1995

Certificate of Amendment of Restated Certificate of Incorporation of the Company.

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Description of Securities .

March 5, 2024

Credit Agreement, dated May 18, 2023, by and among the Company, Programmer’s Paradise, Inc., Climb Channel Solutions, Inc., Techxtend, Inc., ISP International Software Partners, Inc., Interwork Technologies Inc., Climb Global Solutions Holdings UK LTD, Climb Global Solutions LTD, the other Loan Parties party thereto, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.

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Form of Officer and Director Indemnification Agreement.

2012 Stock-Based Compensation Plan .

April 24, 2012

2021 Omnibus Incentive Plan.

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April 20, 2023

Letter from BDO USA, P.C.

dated March 7, 2024.

March 11, 2024

Climb Global Solutions, Inc.

Insider Trading Policy .

Subsidiaries of the Registrant.

Consent of BDO USA, P.C., an Independent Registered Public Accounting Firm.

Consent of Deloitte & Touche LLP, an Independent Registered Public Accounting Firm.

Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Dale Foster, the Chief Executive Officer of the Company .

Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Andrew Clark, the Vice President and Chief Financial Officer of the Company.

Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Matthew Sullivan, the Chief Financial Officer of the Company.

Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.

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Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Andrew Clark, the Vice President and Chief Financial Officer of the Company.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Matthew Sullivan, the Chief Financial Officer of the Company.

Clawback Policy For Incentive-Based Compensation.

March 5, 2024

Incorporated by Reference

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(Principal Executive Officer)

/s/ Andrew Clark

Vice President and Chief Financial Officer

March 5, 2024

(Principal Financial Officer)

/s/ Matthew Sullivan

Vice President and Chief Accounting Officer

Vice President and Chief Financial Officer

March 11, 2025

Matthew Sullivan

(Principal Accounting Officer)

/s/ Jeffrey Geygan

Chairman of the Board of Directors

March 5, 2024

Jeffrey Geygan

(Principal Financial and Accounting Officer)

/s/ John McCarthy

Chairman of the Board of Directors

March 11, 2025

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Index to Consolidated Financial Statements and Schedule

Reports of Independent Registered Public Accounting Firm ( BDO USA, P.C.

Woodbridge, New Jersey ;

Report of Independent Registered Public Accounting Firm ( Deloitte & Touche LLP ;

New York, New York ;

PCAOB ID# 34 )

Report of Independent Registered Public Accounting Firm (BDO USA, P.C.;

Woodbridge, New Jersey;

PCAOB ID#243) F-4

Consolidated Balance Sheets as of December 31, 2024 and 2023

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Schedule II — Valuation and Qualifying Accounts

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Climb Global Solutions, Inc.

Eatontown, New Jersey

R eport of Independent Registered Public Accounting Firm

To the stockholders and the Board of Directors of Climb Global Solutions, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Climb Global Solutions, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the years then ended, and the related notes and schedule and our report dated March 5, 2024 expressed an unqualified opinion thereon.

We have audited the internal control over financial reporting of Climb Global Solutions, Inc.

and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated March 11, 2025, expressed an unqualified opinion on those financial statements.

As described in Management Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Douglas Stewart Software & Services, Inc., which was acquired on July 31, 2024, and whose financial statements constitute 1 % and 3% of net and total assets, respectively, 3% of net sales, and 4% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2024.

Accordingly, our audit did not include the internal control over financial reporting at Douglas Stewart Software & Services, Inc.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Controls and Procedures.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

As indicated in the accompanying Item 9A, Controls and Procedures, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Data Solutions Holdings Limited, which was acquired on October 6, 2023 and was included in the consolidated balance sheet of the Company as of December 31, 2023, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the year then ended.

Data Solutions Holdings Limited constituted 17% and 2% of consolidated total assets and net assets, respectively, as of December 31, 2023, and 4% and 6% of consolidated net sales and net income, respectively, for the year then ended.

Management did not assess the effectiveness of internal control over financial reporting of Data Solutions Holdings Limited because of the timing of the acquisition.

Our audit of internal control over financial reporting of the Company did not include an evaluation of the internal control over financial reporting of Data Solutions Holdings Limited.

Definition and Limitations of Internal Control over Financial Reporting

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ BDO USA, P.C.

Woodbridge, New Jersey

/s/ Deloitte & Touche LLP

New York, New York

March 11, 2025

R eport of Independent Registered Public Accounting Firm

To the stockholders and the Board of Directors of Climb Global Solutions, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Climb Global Solutions, Inc.

and subsidiaries (the "Company") as of

December 31, 2024, the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows, for the year ended

December 31, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of

December 31, 2024, and the results of its operations and its cash flows for the year ended

December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of

December 31, 2024, based on criteria established in

Internal Control —

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated

March 11, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Acquisition — Douglas Stewart — Selection of Discount Rates and EBITDA Projections in relation to the Fair Value Valuation of Acquired Vendor Relationships Intangible Assets — Refer to Note 3 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of Douglas Stewart Software & Services, LLC (“DSS”) on July 31, 2024.

The Company accounted for the DSS acquisition as a business combination and, accordingly, allocated the purchase price to the assets acquired and liabilities assumed based on their respective fair values as of the date of acquisition.

The excess of the purchase consideration over the fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill.

Identifiable intangible assets acquired included vendor relationship intangible assets.

The method for determining relative fair value the vendor relationship assets requires management to make assumptions and estimates related to the selection of the discount rates and EBITDA margins.

Given the fair value determination of certain vendor-related intangible assets for the DSS business combination requires management to make significant assumptions and estimates related to the selection of the discount rates and EBITDA margins, performing audit procedures to evaluate the reasonableness of these assumptions and estimates required a high degree of auditor judgment and an increased extent of effort, including involvement of our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the fair value of the acquired vendor relationship intangible assets, specifically as they relate to the discount rates and EBITDA margins included the following, among others:

We tested the operating effectiveness of controls over the valuation of vendor relationship intangible assets, including management’s controls over discount rates and EBITDA margins.

