What changed in this filing

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Item 1. Financial Statements

2025-05-01 compared with 2024-11-01 · 246 added, 412 removed, 588 unchanged (53% of the section changed)

4 unchanged sentences

(Amounts in thousands, except share and per share amounts)

September 30,

Current assets:

9 unchanged sentences

13,264 12,853

35,675 34,924

Other intangibles, net

30 unchanged sentences

71,705 68,787

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

( 1,339 ) ( 2,892 )

8 unchanged sentences

(Amounts in thousands, except per share data)

Nine months ended

Three months ended

September 30,

Cost of sales, excluding depreciation and amortization expense

$ 138,044 $ 92,422

Cost of sales

114,648 75,402

23,396 17,020

Selling, general, and administrative expenses

16,755 12,523

Acquisition related costs

1 unchanged sentence

Income from operations

Other income:

Other income and (expense):

Interest, net

Foreign currency transaction loss

( 580 ) ( 85 )

Change in fair value of acquisition contingent consideration

1 unchanged sentence

Provision for income taxes

$ 3,684 $ 2,731

Income per common share-Basic

$ 0.81 $ 0.60

Income per common share-Diluted

$ 0.81 $ 0.60

Weighted average common shares outstanding — Basic

5 unchanged sentences

(Amounts in thousands)

Nine months ended

Three months ended

September 30,

$ 3,684 $ 2,731

Other comprehensive income (loss):

Foreign currency translation adjustments, net of taxes

Foreign currency translation adjustments

1,553 ( 718 )

Other comprehensive income (loss)

1,553 ( 718 )

Comprehensive income

$ 5,237 $ 2,013

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

20 unchanged sentences

5,284,500 $ 53 $ 39,532 700,445 $ ( 14,397 ) $ 71,705 $ ( 1,339 ) $ 95,554

— — — — — 3,430 — 3,430

Translation adjustment

— — — — — — ( 121 ) ( 121 )

Dividends paid (per common share $ 0.17 )

— — — — — ( 758 ) — ( 758 )

Share-based compensation expense

— — 1,113 — — — — 1,113

Restricted stock grants (net of forfeitures)

— — ( 545 ) ( 31,213 ) 545 — — —

Treasury shares repurchased

— — — 4,817 ( 283 ) — — ( 283 )

Balance at June 30, 2024

5,284,500 $ 53 $ 35,738 672,973 $ ( 12,462 ) $ 57,862 $ ( 1,361 ) $ 79,830

— — — — — 5,459 — 5,459

Translation adjustment

— — — — — — 2,517 2,517

Dividends paid (per common share $ 0.17 )

— — — — — ( 761 ) — ( 761 )

Share-based compensation expense

— — 938 — — — — 938

Restricted stock grants (net of forfeitures)

— — — — — — — —

Treasury shares repurchased

— — — 4,737 ( 315 ) — — ( 315 )

Balance at September 30, 2024

5,284,500 $ 53 $ 36,676 677,710 $ ( 12,777 ) $ 62,560 $ 1,156 $ 87,668

Comprehensive

15 unchanged sentences

5,284,500 $ 53 $ 35,170 699,369 $ ( 12,724 ) $ 55,190 $ ( 1,240 ) $ 76,449

— — — — — 1,381 — 1,381

Translation adjustment

— — — — — — 1,004 1,004

Dividends paid (per common share $ 0.17 )

— — — — — ( 754 ) — ( 754 )

Share-based compensation expense

— — 2,238 — — — — 2,238

Restricted stock grants (net of forfeitures)

— — ( 1,258 ) ( 71,965 ) 1,258 — — —

Treasury shares repurchased

— — — 19,703 ( 981 ) — — ( 981 )

Balance at June 30, 2023

5,284,500 $ 53 $ 33,476 715,586 $ ( 12,402 ) $ 47,106 $ ( 1,251 ) $ 66,982

— — — — — 2,372 — 2,372

Translation adjustment

— — — — — — ( 1,442 ) ( 1,442 )

Dividends paid (per common share $ 0.17 )

— — — — — ( 754 ) — ( 754 )

Share-based compensation expense

— — 711 — — — — 711

Restricted stock grants (net of forfeitures)

— — ( 292 ) ( 16,737 ) 292 — — —

Treasury shares repurchased

— — — 6,023 ( 247 ) — — ( 247 )

Balance at September 30, 2023

5,284,500 $ 53 $ 33,895 704,872 $ ( 12,357 ) $ 48,724 $ ( 2,693 ) $ 67,622

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

3 unchanged sentences

(Amounts in thousands)

Nine months ended

September 30,

Three months ended

Cash flows from operating activities

4 unchanged sentences

Share-based compensation expense

Gain on disposal of fixed assets

Amortization of discount on accounts receivable

4 unchanged sentences

Prepaid expenses and other current assets

Vendor prepayments

Accounts payable and accrued expenses

3 unchanged sentences

Cash flows from investing activities

Purchase of equipment and leasehold improvements

Payment for acquisition

Purchase of equipment and leasehold improvements and capitalization of internal-use software

Net cash and cash equivalents used in investing activities

1 unchanged sentence

Purchase of treasury stock

Borrowings under credit facilities

Repayments of borrowings under credit facilities

2 unchanged sentences

Contingent consideration paid

Payments of deferred financing costs

Net cash and cash equivalents used in financing activities

10 unchanged sentences

Notes to Condensed Consolidated Financial Statements

September 30, 2024

March 31, 2025

(Amounts in tables in thousands, except share and per share amounts)

11 unchanged sentences

The unaudited condensed consolidated statements of earnings for the interim periods are not necessarily indicative of results for the full year.

For further information, refer to the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10 -K filed with the Securities Exchange Commission for the year ended December 31, 2023 .

The consolidated financial statements include the accounts of Climb Global Solutions, Inc.

4 unchanged sentences

Recently Issued Accounting Standards:

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 adopted the update in the first quarter of 2024 and it did not have a material effect on our consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024 - 03, “ 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.

In January 2025, the FASB issued ASU No.

2025 - 01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Clarifying the Effective Date.

This ASU amends the effective date of ASU No.

2024 - 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 No.

2024 - 03 is permitted.

In December 2023, the FASB issued ASU No.

2023 - 09, “ 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.

Foreign Currency Translation:

2 unchanged sentences

Foreign currency transaction gains and losses are recorded as income or expenses as amounts are settled.

The net sales from our foreign operations for the three months ended September 30, 2024 and 2023 were $ 37.5 million a nd $ 14.0 million, respectively.

The net sales from our foreign operations for the nine months ended September 30, 2024 and 2023 were $ 88.6 mil lion and $ 55.0 million, respectively.

The net sales from our foreign operations for the three months ended March 31, 2025 and 2024 were $ 31.0 million a nd $ 28.2 million, respectively.

The Company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase the product.

3 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 loss of approximately $ 0.1 million on contracts outstanding as of September 30, 2024 , which is included in foreign currency transaction loss in the Consolidated Statements of Earnings.

The Company recognized an unrealized loss of less th an $ 0.1 million on contracts outstanding as of March 31, 2025 , which is included in foreign currency transaction loss in the Consolidated Statements of Earnings.

Comprehensive Income:

2 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 in inventory 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.

1 unchanged sentence

The Company considers shipping and handling activities as costs to fulfill the sales of products.

