2 unchanged sentences
As required by Rule 13a-15(b) under the Exchange Act, our management carried out an evaluation of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures”, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report.
−Removed: This evaluation was carried out under the supervision and with the participation of various members of our management, including our Company’s Chief Executive Officer (principal executive officer) and Vice President and Chief Financial Officer (principal financial and accounting officer).
−Removed: Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this report, to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
−Removed: and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
+Added: This evaluation was carried out under the supervision and with the participation of
+Added: various members of our management, including our Company’s Chief Executive Officer (principal executive officer), Vice President and Chief Financial Officer (principal financial officer) and Vice President and Chief Accounting Officer (principal accounting officer).
+Added: Based upon that evaluation, the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this report, to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act.
−Removed: Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by the Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP.
+Added: Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, and effected by the Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with US GAAP.
Internal control over financial reporting includes maintaining records in reasonable detail that accurately and fairly reflect our transactions and disposition of assets;
4 unchanged sentences
In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that, owing to changes in conditions, controls may become inadequate, or that the degree of compliance with policies or procedures may deteriorate.
−Removed: As previously disclosed in this Annual Report on Form 10-K, on April 30, 2020 we completed the acquisition of Interwork, and on November 6, 2020 we completed the acquisition of CDF.
−Removed: SEC guidance permits management to omit an assessment of an acquired business’ internal control over financial reporting from management’s assessment of internal control over financial reporting for a period not to exceed one year from date of acquisition.
−Removed: As of December 31, 2020, we have integrated Interwork into our existing control environment.
−Removed: Management has excluded from its assessment of internal control over financial reporting the operations and related assets of CDF, which the Company began consolidating in November 2020.
−Removed: The operations and related assets of CDF were included in the consolidated financial statements of the Company and constituted 12% and 14% of total assets and net assets, respectively as of December 31, 2020, and 2% and 5% of consolidated net sales and net income for the year ended December 31, 2020.
−Removed: Management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).
−Removed: Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting was effective as of December 31, 2020.
+Added: Management, with the participation of our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).
+Added: Based on this evaluation, the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer concluded that the Company’s internal control over financial reporting was effective as of December 31, 2021.
The Company's independent registered public accounting firm, BDO USA, LLP, has audited the effectiveness of the Company's internal control over financial reporting as of December 31, 2021, as stated in their report, which is included herein.
1 unchanged sentence
Directors, Executive Officers and Corporate Governance
−Removed: The information required hereunder, with the exception of the information relating to the Company’s Code of Ethical Conduct that is presented in Part I under the heading “Available Information,” is incorporated by reference herein from our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A
−Removed: not later than April 30, 2021 (the “Definitive Proxy Statement”) under the sections captioned “Election of Directors,” “Corporate Governance” and “Delinquent Section 16 (a) Reports.”
+Added: The information required hereunder, with the exception of the information relating to the Company’s Code of Ethical Conduct that is presented in Part I under the heading “Available Information,” is incorporated by reference herein from our Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A not later than May 2, 2022 (the “Definitive Proxy Statement”) under the sections captioned “Election of Directors” and “Corporate Governance.”
Executive Compensation
18 unchanged sentences
Specimen of Common Stock Certificate.
−Removed: Description of Exhibit
Description of Securities.
+Added: Description of Exhibit
Second Amended and Restated Revolving Credit Loan Agreement, dated November 15, 2017, by and among Wayside Technology Group, Inc., Lifeboat Distribution, Inc., Techxtend, Inc., Programmer’s Paradise, Inc., and ISP International Software Partners, Inc., as Co-Borrowers, and Citibank, N.A., as Lender.
7 unchanged sentences
Employment agreement dated January 2, 2018 between the Company and Charles Bass.
−Removed: Employment agreement dated September 26, 2016 between the Company and Michael Vesey.
+Added: Employment agreement dated June 8, 2021 between the Company and Andrew Clark.
Offer Letter, dated January 6, 2003, from the Company to Vito Legrottaglie.
1 unchanged sentence
2012 Stock-Based Compensation Plan.
+Added: 2021 Stock-Based Compensation Plan.
Form of Non-Qualified Stock Option Agreement.
3 unchanged sentences
Description of Exhibit
−Removed: Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Michael Vesey, the Vice President and Chief Financial Officer of the Company.
+Added: Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Andrew Clark, the Vice President and Chief Financial Officer of the Company.
+Added: Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Matthew Sullivan, the Vice President and Chief Accounting Officer of the Company.
Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.
1 unchanged sentence
Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.
−Removed: Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Michael Vesey, the Vice President and Chief Financial Officer of the Company.
+Added: Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Andrew Clark, the Vice President and Chief Financial Officer of the Company.
+Added: Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.
+Added: Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Matthew Sullivan, the Vice President and Chief Accounting Officer of the Company.
The following financial information from Wayside Technology Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 9, 2022, formatted in XBRL (Extensible Business Reporting Language) includes:
(1) Consolidated Balance Sheets, (2) Consolidated Statements of Earnings, (3) Consolidated Statements of Comprehensive Income, (4) Consolidated Statements of Stockholders’ Equity, (5) Consolidated Statements of Cash Flows, and (6) the Notes to the Consolidated Financial Statements.
+Added: Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
(1) Incorporated by reference to the exhibits of the same number to the Registrant’s Registration Statement on Form S-1 or amendments thereto (File No.
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(11) Incorporated by reference to the Registrant’s Form 8-K filed on September 2, 2020.
+Added: (12) Incorporated by reference to Appendix A of the Registrant’s Definitive Annual Meeting Proxy Statement filed on April 16, 2021.
(13) Furnished herewith.
(14) Filed herewith.
+Added: (15) Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on August 6, 2020.
+Added: (16) Incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-K filed on March 16, 2021.
(b) The exhibits required by Item 601 of Regulation S-K are reflected above in Section (a) 3.
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(Principal Executive Officer)
−Removed: /s/ Michael Vesey
−Removed: Vice President and
+Added: /s/ Andrew Clark
+Added: Vice President and Chief Financial Officer
March 9, 2022
−Removed: Michael Vesey
−Removed: Chief Financial Officer
−Removed: (Principal Financial and Accounting Officer)
+Added: (Principal Financial Officer)
+Added: /s/ Matthew Sullivan
+Added: Vice President and Chief Accounting Officer
+Added: March 9, 2022
+Added: Matthew Sullivan
+Added: (Principal Accounting Officer)
/s/ Jeffrey Geygan
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Jeffrey Geygan
−Removed: /s/ Diana Kurty
−Removed: March 16, 2021
/s/ John McCarthy
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March 9, 2022
−Removed: /s/ Carol DiBattiste
+Added: /s/ Gerri Gold
March 9, 2022
−Removed: Carol DiBattiste
+Added: /s/ Greg Scorziello
+Added: March 9, 2022
+Added: Greg Scorziello
Items 8 and 15(a)
2 unchanged sentences
Index to Consolidated Financial Statements and Schedule
−Removed: Reports of Independent Registered Public Accounting Firm
+Added: Reports of Independent Registered Public Accounting Firm ( BDO USA, LLP ;
+Added: Woodbridge, New Jersey ;
+Added: PCAOB ID# 243 )
Consolidated Balance Sheets as of December 31, 2021 and 2020
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We believe that our audit provides a reasonable basis for our opinion.
−Removed: As indicated in the accompanying Item 9A, Controls and Procedures, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of CDF Group Limited, which was acquired on November 6, 2020, and which is included in the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the year then ended.