We evaluated the reasonableness of the EBITDA margins:

We compared projections to historical results, actual results through year-end, relevant peer companies, and industry data.

We evaluated whether the projected EBITDA margins was consistent with evidence obtained during the audit.

With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates by:

Testing the source information underlying the determination of the discount rates and testing the mathematical accuracy of the calculation.

Developing a range of independent estimates and comparing those to the discount rates selected by management.

/s/ Deloitte & Touche LLP

New York, New York

March 11, 2025

We have served as the Company's auditor since 2024.

Report of Independent Registered Public Accounting Firm

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Climb Global Solutions, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the years then ended, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 5, 2024 expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheet of Climb Global Solutions, Inc.

(the “Company”) as of December 31, 2023, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the year then ended, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the year then ended , in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Acquisition – Valuation of Acquired Intangible Assets

As described in Note 3 to the Company’s consolidated financial statements, on October 6, 2023, the Company entered into a Share Purchase Agreement and purchased the entire share capital of Data Solutions Holdings Limited (“Data Solutions”) for an aggregate purchase price of approximately €15.0 million (equivalent to $15.9 million USD), subject to certain working capital and other adjustments, paid at closing plus a potential post-closing earn-out.

As a result of the acquisition, management determined the estimated fair value of the identifiable assets acquired and liabilities assumed at the acquisition date and recorded an $8.3 million intangible asset related to vendor relationships.

We identified the discount rate used in the determination of the fair value of acquired vendor relationships as a critical audit matter.

The principal considerations for our determination included the subjectivity and judgment required to determine the discount rate.

Auditing this element involved especially challenging auditor judgment due to the nature and extent of audit effort required to address this matter, including the extent of specialized skills and knowledge needed.

The primary procedures we performed to address this critical audit matter included:

● Utilizing personnel with specialized skills and knowledge to assist in developing an independent discount rate and comparing it to the rate used by the Company to evaluate the reasonableness of the discount rate used in the determination of the fair value of the acquired vendor relationships.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2018.

We served as the Company's auditor from 2018 through 2024.

Woodbridge, New Jersey

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Cash and cash equivalents

$ 29,778 $ 36,295

Accounts receivable, net of allowance for doubtful accounts of $ 588 and $ 709 , respectively

341,597 222,269

Inventory, net

Vendor prepayments and advances

Prepaid expenses and other current assets

Total current assets

380,696 269,060

Equipment and leasehold improvements, net

34,924 27,182

Other intangibles, net

36,550 26,930

Right-of-use assets, net

1 unchanged sentence

Deferred income tax assets

$ 469,179 $ 335,098

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accounts payable and accrued expenses

$ 370,397 $ 249,648

Lease liability, current portion

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Total current liabilities

371,611 250,638

Lease liability, net of current portion

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Total liabilities

378,591 260,328

Commitments and contingencies

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Additional paid-in capital

37,977 34,647

Treasury stock, at cost, 683,198 and 711,052 shares, respectively

( 13,337 ) ( 12,623 )

Retained earnings

68,787 53,215

Accumulated other comprehensive loss

( 2,892 ) ( 522 )

Total stockholders’ equity

90,588 74,770

Total liabilities and stockholders' equity

$ 469,179 $ 335,098

The accompanying notes are an integral part of the consolidated financial statements.

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Foreign currency transaction loss

Change in fair value of acquisition contingent consideration

Income before provision for income taxes

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(Amounts in thousands)

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustments

Other comprehensive income (loss)

Other comprehensive (loss) income

Comprehensive income

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Balance at January 1, 2023

5,284,500 53 32,715 806,068 ( 13,230 ) 43,904 ( 2,868 ) 60,574

— — — — — 12,323 — 12,323

Translation adjustment

— — — — — — 2,346 2,346

Dividends paid (per common share $ 0.68 )

— — — — — ( 3,012 ) — ( 3,012 )

Share-based compensation expense

— — 4,246 — — — — 4,246

Restricted stock grants (net of forfeitures)

— — ( 2,314 ) ( 132,526 ) 2,314 — — —

Treasury shares repurchased

— — — 37,510 ( 1,707 ) — — ( 1,707 )

Balance at December 31, 2023

5,284,500 53 34,647 711,052 ( 12,623 ) 53,215 ( 522 ) 74,770

— — — — — 18,610 — 18,610

Translation adjustment

— — — — — — ( 2,370 ) ( 2,370 )

Dividends paid (per common share $ 0.68 )

— — — — — ( 3,038 ) — ( 3,038 )

Share-based compensation expense

— — 4,201 — — — — 4,201

Restricted stock grants (net of forfeitures)

— — ( 871 ) ( 49,813 ) 871 — — —

Treasury shares repurchased

— — — 21,959 ( 1,585 ) — — ( 1,585 )

Balance at December 31, 2024

5,284,500 $ 53 $ 37,977 683,198 $ ( 13,337 ) $ 68,787 $ ( 2,892 ) $ 90,588

The accompanying notes are an integral part of the consolidated financial statements

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Amortization of right-of-use assets

Change in fair value of contingent earn-out consideration

Changes in operating assets and liabilities:

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Repayments of borrowings under credit facilities

Borrowings under term loan

Repayments of borrowings under term loan

Dividends paid

Contingent consideration

Payments of deferred financing costs

1 unchanged sentence

Effect of foreign exchange rate on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

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The “Distribution” segment distributes technical software to corporate resellers, value added resellers ("VARs"), consultants and systems integrators worldwide under the name “Climb Channel Solutions”.

The “Solutions” segment is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide under the names “Grey Matter”.