Shipping revenue is included in net sales when control of the product is transferred to the customer, and the related shipping and handling costs are included in the cost of products sold.

Shipping revenue is included in net sales when control of the product is transferred to the customer, and the related shipping and handling costs are included in cost of sales.

Taxes imposed by governmental authorities on the Company’s revenue producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales.

The Company disaggregates its operating revenue by segment, geography and timing of revenue recognition, which the Company believes provides a meaningful depiction of the nature of its revenue.

See Note 16 – Segment Information.

For additional information, see Note 17 – Segment Information.

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.

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.

19 unchanged sentences

These costs are recorded as selling, general and administrative expenses in the period earned as all our performance obligations are complete within a short window of processing the order.

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.

DSS distributes software to value added resellers (“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 $ 6.8 million and net income of approximately $ 1.0 million during the three and nine months ended September 30, 2024 , respectively.

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 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)

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)

Supplementary information:

Cash paid to sellers

Contingent earn-out

Total purchase consideration

Intangible assets are comprised of approximately $ 20.6 million 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 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 18 – 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.

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 included approximately $ 1.7 million fair value for potential earn-out consideration if certain targets are achieved by September 30, 2025, payable in cash.

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

As of March 31, 2025 , the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximately $ 2.0 million, with $ 0.1 million adjustment recognized within change in fair value of acquisition contingent consideration during the three months ended March 31, 2025 .

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 18 – 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

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 $ 2.3 million fair value for potential earn-out consideration if certain targets are achieved, payable in cash.

As of September 30, 2024 , the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximately $ 3.5 million, with $ 1.2 million adjustment recognized within change in fair value of acquisition contingent consideration during the three and nine months ended September 30, 2024 .

The earn-out liability is included in current liabilities as of September 30, 2024 and December 31, 2023 , as payment will be due during the fourth quarter of 2024.

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 11 – Credit Facilities).

The balance outstanding under the IDF at September 30, 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 three months ended September 30, 2024 and 2023 , the Company recognized acquisition related costs of $ 0.6 million and $ 0.2 million, respectively.

During the nine months ended September 30, 2024 and 2023 , the Company recognized acquisition related costs of $ 1.2 million and $ 0.3 million.

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

The costs incurred during the three and nine months ended September 30, 2024 primarily related to the aforementioned DSS acquisition, while the costs incurred during the prior period three and nine months ended September 30, 2023 related to the aforementioned Data Solutions acquisition.

Pro Forma Results (unaudited)

The following unaudited pro forma financial information summarizes the results of operations for the three and nine months ended September 30, 2024 and 2023 as if the acquisition of DSS and Data Solutions has been completed as of the beginning of the three and nine months ended September 30, 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.

Nine months ended

Three months ended

September 30,

$ 318,268 $ 279,918 $ 123,437 $ 94,850

$ 13,745 $ 11,217 $ 6,295 $ 4,757

Goodwill and Other Intangible Assets:

The following table summarizes the changes in the carrying amount of goodwill for the nine months ended September 30, 2024 :

The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 31, 2025 :

Balance December 31, 2024

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

Goodwill acquired

$ 1,398 $ — 1,398

Translation adjustments

609 439 1,048

Balance September 30, 2024

Balance March 31, 2025

$ 27,014 $ 8,661 $ 35,675

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

As of September 30, 2024

As of March 31, 2025

Customer and vendor relationships

5 unchanged sentences

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

Customer relationships are amortized over thirteen years.

Vendor relationships are amortized betwee n eight and fifteen y ears.

Trade name is amortized over fifteen years.

During the three months ended September 30, 2024 and 2023 , the Company recognized total amortization expense for other intangib les, net of $ 1.1 million and $ 0.5 million, respectively.

During the nine months ended September 30, 2024 and 2023 , the Company recognized total amortization expense for other intangibles, net of $ 2.5 million and $ 1.5 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of September 30, 2024 is as follows:

2024 (excluding the nine months ended September 30, 2024)

Customer relationships are amortized o ver thirteen years.

Vendor relationships are amortized between four and fifteen years.

Trade name is amortized over fifteen ye ars.

During the three months ended March 31, 2025 and 2024 , the Company recognized total amortization expense for other intangibles, net of $ 1.3 million and $ 0.7 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of March 31, 2025 is as follows:

2025 (excluding the three months ended March 31, 2025)

Right-of-use Asset and Lease Liability:

8 unchanged sentences

Information related to the Company’s ROU assets and related lease liabilities were as follows:

Nine months ended

September 30,

Three months ended

Cash paid for operating lease liabilities

2 unchanged sentences

Weighted-average discount rate

Maturities of lease liabilities as of September 30, 2024 were as follows:

2024 (excluding the nine months ended September 30, 2024)

Maturities of lease liabilities as of March 31, 2025 were as follows:

2025 (excluding the three months ended March 31, 2025)

imputed interest

3 unchanged sentences

Total lease liabilities

The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable, accounts payable and term loan approximated fair value at September 30, 2024 and December 31, 2023 because of the relative short maturity of these instruments.

The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable, accounts payable and term loan approximated fair value at March 31, 2025 and December 31, 2024 because of the relative short maturity of these instruments.

The Company’s accounts receivable long-term are discounted to their present value at prevailing market rates at the time of sale.

1 unchanged sentence

Equipment and leasehold improvements consist of the following:

September 30,

$ 3,261 $ 2,951

Capitalized software

12,349 11,821

Leasehold improvements

3 unchanged sentences

$ 13,264 $ 12,853

During the three months ended September 30, 2024 and 2023 , depreciation and amortization expense remained consistent at $ 0.1 million, respe ctively.

During the nine months ended September 30, 2024 and 2023 , the Company recorded depreciation and amortization expense of $ 0.4 mill ion and $ 0.5 million, respectively.

During the three months ended March 31, 2025 and 2024 , the Company recorded depreciation and amortization expense of $ 1.7 milli on and $ 0.9 million, respectively.

In limited circumstances, the Company offers extended payment terms to customers for periods of 12 to 36 months.

3 unchanged sentences

Accounts receivable long term, net consists of the following:

September 30,

Total amount due from customer

1 unchanged sentence

unamortized discount

( 90 ) ( 102 )

current portion included in accounts receivable

( 795 ) ( 1,183 )

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $ 0.4 million du ring each of the 12 -month periods ending September 30, 2025, 2026, and 2027.

$ 1,183 $ 1,174

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $ 0.8 million, $0.8 million and $ 0.4 million, respectively, du ring each of the 12 -month periods ending March 31, 2025, 2026, and 2027.

Accounts payable and accrued expenses consist of the following:

September 30,

Trade accounts payable

1 unchanged sentence

Accrued expenses

21,605 22,903

Other accounts payable and accrued expenses

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 September 30, 2024 .

There were no amounts outstanding under the Credit Agreement as of March 31, 2025 .

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.

3 unchanged sentences

Additionally, under certain circumstances, the Company is required to maintain a minimum fixed charge coverage ratio.

In connection with entering into the Credit Agreement, on May 18, 2023, the Company voluntarily terminated its existing revolving credit agreement, dated November 15, 2017 with Citibank N.A.

(“Previous Credit Facility”).

As of the date of termination, 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.

