What changed in this filing

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Item 1. Financial Statements

2025-10-30 compared with 2025-07-31 · 252 added, 193 removed, 779 unchanged (36% of the section changed)

4 unchanged sentences

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

September 30,

Current assets:

53 unchanged sentences

(Amounts in thousands, except per share data)

Six months ended

Nine months ended

Three months ended

$ 297,328 $ 184,498 $ 159,284 $ 92,076

September 30,

Cost of sales

247,624 148,921 132,976 73,518

49,704 35,577 26,308 18,558

Selling, general, and administrative expenses

33,112 25,496 16,357 12,974

Acquisition related costs

139 592 13 469

Depreciation and amortization expense

3,720 1,736 1,982 865

Income from operations

12,733 7,753 7,956 4,250

Other income and (expense):

Interest, net

337 557 151 354

Foreign currency transaction (loss) gain

( 567 ) ( 246 ) 14 ( 162 )

Change in fair value of acquisition contingent consideration

( 515 ) — ( 379 ) —

Income before provision for income taxes

11,988 8,064 7,742 4,442

Provision for income taxes

2,338 1,903 1,774 1,012

$ 9,650 $ 6,161 $ 5,968 $ 3,430

Income per common share-Basic

$ 2.11 $ 1.35 $ 1.30 $ 0.75

Income per common share-Diluted

$ 2.11 $ 1.35 $ 1.30 $ 0.75

Weighted average common shares outstanding — Basic

4,509 4,449 4,521 4,461

Weighted average common shares outstanding — Diluted

4,509 4,449 4,521 4,461

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

3 unchanged sentences

(Amounts in thousands)

Six months ended

Nine months ended

Three months ended

$ 9,650 $ 6,161 $ 5,968 $ 3,430

September 30,

Other comprehensive income (loss):

Foreign currency translation adjustments

5,335 ( 839 ) 3,782 ( 121 )

Other comprehensive income (loss)

5,335 ( 839 ) 3,782 ( 121 )

Comprehensive income

$ 14,985 $ 5,322 $ 9,750 $ 3,309

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

33 unchanged sentences

5,284,500 $ 53 $ 40,043 667,294 $ ( 14,266 ) $ 76,904 $ 2,443 $ 105,177

— — — — — 4,696 — 4,696

Translation adjustment

— — — — — — ( 611 ) ( 611 )

Dividends paid (per common share $ 0.17 )

— — — — — ( 771 ) — ( 771 )

Share-based compensation expense

— — 1,077 — — — — 1,077

Restricted stock grants (net of forfeitures)

— — 16 905 ( 16 ) — — —

Treasury shares repurchased

— — — 2,855 ( 306 ) — — ( 306 )

Balance at September 30, 2025

5,284,500 $ 53 $ 41,136 671,054 $ ( 14,588 ) $ 80,829 $ 1,832 $ 109,262

Comprehensive

28 unchanged sentences

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

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

3 unchanged sentences

(Amounts in thousands)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities

$ 9,650 $ 6,161

Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:

2 unchanged sentences

Deferred income tax benefit

( 409 ) ( 188 )

Share-based compensation expense

1 unchanged sentence

Amortization of discount on accounts receivable

( 23 ) ( 17 )

Amortization of right-of-use assets

2 unchanged sentences

Accounts receivable

61,608 39,751

( 748 ) 2,070

Prepaid expenses and other current assets

( 2,270 ) 1,093

Accounts payable and accrued expenses

( 68,471 ) ( 29,523 )

Lease liability, net

( 319 ) ( 195 )

Other assets and liabilities

173 ( 1,659 )

Net cash and cash equivalents provided by operating activities

1 unchanged sentence

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

( 1,401 ) ( 2,361 )

Payment for acquisition

Net cash and cash equivalents used in investing activities

( 1,401 ) ( 2,361 )

Cash flows from financing activities

Purchase of treasury stock

( 1,423 ) ( 715 )

Repayments of borrowings under credit facilities

Repayments of borrowings under term loan

( 278 ) ( 267 )

Dividends paid

( 1,533 ) ( 1,514 )

Contingent consideration paid

( 3,559 ) ( 150 )

Net cash and cash equivalents used in financing activities

( 6,793 ) ( 6,865 )

Effect of foreign exchange rate on cash and cash equivalents

Net increase in cash and cash equivalents

( 1,191 ) 12,068

Cash and cash equivalents at beginning of period

29,778 36,295

Cash and cash equivalents at end of period

$ 28,587 $ 48,363

Supplementary disclosure of cash flow information:

Income taxes paid

$ 5,136 $ 2,484

Interest paid

3 unchanged sentences

Notes to Condensed Consolidated Financial Statements

June 30, 2025

September 30, 2025

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

15 unchanged sentences

All intercompany transactions and balances have been eliminated.

Reclassifications

Certain reclassifications and immaterial revisions have been made to the prior period financial statements to conform to the current-year presentation.

Recently Issued Accounting Standards:

In September 2025, the FASB issued ASU No.

2025 - 06, “ Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350 - 40 ):

Targeted Improvements to the Accounting for Internal-Use Software ”.

This ASU amends the guidance under ASC 350 - 40 for internal-use software.

The amendments remove referenced to development-stages, clarify when capitalization may begin, and require entities to apply to property, plant and equipment disclosure requirements under ASC 350 - 10 to capitalize internal-use software costs.