The “Solutions” segment is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide under the name “Grey Matter”.

Summary of Significant Accounting Policies

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Our valuation of acquired assets and assumed liabilities requires estimates, especially with respect to intangible assets that was derived using valuation techniques and models such as the income approach.

Such models require use of estimates including discount rates, and future expected revenue.

Such models require use of estimates including discount rates, and future expected revenue and earnings before interest, tax, depreciation and amortization.

The approach to estimating an initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected cash flows over the term of the contingent earn-out period, discounted for the period over which the initial contingent consideration is measured and expected volatility.

3 unchanged sentences

We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from our estimates.

Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities

Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.

As a result, during the measurement period, which may be up to one year from the business acquisition date, we record certain adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

13 unchanged sentences

A reconciliation of the numerators and denominators of the basic and diluted per share computations follows:

$ 18,610 $ 12,323

Less distributed and undistributed income allocated to participating securities

Net income attributable to common shareholders

18,148 12,000

Weighted average common shares (Basic)

1 unchanged sentence

Basic net income per share

$ 4.06 $ 2.72

Diluted net income per share

$ 4.06 $ 2.72

Cash Equivalents

9 unchanged sentences

Management determines the estimate of the allowance for expected credit losses by considering a number of factors, including historical experience, aging of the accounts receivable, as well as current market conditions and future forecasts of our customers’ ability to make payments for goods and services.

At the time of sale, we record an estimate for sales returns based on historical experience, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

If actual sales returns are greater than estimated by management, an additional returns allowance may be required as an offset to net sales.

Deferred Financing Costs

16 unchanged sentences

Financial Instruments

The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of December 31, 2023 and 2022, because of the relative short maturity of

these instruments.

The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of December 31, 2024 and 2023 , because of the relative short maturity of these instruments.

The Company’s accounts receivable-long-term is discounted to its present value at prevailing market rates at the time of sale which, approximates fair value as of December 31, 2024 and 2023 .

7 unchanged sentences

Capitalized software costs are amortized on a straight-line basis over the estimated useful life of the software.

At December 31, 2023 and 2022, the Company had unamortized software development costs of $ 6.9 million and $ 2.4 million, respectively, which are included in "Equipment and leasehold improvements" in the Company's Consolidated Balance Sheets.

As of December 31, 2023, this includes $ 6.9 million for an internal-use software project that amortization expense has not yet been recognized for as the internal-use software is not ready for its intended use.

As of December 31, 2022, there were $ 2.3 million in capitalized costs for this project.

At December 31, 2024 and 2023 , the Company had unamortized software development costs of $ 11.8 m illion an d $ 6.9 mi llion, respectively, which are included in “Equipment and leasehold improvements” in the Company's Consolidated Balance Sheets.

As of December 31, 2024 and 2023 , this includes $ 11.8 million an d $ 6.9 m illion of capitalized costs for an internal-use software project.

We test goodwill for impairment on an annual basis and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

24 unchanged sentences

The Company’s revenues primarily result from the sale of various technology products and services, including third -party products, third -party software and third -party maintenance, software support and services.

The Company recognizes revenue as control of the third-party products and third-party software is transferred to customers, which generally happens at the point of shipment or fulfilment and at the point that our customers and vendors accept the terms and conditions of the arrangement for third-party maintenance, software support and services.

The Company recognizes revenue when control of the third -party products and third -party software is transferred to customers, which generally happens at the point of shipment or fulfilment and at the point that our customers and vendors accept the terms and conditions of the arrangement for third -party maintenance, software support and services.

The Company has contracts with certain customers where the Company’s performance obligation is to arrange for the products or services to be provided by another party.

2 unchanged sentences

The Company allows its customers to return product for exchange or credit subject to certain limitations.

A liability is recorded at the time of sale for estimated product returns based upon historical experience and an asset is recognized for the amount expected to be recorded upon product return.

A liability is recorded at the time of sale for estimated product returns based upon historical experience, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets, and an asset is recognized for the amount expected to be recorded upon product return, which is included in prepaid expenses and other current assets on the Consolidated Balance Sheets.

If actual sales returns are greater than estimated by management, an additional returns allowance may be required as an offset to net sales.

The Company also provides rebates and other discounts to certain customers which are considered variable consideration.

6 unchanged sentences

Hardware and software products sold by the Company are generally delivered via shipment from the Company’s facilities, drop shipment directly from the vendor, or by electronic delivery of keys for software products.

The majority of the Company’s business involves shipments directly from its vendors to its customers, in these transactions, the Company is generally responsible for negotiating price both with the vendor and customer, payment to the vendor, establishing payment terms with the customer, product returns, and has risk of loss if the customer does not make payment.

As the principal with the customer, the Company recognizes revenue upon receiving notification from the vendor that the product

The majority of the Company’s business involves shipments directly from its vendors to its customers, in these transactions, the Company is generally responsible for negotiating price both with the vendor and customer, fulfillment of the order, payment to the vendor, establishing payment terms with the customer, product returns, and has risk of loss if the customer does not make payment.

As the principal with the customer, the Company recognizes revenue upon receiving notification from the vendor that the product was shipped.

Control of software products is deemed to have passed to the customer when they acquire the right to use or copy the software under license as substantially all product functionality is available to the customer at the time of sale.

51 unchanged sentences

The Company does not enter into foreign exchange contracts for trading purposes and the risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the Company minimizes by limiting its counterparties to major financial institutions.

The Company recognized an unrealized gain of less than $ 0.1 million on contracts outstanding as of December 31, 2024

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update No.

2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13").

ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.

Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.

In November 2019, FASB issued ASU 2019-10, “ Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Effective January 1, 2023, the Company adopted the new credit loss standard and it did not have an impact on the Company’s financial statements.