2 unchanged sentences

The borrowing under the Term Loan bears interest at a rate of 3.73 % per annum and is being repaid over forty-eight monthly installments of principal and interest through April 2026.

At September 30, 2024 and December 31, 2023 , the Company had $ 0.9 million an d $ 1.3 million outstanding under the Term Loan, respectively.

At September 30, 2024 , future principal payments under the Term Loan are as follows:

2024 (excluding the nine months ended September 30, 2024)

In connection with the acquisition of Data Solutions (See Note 6– Acquisition), the Company acquired an IDF that is with recourse to the Company.

At March 31, 2025 and December 31, 2024 , the Company had $ 0.6 million an d $ 0.8 million outstanding under the Term Loan, respectively.

At March 31, 2025 , future principal payments under the Term Loan are as follows:

2025 (excluding the three months ended March 31, 2025)

In connection with the acquisition of Data Solutions, which was completed October 6, 2023, the Company acquired an invoice discounting facility ("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 Company subsequently terminated the IDF during the nine months ended September 30, 2024 .

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

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

Earnings Per Share:

5 unchanged sentences

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

Nine months ended

Three months ended

September 30,

$ 3,684 $ 2,731

Less distributed and undistributed income allocated to participating securities

288 171 139 61

Net income attributable to common shareholders

11,332 6,906 5,320 2,311

Weighted average common shares (Basic)

4,458 4,392 4,476 4,414

Weighted average common shares including assumed conversions (Diluted)

4,458 4,392 4,476 4,414

Basic net income per share

3 unchanged sentences

Major Customers and Vendors:

The Company had one major vendor that accounted f or 8 % of total purchases during the three months ended September 30, 2024 , and 15 % of total purchases during the three months ended September 30, 2023 .

The Company ha d one m ajor vendor that account ed for 11 % of total purchases during the nine months ended September 30, 2024 , and 16 % of total purchases during the nine months ended September 30, 2023 .

The Company had two major customers that accounted for 16 % and 13 %, respectively, of its net sales during the three months ended September 30, 2024 , and 21 % and 17 %, respectively, of its net sales during the three months ended September 30, 2023 .

The Company had two major customers that accounted for 18 % and 15 %, respectively, of its net sales during the nine months ended September 30, 2024 , and 21 % and 15 %, respectively, of its net sales during the nine months ended September 30, 2023 .

These same customers accounted for 13 % and 6%, res pectively, of total net accounts receivable as of September 30, 2024 , and 15 % and 6 %, respectively, of total net accounts receivable as of December 31, 2023 .

The Company ha d one m ajor vendor that account ed for 13 % of total purchases during the three months ended March 31, 2025 , and 16 % of total purchases during the three months ended March 31, 2024 .

The Company had two major customers that accounted for 26 % and 13 %% of net sales during the three months ended March 31, 2025 , and 20 % and 15 %, of net sales during the three months ended March 31, 2024 .

These same customers accounted for 23 % and 5 % of total net accounts receivable as of March 31, 2025 , and 16 % of total net accounts receivable as of December 31, 2024 .

Income Taxes:

2 unchanged sentences

The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.

During the three months ended March 31, 2025 and 2024 , the Company recorded a provision for income taxes of $ 0.6 million and 0.9 million, respectively.

The effective tax rate for the three months ended March 31, 2025 and 2024 was 13.3 % and 24.6 %, respectively.

The change in effective tax rate for the three months ended March 31, 2025 compared to the same period in the prior year was primarily impacted by a discrete item for the recognition of excess tax benefits related to share-based compensation in income tax expense.

The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $ 0.5 million and reduced our effective tax rate by 10.7 % during the three months ended March 31, 2025 .

Stockholders ’ Equity and Stock Based Compensation:

2 unchanged sentences

The tota l number of shares of the Company’s common stock, par value $ 0.01 per share (“Common Stock”) initially available for award under the 2021 Plan was 500,000 shares.

As of September 30, 2024 , the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 190,917 .

The 2012 Stock-Based Compensation Plan (the “2012 Plan”) authorized the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards.

The total number of shares of the Company’s Common Stock initially available for award under the 2012 Plan was 600,000 , which was increased to 1,000,000 shares by stockholder approval at the Company’s 2018 Annual Meeting in June 2018.

Immediately prior to the replacement of the 2012 Plan by the 2021 Plan, there were 352,158 shar es of Common Stock available under the 2012 Plan.

The 2012 Plan has been replaced by the 2021 Plan and none of the remaining shares of Common Stock authorized under the 2012 Plan will be transferred to or used under the 2021 Plan nor will any awards under the 2012 Plan that are forfeited increase the shares available for awards under the 2021 Plan.

As of September 30, 2024 , the number of shares of Common Stock available under the 2012 Plan was zero .

During the nine months ended September 30, 2024 , the Company granted a total of 51,812 shares of Restricted Stock to directors, officers and employees.

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

During the nine months ended September 30, 2024 , a total of 1,661 sh ares of Restricted Stock were forfeited.

During the nine months ended September 30, 2023 , the Company granted a total of 132,526 shares of Restricted Stock to officers and employees.

As of March 31, 2025 , the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 201,392 .

During the three months ended March 31, 2025 , the Company granted a total of 1,906 shares of Restricted Stock to an officer.

These shares of Restricted Stock vest over time in sixteen equal quarterly installments.

During the three months ended March 31, 2025 , a total of 12,043 sh ares of Restricted Stock were forfeited.

During the three months ended March 31, 2024 , the Company granted a total of 18,938 shares of Restricted Stock to officers and employees.

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

A summary of nonvested shares of Restricted Stock awards outstanding under the 2012 and 2021 Plans as of September 30, 2024 , and changes during the nine months then ended is as follows:

A summary of nonvested shares of Restricted Stock awards outstanding under the 2021 Plan as of March 31, 2025 , and changes during the three months then ended is as follows:

Average Grant

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( 12,043 ) 43.86

Nonvested shares at September 30, 2024

Nonvested shares at March 31, 2025

78,544 $ 49.60

As of September 30, 2024 , there is approximately $ 5.2 m illion of total unrecognized compensation costs related to nonvested share-based compensation arrangements.

As of March 31, 2025 , there is approximate ly $ 3.4 m illion of total unrecognized compensation costs related to nonvested share-based compensation arrangements.

The unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.1 y ears.

During the three months ended September 30, 2024 and 2023 , the Company recognized share-based compensation expense of $ 0.9 mill ion and $ 0.7 million, respectively.

During the nine months ended September 30, 2024 and 2023 , the Company recognized share-based compensation expense o f $ 2.8 million and $ 3.4 million, respectively.

During the three months ended March 31, 2025 and 2024 , the Company recognized share-based compensation expense o f $ 1.3 million and $ 0.8 million, respectively.

Commitments and Contingencies

Severance Plan

The Board of Directors of the Company previously approved the Climb Global Solutions, Inc.

Executive Severance and Change in Control Plan (the “Severance Plan”), which supersedes and replaces all other severance arrangements between the Company and its executive officers, which previously had been governed by separate legacy employment agreements and offer letters.

The Severance Plan provides severance benefits upon a qualifying termination of employment (“Covered Termination”) of an executive officer.

The Severance Plan provides for three tiers of severance benefits in the event of a Covered Termination based on the executive’s seniority and position, including payment of 6 - 18 months of base salary, a pro rata payment of such executive’s bonus for the year in which the Covered Termination occurred, and a COBRA subsidy during the severance period.