The ASU is effective for annual periods beginning after December 15, 2027, and for interim periods within those annual periods.

Early adoption of ASU No.

2025 - 06 is permitted.

The Company has performed an initial assessment and currently does not expect the adoption of ASU No.

2025 - 06 to have a material effect on its financial position, results of operations or cash flows.

In July 2025, the FASB issued ASU No.

2025 - 05, “ Financial Instruments - Credit Losses (Topic 326 ):

Measurements of Credit Losses for Accounts Receivable and Contract Assets ” .

The update amends the guidance in ASC 326 - 20 to introduce a practical expedient when estimating credit losses that assumes that current conditions as of the balance sheet date do

not change for the remaining life of the asset.

The amendments apply to current accounts receivable and current contract assets arising from transactions under ASC

606 (Revenue from Contracts with Customers).

The amendments are applied prospectively and are effective for annual reporting periods beginning after

December 15, 2025, and interim periods within those years.

Early adoption of ASU

05 is permitted.

The Company has evaluated the impact of ASU

05 on its accounting policies and internal controls related to its credit-customer receivables.

The Company has determined that, given (i) the nature of its receivables (primarily receivables from customers on credit terms), (ii) its historical credit-loss experience and collection patterns, and (iii) its allowance methodology, adoption of ASU

not expected to have a material effect on the Company's consolidated financial position.

In November 2024, the FASB issued ASU No.

22 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 June 30, 2025 and 2024 were $ 42.7 million and $ 22.9 million, respectively.

The net sales from our foreign operations for the six months ended June 30, 2025 and 2024 were $ 73.7 million a nd $ 51.1 million, respectively.

The net sales from our foreign operations for the three months ended September 30, 2025 and 2024 were $ 33.3 million and $ 37.5 million, respectively.

The net sales from our foreign operations for the nine months ended September 30, 2025 and 2024 were $ 107.0 million a nd $ 88.6 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 less than $ 0.1 million on contracts outstanding as of June 30, 2025 , which is included in foreign currency transaction loss in the Consolidated Statements of Earnings.

The Company recognized an unrealized gain of less than $ 0.1 million on contracts outstanding as of September 30, 2025 , which is included in foreign currency transaction loss in the Consolidated Statements of Earnings.

Comprehensive Income:

43 unchanged sentences

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

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.

As of June 30, 2025 , the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximately $ 2.4 million, with $ 0.4 million and $ 0.5 million adjustment recognized within change in fair value of acquisition contingent consideration during the three and six months ended June 30, 2025 , respectively.

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

As of September 30, 2025 , the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximately $ 3.2 million, with $ 0.9 million and $ 1.4 million adjustment recognized within change in fair value of acquisition contingent consideration during the three and nine months ended September 30, 2025 , respectively.

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.

1 unchanged sentence

Goodwill and Other Intangible Assets:

The following table summarizes the changes in the carrying amount of goodwill for the six months ended June 30, 2025 :

The following table summarizes the changes in the carrying amount of goodwill for the nine months ended September 30, 2025 :

Balance December 31, 2024

2 unchanged sentences

1,247 606 1,853

Balance June 30, 2025

Balance September 30, 2025

$ 27,777 $ 9,000 $ 36,777

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

As of June 30, 2025

As of September 30, 2025

Customer and vendor relationships

8 unchanged sentences

Trade name is amortized over fifteen ye ars.

During the three months ended June 30, 2025 and 2024 , the Company recognized total amortization expense for other intangibles, net of $ 1.6 million and $ 0.7 million, respectively.

During the six months ended June 30, 2025 and 2024 , the Company recognized total amortization expense for other intangibles, net of $ 2.9 million and $ 1.4 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of June 30, 2025 is as follows:

2025 (excluding the six months ended June 30, 2025)

During the three months ended September 30, 2025 and 2024 , the Company recognized total amortization expense for other intangibles, net of $ 1.6 million and $ 1.1 million, respectively.

During the nine months ended September 30, 2025 and 2024 , the Company recognized total amortization expense for other intangibles, net of $ 4.4 million and $ 2.5 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of September 30, 2025 is as follows:

2025 (excluding the nine months ended September 30, 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:

Six months ended

Nine months ended

September 30,

Cash paid for operating lease liabilities

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

$ 1,061 $ 360

Weighted-average remaining lease term (years)

Weighted-average discount rate

Maturities of lease liabilities as of June 30, 2025 were as follows:

2025 (excluding the six months ended June 30, 2025)

Maturities of lease liabilities as of September 30, 2025 were as follows:

2025 (excluding the nine months ended September 30, 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 June 30, 2025 and December 31, 2024 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 September 30, 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,

$ 3,143 $ 2,951

6 unchanged sentences

$ 13,485 $ 12,853

During the three months ended June 30, 2025 and 2024 , the Company recorded depreciation and amortization expense o f $ 0.4 million and $ 0.1 million, respectively.

During the six months ended June 30, 2025 and 2024 , the Company recorded depreciation and amortization expense of $ 0.8 milli on and $ 0.3 million, respectively.

During the three months ended September 30, 2025 and 2024 , the Company recorded depreciation and amortization expense of $ 0.4 million and $ 0.1 million, respectively.