In July 2023, the FASB issued Accounting Standards Update 2023-03, “ Presentation of Financial Statements (Topic 205), Income Statement — Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), Compensation — Stock Compensation (Topic 718) .” This ASU amends various paragraphs in the accounting codification pursuant to the issuance of Commission Staff Accounting Bulletin (“SAB”) number 120.

The ASU provides clarifying guidance related to employee and non-employee share-based payment accounting, including guidance related to spring-loaded awards.

ASU 2023-03 was effective upon issuance.

The adoption of this ASU did not have an impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued Accounting Standards Update 2023-07 “Segment Reporting (Topic 280):

November 2024, the FASB issued ASU

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses

This ASU requires entities to disaggregate expense items in the notes to the financial statements and requires disclosure of specified information related to purchases of inventory, employee compensation, depreciation, and intangible asset amortization.

The amendments in this ASU are effective for annual periods beginning after

December 15, 2026, and interim periods beginning after

December 15, 2027.

Companies have the option to apply the guidance either on a retrospective or prospective basis, and early adoption is permitted.

The Company is currently evaluating the impact of the ASU on its condensed consolidated financial statements and related disclosures.

January 2025, the FASB issued ASU

01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic

Clarifying the Effective Date.

This ASU amends the effective date of ASU

03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after

December 15, 2026, and interim periods within annual reporting periods beginning after

December 15, 2027.

Early adoption of ASU

03 is permitted.

December 2023, the FASB issued ASU

Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures

Upon adoption of this ASU, the company will disclose specific new categories in its income tax rate reconciliation and provide additional information for reconciling items above a quantitative threshold.

The Company will also disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions in which income taxes paid were above a threshold.

The Company expects these amendments will

first be applied in

the company’s annual report on Form 10 -K for the fiscal year ending December 31, 2025, on a prospective basis.

In November 2023, the FASB issued Accounting Standards Update 2023 - 07 “

Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures

The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The Company will adopt the update in the first quarter of 2024 but does not expect there to be a material effect on our consolidated financial statements.

Acquisition of Data Solutions Holdings Limited

On October 6, 2023, the Company entered into a Share Purchase Agreement and purchased the entire share capital of Data Solutions Holdings Limited (“Data Solutions”) for an aggregate purchase price of approximately € 15.0 million (equivalent to $ 15.9 million USD), subject to certain working capital and other adjustments, paid at closing plus a potential post-closing earn-out.

The allocation of the purchase price was based on the estimated fair value of Data Solutions’ net tangible and identifiable intangible assets as of the date of the acquisition.

The transaction was accounted for under the purchase method of accounting.

The financial position and operating results of Data Solutions is included in the Company’s consolidated financial statements from the date of the acquisition.

The Company recorded net revenue for Data Solutions of approximately $ 14.3 million and net income of approximately $ 0.8 million during the year ended December 31, 2023.

The Company adopted this ASU in the first quarter of 2024 and upon adoption , the Company has disclosed significant segment expenses, the title and position of the CODM, and an explanation of how the reported measure of segment profit or loss is used by the CODM to assess segment performance and make resource allocation decisions.

Acquisition of Douglas Stewart Software & Services, LLC

On July 31, 2024, Climb Global Solutions DSS, LLC, a wholly-owned subsidiary of the Company, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) and purchased the entire share capital of Douglas Stewart Software & Services, LLC (“DSS”), a Florida limited liability company, for an aggregate purchase price of approximately $ 20.3 million (subject to certain adjustments) plus a potential post-closing earnout payment.

DSS distributes software to VARs and campus stores across North America in both the K- 12 and higher education markets, furthering the Company's reach into these markets.

The Purchase Agreement contains customary representations, warranties, covenants and indemnities.

The acquisition was funded utilizing cash from the Company’s balance sheet.

The financial position and operating results of DSS is included in the Company’s consolidated financial statements from the date of the acquisition.

The Company recorded net revenue for DSS of approximately $ 11.8 million and net income of approximate ly $ 0.8 mill ion during the year ended December 31, 2024 .

The impact of the acquisition’s preliminary purchase price allocations on the Company’s consolidated balance sheet and the acquisition date fair value of the total consideration transferred is depicted in the table below.

Due to the timing of the closing of the transaction in the fourth quarter of 2023, the Company has not yet completed its evaluation and determination of certain assets acquired and liabilities assumed, primarily the final valuation of goodwill and intangible assets and the final evaluation and assessment of income tax accounts;

Due to the timing of the closing of the transaction in the third quarter of 2024, the Company has not yet completed its evaluation and determination of certain assets acquired and liabilities assumed, primarily the final valuation of goodwill and intangible assets;

therefore, the final fair value of the assets acquired and liabilities assumed, which will be completed within the measurement period of up to one year from the acquisition date, may vary from the Company’s preliminary estimates.

(in thousands)

Accounts receivable

Other current assets

Equipment and leasehold improvements

Vendor relationships ( 10 -year weighted average useful life)

Accounts payable and other current liabilities

Deferred tax liability

Prepaid expenses and other current assets

Right-of-use asset

Accounts payable and accrued expenses

Lease liability, current portion

Lease liability, non-current portion

Intangibles - Vendor Relationships

(in thousands)

3 unchanged sentences

Total purchase consideration

Cash paid to sellers

Cash acquired in acquisition

Net cash paid for acquisition

Intangible assets are comprised of approximately $ 8.3 million of vendor relationships with a weighted average amortization period of 10 years, representing the expected period of benefits.

Intangible assets are comprised of approximately $ 13.6 m illion of vendor relationships with a weighted average amortization period of 11 years, representing the expected period of benefits.

Goodwill, which was allocated to the Distribution segment, is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce.

Goodwill recognized as a result of the acquisition is not deductible for income tax purposes.

The DSS transaction was structured as an asset acquisition and as such the goodwill resulting from the transaction will be deductible for income tax purposes.