In the event the Covered Termination in connection with a change of control, the Severance Plan provides for increased severance benefits, including payment of 18 - 24 months of base salary, payment of such executive’s target bonus for the year in which the Covered Termination occurred, double trigger vesting acceleration of equity awards, and a COBRA subsidy during the severance period.

As of March 31, 2025 , the Company has no standby letters of credit, has no standby repurchase obligations or other commercial commitments.

The Company has a line of credit see Note 11 (Credit Facility).

Other than employment agreements and management compensation arrangements, the Company is not engaged in any other transactions with related parties.

Segment Information:

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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 Chief Executive Officer, who has been identified as the Company’s CODM, primarily uses operating income as the measure of profit or loss to assess segment performance and allocate resources.

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.

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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 “Distribution” segment distributes technical software to corporate resellers, VARs, consultants and systems integrators worldwide.

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

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The following segment reporting information of the Company is provided:

Nine months ended

Three months ended

September 30,

$ 132,162 $ 86,822

138,044 92,422

303,847 245,229 119,349 78,457

Gross Profit:

$ 51,454 $ 35,472 $ 21,557 $ 11,671

Cost of Sales:

$ 111,764 $ 72,607

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$ 9,462 $ 7,376

4,013 3,844 1,330 1,226

27,355 19,069 9,760 6,475

Segment Income Before Taxes:

$ 28,112 $ 20,247 $ 13,127 $ 6,422

4,366 3,860 1,370 1,377

Segment Income Before Taxes

Segment Income:

$ 10,936 $ 6,839

Segment Income

General and administrative

1 unchanged sentence

Acquisition related costs

1,201 277 609 246

Depreciation and amortization expense

2,933 1,934 1,197 617

Interest, net

755 760 198 318

Foreign currency transaction loss

1 unchanged sentence

Change in fair value of acquisition contingent consideration

( 1,152 ) — ( 1,152 ) —

Income before taxes

$ 4,248 $ 3,621

Excludes general corporate expenses including interest and foreign currency transaction loss

September 30,

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

Selected Assets by Segment:

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$ 370,053 $ 469,179

Geographic areas and net sales mix related to operations for the three and nine months ended September 30, 2024 and 2023 were as follows.

Geographic areas and net sales mix related to operations for the three months ended March 31, 2025 and 2024 were as follows.

Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.

Nine months ended

Three months ended

September 30, 2024

March 31, 2025

$ 105,088 $ 1,954 $ 107,042

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$ 132,162 $ 5,882 $ 138,044

Nine months ended

Three months ended

September 30, 2023

March 31, 2024

$ 62,364 $ 1,908 $ 64,272

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Includes net sales from third -party maintenance, software support and services.

Geographic identifiable assets related to operations as of September 30, 2024 and December 31, 2023 were as follows.

September 30,

Geographic identifiable assets related to operations as of March 31, 2025 and December 31, 2024 were as follows.

Identifiable Assets by Geographic Areas

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$ 370,053 $ 469,179

Related Party Transactions:

The Company made sales to a customer where a family member of one of our executives previously had a minority ownership position.

The minority ownership position terminated during the nine months ended September 30, 2024 .

During the three months ended September 30, 2024 , there were no sales to this customer prior to the ownership position termination.

During the three months ended September 30, 2023 , net sales to this customer totaled approximately $ 0.3 million.

During the nine months ended September 30, 2024 and 2023 , net sales to this customer totaled approximately $ 0.7 million and $ 1.3 million, respectively.

Amounts due from this customer as of September 30, 2024 and December 31, 2023 were zero and less than $ 0.1 million, respectively, which was settled in cash subsequent to each period end.

Fair Value Measurements

Fair value is defined under US GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fair value is defined under U.S.

GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A fair value hierarchy has been established for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

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The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of September 30, 2024 and December 31, 2023 , respectively, are as follows:

As of September 30, 2024

Treasury bills

$ — $ — $ — $ —

The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of March 31, 2025 and December 31, 2024 , respectively, are as follows:

As of March 31, 2025

Contingent earn-out

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As of December 31, 2024

Treasury bills

$ 5,096 $ — $ — $ 5,096

Contingent earn-out

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Balance December 31, 2024

DSS acquisition - contingent earn-out

Contingent earnout paid

1 unchanged sentence

Translation adjustments

Balance September 30, 2024

Balance March 31, 2025

During the three months ended March 31, 2025 , the Company made a contingent consideration payment of $ 3.6 million in cash related to the acquisition of Spinnakar Limited, which was completed on August 18, 2022.

The payment was made based on Spinnakar's achievement of targets outlined in the acquisition agreement.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

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Our Company is a value added IT distribution and solutions company, primarily selling software and other third-party IT products and services through two reportable operating segments.

Through our “Distribution” segment we sell products and services to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide, who in turn sell these products to end users.

Through our “Distribution” segment we sell products and services to corporate resellers, VARs, consultants and systems integrators worldwide, who in turn sell these products to end users.

Through our “Solutions” segment we act as a cloud solutions provider and value-added reseller, selling computer software and hardware developed by others and provide technical services directly to end user customers worldwide.

We offer an extensive line of products from leading software vendors and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management and other technically sophisticated domains as well as computer hardware.

We market these products through creative marketing communications, including our web sites, local and on-line seminars, webinars, social media, direct e-mail, and printed materials.

We have subsidiaries in the United States, Canada, the Netherlands, the United Kingdom and Ireland, through which sales are made.

We market these products through creative marketing communications, including our web sites, local seminars, webinars, social media, direct e-mail, and printed materials.

We have subsidiaries in the United States, Canada, Netherlands, United Kingdom and Ireland, through which sales are made.

Factors Influencing Our Financial Results

We derive the majority of our net sales through the sale of third-party software licenses, maintenance and service agreements.

We derive most of our net sales through the sale of third-party software licenses, maintenance and service agreements.

In our Distribution segment, sales are impacted by the number of product lines we distribute, and sales penetration of those products into the reseller channel, product lifecycle competition, and demand characteristics of the products which we are authorized to distribute.

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In addition, we grant discounts, allowances, and rebates to certain customers, which may vary from period to period, based on volume, payment terms and other criteria.

To date, we have been able to implement cost efficiencies such as the use of drop shipments, electronic ordering (EDI) and other capabilities to be able to operate our business profitably as gross margins have declined.

We evaluate the profitability of our business based on return on equity and effective margin.

To date, we have been able to implement cost efficiencies such as the use of drop shipments, EDI and other capabilities to be able to operate our business profitably as gross margins have declined.

We evaluate the profitability of our business based on return on equity and effective margin (see discussions below).

Gross profit is calculated as net sales less cost of sales.

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The Company’s sales, gross profit and results of operations have fluctuated and are expected to continue to fluctuate on a quarterly basis as a result of a number of factors, including but not limited to:

the condition of the software industry in general, shifts in demand for software products, pricing, industry shipments of new software products or upgrades, fluctuations in merchandise returns, adverse weather conditions that affect response, distribution or shipping, shifts in the timing of holidays and changes in the Company’s product offerings.

the condition of the software industry in general, shifts in demand for software products, pricing, industry shipments of new software products or upgrades, fluctuations in merchandise returns, adverse weather conditions that affect response, distribution or shipping, import and export tariffs, shifts in the timing of holidays and changes in the Company’s product offerings.

The Company’s operating expenditures are based on sales forecasts.

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Historically we have sought to return value to investors through the payment of quarterly dividends and share repurchases.

Total dividends paid and the dollar value of the shares repurchased were $0.8 million and $0.3 million, r espectively, during the three months ended September 30, 2024.

Total dividends paid and the dollar value of the shares repurchased were $0.8 million and $0.2 million, respectively, during the three months ended September 30, 2023.

The payment of future dividends and share repurchases is at the discretion of our Board of Directors and dependent on results of operations, projected capital requirements, applicable legal, tax and regulatory restrictions, and other factors the Board of Directors may find relevant.

Total dividends paid and the dollar value of the shares repurchased were $0.8 million and $ 0.9 million, for the three months ended March 31, 2025 , r espectively, and $0.7 million and $0.4 million, for the three months ended March 31, 2024, respectively.

The payment of future dividends and share repurchases is at the discretion of our Board of Directors and dependent on results of operations, projected capital requirements, and other factors the Board of Directors may find relevant.

Stock Volatility.

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Numerous conditions which impact these sectors or the stock market in general or the Company in particular, whether or not such events relate to or reflect upon the Company’s operating performance, could adversely affect the market price of the Company’s Common Stock.

Furthermore, fluctuations in the Company’s operating results, announcements regarding litigation, the loss of a significant vendor or customer, increased competition, reduced vendor incentives and trade credit, higher operating expenses, and other developments, could have a significant impact on the market price of our Common Stock.

Furthermore, fluctuations in the Company’s operating results, announcements regarding litigation, the loss of a significant vendor partner or customer, increased competition, reduced vendor incentives and trade credit, higher operating expenses, and other developments, could have a significant impact on the market price of our Common Stock.

We have historically not been adversely affected by inflation, as abrupt changes in technology, rapid changes in customer preferences, short product life cycles and evolving industry standards within the IT industry have generally caused the prices of the products we sell to decline.

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Financial Overview

Net sales increased 52%, or $40.8 million, to $119.3 million f or the three months ended September 30, 2024 compared to $78.5 million for the same period in the prior year.

Gross profit increased 70%, or $10.0 million, to $24.3 milli on for the three months ended September 30, 2024, compared to $14.3 million for the same period in the prior year.

Selling, general and administrative (“SG&A”) expens es increased 38%, or $3.8 million, to $13.9 million for the three months ended September 30, 2024 compared to $10.1 million for the same period in the prior year.

Depreciation and amortization expense increased 94%, or $0.6 million, to $1.2 m illion for the three months ended September 30, 2024 compared to $0.6 million for the same period in the prior year.

Net inco me increased 130%, or $3.1 million, to $5.5 mi llion for the three months ended September 30, 2024 compared to $2.4 million for the same period in the prior year.

Diluted income per share increa sed 129%, or $0.67 to $1.19 fo r the three months ended September 30, 2024 compared to $0.52 for the same period in the prior year.

Net sales increased 49%, or $45.6 million, to $138.0 million f or the three months ended March 31, 2025 compared to $92.4 million for the same period in the prior year.

Gross profit increased 37%, or $6.4 million, to $23.4 milli on for the three months ended March 31, 2025, compared to $17.0 million for the same period in the prior year.

Selling, general and administrative (“SG&A”) expens es increased 34%, or $4.2 million, to $16.8 million for the three months ended March 31, 2025 compared to $12.5 million for the same period in the prior year.

Depreciation and amortization expense increased 99%, or $0.9 million, to $1.7 m illion for the three months ended March 31, 2025 compared to $0.9 million for the same period in the prior year.

Net inco me increased 35%, or $1.0 million, to $3.7 mi llion for the three months ended March 31, 2025 compared to $2.7 million for the same period in the prior year.

Diluted income per share increa sed 35%, or $0.21 to $0.81 fo r the three months ended March 31, 2025 compared to $0.60 for the same period in the prior year.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements that have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

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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, additional expense may be incurred.

Business Combinations

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All acquisition-related costs are accounted for as expenses in the period in which they are incurred.

Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in acquisition related costs in the consolidated statement of earnings.

Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in change in fair value of acquisition contingent consideration in the consolidated statement of earnings.

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.

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Intangible Assets

Intangible assets with determinable lives are amortized on a straight-line basis over their respective estimated useful lives, which is determined based on their expected period of benefit.

Intangible assets with determinable lives are amortized on a straight-line basis over their respective estimated useful lives, which is determined based on their expected period of benefit, or are amortized weighted toward their expected periods of benefit..

Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

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In the event the Company were to determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made.

Share-Based Payments

Under the fair value recognition provision, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period.

We make certain assumptions in order to value and expense our various share-based payment awards.

In connection with our restricted stock programs we record the forfeitures when they occur.

We review our valuation assumptions periodically and, as a result, we may change our valuation assumptions used to value stock-based awards granted in future periods.

Such changes may lead to a significant change in the expense we recognize in connection with share-based payments.

Foreign Exchange

4 unchanged sentences

The Company recognized an unrealized loss of approximately $0.1 million on contracts outstanding as of September 30, 2024.

The Company recognized an unrealized loss of less t han $0.1 million on contracts outstanding as of March 31, 2025, which is included in foreign currency transaction loss in the Consolidated Statement of Earnings.

Recently Issued Accounting Pronouncements

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 adopted the update in the first quarter of 2024 and it did not have a material effect on our consolidated financial statements.

In November 2024, the FASB issued ASU No.

2024-03, “ Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses ”.

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.

In January 2025, the FASB issued ASU No.

2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date.

This ASU amends the effective date of ASU No.

2024-03 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 No.

2024-03 is permitted.

In December 2023, the FASB issued ASU No.

2023-09, “ Income Taxes (Topic 740):

Improvements to Income Tax Disclosures ” .

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.

Results of Operations

1 unchanged sentence

This comparison of financial results is not necessarily indicative of future results:

Nine months ended

Three months ended

September 30,

Cost of sales

5 unchanged sentences

Income tax provision

Key Operating Metrics / Non-GAAP Financial Measures

Key Business Metrics

GAAP and Non-GAAP Financial Measures

Our management monitors several financial and non-financial measures and ratios on a regular basis in order to track the progress of our business.

We believe that the most important of these measures and ratios include net sales, adjusted gross billings, gross profit, adjusted EBITDA, gross profit as a percentage of adjusted gross billings and adjusted EBITDA as a percentage of gross profit.

We use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve annual budgets.

These key indicators include financial information that is prepared in accordance with US GAAP and presented in our Consolidated Financial Statements as well as non-US GAAP performance measurement tools.

Nine months ended

Three months ended

September 30,

Adjusted gross billings (Non-GAAP)

Gross profit - Distribution

Gross profit - Solutions

Adjusted EBITDA (Non-GAAP)

Gross margin % - Adjusted gross billings (Non-GAAP)

Effective margin % - Adjusted EBITDA (Non-GAAP)

We consider gross profit growth and effective margin to be key metrics in evaluating our business.

During the three months ended September 30, 2024 , gross profit increased 70%, or $10.0 million, to $24.3 millio n compared to $14.3 million for the same period in the prior year while effec tive margin increased to 40.9% compared to 35.5% f or the same period in the prior year.