−Removed: CDF Group Limited constituted 12% and 14% of total assets and net assets, respectively, as of December 31, 2020, and 2% and 5% of net sales and net income, respectively, for the year then ended.
−Removed: Management did not assess the effectiveness of internal control over financial reporting of CDF Group Limited because of the timing of the acquisition which was completed on November 6, 2020.
−Removed: Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of CDF Group Limited.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company’s internal control over financial reporting includes those policies
−Removed: and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
+Added: A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
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In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021 , in conformity with accounting principles generally accepted in the United States of America.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) our report dated March 16, 2021 expressed an unqualified opinion thereon.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 9, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
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(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Business Combinations
−Removed: As described in Note 4 of the consolidated financial statements, the Company completed the acquisitions of Interwork Technologies Inc.
−Removed: and CDF Group Limited during the year ended December 31, 2020.
−Removed: The total purchase consideration
−Removed: for Interwork Technologies Inc.
−Removed: was approximately $2.9 million, inclusive of a $0.8 million post-closing contingent earn-out, and for CDF Group Limited was approximately $24.1 million.
−Removed: As a result of the acquisitions, management determined the estimated fair value of the identifiable assets acquired and liabilities assumed at the acquisition dates and recorded intangible assets of approximately $10.7 million in aggregate.
−Removed: The primary intangible assets acquired were vendor and customer relationships.
−Removed: We determined the accounting for the business combinations to be a critical audit matter.
−Removed: The principal considerations for our determination were the inherent uncertainties that exist related to the Company’s forecasts used to determine the fair value of the intangible assets acquired and contingent earn-out liability.
−Removed: Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.
−Removed: The primary procedures we performed to address this critical audit matter included:
−Removed: • Assessing the design and testing the operating effectiveness of certain controls over the selection of the valuation models by management, and controls over the development of significant assumptions used to determine fair values.
−Removed: • Assessing the reasonableness of significant underlying assumptions through (i) evaluating historical performance of the target entity, (ii) assessing performance against market trends, industry metrics, and guideline companies, and (iii) performing a sensitivity analysis of the assumptions used in the discounted cash flow, net asset value, and terminal value and evaluating the potential effect of changes in these assumptions.
−Removed: • Utilizing professionals with specialized skills and knowledge to assist in evaluating (i) the appropriateness of the valuation model used by management, (ii) testing the mathematical accuracy of the Company’s calculations, and (iii) evaluating the reasonableness of the discount rate used.
+Added: The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: Goodwill Impairment Quantitative Assessment
+Added: At December 31, 2021, the Company’s consolidated goodwill balance was approximately $17.2 million, which is allocated between two reporting units.
+Added: As discussed in Note 2 to the consolidated financial statements, the Company tests goodwill for impairment at least annually at the reporting unit level.
+Added: The Company determines the fair value of the reporting unit using a combination of an income approach, and a market approach.
+Added: The determination of the fair value of the reporting units requires management to make significant estimates and assumptions related to forecasts of future cash flows, revenue growth rate, and discount rates.
+Added: These assumptions are affected by expected future market and economic conditions.
+Added: We identified the goodwill impairment quantitative assessment as a critical audit matter.
+Added: The principal considerations for our determination were the significant assumptions management makes as part of the assessment to estimate the fair value of the reporting units.
+Added: The income approach requires significant management assumptions in projecting future cash flows, revenue growth rate, and selection of the discount rates.
+Added: Auditing management’s significant assumptions used in the goodwill impairment quantitative assessment involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the involvement of professionals with specialized skill or knowledge.
+Added: The primary procedures we performed to address this critical matter included:
+Added: ● Testing the design and operating effectiveness of controls related to management’s forecasting process, including controls over data, inputs, and assumptions utilized to determine the fair value of the reporting units.
+Added: ● Evaluating the reasonableness of management’s assumptions in the calculation of fair value of reporting units, including the revenue growth rate in the projected future cash flows by comparing to i) prior period forecasts, ii) historical operating performance, iii) internal and external communications made by the Company, and iv) publicly available industry data of peer companies.
+Added: ● Utilizing personnel with specialized knowledge and skill in valuation to assist in i) evaluating the appropriateness of the methodologies and valuation models utilized by management to determine the fair value of the reporting units, and ii) evaluating the reasonableness of the discount rate used in the income approach.
/s/ BDO USA, LLP
8 unchanged sentences
Cash and cash equivalents
−Removed: Accounts receivable, net of allowances of $892 and $765, respectively
+Added: Accounts receivable, net of allowance for doubtful accounts of $ 881 and $ 892 , respectively
Inventory, net
−Removed: Vendor prepayments
+Added: Vendor prepayments and advances
Prepaid expenses and other current assets
11 unchanged sentences
Lease liability, net of current portion
−Removed: Non-current liabilities
Deferred income tax liabilities
26 unchanged sentences
Interest, net
−Removed: Foreign currency transaction gain
+Added: Foreign currency transaction (loss) gain
Income before provision for income taxes
43 unchanged sentences
Provision for doubtful accounts
−Removed: Deferred income tax benefit
+Added: Deferred income tax expense
Share-based compensation expense
−Removed: Loss on disposal of fixed assets
Amortization of discount on accounts receivable
18 unchanged sentences
Dividends paid
+Added: Contingent consideration
Payments of deferred financing costs
1 unchanged sentence
Effect of foreign exchange rate on cash and cash equivalents
−Removed: Net increase in cash and cash equivalents
−Removed: Cash and cash equivalents at beginning of year
−Removed: Cash and cash equivalents at end of year
+Added: Net (decrease) increase in cash and cash equivalents
+Added: Cash and cash equivalents at beginning of period
+Added: Cash and cash equivalents at end of period
Supplementary disclosure of cash flow information:
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The Company is organized into two reportable operating segments.
−Removed: The “Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide under the names “Climb Channel Solutions” (formerly Lifeboat Distribution) and “Sigma Software Distribution”.
+Added: The “Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide under the name “Climb Channel Solutions”.
The “Solutions” segment is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide under the names “TechXtend” and “Grey Matter”.
18 unchanged sentences
Our basic and diluted earnings per share are computed using the two-class method.
−Removed: The two-class method is an earnings allocation method that determines net income per share for each class of common stock and participating
−Removed: securities according to their participation rights in dividends and undistributed earnings or losses.
−Removed: Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities.
+Added: The two-class method is an earnings allocation method that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses.
+Added: Non-vested restricted
+Added: stock awards that include non-forfeitable rights to dividends are considered participating securities.
Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding during each period.
1 unchanged sentence
A reconciliation of the numerators and denominators of the basic and diluted per share computations follows:
+Added: Year ended December 31,
Less distributed and undistributed income allocated to participating securities
12 unchanged sentences
Proceeds from the sale of receivables approximated their discounted book value and were included in operating cash flows on the Consolidated Statements of Cash Flows.
−Removed: Allowance for Accounts Receivable
−Removed: We provide allowances for doubtful accounts related to accounts receivable for estimated losses resulting from the inability of our customers to make required payments.
+Added: Allowances for Accounts Receivable
+Added: We provide an allowance for doubtful accounts related to accounts receivable for estimated losses resulting from the inability of our customers to make required payments.
We take into consideration the overall quality and aging of the receivable portfolio along with specifically identified customer risks.