The Company used the income approach to value the intangible assets, representing acquired vendor relationships.

The fair value measurements were primarily based on significant inputs that are not observable, which are categorized as a Level 3 measurement in the fair value hierarchy (See Note 14 – Fair Value Measurements).

Inputs used to value these intangible assets include the discount rate, projection of all future cash flows, long-term growth rates, vendor attrition rates and applicable income tax rates.

Inputs used to value these intangible assets include the discount rate, projection of all future cash flows, long-term growth rates in revenue and earnings before interest, tax, depreciation and amortization, vendor attrition rates and applicable income tax rates.

The excess purchase price recorded to goodwill primarily represents the future economic benefits the Company expects to achieve as a result of combining operations and expanding vendor relationships.

The purchase consideration includes approximately $ 2.2 million fair value for potential earn-out consideration if certain targets are achieved, payable in cash.

The earn-out liability is included in current liabilities as of December 31, 2023.

There were no material changes in fair value since the acquisition date.

The fair value earn-out measurement was primarily based on inputs that are not observable, which are categorized as a Level 3 measurement in the fair value hierarchy (See Note 14 – Fair Value Measurements), reflecting its assessment of the assumptions market participants

would use to value these liabilities.

The undiscounted payment of the earn-out can range from zero up to approximately $ 3.9 million and achievement is based on the post-acquisition results of Data Solutions.

In connection with the acquisition of Data Solutions on October 6, 2023, the Company acquired an invoice discounting facility (“IDF”) that is with recourse to the Company (See Note 8 – Credit Facilities).

The balance outstanding under the IDF at December 31, 2023 was $ 4.3 million, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

Acquisition related costs remained consistent at approximately $ 0.6 million for the years ended December 31, 2023 and 2022, respectively, which is reflected in the accompanying consolidated statements of earnings.

The costs incurred during the year ended December 31, 2023 related to the aforementioned Data Solutions acquisition, while the costs incurred during the prior period ended December 31, 2022 related to the Spinnakar Limited acquisition.

The purchase consideration includes approxim ately $ 1.7 mi llion fair value for potential earn-out consideration if certain targets are achieved by September 30, 2025, payable in cash.

As of December 31, 2024 , the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximate ly $ 1.9 m illion, with $ 0.1 m illion adjustment recognized within change in fair value of acquisition contingent consideration during the year ended December 31, 2024 .

The fair value earn-out measurement was primarily based on inputs th at are not observable, which are categorized as a Level 3 measurement in the fair value hierarchy (See Note 14 – Fair Value Measurements), reflecting its assessment of the assumptions market participants would use to value these liabilities.

The undiscounted payment of the earn-out can range from zero up to approximately $ 4.2 million and achievement is based on the post-acquisition results of DSS.

Acquisition of Data Solutions Holdings Limited

On October 6, 2023, the Company entered into a Share Purchase Agreement and purchased the entire share capital of Data Solutions Holdings Limited (“Data Solutions”) for an aggregate purchase price of approximately €15.0 million (equivalent to $ 15.9 million USD), subject to certain working capital and other adjustments, paid at closing plus a potential post-closing earn-out.

The allocation of the purchase price was based on the estimated fair value of Data Solutions’ net tangible and identifiable intangible assets as of the date of the acquisition.

The transaction was accounted for under the purchase method of accounting.

The purchase consideration included approximately $ 2.2 million fair value for potential earn-out consideration if certain targets are achieved, payable in cash.

During the year December 31, 2024 , the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximate ly $ 3.4 m illion, with $ 1.2 m illion adjustment recognized within change in fair value of acquisition contingent consideration during the year ended December 31, 2024 .

The earn-out was paid in cash during the year ended December 31, 2024 and no liability remains as of December 31, 2024 .

The earn-out liability was included in current liabilities as of December 31, 2023.

The Company also paid approximately $ 0.5 million for amounts that had been held back at the closing date of the transaction, which were included in payments for acquisitions, net of cash acquired within the cash flow statement for the year ended December 31, 2024 .

In connection with the acquisition of Data Solutions on October 6, 2023, the Company acquired an invoice discounting facility (“IDF”) that was with recourse to the Company (See Note 11 – Credit Facilities).

The balance outstanding under the IDF at December 31, 2024 was zero , as the Company terminated the IDF during the period, compared to $ 4.3 million at December 31, 2023, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

During the years ended December 31, 2024 and 2023 , the Company recognized acquisition related costs o f $ 2.3 mil lion and $ 0.6 million, respectively.

These acquisition related costs are reflected in the accompanying consolidated statements of earnings.

The costs incurred during the year ended December 31, 2024 related to our continued acquisition initiatives including the aforementioned DSS acquisition, while the costs incurred during the prior period ended December 31, 2023 related to the Data Solutions acquisition.

Pro Forma Results (unaudited)

The following unaudited pro forma financial information summarizes the results of operations for the years ended December 31, 2024 and 2023 as if the acquisition of DSS and Data Solutions has been completed as of the beginning of the years ended December 31, 2024 and 2023 , respectively.

The pro forma results are based upon certain assumptions and estimates, and they give effect to actual operating results prior to the acquisitions and adjustments to reflect income taxes at a rate consistent with the tax rates of the local jurisdictions.

As a result, these pro forma results do not necessarily represent results that would have occurred if the acquisitions had taken place on the basis assumed above, nor are they indicative of the results of future combined periods.

