What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-06 · 96 added, 55 removed, 350 unchanged (30% of the section changed)

20 unchanged sentences

Lease liability, current portion

Term loan, current portion

Total current liabilities

1 unchanged sentence

Deferred income tax liabilities

Term loan, net of current portion

Non-current liabilities

17 unchanged sentences

(Amounts in thousands, except per share data)

Six months ended

Three months ended

5 unchanged sentences

Interest, net

Foreign currency transaction gain (loss)

Foreign currency transaction (loss) gain

Income before provision for income taxes

10 unchanged sentences

(Amounts in thousands)

Six months ended

Three months ended

17 unchanged sentences

Balance at March 31, 2022

Translation adjustment

Dividends paid

Share-based compensation expense

Restricted stock grants (net of forfeitures)

Treasury shares repurchased

Balance at June 30, 2022

Comprehensive

7 unchanged sentences

Balance at March 31, 2021

Translation adjustment

Dividends paid

Share-based compensation expense

Restricted stock grants (net of forfeitures)

Treasury shares repurchased

Balance at June 30, 2021

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

3 unchanged sentences

(Amounts in thousands)

Three months ended

Six months ended

Cash flows from operating activities

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

Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:

Depreciation and amortization expense

12 unchanged sentences

Other assets and liabilities

Net cash and cash equivalents provided by operating activities

Net cash and cash equivalents provided by (used in) operating activities

Cash flows from investing activities

4 unchanged sentences

Purchase of treasury stock

Borrowings under term loan

Repayments of borrowings under term loan

Dividends paid

Net cash and cash equivalents used in financing activities

Net cash and cash equivalents provided by (used in) financing activities

Effect of foreign exchange rate on cash and cash equivalents

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

7 unchanged sentences

Notes to Condensed Consolidated Financial Statements

March 31, 2022

June 30, 2022

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

27 unchanged sentences

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

The net sales from our foreign operations for the three months ended March 31, 2022 and 2021 were $ 15.7 million and $ 16.7 million, respectively.

The net sales from our foreign operations for the three months ended June 30, 2022 and 2021 were $ 14.2 million and $ 15.2 .

million, respectively.

The net sales from our foreign operations for the six months ended June 30, 2022 and 2021 were $ 29.9 million and $ 32.0 million, respectively.

Comprehensive Income:

11 unchanged sentences

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

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

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

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.

31 unchanged sentences

Goodwill and Other Intangible Assets:

The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 31, 2022:

The following table summarizes the changes in the carrying amount of goodwill for the six months ended June 30, 2022:

Balance at January 1, 2022

Translation adjustments

Balance March 31, 2022

Balance June 30, 2022

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

As of March 31, 2022

As of June 30, 2022

Gross Carrying Amount

10 unchanged sentences

Trade name is amortized over fifteen years .

Non-compete is amortized over one year .

During the three months ended March 31, 2022 and 2021, the Company recognized total amortization expense for other intangibles, net of $ 0.2 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of March 31, 2022 is as follows:

2022 (excluding the three months ended March 31, 2022)

During the three months ended June 30, 2022 and 2021, the Company recognized total amortization expense for other intangibles, net of $ 0.2 million, respectively.

During the six months ended June 30, 2022 and 2021, the Company recognized total amortization expense for other intangibles, net of $ 0.4 million and $ 0.5 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of June 30, 2022 is as follows:

2022 (excluding the six months ended June 30, 2022)

Right-of-use Asset and Lease Liability:

8 unchanged sentences

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

Three months ended

Six months ended

Cash paid for operating lease liabilities

2 unchanged sentences

Weighted-average discount rate

Maturities of lease liabilities as of March 31, 2022 were as follows:

2022 (excluding the three months ended March 31, 2022)

Maturities of lease liabilities as of June 30, 2022 were as follows:

2022 (excluding the six months ended June 30, 2022)

imputed interest

3 unchanged sentences

Total lease liabilities

The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable and accounts payable approximated fair value at March 31, 2022 and December 31, 2021 because of the relative short maturity of these instruments.

The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable and accounts payable approximated fair value at June 30, 2022 and December 31, 2021 because of the relative short maturity of these instruments.

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

4 unchanged sentences

Less accumulated depreciation and amortization

During the three months ended March 31, 2022 and 2021, the Company recorded depreciation and amortization expense of $ 0.1 million and $ 0.3 million, respectively.

During the three months ended June 30, 2022 and 2021, the Company recorded depreciation and amortization expense of $ 0.2 million, respectively.

During the six months ended June 30, 2022 and 2021, the Company recorded depreciation and amortization expense of $ 0.4 million and $ 0.3 million, respectively.

In limited circumstances, the Company offers extended payment terms to customers for periods of 12 to 24 months .

8 unchanged sentences

current portion included in accounts receivable

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $ 0.1 million during each of the 12-month periods ending March 31, 2023 and 2024 , respectively.

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $ 0.4 million and $ 0.3 million during each of the 12-month periods ending June 30, 2023 and 2024, respectively.

Accounts payable and accrued expenses consist of the following:

13 unchanged sentences

Additionally, the Loan Agreement contains negative covenants, which were not amended as part of the Amended Credit Facility, prohibiting, among other things, the creation of certain liens, the alteration of the nature or character of the Company’s business, and transactions with the Company’s shareholders, directors, officers, subsidiaries and/or affiliates other than with respect to (i) the repurchase of the issued and outstanding capital stock of the Company from the stockholders of the Company or (ii) the declaration and payment of dividends to the stockholders of the Company.

The Company was in compliance with all such covenants at March 31, 2022 and December 31, 2021.

At March 31, 2022 and December 31, 2021, the Company had no borrowings outstanding under the Credit Facility.

The Company was in compliance with all such covenants at June 30, 2022 and December 31, 2021.

At June 30, 2022 and December 31, 2021, the Company had no borrowings outstanding under the Amended Credit Facility.

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 £ 8,000,000 (“Uncommitted Credit Facility”) with Citibank N.A., London Branch (“Citibank London”) pursuant to certain terms and conditions.

4 unchanged sentences

Citibank London has the sole discretion to accept or reject any requested utilization of the Uncommitted Credit Facilitation.

At March 31, 2022 and December 31, 2021, Wayside UK had no borrowings outstanding under the Uncommitted Credit Facility.

At June 30, 2022 and December 31, 2021, Wayside UK had no borrowings outstanding under the Uncommitted Credit Facility.

On April 8, 2022, the Company entered into a $ 2,148,000 term loan (the “Term Loan”) with First American Commercial Bancorp, Inc.

(“First American”) pursuant to a Master Loan and Security Agreement.

The proceeds from the Term Loan will be used to fund certain capital expenditures.

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

At June 30, 2022, the Company had $ 2.1 million outstanding under the Term Loan.

There were no amounts outstanding under the Term Loan at December 31, 2021.

Earnings Per Share:

2 unchanged sentences

Non-vested restricted 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.

Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding

during each period.

Diluted and basic earnings per share are the same because the restricted shares are the only potentially dilutive security.

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

Three months ended March 31,

Six months ended

Three months ended

Less distributed and undistributed income allocated to participating securities

5 unchanged sentences

Major Customers and Vendors:

The Company had two major vendors that accounted for 22 % and 10 %, respectively, of total purchases during the three months ended March 31, 2022 and 24 % and 9 %, respectively, of total purchases during the three months ended March 31, 2021.

The Company had two major customers that accounted for 24 % and 14 %, respectively, of its net sales during the three months ended March 31, 2022 and 20 % and 13 %, respectively, of its net sales during the three months ended March 31, 2021.

These same customers accounted for 20 % and 17 %, respectively, of total net accounts receivable as of March 31, 2022 and 18 % and 22 %, respectively, of total net accounts receivable as of December 31, 2021.

The Company had two major vendors that accounted for 16 % and 9 %, respectively, of total purchases during the three months ended June 30, 2022 and 18 % and 12 %, respectively, of total purchases during the three months ended June 30, 2021.

The Company had two major vendors that accounted for 19 % and 9 %, respectively, of total purchases during the six months ended June 30, 2022 and 21 % and 9 %, respectively, of total purchases during the six months ended June 30, 2021.

The Company had two major customers that accounted for 21 % and 20 %, respectively, of its net sales during the three months ended June 30, 2022 and 17 % and 17 %, respectively, of its net sales during the three months ended June 30, 2021.

The Company had two major customers that accounted for 23 % and 18 %, respectively, of its net sales during the six months ended June 30, 2022 and 18 % and 15 %, respectively, of its net sales during the six months ended June 30, 2021.

These same customers accounted for 20 % and 17 %, respectively, of total net accounts receivable as of June 30, 2022 and 18 % and 22 %, respectively, of total net accounts receivable as of December 31, 2021.

Income Taxes:

5 unchanged sentences

The 2021 Plan was approved by the Company’s stockholders at the 2021 Annual Meeting in June 2021.

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 March 31, 2022, the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 418,544 .

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 June 30, 2022, the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 401,350 .

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.

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

Immediately prior to the replacement of the 2012 Plan by the 2021 Plan, there were 352,158 shares of Common Stock

available under the 2012 Plan.

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.

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

As of March 31, 2022, the number of shares of Common Stock available under the 2012 Plan is zero .

During the three months ended March 31, 2022, the Company granted a total of 30,999 shares of Restricted Stock to officers.

As of June 30, 2022, the number of shares of Common Stock available under the 2012 Plan was zero .

During the six months ended June 30, 2022, the Company granted a total of 50,749 shares of Restricted Stock to officers and employees.

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

During the three months ended March 31, 2022, a total of 1,500 shares of Restricted Stock were forfeited.