During the nine months ended September 30, 2024, gross profi t increased 39%, or $16.6 million, to $59.8 million compar ed to $43.2 million for the same period in the prior year while effective margin increased to 37.4% compared to 35.7% f or the same period in the prior year.

Reconciliations of Non-GAAP Financial Measures

Nine months ended

Three months ended

September 30,

Reconciliation of net sales to adjusted gross billings (Non-GAAP):

Costs of sales related to sales where the Company is an agent

Adjusted gross billings

We define adjusted gross billings as net sales in accordance with US GAAP, adjusted for the cost of sales related to sales where the Company is an agent.

We provided a reconciliation of adjusted gross billings to net sales, which is the most directly comparable US GAAP measure.

We use adjusted gross billings of product and services as a supplemental measure of our performance to gain insight into the volume of business generated by our business, and to analyze the changes to our accounts receivable and accounts payable.

Our use of adjusted gross billings of product and services as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under US GAAP.

In addition, other companies, including companies in our industry, might calculate adjusted gross billings of product and services or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Nine months ended

We believe that the most important of these measures and ratios include net sales, gross profit and net income, in each case based on information prepared in accordance with U.S.

GAAP, as well as certain non-GAAP financial measures and ratios which include adjusted EBITDA and adjusted EBITDA as a percentage of gross profit, or effective margin.

Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are correspondingly not normally excluded or included in the most directly comparable measure calculated and presented in accordance with U.S.

Our use of non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results reported under U.S.

GAAP, as these measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

Three months ended

September 30,

Net income reconciled to adjusted EBITDA (Non-GAAP):

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Acquisition related costs

Change in fair value of acquisition contingent consideration

Adjusted EBITDA

We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation, interest, and acquisition related costs.

We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation, interest, acquisition related costs and changes in the fair value of contingent considerations.

We define effective margin as adjusted EBITDA as a percentage of gross profit.

We provided a reconciliation of adjusted EBITDA to net income, which is the most directly comparable US GAAP measure.

We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our businesses profitability when compared to the prior year and our competitors.

We provided a reconciliation of adjusted EBITDA to net income, which is the most directly comparable U.S.

GAAP measure.

We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our businesses profitability, operating performance and performance trends, and to provide management and investors a useful measure for period-to-period comparisons by excluding items that management believes are not reflective of our underlying operating performance.

Accordingly, we believe that Adjusted EBITDA and effective margin provide useful information to investors and others in understanding and evaluating our operating results.

Adjusted EBITDA is also a component to our financial covenants in our credit facility.

Our use of adjusted EBITDA has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under US GAAP.

Our use of adjusted EBITDA has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S.

In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Key Operational Metrics

We also use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve annual budgets.

Gross billings are the total dollar value of customer purchases of goods and services during the period, net of customer returns and credit memos, sales, or other taxes.

Gross billings include the transaction values for certain sales transactions that are recognized on a net basis, and, therefore, include amounts that will not be recognized as revenue.

We use gross billings and gross profit as a percentage of gross billings, or gross billings margin, as operational metrics to assess the volume of transactions or market share for our business as well as to understand changes in our accounts receivable and accounts payable.

We believe gross billings and gross billings margin will aid investors in the same manner.

Three months ended

Gross profit - Distribution

Gross profit - Solutions

Non-GAAP Financial Measures:

Adjusted EBITDA (Non-GAAP)

Effective margin % - Adjusted EBITDA (Non-GAAP)

Operational Metrics:

Gross billings

Gross billings - Distribution

Gross billings - Solutions

Gross billings margin % - Gross billings

We consider gross profit growth and effective margin to be key metrics in evaluating our business.

During the three months ended March 31, 2025, gross profi t increased 37%, or $6.4 million, to $23.4 million compar ed to $17.0 million for the same period in the prior year while effective margin increased to 32.7% compared to 32.5% f or the same period in the prior year.

On July 31, 2024, we completed the acquisition of DSS for an aggregate purchase price of approximately $20.3 million (subject to certain adjustments) plus a potential post-closing earnout payment.

On October 6, 2023, we completed the acquisition of 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 operating results of DSS and Data Solutions are included in our operating results from the dates of acquisition.

The operating results of DSS and Data Solutions are included in our Distribution segment.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Net Sales and Adjusted Gross Billings

Net sales for the three months ended September 30, 2024 increased 52%, or $40.8 million, to $119.3 million compared to $78.5 million for the same period in the prior year.

Adjusted gross billings for the thre e months ended September 30, 2024 increased 65%, or $183.3 million, to $465.2 million compared to $281.9 million for the same period in the prior year.

Net sales and adjusted gross billings increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisitions of DSS and Data Solutions.

Adjusted gross billings increased at a greater rate than net sales due to differences in the product mix between the two periods.

During the three months ended September 30, 2024 , adjusted gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales, while during the three months ended September 30, 2023 , adjusted gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis.

Distribution segment net sales for the three months ended September 30, 2024 increased 55%, or $39.7 million, to $111.9 million compared to $72.2 million for the same period in the prior year.

Adjusted gross billings for the Distribution segment for the three months ended September 30, 2024 increased 69%, or $179.8 million, to $441.4 million compared to $261.6 million for the same period in the prior year.

Net sales increased at a lesser rate than adjusted gross billings increased due to the aforementioned differences in the product mix between the two periods.

Solutions segment net sales for the three months ended September 30, 2024 , increased 20%, or $1.3 million, to $7.5 million compared to $6.2 million for the same period in the prior year.

Adjusted gross billings for the Solutions segment for the three months ended September 30, 2024 increased 17%, or $3.5 million, to $23.8 m il lion compared to $20.3 million for the same period in the prior year.

Net sales increased at a lesser rate than adjusted gross billings due to differences in the product mix between the two periods.

During the three months ended September 30, 2024, the Company had two major customers that accounted for 16% and 13%, resp ectively, of our total net sales.

During the three months ended September 30, 2023, the Company had two m ajor customers that accounted for 21% and 17%, respectively, of our total net sales.

The Company had one m ajor vendor that accounted fo r 8% of tot al purchases during the three months ended September 30, 2024 and 15% of total purchases during the three months ended September 30, 2023.

Gross profit for the three months ended September 30, 2024 increased 70%, or $10.0 million, to $24.3 million compared to $14.3 million for the same period in the prior year.

Gross profit increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisitions of DSS and Data Solutions.

Distribution segment gross profit for the three months ended September 30, 2024 increased 85%, or $9.9 million, to $21.6 million compared to $11.7 million for the same period in the prior year.

The increase in Distribution segment gross profit was due to the aforementioned organic growth from our existing vendor partnerships as well as the contribution from the acquisitions of DSS and Data Solutions, partially offset by higher early pay discounts and other rebates and discounts offered to our customers as a percentage of adjusted gross billings.

Solutions segment gross profit for the three months ended September 30, 2024 increased 4%, or $0.1 million, to $2.7 million compared to $2.6 million for the same period in the prior year.

This increase was driven by the aforementioned increase in adjusted gross billings compared to the same period in the prior year.

Customer rebates and discounts for the three months ended September 30, 2024 we re $3.9 million compared to $2.8 million for the same period in the prior year.

Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.

Vendor rebates and discounts for the three months ended September 30, 2024 were $0.8 million compared to $2.3 million for the same period in the prior year.

Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors or meeting certain early payment programs offered by our vendors.

The Company monitors vendor rebate levels, competitive pricing, and gross profit margins carefully.

Selling, General and Administrative Expenses

SG&A expenses for the three months ended September 30, 2024 increased 38%, or $3.8 million, to $13.9 million compared to $10.1 million for the same period in the prior year primarily due to the impact of the acquisition of DSS.

SG&A expenses were 3.0% of adjusted gross billings for the three months ended September 30, 2024 , compared to 3.6% for the same period in the prior year.

The Company expects that its SG&A expenses, as a percentage of adjusted gross billings, may vary depending on changes in sales volume, as well as the levels of continuing investments to drive future growth.

Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended September 30, 2024 , increased 94%, or $0.6 million, to $1.2 million compared to $0.6 million for the same period in the prior year, primarily due to the amortization of intangible assets acquired in the DSS and Data Solutions acquisitions.

Acquisition Related Costs

Acquisition related costs for the three months ended September 30, 2024 were $0.6 million, which were primarily costs incurred in conjunction with the acquisition of DSS, compared to $0.

2 million for the same period in the prior year, which were costs incurred in conjunction with the acquisition of Data Solutions.

For the three months ended September 30, 2024 and 2023, the Company recorded a provision for income taxes of $1.7 mill ion and $1.1 million, respectively.

The effective tax rate for the three months ended September 30, 2024 and 2023 w as 23.3% and 31.6 %, r espectively.

The change in effective tax rate for the three months ended September 30, 2024 compared to the same period in the prior year was impacted by changes in the mix of jurisdictions in which taxable income was earned, as well as the prior year period included limitations on the deductibility of certain executive compensation amounts .

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net Sales and Adjusted Gross Billings

Net sales for the nine months ended September 30, 2024 increased 24%, or $58.6 million, to $303.8 mil lion compared to $245.2 million for the same period in the prior year.

Adjusted gross billings for the nine months ended September 30, 2024 increased 37%, or $317.0 million, to $1,180.3 million compared to $863 .3 million for the same period in the prior year.

Net sales and adjusted gross billings increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisitions of DSS and Data Solutions.

Adjusted gross billings increased at a greater rate than net sales due to differences in the product mix between the two periods and an unfavorable impact of foreign exchange rates.

During the nine months ended September 30, 2024 , adjusted gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales, while during the nine months ended September 30, 2023 , adjusted gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis.

Distri bution segment net sales for the nine months ended September 30, 2024 increased 26%, or $59.6 million, to $286.5 million compared to $226.9 million for the same period in the prior year.

Adjusted gross billings for the Distribution segment for the nine months ended September 30, 2024 increased 38%, or $308.4 million, to $1113.6 millio n compared to $805.2 million for the same period in the prior year.

Net sales increased at a lesser rate than adjusted gross billings due to the aforementioned differences in the product mix between the two period s.

So lutions segment net sales for the nine months ended September 30, 2024 , decreased 6%, or $1.0 million, to 17.3 million compared to $18.3 million for the same period in the prior year.

Adjusted gross billings for the Solutions segment for the nine months ended September 30, 2024 increased 15%, or $8.6 million, to $66.7 m illion compared to $58.1 million for the same period in the prior year.

Net sales decreased while adjusted gross billings increased due to the aforementioned differences in the product mix between the two periods.

During the nine months ended September 30, 2024, the Company had two m ajor customers that accounted f or 15% and 18%, r espectively, of our total net sales.

During the nine months ended September 30, 2023, the Company had two major customers that accounted for 21% and 15%, respectively, of our total net sales.

The Company had one major vendor that accounted for 11%, respectively, of total purchases during the nine months ended September 30, 2024 and 16% of to tal purchases during the nine months ended September 30, 2023.

Gross profit for the nine months ended September 30, 2024 increased 39%, or $16.6 million, to $59.8 mil lion compared to $43.2 million for the same period in the prior year.

Gross profit increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisitions of DSS and Data Solutions.

Distribution segment gross profit for the nine months ended September 30, 2024 increased 45%, or $16.0 million, to $51.5 million compared to $35.5 million for the same period in the prior year.

Solutions segment gross profit for the nine months ended September 30, 2024 increased 9%, or $0.7 million, to $8.4 millio n compared to $7.7 million for the same period in the pri or year.

This increase was driven by the aforementioned increase in adjusted gross billings compared to the same period in the prior year.

Customer rebates and discounts for the nine months ended September 30, 2024 were $10.4 mill ion compared to $9.2 million for the sam e period in the prior year.

The operating results of DSS are included in our in our operating results from the date of acquisition within our Distribution segment.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Net Sales and Gross Billings

Net sales for the three months ended March 31, 2025 increased 49%, or $45.6 million, to $138.0 million compared to $92.4 million for the same period in the prior year.

Gross billings, an operational metric, for the thre e months ended March 31, 2025 increased 34%, or $119.3 million, to $474.6 million compared to $355.3 million for the same period in the prior year.

Net sales and gross billings increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisition of DSS.

Gross billings increased at a lesser rate than net sales due to differences in the product mix between the two periods.

During the three months ended March 31, 2025 , gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis, while during the three months ended March 31, 2024 , gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales.

Distribution segment net sales for the three months ended March 31, 2025 increased 52%, or $45.4 million, to $132.2 million compared to $86.8 million for the same period in the prior year.

Gross billings for the Distribution segment for the three months ended March 31, 2025 increased 36%, or $119.0 million, to $453.6 million compared to $334.6 million for the same period in the prior year.

Net sales increased at a greater rate than gross billings increased due to the impact of hardware and software sales recognized during the current period, which are recorded on a gross basis.

Solutions segment net sales for the three months ended March 31, 2025 , increased 5%, or $0.3 million, to $5.9 million compared to $5.6 million for the same period in the prior year.

Gross billings for the Solutions segment for the three months ended March 31, 2025 increased 2%, or $0.4 million, to $21.0 m il lion compared to $20.6 million for the same period in the prior year.

Net sales increased at a greater rate than gross billings due to differences in the product mix between the two periods.

The Company had two major customers that accounted for 26% and 13%, respectively, of its total net sales during the three months ended March 31, 2025 and 20% and 15%, respectively, of its total net sales during the three months ended March 31, 2024.

The Company had one m ajor vendor that accounted fo r 13% of tot al purchases during the three months ended March 31, 2025 and 16 % of total purchases during the three months ended March 31, 2024.

Gross profit for the three months ended March 31, 2025 increased 37%, or $6.4 million, to $23.4 million compared to $17.0 million for the same period in the prior year.

Gross profit increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisition of DSS.

Distribution segment gross profit for the three months ended March 31, 2025 increased 44%, or $6.2 million, to $20.4 million compared to $14.2 million for the same period in the prior year.

The increase in Distribution segment gross profit was due to the aforementioned organic growth from our existing vendor partnerships as well as the contribution from the acquisition of DSS, partially offset by higher early pay discounts and other rebates and discounts offered to our customers as a percentage of gross billings.

Solutions segment gross profit for the three months ended March 31, 2025 increased 7%, or $0.2 million, to $3.0 million compared to $2.8 million for the same period in the prior year.

This increase was driven by the aforementioned increase in gross billings compared to the same period in the prior year.

Customer rebates and discounts for the three months ended March 31, 2025 we re $4.6 million compared to $3.3 million for the same period in the prior year.

Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.

Vendor rebates and discounts for the nine months ended September 30, 2024 wer e $4.4 million compared to $6.1 million for the same period in the prior year.

Vendor rebates and discounts for the three months ended March 31, 2025 were $4.7 million compared to $1.9 million for the same period in the prior year.

Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors or meeting certain early payment programs offered by our vendors.

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Selling, General and Administrative Expenses

SG&A expenses for the nine months ended September 30, 2024 increased 23%, or $7.4 million, to $39.4 million compared to $31.9 mil lion for the same period in the prior ye ar, primarily due to the impact of the acquisition of DSS.

SG& A expenses wer e 3.3% of adj usted gross billings for the nine months ended September 30, 2024, compared to 3.7% for the same period in the prior year.

SG&A expenses for the three months ended March 31, 2025 increased 34%, or $4.3 million, to $16.8 million compared to $12.5 million for the same period in the prior year.

This increase was primarily due to the impact of the acquisition of DSS as well as an increase in salaries, commissions and other employee related expenses in support of the increased gross profit.

SG&A expenses were 3.5% of gross billings for the three months ended March 31, 2025 and 2024 , respectively.

The Company expects that its SG&A expenses, as a percentage of gross billings, may vary depending on changes in sales volume, as well as the levels of continuing investments to drive future growth.

Depreciation and Amortization Expense

Depreciation and amortization expense for the nine months ended September 30, 2024, increased 54%, or $1.1 million, to $3.0 mil lion compared to $1.9 million for the same period in the prio r year, primarily due to the amortization of intangible assets acquired in the DSS acquisition.

Depreciation and amortization expense for the three months ended March 31, 2025 , increased 99%, or $0.8 million, to $1.7 million compared to $0.9 million for the same period in the prior year, primarily due to the amortization of intangible assets acquired in the DSS acquisition as well as increased amortization for a vendor relationship acquired through a prior year acquisition.

The Company received notice of termination of its distribution agreement from this vendor and therefore changed the amortization life of the intangible asset to a shorter period to reflect the expected period of benefits.

Acquisition Related Costs

Acquisition related costs for the nine months ended September 30, 2024 were $1.2 million, which were primarily costs incurred in conjunction with the acquisition of DSS, compared to $0.3 million for the sa me period in the prior year, which were costs incurred in conjunction with the acquisition of Data Solutions.

For the nine months ended September 30, 2024 and 2023, the Company recorded a provision for income taxes of $3.6 mi llion and $2.6 million, respectively.

The effective tax rate for the nine months ended September 30, 2024 and 2023 wa s 23.5% an d 27.0%, respectively.

The change in the effective tax rate for the nine months ended September 30, 2024 compared to the same period in the prior year was impacted by changes in the mix of jurisdictions in which taxable income was earned, as well as the prior year period included limitations on the deductibility of certain executive compensation amounts.

Acquisition related costs for the three months ended March 31, 2025 and 2024 r emained consistent at $0.1 million, respectively.

We compute interim period income taxes by applying an anticipated annual effective tax rate to our year-to-date income or loss from operations before income taxes, except for significant unusual or infrequently occurring items and discrete items.

As a result, our estimated tax rate is adjusted each quarter.

For the three months ended March 31, 2025 and 2024, the Company recorded a provision for income taxes of $0.6 mill ion and $0.9 million, respectively.

The effective tax rate for the three months ended March 31, 2025 and 2024 w as 13.3% and 24.6 %, r espectively.

The change in effective tax rate for the three months ended March 31, 2025 compared to the same period in the prior year was impacted by a discrete item for the recognition of excess tax benefits related to share-based compensation in income tax expense, changes in the mix of jurisdictions in which taxable income was earned, as well as limitations on the deductibility of certain executive compensation amounts during both periods.

Liquidity and Capital Resources

Our cash and cash equivalents as of September 30, 2024 decreased 39%, or $14.2 million, to $22.1 million c ompared to $36.3 million as of December 31, 2023.

Net cash and cash equivalents provided by operating activities for the nine months ended September 30, 2024 was $17.8 million, com prised primarily of net income adjusted for non-cash items of $18.7 million, partially offset by changes in operating assets and liabilities of $0.9 million.

Net cash and cash equivalents used in investing activities during the nine months ended September 30, 2024 was $24.3 million, comprised of $3.6 million purchases of fixed assets supporting our ongoing ERP project and $20.7 million payment for the DSS acquisition.

Net cash and cash equivalents used in financing activities during the nine months ended September 30, 2024 w as $8.1 mill ion, comprised of dividend payments on our Common Stock of $2.3 million, purchases of treasury stock of $1.0 million, repayments of borrowings under term loan of $0.4 mil lion and repayments of borrowings under credit facil ities of $4.2 mi llion.

Our cash and cash equivalents as of March 31, 2025 increased 9%, or $2.7 million, to $32.5 million c ompared to $29.8 million as of December 31, 2024.

Net cash and cash equivalents provided by operating activities for the three months ended March 31, 2025 was $8.5 million, comprised primarily of net income adjusted for non-cash items of $6.9 million, partially offset by changes in operating assets and liabilities of $1.5 million.

Net cash and cash equivalents used in investing activities during the three months ended March 31, 2025 was $0.7 million purchases of fixed assets supporting our ongoing ERP project and new leasehold improvements.

Net cash and cash equivalents us ed in financing activities during the three months ended March 31, 2025 was $5.3 million, comprised of payments of contingent considerations of $3.6 million, purchases of treasury stock of $0.9 million, dividend payments on our Common Stock of $0.8 million and repayments of borrowings under term loan of $0.1 million.

On May 18, 2023, the Company entered into a revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A.

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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 September 30, 2024.

There were no amounts outstanding under the Credit Agreement as of March 31, 2025.

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

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The borrowing under the Term Loan bears interest at a rate of 3.73% per annum and is being repaid over forty-eight monthly installments of principal and interest through April 2026.

As of September 30, 2024, the Company ha d $0.9 m illion outstanding under the Term Loan.

In connection with the acquisition of Data Solutions, the Company acquired an invoice discounting facility (“IDF”) that was with recourse to the Company.

As of March 31, 2025, the Company had $0.6 millio n outstanding under the Term Loan.

In connection with the acquisition of Data Solutions, which was completed October 6, 2023, 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 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 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.

At September 30, 2024 , the outstanding balance under the IDF at was zero, as the Company terminated the IDF during the period.

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 varied based on the currency of the accounts receivable.

We anticipate that our working capital needs will increase as we invest in the growth of our business.

We believe that the funds held in cash and cash equivalents and our unused borrowings under our Credit Agreement will be sufficient to fund our working capital and cash requirements for at least the next 12 months.

Our uses of cash beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which we are uncertain but include funding our operations and additional capital expenditures.

We continuously evaluate our liquidity and capital resources, including access to external capital, to ensure we can finance our longer-term capital requirements.

Foreign Exchange

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Off-Balance Sheet Arrangements

As of September 30, 2024, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934, as amended.

Quantitative and Qualitative Disclosures about Market Risk

Smaller reporting companies are not required to provide the information required by this item.

As of March 31, 2025, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934, as amended.

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-Q

Item 1. Financial Statements