$ 480,420 $ 392,184

$ 20,735 $ 17,195

Goodwill and Other Intangible Assets

2 unchanged sentences

Balance January 1, 2023

$ 10,682 $ 8,281 $ 18,963

Goodwill acquired

7,143 — 7,143

Translation adjustments

833 243 1,076

Balance December 31, 2023

$ 18,658 $ 8,524 $ 27,182

Goodwill acquired

8,401 — 8,401

Translation adjustments

( 529 ) ( 130 ) ( 659 )

Balance December 31, 2024

$ 26,530 $ 8,394 $ 34,924

Information related to the Company’s other intangibles, net is as follows:

As of December 31, 2024

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Carrying Amount

Customer and vendor relationships

$ 43,805 $ 7,603 $ 36,202

$ 44,286 $ 7,736 $ 36,550

As of December 31, 2023

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Carrying Amount

Customer and vendor relationships

$ 30,968 $ 4,424 $ 26,544

$ 31,457 $ 4,527 $ 26,930

Customer relationships are amortized over thirteen years.

15 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease obligations

Weighted-average remaining lease term

Weighted-average remaining lease term (years)

Weighted-average discount rate

7 unchanged sentences

Equipment and leasehold improvements, net consist of the following:

$ 2,951 $ 3,195

Capitalized software

Leasehold improvements

17,866 13,179

Less accumulated depreciation and amortization

Depreciation expense relating to equipment, leasehold improvements and buildings, net was $ 0.6 million and $ 0.4 million during the years ended December 31, 2023 and 2022, respectively.

Amortization expense relating to capitalized software was $ 0.1 million and $ 0.4 million during the years ended December 31, 2023 and 2022.

( 5,013 ) ( 4,329 )

$ 12,853 $ 8,850

Depreciation expense relating to equipment, leasehold improvements and buildings, net was $ 0.9 m illion and $ 0.6 million during the years ended December 31, 2024 and 2023 , respectively.

Accounts receivable – long term, net consist of the following:

Total amount due from customer

$ 2,459 $ 1,637

unamortized discount

( 102 ) ( 12 )

current portion included in accounts receivable

( 1,183 ) ( 828 )

$ 1,174 $ 797

Accounts payable and accrued expenses consist of the following:

Trade accounts payable

$ 331,654 $ 218,717

Accrued expenses

17,179 22,903

Other accounts payable and accrued expenses

$ 370,397 $ 249,648

Accumulated other comprehensive loss consists of the following:

Foreign currency translation adjustments

$ ( 2,370 ) $ 2,346

Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the Consolidated Balance Sheets are as follows:

1 unchanged sentence

Accruals and reserves

$ 1,563 $ 574

Deferred rent credit

2 unchanged sentences

Deferred tax liabilities:

Accruals and reserves

Depreciation and amortization

( 5,855 ) ( 5,974 )

Total deferred tax liabilities

Net deferred tax (liabilities) asset

( 6,820 ) ( 5,974 )

Net deferred tax liabilities

$ ( 4,530 ) $ ( 5,230 )

The provision for income taxes is as follows:

Year ended December 31,

$ 4,610 $ 2,793

( 652 ) ( 425 )

( 512 ) ( 383 )

$ 6,408 $ 4,458

Effective Tax Rate

25.6 % 26.6 %

The reasons for the difference between total tax expense and the amount computed by applying the U.S.

2 unchanged sentences

Statutory rate applied to pretax income

$ 5,254 $ 3,524

Other permanent items

2 unchanged sentences

GILTI, net of foreign tax credits

Foreign income taxes (under) over U.S.

( 41 ) ( 11 )

Foreign income taxes (under) U.S.

statutory rate

( 200 ) ( 46 )

Stock compensation

( 556 ) ( 249 )

Income tax expense

$ 6,408 $ 4,458

The Company has analyzed filing positions in all the federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions.

The Company has identified its federal

consolidated tax return, its state tax returns, its Canadian tax return and its tax return in the United Kingdom as major tax jurisdictions.

The Company has identified its federal consolidated tax return, its state tax returns, its Canadian tax return and its tax return in the United Kingdom as major tax jurisdictions.

As of December 31, 2024 , the Company’s 2021 through 2023 Federal tax returns remain open for examination.

6 unchanged sentences

United States

The Company has approximately $ 9.2 million of undistributed earnings in Canada and $ 5.3 million of undistributed earnings in the United Kingdom and $ 0.9 million of undistributed earnings in Ireland, which it continues to reinvest indefinitely, and therefore no withholding taxes related to its repatriation has been recorded.

$ 20,961 $ 11,990

$ 25,018 $ 16,781

The Company has approximately $ 10.2 millio n of undistributed earnings in Canada a nd $ 4.9 m illion of undistributed earnings in the United Kingdom a nd $ 0.6 m illion of undistributed earnings in Ireland, which it continues to reinvest indefinitely, and therefore no withholding taxes related to its repatriation has been recorded.

There was no activity related to the Company’s unrecognized tax benefits during the year ended December 31, 2024 and December 31, 2023 .

6 unchanged sentences

All outstanding loans issued pursuant to the Credit Agreement become due and payable on May 18, 2028.

There were no amounts outstanding under the Credit Agreement as of December 31, 2023.

There were no amounts outstanding under the Credit Agreement as of December 31, 2024 and 2023 , respectively.

Outstanding Loans comprising (i) ABR Borrowings bear interest at the ABR plus the Applicable Rate, (ii) Term Benchmark Borrowings bear interest at the Adjusted Term SOFR Rate or the Adjusted EURIBOR Rate, as applicable, plus the Applicable Rate and (iii) RFR Loans bear interest at a rate per annum equal to the applicable Adjusted Daily Simple RFR plus the Applicable Rate.

5 unchanged sentences

(“Previous Credit Facility”).

As of December 31, 2023, the Company had no borrowings outstanding under the Previous Credit Facility.

On April 8, 2022, the Company entered into a $ 2.1 million term loan (the “Term Loan”) with First American Commercial Bancorp, Inc.