During the nine months ended September 30, 2025 and 2024 , the Company recorded depreciation and amortization expense of $ 1.2 milli on and $ 0.4 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

5 unchanged sentences

$ 878 $ 1,174

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $ 0.4 million, $ 0.9 million and $ 0.4 million, respectively, du ring each of the 12 -month periods ending June 30, 2025, 2026, and 2027.

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $ 0.4 million, $ 0.5 million and $ 0.9 million, respectively, du ring each of the 12 -month periods ending September 30, 2025, 2026 and 2027.

Accounts payable and accrued expenses consist of the following:

September 30,

Trade accounts payable

11 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 June 30, 2025 and December 31, 2024 .

There were no amounts outstanding under the Credit Agreement as of September 30, 2025 and December 31, 2024 .

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.

8 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 June 30, 2025 and December 31, 2024 , the Company had $ 0.5 million an d $ 0.8 million outstanding under the Term Loan, respectively.

At June 30, 2025 , future principal payments under the Term Loan are as follows:

2025 (excluding the six months ended June 30, 2025)

At September 30, 2025 and December 31, 2024 , the Company had $ 0.3 million an d $ 0.8 million outstanding under the Term Loan, respectively.

At September 30, 2025 , future principal payments under the Term Loan are as follows:

2025 (excluding the nine months ended September 30, 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.

11 unchanged sentences

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

Six months ended

Nine months ended

Three months ended

September 30,

$ 14,346 $ 11,620 $ 4,696 $ 5,459

12 unchanged sentences

Major Customers and Vendors:

During the three months ended June 30, 2025 , the Company had no major vendors, compared to one major vendor that accounted for 10 % of total purchases during the three months ended June 30, 2024.

During the six months ended June 30, 2025 , the Company ha d no m ajor vendors, compared to one major vendor that account ed for 13 % of total purchases during the six months ended June 30, 2024 .

The Company had three major customers that accounted f or 24 %, 20 % and 13 %, r espectively, of its net sales during the three months ended June 30, 2025 , and 18 %, 1 % and 18 %, re spectively, of its net sales during the three months ended June 30, 2024.

The Company had three major customers that accounted for 25 %, 13 % and 13 % o f net sales during the six months ended June 30, 2025 , and 19 %, 2 % and 16 %, of net sales during the six months ended June 30, 2024 .

These same customers accounted for 18 %, 25 % and 8 % of total net accounts receivable as of June 30, 2025 , and 12 %, 19 % and 6 % of total net accounts receivable as of December 31, 2024 .

The Company had one major vendor that accounted for 13 % of total purchases during the three months ended September 30, 2025 , compared to no major vendors during the three months ended September 30, 2024 .

During the nine months ended September 30, 2025 , the Company ha d no m ajor vendors, compared to one major vendor that account ed for 11 % of total purchases during the nine months ended September 30, 2024 .

The Company had two major customers that accounted for 22 % and 14 %, respectively, of its net sales during the three months ended September 30, 2025 , and 16 % and 13 %, respectively, of its net sales during the three months ended September 30, 2024 .

The Company had two major customers that accounted for 24 % and 13 % of net sales during the nine months ended September 30, 2025 , and 18 % and 15 %, of net sales during the nine months ended September 30, 2024 .

These same customers accounted for 16 % and 7 % of total net accounts receivable as of September 30, 2025, and 12 % and 6 % 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 June 30, 2025 and 2024 , the Company recorded a provision for income taxes of $ 1.8 million and $ 1.0 million, respectively.

The effective tax rate for the three months ended June 30, 2025 and 2024 was 22.9 % and 22.8 %, respectively.

During the six months ended June 30, 2025 and 2024 , the Company recorded a provision for income taxes of $ 2.3 million and $ 1.9 million, respectively.

The effective tax rate for the six months ended June 30, 2025 and 2024 was 19.5 % and 23.6 %, respectively.

The change in effective tax rate for the t hree and six months ended June 30, 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 $ 0.2 million and $ 0.7 million, respectively, which reduced our effective tax rate by 2.6 % and 5.9 % during the three and six months ended June 30, 2025 .

During the three months ended September 30, 2025 and 2024 , the Company recorded a provision for income taxes of $ 1.6 million and $ 1.7 million, respectively.

The effective tax rate for the three months ended September 30, 2025 and 2024 was 25.5 % and 23.3 %, respectively.

During the nine months ended September 30, 2025 and 2024 , the Company recorded a provision for income taxes of $ 3.9 million and $ 3.6 million, respectively.

The effective tax rate for the nine months ended September 30, 2025 and 2024 was 21.6 % and 23.5 %, respectively.

The change in effective tax rate for the three and nine months ended September 30, 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, 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.

The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $ 0.1 million and $ 0.8 million, respectively, which reduced our effective tax rate by 1.9 % and 4.6 % during the three and nine months ended September 30, 2025 .

The One Big Beautiful Bill Act was enacted on July 4, 2025.

The Company is evaluating the impacts of the newly enacted legislation and does not expect it to have a material impact on its effective tax rate or cash flows in the current year.

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 June 30, 2025 , the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 155,991 .

During the six months ended June 30, 2025 , the Company granted a total of 43,736 shares of Restricted Stock Units to directors, officers and employees.

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

During the six months ended June 30, 2025 , a total of 15,471 sh ares of Restricted Stock Units were forfeited.

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

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

During the six months ended June 30, 2024 , a total of 1,661 shares of Restricted Stock Units were forfeited.

A summary of nonvested shares of Restricted Stock Units awards outstanding under the 2021 Plan as of June 30, 2025 , and changes during the three months then ended is as follows:

As of September 30, 2025 , the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 163,895 .

During the nine months ended September 30, 2025 , the Company granted a total of 43,736 Restricted Stock Units to directors, officers and employees.

These Restricted Stock Units vest immediately, over time in three equal installments or over time in sixteen equal quarterly installment s.

During the nine months ended September 30, 2025 , a total of 16,376 Restricted Stock Units were forfeited.

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

These Restricted Stock Units 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 Restricted Stock Units were forfeited.

A summary of nonvested Restricted Stock Unit awards outstanding under the 2021 Plan as of September 30, 2025 , and changes during the three months then ended is as follows:

Average Grant

6 unchanged sentences

( 16,376 ) 50.27

Nonvested shares at June 30, 2025

Nonvested shares at September 30, 2025

76,449 $ 71.14

As of June 30, 2025 , there is approximate ly $ 5.5 m illion of total unrecognized compensation costs related to nonvested share-based compensation arrangements.

As of September 30, 2025 , there is approximate ly $ 4.8 million 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 2.0 y ears.

During the t hree months ended June 30, 2025 and 2024 , the Company recognized share-based compensation expense of $ 1.2 million and $ 1.1 million, respectively.

During the six months ended June 30, 2025 and 2024 , the Company recognized share-based compensation expense o f $ 2.5 m illion and $ 1.9 million, respectively.

During the t hree months ended September 30, 2025 and 2024 , the Company recognized share-based compensation expense of $ 1.1 million and $ 0.9 million, respectively.

During the nine months ended September 30, 2025 and 2024 , the Company recognized share-based compensation expense o f $ 3.6 m illion and $ 2.8 million, respectively.

Commitments and Contingencies

5 unchanged sentences

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 June 30, 2025 , the Company has no standby letters of credit, has no standby repurchase obligations or other commercial commitments.

As of September 30, 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).

5 unchanged sentences

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

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

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

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

1 unchanged sentence

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.

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

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

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

8 unchanged sentences

The following segment reporting information of the Company is provided:

Six months ended

Nine months ended

Three months ended

September 30,

$ 439,584 $ 286,523 $ 154,413 $ 111,861

29 unchanged sentences

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

September 30,

Selected Assets by Segment:

6 unchanged sentences

$ 376,091 $ 469,179

Geographic areas and net sales mix related to operations for the three and six months ended June 30, 2025 and 2024 were as follows.

Geographic areas and net sales mix related to operations for the three and nine months ended September 30, 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.

Six months ended

Nine months ended

Three months ended

June 30, 2025

September 30, 2025

$ 345,023 $ 6,622 $ 351,645 $ 125,573 $ 2,442 $ 128,015

11 unchanged sentences

$ 439,584 $ 19,087 $ 458,671 $ 154,413 $ 6,930 $ 161,343

Six months ended

Nine months ended

Three months ended

June 30, 2024

September 30, 2024

$ 208,462 $ 6,808 $ 215,270 $ 78,012 $ 3,818 $ 81,830

13 unchanged sentences

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

Geographic identifiable assets related to operations as of June 30, 2025 and December 31, 2024 were as follows.

Geographic identifiable assets related to operations as of September 30, 2025 and December 31, 2024 were as follows.

September 30,

Identifiable Assets by Geographic Areas

14 unchanged sentences

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 June 30, 2025 and December 31, 2024 , respectively, are as follows:

As of June 30, 2025

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, 2025 and December 31, 2024 , respectively, are as follows:

As of September 30, 2025

Contingent earn-out

10 unchanged sentences

The approach to estimating the contingent earn-out associated with the Company’s business combinations uses unobservable factors such as projected cash flows over the term of the contingent earn-out periods.

The Company’s investment in treasury bills are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy.

The Company’s contingent earn-out liability is measured at fair value on a recurring basis and is classified as level 3 within the fair value hierarchy.

6 unchanged sentences

Change in fair value of acquisition contingent consideration

Discount on escrow reserve

Translation adjustments

Balance June 30, 2025

During the six months ended June 30, 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.

Balance September 30, 2025

During the nine months ended September 30, 2025 , the Company made a contingent consideration payment of $ 4.0 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.

Subsequent Events

The One, Big, Beautiful Bill Act ("OBBBA”) was enacted on July 4, 2025 and the Company continues to evaluate the impact on its financial position.

The OBBBA is not currently expected to materially impact the Company’s effective tax rate or cash flows in the current fiscal year.

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

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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 $ 0.5 million, for the three months ended June 30, 2025 , r espectively, and $0.8 million and $0.3 million, for the three months ended June 30, 2024, respectively.

Total dividends paid and the dollar value of the shares repurchased were $0.8 million and $ 0.3 million, for the three months ended September 30, 2025 and 2024.

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.

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Financial Overview

Net sales increased 73%, or $67.2 million, to $159.3 million f or the three months ended June 30, 2025 compared to $92.1 million for the same period in the prior year.

Gross profit increased 42%, or $7.7 million, to $26.3 milli on for the three months ended June 30, 2025, compared to $18.6 million for the same period in the prior year.

Selling, general and administrative (“SG&A”) expens es increased 26 %, or $3.4 million, to $16.4 million for the three months ended June 30, 2025 compared to $13.0 million for the same period in the prior year.

Depreciation and amortization expense increased 129%, or $1.1 million, to $2.0 m illion for the three months ended June 30, 2025 compared to $0.9 million for the same period in the prior year.

Net inco me increased 74%, or $2.5 million, to $5.9 mi llion for the three months ended June 30, 2025 compared to $3.4 million for the same period in the prior year.

Diluted income per share increa sed 73%, or $0.55 to $1.30 for the three months ended June 30, 2025 compared to $0.75 for the same period in the prior year.

Net sales increased 35%, or $42.0 million, to $161.3 million f or the three months ended September 30, 2025 compared to $119.3 million for the same period in the prior year.

Gross profit increased 6%, or $1.4 million, to $25.7 milli on for the three months ended September 30, 2025, compared to $24.3 million for the same period in the prior year.

Selling, general and administrative (“SG&A”) expens es increased 16%, or $2.3 million, to $16.2 mill ion for the three months ended September 30, 2025 compared to $13.9 million for the same period in the prior year.

Depreciation and amortizatio n expense increased 65%, or $0.8 million, to $2.0 mil lion for the three months ended September 30, 2025 compared to $1.2 million for the same period in the prior year.

Net inco me decreased 14%, or $0.8 million, to $4.7 mi llion for the three months ended September 30, 2025 compared to $5.5 million for the same period in the prior year.

Diluted income per share decreased 14%, or $0.17 to $1.02 for the three months ended September 30, 2025 compared to $1.19 for the same period in the prior year.

Critical Accounting Policies and Estimates

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In cases where the Company is not able to create a natural hedge by maintaining offsetting asset and liability amounts in the same currency, it may enter into foreign exchange contracts, typically in the form of forward purchase agreements, to facilitate the hedging of foreign currency exposures to mitigate the impact of changes in foreign currency exchange rates.

These contracts generally have terms of no more than two months.

These contracts generally have terms of no more than three months.

The Company does not apply hedge accounting to these contracts and therefore the changes in fair value are recorded in earnings.

The Company recognized an unrealized loss of less t han $0.1 million on contracts outstanding as of June 30, 2025, which is included in foreign currency transaction loss in the Consolidated Statement of Earnings.

The Company recognized an unrealized gain of less than $0.1 million o n contracts outstanding as of September 30, 2025, which is included in foreign currency transaction loss in the Consolidated Statement of Earnings.

Recently Issued Accounting Pronouncements

In September 2025, the FASB issued ASU No.

2025-06, “ Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software ”.

This ASU amends the guidance under ASC 350-40 for internal-use software.

The ASU is effective for annual periods beginning after December 15, 2027, and for interim periods within those annual periods.

Early adoption of ASU No.

2025-06 is permitted.

The Company has performed an initial assessment and currently does not expect the adoption of ASU No.

2025-06 to have a material effect on its financial position, results of operations or cash flows.

In July 2025, the FASB issued ASU No.

2025-05, “ Financial Instruments - Credit Losses (Topic 326):

Measurements of Credit Losses for Accounts Receivable and Contact Assets ” .

The update amends the guidance in ASC 326-20 to introduce a practical expedient when estimating credit losses that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset.

The amendments apply to current accounts receivable and current contract assets arising from transactions under ASC 606 (Revenue from Contracts with Customers).

The amendments are applied prospectively and are effective for annual reporting periods beginning after December 15, 2025, and interim periods within those years.

Early adoption of ASU No.

2025-05 is permitted.

The Company has evaluated the impact of ASU No.

2025-05 on its accounting policies and internal controls related to its credit-customer receivables.

2025-05 is not expected to have a material effect on the Company's consolidated financial position.

In November 2024, the FASB issued ASU No.

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

Six months ended

Nine months ended

Three months ended

September 30,

Cost of sales

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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.

Six months ended

Nine months ended

Three months ended

September 30,

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

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

Six months ended

Nine months ended

Three months ended

September 30,

Gross profit - Distribution

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

During the three months ended June 30, 2025 , gross profit increased 42%, or $7.7 million, to $26.3 million compared to $18.6 million for the same period in the prior year while effective margin increased to 43.3% compared to 37.3% for the same period in the prior year.

During the six months ended June 30, 2025, gross profi t increased 40%, or $14.1 million, to $49.7 million compar ed to $35.6 million for the same period in the prior year while effective margin increased to 38.3% compared to 35.0% f or the same period in the prior year.

During the three months ended September 30, 2025 , gross profit increased 6%, or $1.4 million, to $25.7 million compared to $24.3 million for the same period in the prior year while effective margin decreased to 42.3% compared to 45.7% for the same period in the prior year.

During the nine months ended September 30, 2025, gross prof it increased 26%, or $15.6 million, to $75.4 million compar ed to $59.8 million for the same period in the prior year while effective margin increased to 39.6% compared to 39.3% 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.

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

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Net Sales and Gross Billings

Net sales for the three months ended June 30, 2025 increased 73%, or $67.2 million, to $159.3 million compared to $92.1 million for the same period in the prior year.

Gross billings, an operational metric, for the thre e months ended June 30, 2025 increased 39%, or $140.8 million, to $500.6 million compared to $359.8 million for the same period in the prior year.

Net sales for the three months ended September 30, 2025 increased 35%, or $42.0 million, to $161.3 million compared to $119.3 million for the same period in the prior year.

Gross billings, an operational metric, for the thre e months ended September 30, 2025 increased 8%, or $39.4 million, to $504.6 million compared to $465.2 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 June 30, 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 June 30, 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 June 30, 2025 increased 74%, or $65.2 million, to $153.0 million compared to $87.8 million for the same period in the prior year.

Gross billings for the Distribution segment for the three months ended June 30, 2025 increased 40%, or $136.9 million, to $477.0 million compared to $340.1 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 June 30, 2025 , increased 48%, or $2.1 million, to $6.3 million compared to $4.2 million for the same period in the prior year.

Gross billings for the Solutions segment for the three months ended June 30, 2025 increased 19%, or $3.7 million, to $23.5 m il lion compared to $19.8 million for the same period in the prior year.

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

The Company had three major customers that accounted f or 24%, 20% and 13%, r espectively, of its total net sales during the three months ended June 30, 2025 and 18%, 1% and 18%, respectively, of its total net sales during the three months ended June 30, 2024.

During the three months ended June 30, 2025 the Company had no m ajor vendors, compared to one major vendor that accounted fo r 10 % of total purchases during the three months ended June 30, 2024.

Gross profit for the three months ended June 30, 2025 increased 42%, or $7.7 million, to $26.3 million compared to $18.6 million for the same period in the prior year.

This increase was driven by both organic growth from existing vendor partnerships and a $2.4 million contribution from the DSS acquisition.

Distribution segment gross profit for the three months ended June 30, 2025 increased 47%, or $7.3 million, to $23.0 million compared to $15.7 million for the same period in the prior year.

The increase reflects the previously noted organic growth from existing vendor partnerships and a $2.4 million contribution from the DSS acquisition, partially offset by an increase in early pay discounts and other customer incentives as a percentage of gross billings.

Solutions segment gross profit for the three months ended June 30, 2025 increased 13%, or $0.4 million, to $3.3 million compared to $2.9 million for the same period in the prior year.

This increase was organically 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 June 30, 2025 we re $6.3 million compared to $3.2 million for the same period in the prior year.

During the three months ended September 30, 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 September 30, 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 September 30, 2025 increased 38%, or $42.5 million, to $154.4 million compared to $111.9 million for the same period in the prior year.

Gross billings for the Distribution segment for the three months ended September 30, 2025 increased 9%, or $40.5 million, to $481.9 million compared to $441.4 million for the same period in the prior year.

Net sales increased organically 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, as well as the impact of the acquisition of DSS.

Solutions segment net sales for the three months ended September 30, 2025 , decreased 7%, or $0.6 million, to $6.9 million compared to $7.5 million for the same period in the prior year.

Gross billings for the Solutions segment for the three months ended September 30, 2025 decreased 5%, or $1.1 million, to $22.7 m il lion compared to $23.8 million for the same period in the prior year.

Net sales decreased at a greater rate than the decrease in gross billings due to differences in the product mix between the two periods in our Solution segment.

The Company had two major customers that accounted for 22% and 14%, respectively, of its total net sales during the three months ended September 30, 2025 and 16% and 13%, resp ectively, of its total net sales during the three months ended September 30, 2024.

The Company had one major vendor that accounted for 13% of total purchases during the three months ended September 30, 2025 , compared to no major vendors during the three months ended September 30, 2024.

Gross profit for the three months ended September 30, 2025 increased 6%, or $1.4 million, to $25.7 million compared to $24.3 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 DSS acquisition.

Distribution segment gross profit for the three months ended September 30, 2025 increased 4%, or $0.8 million, to $22.4 million compared to $21.6 million for the same period in the prior year.

The increase reflects the previously noted organic growth from existing vendor partnerships as well as the contribution from the DSS acquisition, partially offset by an increase in early pay discounts and other customer incentives as a percentage of gross billings.

Solutions segment gross profit for the three months ended September 30, 2025 increased 23%, or $0.6 million, to $3.3 million compared to $2.7 million for the same period in the prior year.

This increase was driven by higher gross profit margins generated in both North American and Europe.

Customer rebates and discounts for the three months ended September 30, 2025 were $5.6 million compared to $3.9 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 June 30, 2025 were $5.5 million compared to $1.6 million for the same period in the prior year.

Vendor rebates and discounts for the three months ended September 30, 2025 were $3.9 million compared to $0.8 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 three months ended June 30, 2025 increased 26%, or $3.4 million, to $16.4 million compared to $13.0 million for the same period in the prior year.

This increase was primarily due to the impact of the acquisition of DSS of $0.9 million as well as an increase in salaries, commissions and other employees related expenses in support of the increased gross profit.

SG&A expenses were 3.3% of gross billings for the three months ended June 30, 2025 , compared to 3.6% for the same period in the prior year.

SG&A expenses for the three months ended September 30, 2025 increased 16%, or $2.3 million, to $16.2 million compared to $13.9 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 employees related expenses in support of the increased gross profit.

SG&A expenses were 3.2% of gross billings for the three months ended September 30, 2025 , compared to 3.0% for the same period in the prior year.