During the three months ended March 31, 2021, the Company granted a total of 52,190 shares of Restricted Stock to officers.

During the six months ended June 30, 2022, a total of 4,056 shares of Restricted Stock were forfeited.

During the six months ended June 30, 2021, the Company granted a total of 52,190 shares of Restricted Stock to officers.

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

A summary of nonvested shares of Restricted Stock awards outstanding under the 2012 and 2021 Plans as of March 31, 2022, and changes during the three months then ended is as follows:

During the six months ended June 30, 2021, a total of 20,184 shares of Restricted Stock were forfeited.

A summary of nonvested shares of Restricted Stock awards outstanding under the 2012 and 2021 Plans as of June 30, 2022, and changes during the six months then ended is as follows:

Average Grant

3 unchanged sentences

Forfeited in 2022

Nonvested shares at March 31, 2022

As of March 31, 2022, there is approximately $ 2.6 million of total unrecognized compensation costs related to nonvested share-based compensation arrangements.

Nonvested shares at June 30, 2022

As of June 30, 2022, there is approximately $ 2.9 million of total unrecognized compensation costs related to nonvested share-based compensation arrangements.

The unrecognized compensation cost is expected to be recognized over a weighted-average period of 3.0 years.

During the three months ended March 31, 2022 and 2021, the Company recognized share-based compensation expense of $ 0.4 million and $ 0.3 million, respectively.

During the three months ended June 30, 2022 and 2021, the Company recognized share-based compensation expense of $ 0.3 million, respectively.

During the six months ended June 30, 2022 and 2021, the Company recognized share-based compensation of $ 0.7 million and $ 0.6 million, respectively.

Segment Information:

6 unchanged sentences

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

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

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

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

3 unchanged sentences

The following segment reporting information of the Company is provided:

Six months ended

Three months ended

6 unchanged sentences

Interest, net

Foreign currency transaction gain (loss)

Foreign currency transaction (loss) gain

Income before taxes

(1) Excludes general corporate expenses including interest and foreign currency transaction gain (loss).

(1) Excludes general corporate expenses including interest and foreign currency transaction (loss) gain.

Selected Assets by Segment:

1 unchanged sentence

Corporate Assets

Geographic areas and net sales mix related to operations for the three months ended March 31, 2022 and 2021 were as follows.

Geographic areas and net sales mix related to operations for the three and six months ended June 30, 2022 and 2021 were as follows.

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

Six months ended

Three months ended

March 31, 2022

June 30, 2022

Europe and United Kingdom

4 unchanged sentences

Total net sales

Six months ended

Three months ended

March 31, 2021

June 30, 2021

Europe and United Kingdom

6 unchanged sentences

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

Geographic identifiable assets related to operations as of March 31, 2022 and December 31, 2021 were as follows.

Geographic identifiable assets related to operations as of June 30, 2022 and December 31, 2021 were as follows.

Identifiable Assets by Geographic Areas

1 unchanged sentence

Related Party Transactions:

The Company made sales to a customer where a member of our Board of Directors is an executive.

During the three months ended March 31, 2022 and 2021, net sales to this customer totaled approximately $ 0.1 million and $ 0.2 million, respectively.

Amounts due from this customer as of March 31, 2022 and December 31, 2021 were approximately $ 0.1 million and zero , respectively, which were settled in cash subsequent to each period end.

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

During the three months ended March 31, 2022 and 2021, net sales to this customer totaled approximately $ 0.3 million and zero , respectively.

Amounts due from this customer as of March 31, 2022 and December 31, 2021 were approximately $ 0.1 million and $ 0.2 million, respectively, which were or are expected to be settled in cash subsequent to each period end.

The Company made sales to a customer where a member of our Board of Directors was formerly an executive.

This member of our Board of Directors employment with the customer ended during the three months ended June 30, 2022.

During the three months ended June 30, 2022 and 2021, net sales to this customer totaled approximately $ 0.1 million, respectively.

During the six months ended June 30, 2022 and 2021, net sales to this customer totaled approximately $ 0.2 million, respectively.

Amounts due from this customer as of June 30, 2022 and December 31, 2021 were less than $ 0.1 million and zero , respectively, which were settled in cash subsequent to each period end.

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

During the three months ended June 30, 2022 and 2021, net sales to this customer totaled approximately $ 0.7 million and zero , respectively.

During the six months ended June 30, 2022 and 2021, net sales to this customer totaled approximately $ 1.0 million and zero , respectively.

Amounts due from this customer as of June 30, 2022 and December 31, 2021 were approximately $ 0.2 million and $ 0.2 million, respectively, which were or are expected to be settled in cash subsequent to each period end.

The Company also had accrued referral fees that it owed to this customer totaling $ 0.1 million as of December 31, 2021, which were settled in cash subsequent to the period end.

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

What changed 10-Q

Item 1. Financial Statements