4 unchanged sentences

As of December 31, 2024 , future principal payments under the Term Loan are as follows:

In connection with the acquisition of Data Solutions (See Note 3 – Acquisition), the Company acquired an IDF that is with recourse to the Company.

In connection with the acquisition of Data Solutions (See Note 3 – Acquisition), the Company acquired an IDF that was with recourse to the Company.

Data Solutions had previously entered into the IDF with AIB Commercial Finance Limited (“AIB”) pursuant to a Debt Purchase Agreement.

The proceeds from the IDF will be used for working capital needs of Data Solutions.

Borrowings under the IDF are based on accounts receivable up to 80 % of the outstanding accounts receivable balance.

The discount rate under the IDF is equal to 2.5 % above AIB’s applicable lending rates that vary based on the currency of the accounts receivable.

The outstanding balance under the IDF at December 31, 2023 was $ 4.3 million, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

The Company subsequently terminated the IDF during the year ended December 31, 2024.

The proceeds from the IDF were used for working capital needs of Data Solutions.

Borrowings under the IDF were based on accounts receivable up to 80 % of the outstanding accounts receivable balance.

The discount rate under the IDF was equal to 2.5 % above AIB’s applicable lending rates that vary based on the currency of the accounts receivable.

The outstanding balance under the IDF at December 31, 2024 was zero, as the Company terminated the IDF during the period, compared to $ 4.3 million at December 31, 2023, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

Stockholders ’ Equity and Stock-Based Compensation

10 unchanged sentences

These shares of Restricted Stock vest immediately, over time in three equal installments or over time in up to sixteen equal quarterly installments.

During the year ended December 31, 2022, the Company granted a total of 78,505 shares of Restricted Stock to officers, directors and employees.

These shares of Restricted Stock vest immediately or over time in up to sixteen equal

quarterly installments.

During the year ended December 31, 2024 , 1,999 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company.

During the year ended December 31, 2023 , the Company granted a total of 132,526 shares of Restricted Stock to officers, directors and employees.

These shares of Restricted Stock vest immediately, over time in three equal installments or over time in up to sixteen equal quarterly installments.

There was no options activity during the year ended December 31, 2024 and 2023 and there were no options outstanding or exercisable at December 31, 2024 and 2023 , respectively, under both the Company’s 2012 Plan and 2021 Plan.

4 unchanged sentences

Nonvested shares at January 1, 2023

121,059 $ 24.83

Granted in 2023

132,526 44.99

Vested in 2023

( 110,291 ) 33.92

Forfeited in 2023

Nonvested shares at December 31, 2023

143,294 $ 36.48

Granted in 2024

Vested in 2024

( 78,397 ) 35.28

Forfeited in 2024

( 1,999 ) 45.33

Nonvested shares at December 31, 2024

114,710 $ 47.23

As of December 31, 2024 , there was approximately $ 2.9 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements.

The unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.5 years.

For the years ended December 31, 2023 and 2022, the Company recognized share-based compensation cost of approximately $ 4.1 million and $ 1.9 million, respectively, which is included in selling, general and administrative expenses.

For the years ended December 31, 2024 and 2023 , the Company consistently recognized share-based compensation cost of approximately $ 4.1 million, respectively, which is included in selling, general and administrative expenses.

Defined Contribution Plan

15 unchanged sentences

The Company made sales to a customer where a family member of one of our executive’s has a minority ownership position.

During the year ended December 31, 2023 and 2022, net sales to this customer totaled $ 1.4 million and $ 1.8 million, respectively, and amounts due from this customer as of December 31, 2023 and 2022 totaled less than $ 0.1 million and $ 0.1 million, respectively.

The minority ownership position terminated during the year ended December 31, 2024 .

During the year ended December 31, 2024 and 2023 , net sales to this customer totaled approximately $ 0.7 million and $ 1.4 million, respectively, and amounts due from this customer as of December 31, 2024 and 2023 were zero and less than $ 0.1 million, respectively, which was settled in cash subsequent to the period end.

Industry, Segment and Geographic Financial Information

3 unchanged sentences

The internal organization used by the public company’s Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources determines the basis for reportable operating segments.

The Company’s CODM is the Chief Executive Officer.

The Company’s Chief Executive Officer, who has been identified as the Company’s CODM, evaluates the performance of both reportable segments based on operating income.

Net sales, gross profit, and operating expenses are also monitored closely.

This information is used to measure segment profitability, allocate resources, and make budgeting and forecasting decisions about the reportable segments.

The CODM also uses these measures to monitor trends in year over year performance comparisons, sequential quarter performance comparisons, and to compare actual results to forecasts.

More disaggregated information about operating expense is generally only reviewed by the CODM on a consolidated basis.

Operating income represents net sales less costs of sales, excluding depreciation and amortization expense and operating expenses.

Net sales and cost of sales, excluding depreciation and amortization expense are directly attributed to each segment.

The majority of operating expenses are also directly attributed to each segment, while certain other operating expenses are allocated to the segments in a reasonable manner considering the specific facts and circumstances of the expenses being allocated.

The Company is organized into two reportable operating segments.

The “Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide.

The “Solutions” segment is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide.

As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada, Europe and the United Kingdom with the domestic segments as the international operations provide the same products and services to similar clients and are considered together when the Company’s CODM decides how to allocate resources.

Segment income is based on segment net sales less the respective segment’s cost of sales as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit.

The Company only identifies accounts receivable, vendor prepayments and inventory by segment as shown below as “Selected Assets” by segment;

The “Solutions” segment is a provider of cloud solutions and value-added reseller of software, hardware and services to customers worldwide.

The Company's reportable segments are based on products and services delivered, and the Company's CODM decides how to assess performance and allocate resources based on segment.

Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit.

The Company only identifies accounts receivable, vendor prepayments, inventory, goodwill and intangible assets by segment as shown below as “Selected Assets” by segment;

it does not allocate its other assets, including capital expenditures by segment.