If actual customer payment performance were to deteriorate to an extent not expected, additional allowances may be required.
−Removed: At the time of sale, we record an estimate for sales returns based on historical experience.
+Added: At the time of sale, we also 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.
1 unchanged sentence
Assets and liabilities of the Company’s foreign subsidiaries have been translated using the end of the reporting period exchange rates, and related revenues and expenses have been translated at average rates of exchange in effect during the period.
−Removed: Cumulative translation adjustments have been classified within accumulated other comprehensive income, which is a separate component of stockholders’ equity in accordance FASB ASC Topic No.
+Added: Cumulative translation adjustments have been classified within accumulated other comprehensive loss, which is a separate component of stockholders’ equity in accordance FASB ASC Topic No.
220, “Comprehensive Income”.
11 unchanged sentences
The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of December 31, 2021 and 2020, because of the relative short maturity of these instruments.
−Removed: The Company’s accounts receivable-long-term is discounted to their present value at prevailing market rates at the time of sale which, approximates fair value as of December 31, 2020 and 2019.
+Added: The Company’s accounts receivable-long-term is discounted to its present value at prevailing market rates at the time of sale which, approximates fair value as of December 31, 2021 and 2020.
Inventory, consisting primarily of finished products held for resale, is stated at the lower of cost or net realizable value.
−Removed: Vendor Prepayments
+Added: Vendor Prepayments and Advances
Vendor prepayments represents advance payments made to vendors to be applied against future purchases.
6 unchanged sentences
The Company capitalizes certain internal and external costs incurred to acquire or create internal-use software.
−Removed: Capitalized software costs are amortized on a straight-line basis over the estimated useful life of the software, which is generally four to ten years.
−Removed: At December 31, 2020 and 2019, the company had unamortized software development costs
−Removed: of $0.8 million and zero, respectively, which are included in "Equipment and leasehold improvements"
+Added: Capitalized software costs are amortized on a straight-line basis over the estimated useful life of the software, which is generally four to seven years .
+Added: At December 31, 2021 and 2020, the Company had unamortized software development
+Added: costs of $ 0.7 million and $ 0.8 million, respectively, which are included in "Equipment and leasehold improvements"
in the Company's consolidated balance sheets.
4 unchanged sentences
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.
+Added: The Company performs an evaluation of goodwill, utilizing either a qualitative or quantitative impairment test.
+Added: The annual test for impairment is conducted as of October 1.
+Added: The Company’s reporting units included in the assessment of potential goodwill impairment are the same as its operating segments.
+Added: Goodwill is not amortized but is subject to periodic testing for impairment at the reporting unit level.
In a qualitative assessment, we assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill.
5 unchanged sentences
Conversely, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
+Added: Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including net sales growth rates, gross profit margins, operating margins, discount rates and future market conditions, among others.
+Added: Any changes in the judgments, estimates or assumptions used could produce significantly different results.
Intangible Assets
6 unchanged sentences
Comprehensive Income
−Removed: Comprehensive income consists of net income for the period and the impact of unrealized foreign currency translation adjustments.
+Added: Comprehensive income consists of net income for the year and the impact of unrealized foreign currency translation adjustments.
The foreign currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in international subsidiaries.
Revenue Recognition
−Removed: The core principle of the revenue recognition criteria is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services.
−Removed: This principle is achieved through applying the following five-step approach:
−Removed: Identification of the contract, or contracts, with a customer — A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.
−Removed: We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
−Removed: The Company considers customer purchase orders, which in some cases are governed by master agreements or general terms and conditions of sale, to be contracts with customers.
−Removed: All revenue is generated from contracts with customers.
−Removed: Identification of the performance obligations in the contract — Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract.
−Removed: To the extent a contract includes multiple promised goods or services, we apply judgment to determine whether promised goods or services are capable of being distinct in the context of the contract.
−Removed: If these criteria are not met the promised goods or services are accounted for as a single performance obligation.
−Removed: Determination of the transaction price —The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer, net of sales taxes collected from customers, which are subsequently remitted to governmental entities.
−Removed: Net sales are recorded net of estimated discounts, rebates, and returns.
−Removed: Vendor rebates are recorded when earned as a reduction to cost of sales or inventory, as applicable.
−Removed: Allocation of the transaction price to the performance obligations in the contract — If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.
−Removed: Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price, or SSP, basis.
−Removed: We determine SSP based on the price at which the performance obligation is sold separately.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: In these arrangements, as the Company assumes an agency relationship in the transaction, revenue is recognized in the amount of the net fee associated with serving as an agent.
+Added: These arrangements primarily relate to third party maintenance, cloud services and certain security software whose intended functionality is dependent on third party maintenance.
+Added: The Company allows its customers to return product for exchange or credit subject to certain limitations.
+Added: A liability is recorded at the time of sale for estimated product returns based upon historical experience and an asset is recognized for the amount expected to be recorded upon product return.
+Added: The Company also provides rebates and other discounts to certain customers which are considered variable consideration.
+Added: A provision for customer rebates and other discounts is recorded as a reduction of revenue at the time of sale based on an evaluation of the contract terms and historical experience.
+Added: The Company considers shipping and handling activities as costs to fulfill the sales of products.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: For additional information, see Note 13 (Industry, Segment and Geographic Information).
+Added: 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.
+Added: 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.
+Added: As the principal with the customer, the Company recognizes revenue upon receiving notification from the vendor that the product was shipped.
+Added: Control of software products is deemed to have passed to the customer when they acquire the right to use or copy the software under license as substantially all product functionality is available to the customer at the time of sale.
+Added: The Company performs an analysis of the number of days of sales in-transit to customers at the end of each reporting period based on an analysis of commercial delivery terms that include drop-shipment arrangements.
+Added: This analysis is the basis upon which the Company estimates the amount of net sales in-transit at the end of the period and adjusts revenue and the related costs to reflect only what has been delivered to the customer.
+Added: Changes in delivery patterns may result in a different number of business days estimated to make this adjustment.
+Added: The Company also performs a weighted average analysis of the estimated number of days between order fulfillment and beginning of the renewal term for term licenses recorded on a gross basis, and a deferral estimate is recorded for term license renewals fulfilled prior to commencement date.
+Added: Generally, software products are sold with accompanying third-party delivered software assurance, which is a product that allows customers to upgrade, at no additional cost, to the latest technology if new capabilities are introduced during the period that the software assurance is in effect.
+Added: The Company evaluates whether the software assurance is a separate performance obligation by assessing if the third-party delivered software assurance is critical or essential to the core functionality of the software itself.
+Added: This involves considering if the software provides its original intended functionality to the customer without the updates, if the customer would ascribe a higher value to the upgrades versus the up-front deliverable, if the customer would expect frequent intelligence updates to the software (such as updates that maintain the original functionality), and if the customer chooses to not delay or always install upgrades.
+Added: If the Company determines that the accompanying third-party delivered software assurance is critical or essential to the core functionality of the software license, the software license and the accompanying third-party delivered software assurance are recognized as a single performance obligation.
+Added: The value of the product is primarily the accompanying support delivered by a third party and therefore the Company is acting as an agent in these transactions and recognizes them on a net basis at the point the associated software license is delivered to the customer.
+Added: The Company sells cloud computing solutions that utilize third-party vendors to enable customers to access data center functionality in a cloud-based solution, including storage, computing and networking and access to software in the cloud that enhances office productivity, provides security or assists in collaboration.
+Added: The Company recognizes revenue for cloud computing solutions for arrangements with one-time invoicing to the customer at the time of invoice on a net basis as the Company is acting as an agent in the transaction.
+Added: For monthly subscription-based arrangements, the Company is acting as an agent in the transaction and recognizes revenue as it invoices the customer for its monthly usage on a net basis.
+Added: For software licenses where the accompanying third-party delivered software assurance is not critical or essential to the core functionality, the software assurance is recognized as a separate performance obligation, with the associated revenue recognized on a net basis at the point the related software license is delivered to the customer.
+Added: The Company also sells some of its products and services as part of bundled contract arrangements containing multiple deliverables, which may include a combination of products and services.
+Added: For each deliverable that represents a distinct performance obligation, total arrangement consideration is allocated based upon the standalone selling prices (“SSP”) of each performance obligation.
+Added: SSP is determined based on the price at which the performance obligation is sold separately.
If the standalone selling price is not observable through established standard prices, we use judgement and estimate the standalone selling price considering available information such as market pricing and pricing related to similar products.
−Removed: Contracts with a significant financing component are discounted to their present value at contract inception and accreted up to the expected payment amounts.
−Removed: These contracts generally offer customers extended payment terms of up to three years.
−Removed: Recognition of revenue when, or as, we satisfy a performance obligation — The Company recognizes revenue when its performance obligations are complete, and control of the specified goods or services pass to the customer.
−Removed: The Company considers the following indicators in determining when control passes to the customer:
−Removed: (i) the Company has a right to payment for the product or service (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product (iv) the Customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product.
−Removed: Substantially all our performance obligations are satisfied at a point in time, as our obligation is to deliver a product or fulfill an order for a third party to deliver ongoing services, maintenance or support.
−Removed: The Company records freight billed to its customer as net sales and the related freight costs as cost of sales when the underlying product revenue is recognized.
−Removed: The Company does not consider shipping to be a separate performance obligation.
+Added: The Company records freight billed to its customers as net sales and the related freight costs as cost of sales when the underlying product revenue is recognized.
+Added: For freight not billed to its customers, the Company records the freight costs as cost of sales.
+Added: The Company’s typical shipping terms result in shipping being performed before the customer obtains control of the product.
+Added: The Company considers shipping to be a fulfillment activity and not a separate performance obligation.
+Added: The Company pays commissions and related payroll taxes to sales personnel when customers are invoiced.
+Added: 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.
Stock-Based Compensation
5 unchanged sentences
Distribution and Solutions.
+Added: For additional information, see Note 13 (Industry, Segment and Geographic Information).
Treasury Stock
20 unchanged sentences
The fair value of forward purchase contracts at December 31, 2021 was not material to the Consolidated Financial Statements.
−Removed: Reclassifications
−Removed: Certain amounts from the prior year’s financial statements have been reclassified in order to conform to the current year’s presentation.
Recently Issued Accounting Pronouncements
3 unchanged sentences
Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.
−Removed: In November 2019, FASB issued ASU 2019-10, “ Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
+Added: In November 2019, FASB issued ASU 2019-10, “ Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies
+Added: that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
The Company is planning to adopt this standard in the first quarter of fiscal 2023.
1 unchanged sentence
2016-13 on its Consolidated Financial Statements, particularly its recognition of allowances for accounts receivable.
−Removed: In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes” as part of its initiative to reduce complexity in the accounting standards.
−Removed: The standard eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.
−Removed: The standard also clarifies and simplifies other aspects of the accounting for income taxes.
−Removed: The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.
−Removed: Early adoption is permitted.
−Removed: The Company is currently evaluating the impact that this guidance will have upon its financial position and results of operations, if any.
−Removed: Revenue Recognition
−Removed: We generate revenue from the re-sale of third-party software licenses, subscriptions, hardware, and related service contracts.
−Removed: Finance fees related to sales are classified as interest income.
−Removed: The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance
−Removed: Hardware, software and other products
−Removed: Software - security & highly interdependent with support
−Removed: Maintenance, support & other services
−Removed: See Note 14 for disaggregation of revenue by segment and geography.
−Removed: Hardware, software and other products - Hardware product consists of sales of hardware manufactured by third parties.
−Removed: Hardware product is delivered from our warehouse or drop shipped directly from the vendor.
−Removed: Revenue from our hardware products is recognized on a gross basis, with the selling price to the customer as net sales, and the cost of the related product as cost of sales, upon transfer of control to the customer, as the Company is acting as a principal in the transaction.
−Removed: Control is generally deemed to have passed to the customer upon transfer of title and risk of ownership.
−Removed: Software product consists of sales of perpetual and term software licenses for products developed by third party vendors, which are distinct from related maintenance and support.
−Removed: Software licenses are delivered via electronic license keys provided by the vendor to the end user.
−Removed: Revenue from the sale of software products is recognized on a gross basis, with the selling price to the customer as net sales, and the cost of the related product as cost of sales, upon transfer of control to our customers as the Company is a principal in the transaction.
−Removed: Control is deemed to have passed to the customer when they acquire the right to use or copy the software under license as substantially all product functionality is available to the customer at the time of sale.
−Removed: Other products include marketing revenues that are recorded on a gross basis as the Company is a principal in the arrangement.
−Removed: Software maintenance and support, commonly known as software assurance or post contract support, consists of software updates and technical support provided by the software vendor to the licensor over a period.
−Removed: In cases where the software maintenance is distinct from the related software license, software maintenance is accounted for as a separate performance obligation.
−Removed: In cases where the software maintenance is not distinct from the related software license, it is accounted for as a single performance obligation with the related license.
−Removed: We utilize judgement in determining whether the maintenance is distinct from the software itself.
−Removed: This involves considering if the software provides its original intended functionality without the updates, or is dependent on frequent, or continuous updates to maintain its functionality.
−Removed: See Allocation of the transaction price to the performance obligations in the contract in Note 2 for a discussion of the allocation of maintenance and support costs when they are distinct from the related software licenses and Software - security and highly interdependent with support below for a discussion of maintenance and support costs when they are not distinct from the related software license.
−Removed: Software - security and highly interdependent with support - Software - security software and software highly interdependent with support consists of sales of security subscriptions and other licensed software products whose functionality is highly interdependent with, and therefore not distinct from, related software maintenance.
−Removed: Delivery of the software license and related support over time is considered a single performance obligation of the third-party vendor for these products.
−Removed: The Company is an agent in these transactions, with revenue being recorded on a net basis when its performance obligation of processing a valid order between the vendor partner and customer contracting for the services is complete.
−Removed: Maintenance, support and other services revenue - Maintenance, support and other services revenue consists of third-party post-contract support that is not critical or essential to the core functionality of the related licensed software, and, to a lesser extent, from third-party professional services, software as a service, and cloud subscriptions.
−Removed: Revenue from maintenance, support and other service revenues is recognized on a net basis, upon fulfillment of an order to the customer, as the Company is an agent in the transaction, and its performance obligations are complete at the time a valid order between the parties is processed.
−Removed: Costs to obtain and fulfill a contract - We pay commissions and related payroll taxes to sales personnel when customers are invoiced.
−Removed: 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.
−Removed: Contract balances - Accounts receivable is recorded at the invoiced amount, net of an allowance for doubtful accounts.
−Removed: A receivable is recognized in the period we deliver goods or provide services or when our right to consideration is unconditional.
−Removed: Payment terms on invoiced amounts are typically 30-60 days.
−Removed: The balance of accounts receivable, net of allowance for doubtful accounts as of December 31, 2020 and 2019 is presented in the accompanying Consolidated Balance Sheets.
−Removed: Accounts receivable-long-term result from product sales with extended payment terms that are discounted to their present values at the Company’s estimates of prevailing market rates at the time of the sale.
−Removed: The Company has determined that these amounts do not represent variable consideration as the amount earned is fixed.
−Removed: In subsequent periods, the accounts receivable is increased to the amounts due and payable by the customers through the accretion of interest income on the unpaid accounts receivable due in future years.
−Removed: The amounts due under these long-term accounts receivable due within one year are reclassified to the current portion of accounts receivable and are shown net of reserves.
−Removed: As our revenues are generally recognized at a point in time in the same period as they are billed, we have no deferred revenue balances.
−Removed: Provisions for doubtful accounts including long-term accounts receivable and returns are estimated based on historical write offs, sales returns and credit memo analysis which are adjusted to actual on a periodic basis.
−Removed: Refund liability – The Company records a refund liability for expected product returns with a corresponding asset for an amount representing any expected recovery from vendors regarding the return.
−Removed: Principal versus agent considerations – The Company determines whether it is acting as a principal or agent in a transaction by assessing whether it controls a good or service prior to it being transferred to a customer, with control being defined as having the ability to direct the use of and obtain the benefits from the asset.
−Removed: The Company considers the following indicators, among others, in making the determination:
−Removed: 1) the Company is primarily responsible for fulfilling the promise to provide the promised good or service, 2) the Company has inventory risk, before or after the specified good or service has been transferred to the customer, and 3) the Company has discretion in establishing price for the specified good or service.
−Removed: Generally, we conclude that we are a principal in transactions where software or hardware products containing their core functionality are delivered to the customer at the time of sale and are agents in transactions where we are arranging for the provision of future performance obligations by a third party.
−Removed: As we enter into distribution agreements with third-party service providers, we evaluate whether we are acting as a principal or agent for each product sold under the agreement based on the nature of the product or service, and our performance obligations.
−Removed: Products for which there are significant ongoing third-party performance obligations include software maintenance, which includes periodic software updates and support, security software that is highly interdependent with maintenance, software as a service, cloud and third-party professional services.
−Removed: Sales of hardware, software and other products where we are a principal are recorded on a gross basis with the selling price to the customer recorded as sales and the cost of the product or software recorded as cost of sales.
−Removed: Sales where we are acting as an agent are recognized on a net basis at the date our performance obligations are complete.
−Removed: Under net revenue recognition, the cost paid to the vendor or third-party service provider is recorded as a reduction to sales, resulting in revenue being equal to the gross profit on the transaction.
Acquisition of Interwork Technologies
−Removed: On April 30, 2020, pursuant to a Stock Purchase Agreement dated April 20, 2020, the Company completed the purchase of Interwork Technologies Inc., a Delaware corporation, and Interwork Technologies Inc., a corporation incorporated under the laws of the Province of Ontario, Canada (collectively “Interwork”).
−Removed: The Company acquired Interwork for an aggregate purchase price of $5 million Canadian dollar (equivalent to $3.6 million USD), subject to certain working capital adjustments, paid at closing plus a potential post-closing $1.1 million Canadian dollar (equivalent to $0.8 million USD) earn-out.
−Removed: The allocation of the purchase price was based upon the estimated fair value of Interwork’s net tangible and identifiable intangible assets as of the date of the acquisition.
−Removed: The transaction was accounted for under the purchase method of accounting.
−Removed: The financial position and operating results of Interwork is included in the Company’s consolidated financial statements from the date of acquisition.
−Removed: The net sales and net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been integrated into the Company’s operations.
−Removed: 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 were as follows.
−Removed: The Company is in the process of filing remaining tax returns;
−Removed: thus the provisional measurements of goodwill and deferred income taxes are subject to change:
+Added: On April 30, 2020, the Company completed the purchase of Interwork Technologies Inc., a Delaware corporation and Interwork Technologies Inc., a corporation incorporated under the laws of the Province of Ontario, Canada (collectively, “Interwork”) for an aggregate purchase price of $ 5 million Canadian dollar (equivalent to $ 3.6 million USD), subject to certain working capital adjustments, paid at closing plus a potential post-closing $ 1.1 million Canadian dollars (equivalent to $ 0.8 million USD) earn-out.
+Added: The earn-out liability was paid for approximately $ 0.9 million during the year ended December 31, 2021.
+Added: The purchase price allocation is final, with no measurement period adjustments made to the account balances recorded at the acquisition date.
+Added: The impact of the acquisition’s final purchase price allocations on the Company’s Consolidated Balance Sheet and the acquisition date fair value of the total consideration transferred were as follows:
(in thousands)
15 unchanged sentences
Net cash paid for acquisition
−Removed: Intangible assets are comprised of approximately $3.8 million of vendor relationships with a weighted average amortization period of 13.7 years, representing the expected period of benefits, of which $2.3 million is deductible for
−Removed: Canadian income tax purposes.
−Removed: 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.
−Removed: Goodwill recognized as a result of the acquisition is not deductible for income tax purposes.
−Removed: The purchase consideration includes approximately $0.8 million of potential earn-out consideration if certain targets are achieved, payable in cash.
−Removed: As of December 31, 2020, the Company reassessed the earn-out liability and increased the fair value of the earn-out liability by less than $0.1 million, with the adjustment recognized within selling, general and administrative expenses during the year ended December 31, 2020.
−Removed: The earn-out liability is included in accounts payable and accrued expenses as of December 31, 2020 as payment would be due in the third quarter of 2021.
Acquisition of CDF Group Limited
On November 6, 2020, the Company entered into a Share Purchase Agreement and purchased the entire share capital of CDF Group Limited (“CDF”) for an aggregate purchase price of approximately £ 13.3 million (equivalent to approximately $ 17.4 million USD), subject to certain working capital and other adjustments.
−Removed: The allocation of the purchase price was based upon the estimated fair value of CDF’s net tangible and identifiable intangible assets as of the date of the acquisition.
−Removed: The transaction was accounted for under the purchase method of accounting.
−Removed: The financial position and operating results of CDF is included in the Company’s consolidated financial statements from the date of acquisition.
−Removed: The Company recorded net revenue for CDF of approximately $3.8 million and net income of approximately $0.2 million during the year ended December 31, 2020.
−Removed: 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.
−Removed: Due to the timing of the closing of the transaction in the fourth quarter of 2020, the Company has not yet completed its evaluation and determination of certain assets acquired and liabilities assumed, primarily (i) the final valuation of goodwill and intangible assets, (ii) capitalized software, and (iii) the final evaluation and assessment of income tax accounts;
−Removed: therefore the final fair value of the assets acquired and liabilities assumed may vary from the Company’s preliminary estimates:
+Added: The purchase price allocation is final, with no measurement period adjustments made to the account balances recorded at the acquisition date.
+Added: The impact of the acquisition’s final purchase price allocations on the Company’s Consolidated Balance Sheet and the acquisition date fair value of the total consideration transferred were as follows:
(in thousands)
14 unchanged sentences
Net cash paid for acquisition
−Removed: Estimated intangible assets are comprised of approximately $6.4 million of customer relationships with an amortization period of 13 years and $0.5 million of tradenames with an amortization period of 15 years, representing the expected periods of benefits.
−Removed: Goodwill 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.
−Removed: Goodwill recognized as a result of the acquisition is not deductible for income tax purposes.
−Removed: The preliminary allocation of the purchase price for the acquisitions of Interwork and CDF were allocated based on information that is currently available.
−Removed: The Company's estimates and assumptions underlying the initial allocations is subject to the collection of information necessary to complete its allocations within the measurement period, which is up to one year from each of the acquisition dates.
−Removed: The Company incurred acquisition related costs of approximately $1.5 million during the year ended December 31, 2020 in conjunction with the acquisitions of Interwork and CDF, which are reflected in the accompanying consolidated statements of earnings.
There were no acquisition related costs incurred during the year ended December 31, 2021.
−Removed: Pro Forma Results (unaudited)
−Removed: The following unaudited pro forma financial information summarizes the results of operations for the years ended December 31, 2020 and 2019 as if the acquisition of Interwork and CDF had been completed as of the beginning of 2020 and 2019, respectively.
−Removed: 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 the change in intangible assets amortization and income taxes at a rate consistent with the tax rates of the local jurisdictions.
−Removed: 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.
−Removed: Year ended December 31,
+Added: The Company incurred acquisition related costs of approximately $ 1.5 million during the year ended December 31, 2020 in conjunction with the acquisitions of Interwork and CDF, which are reflected in the accompanying Consolidated Statements of Earnings.
Goodwill and Other Intangible Assets
−Removed: The following table summarizes the changes in the carrying amount of goodwill for the year ended December 31, 2020.
+Added: Goodwill represents the premium paid over the fair value of the net tangible and intangible assets that are individually identified and separately recognized in business combinations.
+Added: The following table summarizes the changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020.
Balance at January 1, 2020
−Removed: Goodwill acquired during 2020
+Added: Goodwill acquired
Translation adjustments
Balance December 31, 2020
−Removed: Goodwill represents the premium paid over the fair value of the net tangible and intangible assets that are individually identified and separately recognized in business combinations.
−Removed: The change in our goodwill balance during the year ended December 31, 2020 relates to our acquisitions of Interwork and CDF, with goodwill acquired through our acquisitions of Interwork and CDF provisional for a period of up to one year from the acquisition date.
+Added: Translation adjustments
+Added: Balance December 31, 2021
Information related to the Company’s other intangibles, net is as follows:
4 unchanged sentences
Customer and vendor relationships
+Added: As of December 31, 2020
+Added: Gross Carrying Amount
+Added: Accumulated Amortization
+Added: Net Carrying Amount
+Added: Customer and vendor relationships
Customer relationships are amortized over thirteen years .
2 unchanged sentences
Non-compete is amortized over one year .
−Removed: Intangible assets acquired through our acquisition of CDF are provisional for a period of up to one year from the acquisition date.
−Removed: During the year ended December 31, 2020, the Company recognized total amortization expense for other intangibles, net of $0.3 million.
−Removed: There was no amortization expense for other intangibles, net during the year ended December 31, 2019.
+Added: The Company recognized total amortization expense for other intangibles, net of $ 0.9 million and $ 0.3 million during the years ended December 31, 2021 and 2020, respectively.
Estimated future amortization expense of the Company’s other intangibles, net as of December 31, 2021 is as follows:
14 unchanged sentences
(1) During the year ended December 31, 2020, includes $ 0.5 million recognized through acquisitions.
−Removed: During the year ended December 31, 2019, represents operating leases existing on January 1, 2019 and recognized as part of the Company’s adoption of ASU 2016-02 .
Maturities of lease liabilities as of December 31, 2021 were as follows:
10 unchanged sentences
Depreciation expense relating to equipment and leasehold improvements, net was $ 0.5 million and $ 0.4 million during the years ended December 31, 2021 and 2020, respectively.
−Removed: Amortization expense relating to capitalized software was less than $0.1 million and zero during the years ended December 31, 2020 and 2019.
+Added: Amortization expense relating to capitalized software was $ 0.1 million and less than $ 0.1 million during the years ended December 31, 2021 and 2020.
Accounts receivable – long term, net consist of the following:
7 unchanged sentences
Foreign currency translation adjustments
−Removed: Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the consolidated balance sheet are as follows:
+Added: Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the Consolidated Balance Sheets are as follows:
Deferred tax assets:
15 unchanged sentences
Statutory rate applied to pretax income
−Removed: Acquisition related costs
−Removed: Stock compensation
−Removed: Other permanent items
State income taxes, net of federal income tax benefit
+Added: Adjustment for foreign rate change
+Added: Other permanent items
+Added: Acquisition related costs
Foreign income taxes over U.S.
statutory rate
+Added: GILTI, net of foreign tax credits
+Added: Stock compensation
Income tax expense
1 unchanged sentence
The Company has identified its federal consolidated tax return, its state tax return in New Jersey, its Canadian tax return and its tax return in the United Kingdom as major tax jurisdictions.
−Removed: As of December 31, 2020, the Company’s 2017 through 2019 Federal tax returns remain open for examination.
+Added: As of December 31, 2021, the Company’s 2018 through 2020 Federal tax returns remain open for
The Company’s New Jersey and Canadian tax returns are open for examination for the years 2017 through 2020.
5 unchanged sentences
United States
−Removed: The Company has approximately $6.7 million of undistributed earnings in Canada, which it continues to reinvest indefinitely, and therefore no withholding taxes related to its repatriation has been recorded.
+Added: The Company has approximately $ 7.4 million of undistributed earnings in Canada and $ 2.2 million of undistributed earnings in the United Kingdom, which it continues to reinvest indefinitely, and therefore no withholding taxes related to its repatriation has been recorded.
The following table summarizes the activity related to the Company’s unrecognized tax benefits as of December 31, 2021 and 2020:
3 unchanged sentences
Balance as of December 31
−Removed: During the years ended December 31, 2020 and 2019, the Company incurred interest and penalties of less than $0.1 million, respectively, related to these uncertain tax benefits.
+Added: During the years ended December 31, 2021 and 2020, the Company incurred interest and penalties of zero and less than $ 0.1 million, respectively, related to these uncertain tax benefits.
Credit Facility
4 unchanged sentences
In addition, the Company will pay regular monthly payments of all accrued and unpaid interest.
−Removed: The interest rate for any borrowings under the Amended Credit Facility is subject to change from time to time based on the changes in the LIBOR Rate, as defined in the Amended Loan Agreement (the “Index”).
−Removed: The Index was 2.50% at December 31, 2020.
−Removed: Interest on the unpaid principal balance of the Amended Note will be calculated using a rate of 1.75 percentage points over the Index.
−Removed: If the Index becomes unavailable during the term of the Amended Credit Facility, interest will be based upon the Benchmark Replacement (as defined in the Amended Loan Agreement) selected by Citibank after notifying the Company.
+Added: The interest rate for any borrowings under the Amended Credit Facility is subject to change from time to time based on the changes in the LIBOR Rate, as defined in the Amended Loan Agreement, with the LIBOR Rate not to be less than 0.75 percentage points.
+Added: Interest on the unpaid principal balance of the Amended Note will be calculated using a rate of 1.75 percentage points over the LIBOR Rate, with the interest rate being 2.50 % at December 31, 2021.
+Added: If the LIBOR Rate becomes unavailable during the term of the Amended Credit Facility, interest will be based upon the Benchmark Replacement (as defined in the Amended Loan Agreement) selected by Citibank after notifying the Company.
The Amended Credit Facility is secured by the assets of the Company.
1 unchanged sentence
The Company incurred $ 0.1 million of interest expense, related to the Credit Facility during the years ended December 31, 2021 and 2020, respectively .
+Added: On April 13, 2021, Wayside Technology UK Holdings Limited (“Wayside UK”), a wholly-owned subsidiary of the Company, entered into an uncommitted short term credit facility of £ 8 million (“Uncommitted Credit Facility”) with Citibank N.A., London Branch (“Citibank London”) pursuant to certain terms and conditions.
+Added: Obligations under the Uncommitted Credit Facility are guaranteed by the Company and will be used for working capital and general corporate purposes and have a maturity date of April 13, 2022, at which time Wayside UK must pay all outstanding principal of all outstanding loans plus all accrued and unpaid interest, and any interest, fees, costs and expenses, if any.
+Added: Interest on the unpaid principal balance of the Uncommitted Credit Facility will be calculated using a rate of 1.85 percentage points over the Daily Rate, as defined in the Uncommitted Credit Facility.
+Added: Amounts borrowed under the Uncommitted Credit Facility will be guaranteed by the Company.
+Added: The Uncommitted Credit Facility may be cancelled at any time by Citibank London.
+Added: Citibank London has the sole discretion to accept or reject any requested utilization of the Uncommitted Credit Facilitation.
+Added: At December 31, 2021, Wayside UK had no borrowings outstanding under the Uncommitted Credit Facility.
Stockholders’ Equity and Stock-Based Compensation
−Removed: At the annual stockholder’s meeting held on June 6, 2012, the Company’s stockholders approved the 2012 Stock-Based Compensation Plan (the “2012 Plan”).
−Removed: The 2012 Plan authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards.
−Removed: The total number of shares of Common Stock initially available for award under the 2012 Plan was 600,000, which was increased to 1,000,000 shares by shareholder approval at the Company’s 2018 Annual Meeting in June 2018.
+Added: The 2021 Omnibus Incentive Plan (the “2021 Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards.
+Added: The 2021 Plan was approved by the Company’s stockholders at the 2021 Annual Meeting in June 2021.
+Added: The total 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 December 31, 2021, the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 448,043 .
+Added: The 2012 Stock-Based Compensation Plan (the “2012 Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards.
+Added: 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.
+Added: Immediately prior to the replacement of the 2012 Plan by the 2021 Plan, there were 352,158 shares of Common Stock available under the 2012 Plan.
+Added: 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.
+Added: As of December 31, 2021, the number of shares of Common Stock available under the 2012 Plan is zero .
During the year ended December 31, 2021, the Company granted a total of 106,122 shares of Restricted Stock to officers, directors and employees.
These shares of Restricted Stock vest immediately or over time in up to sixteen equal quarterly installments.
−Removed: During the year ended December 31, 2020, 4,682 shares of Restricted Stock were forfeited as a result of officers, directors and employees terminating employment with the Company.
+Added: During the year ended December 31, 2021, 22,159 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company.
During the year ended December 31, 2020, the Company granted a total of 134,165 shares of Restricted Stock to officers, directors and employees.
These shares of Restricted Stock vest immediately or over time in up to sixteen equal quarterly installments.
−Removed: During the year ended December 31, 2019, 16,530 shares of Restricted Stock were forfeited as a result of officers, directors and employees terminating employment with the Company.
−Removed: There was no options activity during the year ended December 31, 2020 and 2019 and there were no options outstanding or exercisable at December 31, 2020 and 2019, respectively, under the Company’s 2012 Plan.
+Added: During the year ended December 31, 2020, 4,682 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company.
+Added: There was no options activity during the year ended December 31, 2021 and 2020 and there were no options outstanding or exercisable at December 31, 2021 and 2020, respectively, under both the Company’s 2012 Plan and 2021 Plan.
Under the various plans, options that are cancelled can be reissued.
30 unchanged sentences
The Company made sales to a customer where a member of our Board of Directors is an executive.
−Removed: During the years ended December 31, 2020 and 2019, net sales to this customer totaled $0.1 million, respectively, and amounts due from this customer as of December 31, 2020 and 2019 totaled $0.1 million, respectively, which were settled in cash subsequent to each year end.
+Added: During the years ended December 31, 2021 and 2020, net sales to this customer totaled $ 0.3 million and $ 0.1 million, respectively, and amounts due from this customer as of December 31, 2021 and 2020 totaled zero and $ 0.1 million, respectively, and the December 31, 2020 balance was settled in cash subsequent to year end.
+Added: The Company made sales to a customer where a family member of one of our executive’s has a minority ownership position.
+Added: During the year ended December 31, 2021, net sales to this customer totaled $ 0.4 million and amounts due from this customer as of December 31, 2021 totaled $ 0.2 million, which are expected to be settled in cash subsequent to the year end.
+Added: The Company also accrued referral fees totaling $ 0.2 million to this customer during the year ended December 31, 2021 and amounts owed to this customer for these referral fees as of December 31, 2021 totaled $ 0.1 million, which are expected to be settled in cash subsequent to the year end.
Industry, Segment and Geographic Financial Information
1 unchanged sentence
We also resell computer software and hardware developed by others and provide technical services directly to customers worldwide.
−Removed: We also operate a sales branch in Europe to serve our customers in this region of the world.
−Removed: Geographic revenue and identifiable assets related to operations as of and for the years ended December 31, 2020 and 2019 were as follows.
−Removed: Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.
−Removed: No one country other than the USA represents more than 10% of net sales for 2020 or 2019.
−Removed: Net sales to Unaffiliated Customers:
−Removed: Europe and United Kingdom
−Removed: Identifiable Assets by Geographic Areas at December 31,
−Removed: Europe and United Kingdom
FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements.
−Removed: organization used by the Company’s Chief Operating Decision Maker (CODM) to assess performance and allocate resources determines the basis for reportable operating segments.
+Added: The internal organization used by the public company’s Chief Operating Decision Maker (CODM) to assess performance and allocate resources determines the basis for reportable operating segments.
The Company’s CODM is the Chief Executive Officer.
2 unchanged sentences
The “Solutions” segment is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide.
−Removed: As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada with the domestic segments as they provide the same products and services to similar clients and are considered together when the CODM decides how to allocate resources.
−Removed: Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to a business unit.
−Removed: The Company only identifies accounts receivable and inventory by segment as shown below as “Selected Assets” by segment;
+Added: As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada, Europe and the United Kingdom with the domestic segments as the international operations provide the same products and services to similar clients and are considered together when the Company’s CODM decides how to allocate resources.
+Added: Segment income is based on segment net sales less the respective segment’s cost of sales as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit.
+Added: The Company only identifies accounts receivable, vendor prepayments and inventory by segment as shown below as “Selected Assets” by segment;
it does not allocate its other assets, including capital expenditures by segment.
+Added: The following segment reporting information of the Company is provided:
Gross Profit:
7 unchanged sentences
Interest, net
−Removed: Foreign currency transaction gain
+Added: Foreign currency transaction (loss) gain
Income before taxes
−Removed: (1) Excludes general corporate expenses including legal and financial advisory expenses, net – unsolicited bid and related matters, acquisition related costs, amortization and depreciation expense, interest, and foreign currency transaction gains.
+Added: (1) Excludes general corporate expenses including legal and financial advisory expenses, net – unsolicited bid and related matters, acquisition related costs, amortization and depreciation expense, interest, and foreign currency transaction (loss) gain.
Selected Assets by Segment:
Segment Select Assets
−Removed: Goodwill and Intangible Assets
Corporate Assets
−Removed: Disaggregation of Revenue:
−Removed: Hardware, software and other products
−Removed: Software - security & highly interdependent with support
−Removed: Maintenance, support & other services
−Removed: Hardware, software and other products
−Removed: Software - security & highly interdependent with support
−Removed: Maintenance, support & other services
+Added: Geographic areas and net sales mix related to operations for the year ended December 31, 2021 and 2020 were as follows.
+Added: Net sales is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.
+Added: December 31, 2021
+Added: Europe and United Kingdom
+Added: Total net sales
+Added: Timing of Revenue Recognition
+Added: Transferred at a point in time where the Company is principal (1)
+Added: Transferred at a point in time where the Company is agent (2)
+Added: Total net sales
+Added: December 31, 2020
+Added: Europe and United Kingdom
+Added: Total net sales
+Added: Timing of Revenue Recognition
+Added: Transferred at a point in time where the Company is principal (1)
+Added: Transferred at a point in time where the Company is agent (2)
+Added: Total net sales
+Added: (1) Includes net sales from third-party hardware and software products.
+Added: (2) Includes net sales from third-party maintenance, software support and services.
+Added: Geographic identifiable assets related to operations as of December 31, 2021 and 2020 were as follows.
+Added: Identifiable Assets by Geographic Areas
+Added: Europe and United Kingdom
The Company had two customers that each accounted for more than 10% of total consolidated net sales for the year ended December 31, 2021.
1 unchanged sentence
For the year ended December 31, 2021, Sophos and SolarWinds accounted for 20 % and 10 %, respectively of our consolidated purchases.
−Removed: For the year ended December 31, 2019, CDW and SHI accounted for 26%, and 16%, respectively, of consolidated net sales and as of December 31, 2019, 43% and 12%, respectively, of total net accounts receivable.
+Added: For the year ended December 31, 2020, CDW Corporation (“CDW”) and Software House International Corporation (“SHI”), accounted for 24 %, and 14 %, respectively, of consolidated net sales and as of December 31, 2020, 19 % and 9 %, respectively, of total net accounts receivable.
For the year ended December 31, 2020, Sophos and SolarWinds accounted for 20 % and 12 %, respectively of our consolidated purchases.
1 unchanged sentence
Unsolicited Bid and Shareholder Demand
−Removed: On July 15, 2019 and August 23, 2019, the Company received letters from Shepherd Kaplan Krochuk, LLC (“SKK”) and North & Webster SSG, LLC (“N&W”) announcing an unsolicited bid to acquire the Company.
−Removed: The proposal was subject to a number of contingencies, including the need for SKK and N&W to secure financing to complete a transaction.
−Removed: On November 27, 2019, SKK, N&W, and Messrs.
−Removed: Shepherd, Kaplan, Krochuk and Kidston (collectively, the “SKK 13D Group”) entered into a Joint Filing Agreement and filed a Schedule 13D with the SEC, disclosing an aggregate 5.8% ownership stake in the Company.
−Removed: Also on November 27, 2019, Mr.
−Removed: Nynens entered into an agreement with SKK and N&W (the “November 27 Agreement”), granting SKK an irrevocable proxy to vote his shares of Common Stock (i) in favor of any acquisition proposal by SKK, (ii) against any third-party acquisition, and (iii) as directed by SKK with respect to the election of directors nominated by persons other than the Company.
−Removed: On December 20, 2019, Mr.
−Removed: Nynens delivered a nomination notice to the Company regarding his intent to nominate Kim J.
−Removed: McCauley, Delynn Copley, Dennis M.
−Removed: Crowley, III and Nilesh Shah at the Meeting.
−Removed: On February 11, 2020, after considering the proposals with its financial advisers, the Board responded to SKK and N&W that the expired proposal received on December 10, 2019 would not have been in the best interests of the Company’s stockholders because it undervalues the Company, and did not serve as a basis for further diligence or discussion.
−Removed: On January 22, 2020, the Company received a letter from one of its stockholders demanding that the Board investigate and bring an action against Mr.
−Removed: Nynens for breaches of certain restrictive covenants contained in his Separation and Release Agreement, dated May 11, 2018, including his covenant not to seek future employment with the Company.
−Removed: As a result, the Company filed a lawsuit (the “Lawsuit”) against Mr.
−Removed: Nynens, SKK, and N&W in the Superior Court of New Jersey Monmouth County, on February 14, 2020.
−Removed: On April 16, 2020 (the “Effective Date”), the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Mr.
−Removed: Nynens, SKK, N&W, and each of Dennis Crowley, David Shepherd, David Kaplan, Timothy Krochuk and Samuel Kidston (collectively with SKK and N&W, the “SKK Parties”).
−Removed: Pursuant to the Settlement Agreement, the Company agreed to voluntarily dismiss the Lawsuit with prejudice, and to purchase all of Mr.
+Added: On April 16, 2020 (the “Effective Date”), the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Simon Nynens, Shepherd Kaplan Krochuk, LLC, North & Webster SSG, LLC, and each of Dennis Crowley, David Shepherd, David Kaplan, Timothy Krochuk and Samuel Kidston relating to an unsolicited bid and shareholder demand.
+Added: Pursuant to the Settlement Agreement, the Company agreed to purchase all of Mr.
Nynens’ 261,631 shares of the Common Stock owned, of record or beneficially, as of the Effective Date, at fair market value, as defined in the agreement.
−Removed: Nynens and the SKK Parties terminated the November 27 Agreement and the Joint Filing Agreement.
−Removed: Additionally, Mr.
−Removed: Nynens agreed to withdraw the notice of intent to nominate director candidates for election at the 2020 annual meeting of stockholders of the Company, submitted by Mr.
−Removed: Nynens on December 20, 2019, and to cease all solicitation of proxies and other activities in connection with such annual meeting.
−Removed: For further information, see the Current Report on Form 8-K filed by the Company on April 17, 2020.
On April 23, 2020, the Company purchased all of Nynens’ 261,631 shares of Common Stock at $ 13.19 per share pursuant to the Settlement Agreement, representing approximately 5.8 % of the issued and outstanding Common Stock of the Company, for an aggregate purchase price of $ 3.5 million.
−Removed: The Company incurred approximately $1.6 million in legal and advisory expenses, net during the year ended December 31, 2020 related to the above matter.
−Removed: In connection with the above matter, the Company made certain claims for reimbursement under its insurance policies.
−Removed: During the year ended December 31, 2020, reimbursement for insurance proceeds realized totaling $0.3 million has been recorded.
+Added: The Company incurred zero and $ 1.6 million in legal and advisory expenses, net during the year ended December 31, 2021 and 2020, respectively, related to the above matter.
Quarterly Results of Operations (Unaudited)
10 unchanged sentences
Year ended December 31, 2020
−Removed: Allowances for accounts receivable
+Added: Allowance for doubtful accounts
Year ended December 31, 2021
−Removed: Allowances for accounts receivable
+Added: Allowance for doubtful accounts
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.