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 three months ended June 30, 2025 , increased 129%, or $1.1 million, to $2.0 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 amortization of previously capitalized ERP costs, which amortization commenced in the fourth quarter of 2024 and 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.

Depreciation and amortization expense for the three months ended September 30, 2025 , increased 65%, or $0.8 million, to $2.0 million compared to $1.2 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 amortization of previously capitalized ERP costs, which amortization commenced in the fourth quarter of 2024 and 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 during the first quarter of 2025 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 three months ended June 30, 2025 were less than $0.1 million, c ompared to $0.5 million for the same period in the prior year, which were costs incurred in conjunction with the acquisition of DSS discussed above.

Acquisition related costs for the three months ended September 30, 2025 and 2024 remained consistent at $0.6 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 June 30, 2025 and 2024, the C ompany recorded a provision for income taxes of $1.8 million and $1.0 million, respectively.

The effective tax rate for the three months ended June 30, 2025 and 2024 was 22.9% and 22.8%, respectively.

The effective tax rate for the three months ended June 30, 2025 compared to the same period in the prior year was impacted by changes in the mix of jurisdictions in which taxable income was earned and limitations on the deductibility of certain executive compensation amounts during both periods, as well as a discrete item for the recognition of excess tax benefits related to share-based compensation in income tax expense during the three months ended June 30, 2025.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

For the three months ended September 30, 2025 and 2024, the C ompany recorded a provision for income taxes of $1.6 million and $1.7 million, respectively.

The effective tax rate for the three months ended September 30, 2025 and 2024 was 25.5% and 23.3%, respectively.

The effective tax rate for the three months ended September 30, 2025 compared to the same period in the prior year was impacted by changes in the mix of jurisdictions in which taxable income was earned and limitations on the deductibility of certain executive compensation amounts during both periods, as well as a discrete item for the recognition of excess tax benefits related to share-based compensation in income tax expense during the three months ended September 30, 2025 .

The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $0.1 million, which reduced our effective tax rate by 1.9% during the three months ended September 30, 2025.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Net Sales and Gross Billings

Net sales for the six months ended June 30, 2025 increased 61%, or $112.8 million, to $297.3 million compared to $184.5 million for the same period in the prior year.

Gross billings, an operational metric, for the six months ended June 30, 2025 increased 36%, or $260.0 million, to $975.1 million compared to $715.1 million for the same period in the prior year.

Net sales for the nine months ended September 30, 2025 increased 51%, or $154.8 million, to $458.6 million compared to $303.8 million for the same period in the prior year.

Gross billings, an operational metric, for the nine months ended September 30, 2025 increased 25%, or $299.5 million, to $1,479.8 million compared to $1,180.3 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 six months ended June 30, 2025 , gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis, while during the six months ended June 30, 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 six months ended June 30, 2025 increased 63%, or $110.5 million, to $285.2 million compared to $174.7 million for the same period in the prior year.

Gross billings for the Distribution segment for the six months ended June 30, 2025 increased 38%, or $255.9 million, to $930.6 million compared to $674.7 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 six months ended June 30, 2025 , increased 24% or $2.3 million, to $12.1 million compared to $9.8 million for the same period in the prior year.

Gross billings for the Solutions segment for the six months ended June 30, 2025 increased 10%, or $4.1 million, to $44.5 m il lion compared to $40.4 million for the same period in the prior year.

During the nine months ended September 30, 2025 , gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis, while during the nine months ended September 30, 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 nine months ended September 30, 2025 increased 53%, or $153.1 million, to $439.6 million compared to $286.5 million for the same period in the prior year.

Gross billings for the Distribution segment for the nine months ended September 30, 2025 increased 27%, or $298.9 million, to $1,412.5 million compared to $1,113.6 million for the same period in the prior year.

Solutions segment net sales for the nine months ended September 30, 2025 , increased 10% or $1.8 million, to $19.1 million compared to $17.3 million for the same period in the prior year.

Gross billings for the Solutions segment for the nine months ended September 30, 2025 increased 1%, or $0.5 million, to $67.2 million compared to $66.7 million for the same period in the prior year.

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

The Company had three major customers that accounted fo r 25%, 13% and 13%, re spectively, of its total net sales during the six months ended June 30, 2025 and 19%, 2% and 16%, respectively, of its total net sales during the six months ended June 30, 2024.

During the six months ended June 30, 2025 the Company had no m ajor vendors, compared to one major vendor that accounted fo r 13 % of total purchases during the six months ended June 30, 2024.

Gross profit for the six months ended June 30, 2025 increased 40%, or $14.1 million, to $49.7 million compared to $35.6 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 of $4.4 million.

Distribution segment gross profit for the six months ended June 30, 2025 increased 45%, or $13.5 million, to $43.4 million compared to $29.9 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 of $4.4 million, 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 six months ended June 30, 2025 increased 10%, or $0.6 million, to $6.3 million compared to $5.7 million for the same period in the prior year.

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

Customer rebates and discounts for the six months ended June 30, 2025 we re $10.9 million compared to $6.6 million for the same period in the prior year.

The Company ha d two major customers that accounted for 24% and 13%, respectively, of its total net sales during the nine months ended September 30, 2025 and 17% and 15%, respectively, of its total net sales during the nine months ended September 30, 2024 .

During the nine months ended September 30, 2025 the Company had no major vendors, compared to one major vendor that accounted for 11% of total purchases during the nine months ended September 30, 2024 .

Gross profit for the nine months ended September 30, 2025 increased 26%, or $15.6 million, to $75.4 million compared to $59.8 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 nine months ended September 30, 2025 increased 28%, or $14.3 million, to $65.8 million compared to $51.5 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 nine months ended September 30, 2025 increased 14%, or $1.2 million, to $9.6 million compared to $8.4 million for the same period in the prior year.

This increase was organically driven by the aforementioned increase in gross billings compared to the same period in the prior year, as well as higher gross profit margins generated in both North America and Europe.

Customer rebates and discounts for the nine months ended September 30, 2025 were $16.5 million compared to $10.4 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 six months ended June 30, 2025 were $10.3 million compared to $3.6 million for the same period in the prior year.

Vendor rebates and discounts for the nine months ended September 30, 2025 were $14.1 million compared to $4.4 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 six months ended June 30, 2025 increased 30%, or $7.6 million, to $33.1 million compared to $25.5 million for the same period in the prior year.

This increase was primarily due to the impact of the acquisition of DSS of $2.0 million as well as an increase in salaries, commissions and other employee related expenses in support of the increased gross profit.

SG&A expenses were 3.4% of gross billings for the six months ended June 30, 2025 , compared to 3.6% for the same period in the prior year.

SG&A expenses for the nine months ended September 30, 2025 increased 25%, or $9.9 million, to $49.3 million compared to $39.4 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 3.3% of gross billings for the nine months ended September 30, 2025 and 2024 .

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 six months ended June 30, 2025 , increased 114%, or $2.0 million, to $3.7 million compared to $1.7 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 amortization of previously capitalized ERP costs, which amortization commenced in the fourth quarter of 2024 and increased amortization for a vendor relationship acquired through a prior year acquisition.

Depreciation and amortization expense for the nine months ended September 30, 2025 , increased 94%, or $2.7 million, to $5.7 million compared to $3.0 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 amortization of previously capitalized ERP costs, which amortization commenced in the fourth quarter of 2024 and increased amortization for a vendor relationship acquired through a prior year acquisition.

Acquisition Related Costs

Acquisition related costs for the six months ended June 30, 2025 and 2024 were $0.1 million and $0.6 million, respectively, which were primarily costs incurred in conjunction with the acquisition of DSS.

Acquisition related costs for the nine months ended September 30, 2025 and 2024 wer e $0.7 million and $1.2 million, respectively.

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

For the six months ended June 30, 2025 and 2024, the Com pany recorded a provision for income taxes of $2.3 million and $1.9 million, respectively.

The effective tax rate for the six months ended June 30, 2025 and 2024 was 19.5% and 23.6%, respectively.

The change in effective tax rate for the six months ended June 30, 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.

For the nine months ended September 30, 2025 and 2024, the Com pany recorded a provision for income taxes of $3.9 million and $3.6 million, respectively.

The effective tax rate for the nine months ended September 30, 2025 and 2024 was 21.6% and 23.5%, respectively.

The change in effective tax rate for the nine months ended September 30, 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.

The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $0.8 million, which reduced our effective tax rate by 4.6% during the nine months ended September 30, 2025.

Liquidity and Capital Resources

Our cash and cash equivalents as of June 30, 2025 decreased 4%, or $1.2 million, to $28.6 million c ompared to $29.8 million as of December 31, 2024.

Net cash and cash equivalents provided by operating activities for the six months ended June 30, 2025 was $6.3 million, comprised primarily of net income adjusted for non-cash items of $16.3 million, partially offset by changes in operating assets and liabilities of $10.0 million.

Net cash and cash equivalents used in investing activities during the six months ended June 30, 2025 wa s $1.4 million purchases of fixed assets supporting our recently completed ERP project and new leasehold improvements.

Net cash and cash equiv alents used in financing activities during the six months ended June 30, 2025 was $6.8 million, comprised of payments of contingent considerations of $3.6 million, purchases of treasury stock of $1.4 million, dividend payments on our Common Stock of $1.5 million and repayments of borrowings under term loan of $0.3 million.

Our cash and cash equivalents as of September 30, 2025 increased 67%, or $20.0 million, to $49.8 million c ompared to $29.8 million as of December 31, 2024.

Net cash and cash equivalents provided by operating activities for the nine months ended September 30, 2025 was $28.5 million, comprised primarily of net income adjusted for non-cash items of $24.3 million, partially offset by changes in operating assets and liabilities of $4.2 million.

Net cash and cash equivalents used in investing activities during the nine months ended September 30, 2025 wa s $1.7 million, comprised primarily of purchases of fixed assets supporting our recently completed ERP project and new leasehold improvements.

Net cash and cash equiv alents used in financing activities during the nine months ended September 30, 2025 was $8.0 million, comprised of payments of contingent considerations of $3.6 million, purchases of treasury stock of $1.7 million, dividend payments on our Common Stock of $2.3 million and repayments of borrowings under term loan of $0.4 million.

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

3 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 June 30, 2025.

There were no amounts outstanding under the Credit Agreement as of September 30, 2025.

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.

As of June 30, 2025, the Company had $0.5 millio n outstanding under the Term Loan.

As of September 30, 2025, the Company had $0.3 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.

13 unchanged sentences

Off-Balance Sheet Arrangements

As of June 30, 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.

As of September 30, 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