The following segment reporting information of the Company is provided:

Gross Profit:

$ 441,940 $ 325,262

23,667 26,751

465,607 352,013

Cost of Sales:

$ 363,648 $ 271,899

10,879 15,867

374,527 287,766

Direct Costs:

Segment Income Before Taxes:

Segment Income Before Taxes

$ 31,888 $ 22,467

37,343 27,705

Segment Income:

$ 46,404 $ 30,896

Segment Income

53,737 36,542

General and administrative

$ 19,165 $ 16,625

Acquisition related costs

2 unchanged sentences

Foreign currency transaction loss

( 273 ) ( 636 )

Change in fair value of acquisition contingent consideration

Income before taxes

(1) Excludes general corporate expenses including acquisition related costs, amortization and depreciation expense, interest, and foreign currency transaction (loss) gain.

$ 25,018 $ 16,781

Excludes general corporate expenses including acquisition related costs, amortization and depreciation expense, interest, foreign currency transaction (loss) gain, and change in fair value of acquisition contingent consideration.

Selected Assets by Segment:

$ 394,809 $ 242,927

21,882 37,992

Segment Select Assets

416,691 280,919

Corporate Assets

52,488 54,179

$ 469,179 $ 335,098

Geographic areas and net sales mix related to operations for the year ended December 31, 2024 and 2023 were as follows.

1 unchanged sentence

December 31, 2024

$ 333,197 $ 8,652 $ 341,849

Europe and United Kingdom

82,039 13,889 95,928

26,704 1,126 27,830

Total net sales

$ 441,940 $ 23,667 $ 465,607

Timing of Revenue Recognition

Transferred at a point in time where the Company is principal (1)

$ 399,360 $ 15,847 $ 415,207

Transferred at a point in time where the Company is agent (2)

42,580 7,820 50,400

Total net sales

$ 441,940 $ 23,667 $ 465,607

December 31, 2023

$ 244,261 $ 15,425 $ 259,686

Europe and United Kingdom

57,253 10,167 67,420

23,748 1,159 24,907

Total net sales

$ 325,262 $ 26,751 $ 352,013

Timing of Revenue Recognition

Transferred at a point in time where the Company is principal (1)

$ 286,051 $ 19,853 $ 305,904

Transferred at a point in time where the Company is agent (2)

39,211 6,898 46,109

Total net sales

$ 325,262 $ 26,751 $ 352,013

Includes net sales from third -party hardware and software products.

2 unchanged sentences

Identifiable Assets by Geographic Areas

$ 278,957 $ 171,080

34,352 23,994

Europe and United Kingdom

For the year ended December 31, 2023, the Company had two customers that accounted for 20 %, and 15 %, respectively, of consolidated net sales and as of December 31, 2023, 15 % and 6 %, respectively, of total net accounts receivable.

155,870 140,024

$ 469,179 $ 335,098

For the year ended December 31, 2024 , the Company had three customers that accounted f or 18 %, 14 % and 11 %, res pectively, of consolidated net sales and as of December 31, 2024 , 12 %, 6 % and 19 %, re spectively, of total net accounts receivable.

For the year ended December 31, 2024 , the Company had one vendor that accounted for 10 % of our consolidated purchases.

These customers and vendors are all in the Company's Distribution segment.

For the year ended December 31, 2023 , the Company had two customers that accounted for 20 %, and 15 %, respectively, of consolidated net sales and as of December 31, 2023 , 15 % and 6 %, respectively, of total net accounts receivable.

For the year ended December 31, 2023 , the Company had one vendor that accounted for 14 % of our consolidated purchases.

Our top five customers accounted for 51 % of consolidated net sales for the years ended December 31, 2023 and 2022, respectively.

These customers and vendors are all in the Company's Distribution segment.

Our top five customers accounted fo r 54 % and 51 % of consolidated net sales for the years ended December 31, 2024 and 2023 , respectively.

Fair Value Measurements

10 unchanged sentences

Treasury bills

$ — $ — $ — $ —

Contingent earn-out

$ — $ — $ 5,896 $ 5,896

Total liabilities

$ — $ — $ 5,896 $ 5,896

As of December 31, 2023

Treasury bills

$ 5,096 $ — $ — $ 5,096

Contingent earn-out

$ — $ — $ 4,189 $ 4,189

Total liabilities

$ — $ — $ 4,189 $ 4,189

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.

8 unchanged sentences

Balance January 1, 2023

Spinnakar acquisition - contingent earn-out

Data Solutions acquisition - contingent earn-out

Translation adjustments

Balance December 31, 2023

Data Solutions acquisition - contingent earn-out

DSS acquisition - contingent earn-out

Contingent earn-out paid

Change in fair value of acquisition contingent consideration

Translation adjustments

Balance December 31, 2024

There were no material changes in fair value since the respective acquisition dates associated with the contingent earn-outs.

Subsequent Events

On January 30, 2025, the Company received notice of termination of a distribution agreement from one of its vendors.

This vendor relationship was acquired through a prior year acquisition and as such, the Company had previously recognized an intangible asset at the prior year acquisition date for this vendor relationship that was being amortized over a period of 11 years, which represented the expected period of benefits as of the acquisition date.

As of December 31, 2024 , the unamortized value of this vendor relationship intangible asset was approximately $ 4.9 million, which will be assessed for potential impairment or change in the amortization life of the intangible asset during the first quarter of 2025.

Climb Global Solutions, Inc.

3 unchanged sentences

Year ended December 31, 2023

Allowance for doubtful accounts

Allowance for expected credit losses (1)

$ 842 $ 54 $ 187 $ 709

Year ended December 31, 2024

Allowance for expected credit losses (1)

$ 709 $ 128 $ 249 $ 588

Previously referred to as Allowance for doubtful accounts.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures