Climb Global Solutions, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS ​ Climb Global Solutions, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (Amounts in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ ASSETS ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 43,572 ​ $ 36,295 ​ Accounts receivable, net of allowance for doubtful accounts of $ 744 and $ 709 , respectively ​ ​ 180,587 ​ 222,269 ​ Inventory, net ​ ​ 1,865 ​ 3,741 ​ Prepaid expenses and other current assets ​ ​ 6,619 ​ 6,755 ​ Total current assets ​ ​ 232,643 ​ 269,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ Equipment and leasehold improvements, net ​ ​ 9,890 ​ 8,850 ​ Goodwill ​ ​ 26,906 ​ ​ 27,182 ​ Other intangibles, net ​ ​ 25,920 ​ ​ 26,930 ​ Right-of-use assets, net ​ ​ 848 ​ ​ 878 ​ Accounts receivable, net of current portion ​ ​ 752 ​ 797 ​ Other assets ​ ​ 974 ​ 1,077 ​ Deferred income tax assets ​ ​ 389 ​ 324 ​ Total assets ​ $ 298,322 ​ $ 335,098 ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts payable and accrued expenses ​ $ 213,221 ​ $ 249,648 ​ Lease liability, current portion ​ ​ 495 ​ ​ 450 ​ Term loan, current portion ​ ​ 545 ​ ​ 540 ​ Total current liabilities ​ ​ 214,261 ​ 250,638 ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease liability, net of current portion ​ ​ 771 ​ ​ 879 ​ Deferred income tax liabilities ​ ​ 5,492 ​ ​ 5,554 ​ Term loan, net of current portion ​ ​ 614 ​ ​ 752 ​ Other non-current liabilities ​ ​ 735 ​ ​ 2,505 ​ Total liabilities ​ ​ 221,873 ​ ​ 260,328 ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ ​ Common stock, $ .01 par value; 10,000,000 shares authorized; 5,284,500 shares issued: 4,585,131 and 4,573,448 shares outstanding, respectively ​ ​ 53 ​ ​ 53 ​ Additional paid-in capital ​ ​ 35,170 ​ ​ 34,647 ​ Treasury stock, at cost, 699,369 and 711,052 shares, respectively ​ ​ ( 12,724 ) ​ ​ ( 12,623 ) ​ Retained earnings ​ ​ 55,190 ​ ​ 53,215 ​ Accumulated other comprehensive loss ​ ​ ( 1,240 ) ​ ​ ( 522 ) ​ Total stockholders’ equity ​ ​ 76,449 ​ 74,770 ​ Total liabilities and stockholders' equity ​ $ 298,322 ​ $ 335,098 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents Climb Global Solutions, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (Unaudited) (Amounts in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ ​ March 31, ​ ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 92,422 ​ $ 85,040 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales, excluding depreciation and amortization expense ​ ​ 75,402 ​ ​ 69,831 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit ​ 17,020 ​ 15,209 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general, and administrative expenses ​ ​ 12,523 ​ ​ 10,241 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisition related costs ​ ​ 123 ​ ​ 22 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization expense ​ ​ 871 ​ ​ 713 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from operations ​ 3,503 ​ 4,233 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest, net ​ ​ 203 ​ ​ 112 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency transaction (loss) gain ​ ​ ( 85 ) ​ ​ 44 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before provision for income taxes ​ 3,621 ​ 4,389 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 890 ​ 1,065 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,731 ​ $ 3,324 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income per common share-Basic ​ $ 0.60 ​ $ 0.74 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income per common share-Diluted ​ $ 0.60 ​ $ 0.74 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding — Basic ​ ​ 4,438 ​ ​ 4,366 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares outstanding — Diluted ​ 4,438 ​ 4,366 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 5 Table of Contents Climb Global Solutions, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ ​ March 31, ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,731 ​ $ 3,324 ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive (loss) income: ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments ​ ( 718 ) ​ 613 ​ Other comprehensive (loss) income ​ ( 718 ) ​ 613 ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive income ​ $ 2,013 ​ $ 3,937 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 6 Table of Contents Climb Global Solutions, Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) ( Amounts in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Treasury ​ Retained ​ Comprehensive ​ ​ ​ ​ Shares Amount Capital Shares Amount Earnings (Loss) Income Total Balance at January 1, 2024 5,284,500 ​ $ 53 ​ $ 34,647 711,052 ​ $ ( 12,623 ) ​ $ 53,215 ​ $ ( 522 ) ​ $ 74,770 Net income ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2,731 ​ ​ — ​ ​ 2,731 Translation adjustment ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 718 ) ​ ​ ( 718 ) Dividends paid (per common share $ 0.17 ) ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 756 ) ​ ​ — ​ ​ ( 756 ) Share-based compensation expense ​ — ​ ​ — ​ ​ 854 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 854 Restricted stock grants (net of forfeitures) ​ — ​ ​ — ​ ​ ( 331 ) ​ ( 18,938 ) ​ ​ 331 ​ ​ — ​ ​ — ​ ​ — Treasury shares repurchased ​ — ​ ​ — ​ ​ — ​ 7,255 ​ ​ ( 432 ) ​ ​ — ​ ​ — ​ ​ ( 432 ) Balance at March 31, 2024 5,284,500 ​ $ 53 ​ $ 35,170 699,369 ​ $ ( 12,724 ) ​ $ 55,190 ​ $ ( 1,240 ) ​ $ 76,449 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Treasury ​ Retained ​ Comprehensive ​ ​ ​ ​ Shares Amount Capital Shares Amount Earnings (Loss) Income Total Balance at January 1, 2023 5,284,500 ​ ​ 53 ​ ​ 32,715 806,068 ​ ​ ( 13,230 ) ​ ​ 43,904 ​ ​ ( 2,868 ) ​ $ 60,574 Net income ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 3,324 ​ ​ — ​ ​ 3,324 Translation adjustment ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 613 ​ ​ 613 Dividends paid (per common share $ 0.17 ) ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 749 ) ​ ​ — ​ ​ ( 749 ) Share-based compensation expense ​ — ​ ​ — ​ ​ 545 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 545 Restricted stock grants (net of forfeitures) ​ — ​ ​ — ​ ​ ( 765 ) ​ ( 43,824 ) ​ ​ 765 ​ ​ — ​ ​ — ​ ​ — Treasury shares repurchased ​ — ​ ​ — ​ ​ — ​ 5,604 ​ ​ ( 214 ) ​ ​ — ​ ​ — ​ ​ ( 214 ) Balance at March 31, 2023 5,284,500 ​ $ 53 ​ $ 32,495 ​ 767,848 ​ $ ( 12,679 ) ​ $ 46,479 ​ $ ( 2,255 ) ​ $ 64,093 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 7 Table of Contents Climb Global Solutions, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (Amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ ​ March 31, ​ ​ 2024 2023 Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,731 ​ $ 3,324 ​ Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization expense ​ 871 ​ ​ 716 ​ Provision for doubtful accounts ​ 45 ​ ​ 9 ​ Deferred income tax benefit ​ ( 77 ) ​ ​ 241 ​ Share-based compensation expense ​ ​ 822 ​ ​ 529 ​ Amortization of discount on accounts receivable ​ ​ ( 6 ) ​ ​ ( 11 ) ​ Amortization of right-of-use assets ​ ​ 29 ​ ​ 101 ​ Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ 40,435 ​ ​ 30,345 ​ Inventory ​ 1,824 ​ ​ 703 ​ Prepaid expenses and other current assets ​ 115 ​ ​ ( 3,696 ) ​ Vendor prepayments ​ ​ — ​ ​ 890 ​ Accounts payable and accrued expenses ​ ( 31,024 ) ​ ​ 9,994 ​ Lease liability, net ​ ​ ( 63 ) ​ ​ ( 133 ) ​ Other assets and liabilities ​ ( 1,655 ) ​ ​ 598 ​ Net cash and cash equivalents provided by operating activities ​ 14,047 ​ 43,610 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ Purchase of equipment and leasehold improvements ​ ( 1,180 ) ​ ​ ( 1,270 ) ​ Net cash and cash equivalents used in investing activities ​ ( 1,180 ) ​ ( 1,270 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ Purchase of treasury stock ​ ( 432 ) ​ ​ ( 214 ) ​ Borrowings under credit facilities ​ ​ — ​ ​ 10,000 ​ Repayments of borrowings under credit facilities ​ ​ ( 4,229 ) ​ ​ ( 10,000 ) ​ Repayments of borrowings under term loan ​ ​ ( 133 ) ​ ​ ( 128 ) ​ Dividends paid ​ ( 756 ) ​ ​ ( 749 ) ​ Net cash and cash equivalents used in financing activities ​ ( 5,550 ) ​ ( 1,091 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of foreign exchange rate on cash and cash equivalents ​ ( 40 ) ​ 247 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase in cash and cash equivalents ​ 7,277 ​ ​ 41,496 ​ Cash and cash equivalents at beginning of period ​ 36,295 ​ ​ 20,245 ​ Cash and cash equivalents at end of period ​ $ 43,572 ​ $ 61,741 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplementary disclosure of cash flow information: ​ ​ ​ ​ ​ ​ ​ Income taxes paid ​ $ 272 ​ $ 222 ​ Interest paid ​ $ 68 ​ $ 22 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 8 Table of Contents ​ Climb Global Solutions, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements March 31, 2024 (Unaudited) (Amounts in tables in thousands, except share and per share amounts) ​ 1. Basis of Presentation: ​ The accompanying unaudited condensed consolidated financial statements of Climb Global Solutions, Inc. and its subsidiaries (collectively, the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, as permitted by the rules and regulation of the Securities and Exchange Commission, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete audited financial statements. ​ The preparation of these condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to product returns, bad debts, inventories, intangible assets, income taxes, stock-based compensation, evaluation of performance obligations and allocation of revenue to distinct items, contingencies and litigation. The Company bases its estimates on its historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In the opinion of the Company’s management, all adjustments that are of a normal recurring nature, considered necessary for fair presentation of the results for the periods presented, have been included in the accompanying condensed consolidated financial statements. The Company’s actual results may differ from these estimates under different assumptions or conditions. The unaudited condensed consolidated statements of earnings for the interim periods are not necessarily indicative of results for the full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K filed with the Securities Exchange Commission for the year ended December 31, 2023. ​ The consolidated financial statements include the accounts of Climb Global Solutions, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. ​ Reclassifications ​ Certain reclassifications and immaterial revisions have been made to the prior period financial statements to conform to the current-year presentation. ​ ​ ​ 2. Recently Issued Accounting Standards: ​ In November 2023, the FASB issued Accounting Standards Update 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The Company adopted the update in the first quarter of 2024 and it did not have a material effect on our consolidated financial statements. ​ 3. Foreign Currency Translation: ​ 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. Transactions denominated in currencies other than the applicable functional currency are converted to the functional currency at the exchange rate on the transaction date. 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, 2024 and 2023 were $ 28.2 million and $ 24.6 million, respectively. ​ 9 Table of Contents 4. Comprehensive Income: ​ Cumulative translation adjustments have been classified within accumulated other comprehensive loss, which is a separate component of stockholders’ equity in accordance with FASB ASC Topic 220, “Comprehensive Income.” ​ 5. Revenue Recognition: The Company’s revenues primarily result from the sale of various technology products and services, including third-party products, third-party software and third-party maintenance, software support and services. The Company recognizes revenue as control of the third-party products and third-party software is transferred to customers, which generally happens at the point of shipment or fulfilment and at the point that our customers and vendors accept the terms and conditions of the arrangement for third-party maintenance, software support and services. The Company 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. 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. These arrangements primarily relate to third party maintenance, cloud services and certain security software whose intended functionality is dependent on third party maintenance. The Company allows its customers to return product for exchange or credit subject to certain limitations. A liability is recorded at the time of sale for estimated product returns based upon historical experience and an asset is recognized for the amount expected to be recorded in inventory upon product return. The Company also provides rebates and other discounts to certain customers which are considered variable consideration. 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. The Company considers shipping and handling activities as costs to fulfill the sales of products. Shipping revenue is included in net sales when control of the product is transferred to the customer, and the related shipping and handling costs are included in the cost of products sold. Taxes imposed by governmental authorities on the Company’s revenue producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales. The Company disaggregates its operating revenue by segment, geography and timing of revenue recognition, which the Company believes provides a meaningful depiction of the nature of its revenue. See Note 16 – Segment Information. ​ Hardware and software products sold by the Company are generally delivered via shipment from the Company’s facilities, drop shipment directly from the vendor, or by electronic delivery of keys for software products. The majority of the Company’s business involves shipments directly from its vendors to its customers. In these transactions, the Company is generally responsible for negotiating price both with the vendor and customer, payment to the vendor, establishing payment terms with the customer, product returns, and has risk of loss if the customer does not make payment. As the principal with the customer, the Company recognizes revenue upon receiving notification from the vendor that the product was shipped. Control of software products is deemed to have passed to the customer when they acquire the right to use or copy the software under license as substantially all product functionality is available to the customer at the time of sale. ​ 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. 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. Changes in delivery patterns may result in a different number of business days estimated to make this adjustment. 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. 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. 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. 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. If the Company determines that the accompanying third-party delivered software assurance is critical or essential to the core functionality of the software license, 10 Table of Contents the software license and the accompanying third-party delivered software assurance are recognized as a single performance obligation. 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. 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. 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. 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. 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. 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. 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. 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. ​ The Company pays commissions and related payroll taxes to sales personnel when customers are invoiced. 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. ​ 6. Acquisition: ​ On October 6, 2023, the Company entered into a Share Purchase Agreement and purchased the entire share capital of Data Solutions Holdings Limited (“Data Solutions”) for an aggregate purchase price of approximately € 15.0 million (equivalent to $ 15.9 million USD), subject to certain working capital and other adjustments, paid at closing plus a potential post-closing earn-out. The allocation of the purchase price was based on the estimated fair value of Data Solutions’ net tangible and identifiable intangible assets as of the date of the acquisition. The transaction was accounted for under the purchase method of accounting. ​ The purchase consideration includes approximately $ 2.3 million fair value for potential earn-out consideration if certain targets are achieved, payable in cash. The earn-out liability is included in current liabilities as of March 31, 2024 and December 31, 2023. There were no material changes in fair value since the acquisition date. The fair value earn-out measurement was primarily based on inputs that are not observable, which are categorized as a Level 3 measurement in the fair value hierarchy (See Note 18 – Fair Value Measurements), reflecting its assessment of the assumptions market participants would use to value these liabilities. The undiscounted payment of the earn-out can range from zero up to approximately $ 3.9 million and achievement is based on the post-acquisition results of Data Solutions. ​ In connection with the acquisition of Data Solutions on October 6, 2023, the Company acquired an invoice discounting facility (“IDF”) that is with recourse to the Company (See Note 11 – Credit Facilities). The balance outstanding under the IDF at March 31, 2024 was zero compared to $ 4.3 million at December 31, 2023, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 11 Table of Contents 7. Goodwill and Other Intangible Assets: ​ The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Distribution ​ Solutions ​ Consolidated Balance January 1, 2023 ​ $ 10,682 ​ $ 8,281 ​ $ 18,963 Goodwill acquired ​ ​ 7,143 ​ ​ — ​ ​ 7,143 Translation adjustments ​ ​ 833 ​ ​ 243 ​ ​ 1,076 Balance December 31, 2023 ​ $ 18,658 ​ $ 8,524 ​ $ 27,182 Translation adjustments ​ ​ ( 207 ) ​ ​ ( 69 ) ​ ​ ( 276 ) Balance March 31, 2024 ​ $ 18,451 ​ $ 8,455 ​ $ 26,906 ​ Information related to the Company’s other intangibles, net is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2024 ​ ​ Gross Carrying Amount ​ Accumulated Amortization ​ Net Carrying Amount Customer and vendor relationships ​ $ 30,638 ​ ​ 5,093 ​ $ 25,545 Trade name ​ ​ 485 ​ ​ 110 ​ ​ 375 Total ​ $ 31,123 ​ $ 5,203 ​ $ 25,920 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ Gross Carrying Amount ​ Accumulated Amortization ​ Net Carrying Amount Customer and vendor relationships ​ $ 30,968 ​ $ 4,424 ​ $ 26,544 Trade name ​ ​ 489 ​ ​ 103 ​ ​ 386 Total ​ $ 31,457 ​ $ 4,527 ​ $ 26,930 ​ Customer relationships are amortized over thirteen years . Vendor relationships are amortized between eight and fifteen years . Trade name is amortized over fifteen years . ​ During the three months ended March 31, 2024 and 2023, the Company recognized total amortization expense for other intangibles, net of $ 0.7 million and $ 0.5 million, respectively. ​ Estimated future amortization expense of the Company’s other intangibles, net as of March 31, 2024 is as follows: ​ ​ ​ ​ ​ 2024 (excluding the three months ended March 31, 2024) $ 2,096 2025 ​ 2,795 2026 ​ 2,795 2027 ​ 2,795 2028 ​ 2,795 Thereafter ​ 12,644 Total ​ $ 25,920 ​ ​ 8. Right-of-use Asset and Lease Liability: ​ The Company has entered into operating leases for office and warehouse facilities, which have terms at lease commencement that range from 2 years to 11 years . The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets and lease expense for these leases is recognized on a straight-line basis over the lease term. ​ 12 Table of Contents Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date of the lease based on the present value of the lease payments over the lease term. As our leases do not provide a readily determinable implicit rate, we use an incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Operating lease expense is recognized on a straight-line basis over the lease term and included in selling, general and administrative expenses. ​ Information related to the Company’s ROU assets and related lease liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ March 31, ​ ​ ​ 2024 ​ ​ 2023 Cash paid for operating lease liabilities ​ $ 160 ​ $ 156 Right-of-use assets obtained in exchange for new operating lease obligations ​ $ 69 ​ $ — Weighted-average remaining lease term ​ ​ 2.9 years ​ ​ 3.9 years Weighted-average discount rate ​ ​ 3.7 % ​ ​ 3.5 % ​ Maturities of lease liabilities as of March 31, 2024 were as follows: ​ ​ ​ ​ ​ 2024 (excluding the three months ended March 31, 2024) $ 483 2025 ​ 553 2026 ​ 548 2027 ​ 111 ​ ​ ​ 1,695 Less: imputed interest ​ ​ ( 429 ) Total lease liabilities ​ $ 1,266 ​ ​ ​ ​ Lease liabilities, current portion ​ ​ 495 Lease liabilities, net of current portion ​ ​ 771 Total lease liabilities ​ $ 1,266 ​ ​ 9. Fair Value: ​ The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable, accounts payable and term loan approximated fair value at March 31, 2024 and December 31, 2023 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. ​ 13 Table of Contents 10. Balance Sheet Detail: ​ Equipment and leasehold improvements consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ 2024 2023 Equipment ​ $ 3,277 ​ $ 3,195 Capitalized software ​ ​ 7,987 ​ ​ 6,890 Buildings ​ ​ 694 ​ ​ 709 Leasehold improvements ​ 2,377 ​ 2,385 ​ ​ 14,335 ​ 13,179 Less accumulated depreciation and amortization ​ ( 4,445 ) ​ ( 4,329 ) ​ ​ $ 9,890 ​ $ 8,850 ​ During the three months ended March 31, 2024 and 2023, the Company recorded depreciation and amortization expense of $ 0.9 million and $ 0.7 million, respectively. ​ In limited circumstances, the Company offers extended payment terms to customers for periods of 12 to 36 months . The related customer receivables are classified as accounts receivable long-term and discounted to their present value at prevailing market rates at the time of sale. 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. The amounts under these long-term accounts receivable due within one year are reclassified to the current portion of accounts receivable. Accounts receivable long term, net consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ 2024 2023 Total amount due from customer ​ $ 1,623 ​ $ 1,637 Less: unamortized discount ​ ( 6 ) ​ ( 12 ) Less: current portion included in accounts receivable ​ ( 865 ) ​ ( 828 ) ​ ​ $ 752 ​ $ 797 ​ The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $ 0.8 million, $ 0.4 million, $ 0.4 million during each of the 12-month periods ending March 31, 2025, 2026, and 2027, respectively. ​ Accounts payable and accrued expenses consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ ​ 2024 2023 Trade accounts payable ​ $ 189,732 ​ $ 218,717 ​ Accrued expenses ​ ​ 17,823 ​ ​ 22,903 ​ Other accounts payable and accrued expenses ​ 5,666 ​ 8,028 ​ ​ ​ $ 213,221 ​ $ 249,648 ​ ​ ​ ​ ​ 11. Credit Facility: ​ On May 18, 2023, the Company entered into a revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JPM”), providing for a revolving credit facility of up to $ 50.0 million, including the issuance of letters of credit and swingline loans not to exceed $ 2.5 million and $ 5.0 million, respectively, at any time outstanding. In addition, subject to certain conditions enumerated in the Credit Agreement, the Company has the right to increase the revolving credit facility by a total amount not to exceed $ 20.0 million. The proceeds of the revolving loans, letters of credit and swingline loans under the Credit Agreement may be used for working capital needs, general corporate purposes and for acquisitions permitted by the terms of the Credit Agreement. ​ 14 Table of Contents All outstanding loans issued pursuant to the Credit Agreement become due and payable, on May 18, 2028. There were no amounts outstanding under the Credit Agreement as of March 31, 2024. ​ Outstanding Loans comprising (i) ABR Borrowings bear interest at the ABR plus the Applicable Rate, (ii) Term Benchmark Borrowings bear interest at the Adjusted Term SOFR Rate or the Adjusted EURIBOR Rate, as applicable, plus the Applicable Rate and (iii) RFR Loans bear interest at a rate per annum equal to the applicable Adjusted Daily Simple RFR plus the Applicable Rate. The Applicable Rate for borrowings varies (i) in the case of ABR Borrowings, from 0.50 % to 0.75 % and (ii) in the case of Term Benchmark Borrowings and RFR Loans, from 1.50 % to 1.75 %. ​ The Credit Agreement contains customary affirmative covenants, such as financial statement and collateral reporting requirements. The Credit Agreement also contains customary negative covenants that limit the ability of the Company to, among other things, incur indebtedness, create liens or permit encumbrances, or undergo certain fundamental changes. Additionally, under certain circumstances, the Company is required to maintain a minimum fixed charge coverage ratio. ​ In connection with entering into the Credit Agreement, on May 18, 2023, the Company voluntarily terminated its existing revolving credit agreement, dated November 15, 2017 with Citibank N.A. (“Previous Credit Facility”). As of the date of termination, the Company had no borrowings outstanding under the Previous Credit Facility. ​ On April 8, 2022, the Company entered into a $ 2.1 million term loan (the “Term Loan”) with First American Commercial Bancorp, Inc. (“First American”) pursuant to a Master Loan and Security Agreement. The proceeds from the Term Loan was 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 March 31, 2024 and December 31, 2023, the Company had $ 1.2 million and $ 1.3 million outstanding under the Term Loan, respectively. At March 31, 2024, future principal payments under the Term Loan are as follows: ​ ​ ​ ​ ​ 2024 (excluding the three months ended March 31, 2024) ​ ​ 453 2025 ​ ​ 562 2026 ​ ​ 144 Total ​ $ 1,159 ​ ​ ​ In connection with the acquisition of Data Solutions (See Note 6– Acquisition), the Company acquired an IDF that is with recourse to the Company. Data Solutions had previously entered into the IDF with AIB Commercial Finance Limited (“AIB”) pursuant to a Debt Purchase Agreement. The proceeds from the IDF will be used for working capital needs of Data Solutions. Borrowings under the IDF are based on accounts receivable up to 80 % of the outstanding accounts receivable balance. The discount rate under the IDF is equal to 2.5 % above AIB’s applicable lending rates that vary based on the currency of the accounts receivable. At March 31, 2024 and December 31, 2023, the outstanding balance under the IDF at was zero and $ 4.3 million, respectively, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheet. ​ ​ 12. Earnings Per Share: ​ Our basic and diluted earnings per share are computed using the two-class method in accordance with ASC 260. The two-class method is an earnings allocation 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. 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. Diluted and basic earnings per share are the same because the restricted shares are the only potentially dilutive security. ​ 15 Table of Contents A reconciliation of the numerators and denominators of the basic and diluted per share computations follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ ​ March 31, ​ ​ 2024 2023 Numerator: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,731 ​ $ 3,324 ​ ​ ​ ​ ​ ​ ​ ​ ​ Less distributed and undistributed income allocated to participating securities ​ ​ 63 ​ ​ 83 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to common shareholders ​ ​ 2,668 ​ ​ 3,241 ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ ​ ​ Weighted average common shares (Basic) ​ 4,438 ​ 4,366 ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares including assumed conversions (Diluted) ​ 4,438 ​ 4,366 ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic net income per share ​ $ 0.60 ​ $ 0.74 ​ Diluted net income per share ​ $ 0.60 ​ $ 0.74 ​ ​ ​ ​ 13. Major Customers and Vendors: ​ The Company had two major vendors that accounted for 16 % and 10 % of total purchases during the three months ended March 31, 2024, and 21 % and 10 %, respectively, of total purchases during the three months ended March 31, 2023. ​ The Company had two major customers that accounted for 20 % and 15 %, respectively, of its net sales during the three months ended March 31, 2024, and 19 % and 14 %, respectively, of its net sales during the three months ended March 31, 2023. These same customers accounted for 16 % and 6 %, respectively, of total net accounts receivable as of March 31, 2024, and 15 % and 6 %, respectively, of total net accounts receivable as of December 31, 2023. ​ 14. Income Taxes: ​ The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. ​ 15. Stockholders’ Equity and Stock Based Compensation: ​ 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. 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, 2024, the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 222,130 . ​ The 2012 Stock-Based Compensation Plan (the “2012 Plan”) authorized the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards. The total number of shares of the Company’s Common Stock initially available for award under the 2012 Plan was 600,000 , which was increased to 1,000,000 shares by stockholder approval at the Company’s 2018 Annual Meeting in June 2018. Immediately prior to the replacement of the 2012 Plan by the 2021 Plan, there were 352,158 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 16 Table of Contents 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, 2024, the number of shares of Common Stock available under the 2012 Plan was zero . ​ During the three months ended March 31, 2024, the Company granted a total of 18,938 shares of Restricted Stock to officers and employees. These shares of Restricted Stock vest immediately, over time in three equal installments or over time in sixteen equal quarterly installments. ​ During the three months ended March 31, 2023, the Company granted a total of 43,824 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, 2024, and changes during the three months then ended is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average Grant ​ ​ ​ ​ ​ Date ​ ​ Shares ​ Fair Value Nonvested shares at January 1, 2024 143,294 ​ $ 36.48 ​ Granted in 2024 18,938 ​ 60.19 ​ Vested in 2024 ( 20,559 ) ​ 34.16 ​ Forfeited in 2024 — ​ — ​ Nonvested shares at March 31, 2024 141,673 ​ $ 39.98 ​ ​ As of March 31, 2024, there is approximately $ 4.9 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 1.7 years. During the three months ended March 31, 2024 and 2023, the Company recognized share-based compensation expense of $ 0.8 million and $ 0.5 million, respectively. ​ 16. Segment Information: ​ The Company distributes software developed by others through resellers indirectly to customers worldwide. We also resell computer software and hardware developed by others and provide technical services directly to customers worldwide. ​ 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. The internal organization used by the public company’s Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s Chief Executive Officer, who has been identified as the Company’s CODM, primarily uses operating income as the measure of profit or loss to assess segment performance and allocate resources. Operating income represents net sales less costs of sales, excluding depreciation and amortization expense and operating expenses. Net sales and cost of sales, excluding depreciation and amortization expense are directly attributed to each segment. The majority of operating expenses are also directly attributed to each segment, while certain other operating expenses are allocated to the segments in a reasonable manner considering the specific facts and circumstances of the expenses being allocated. ​ The Company is organized into two reportable operating segments. The “Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “Solutions” segment is a provider of cloud solutions 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 17 Table of Contents the same products and services to similar clients and are considered together when the Company’s CODM decides how to allocate resources. ​ Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit. The Company only identifies accounts receivable, vendor prepayments, inventory, goodwill and intangible assets by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ ​ March 31, ​ ​ ​ 2024 2023 Net Sales: ​ ​ ​ ​ ​ ​ ​ Distribution ​ $ 86,822 ​ $ 78,550 ​ Solutions ​ 5,600 ​ 6,490 ​ ​ ​ 92,422 ​ 85,040 ​ Gross Profit: ​ ​ ​ ​ ​ ​ ​ Distribution ​ $ 14,215 ​ $ 12,728 ​ Solutions ​ 2,805 ​ 2,481 ​ ​ ​ 17,020 ​ 15,209 ​ Direct Costs: ​ ​ ​ ​ ​ ​ ​ Distribution ​ $ 7,376 ​ $ 4,777 ​ Solutions ​ 1,381 ​ 1,301 ​ ​ ​ 8,757 ​ 6,078 ​ Segment Income Before Taxes: (1) ​ ​ ​ ​ ​ ​ ​ Distribution ​ $ 6,839 ​ $ 7,951 ​ Solutions ​ 1,424 ​ 1,180 ​ Segment Income Before Taxes ​ 8,263 ​ 9,131 ​ ​ ​ ​ ​ ​ ​ ​ ​ General and administrative ​ $ 3,766 ​ $ 4,163 ​ Acquisition related costs ​ ​ 123 ​ ​ 22 ​ Depreciation and amortization expense ​ ​ 871 ​ ​ 713 ​ Interest, net ​ 203 ​ 112 ​ Foreign currency transaction loss ​ ​ ( 85 ) ​ ​ 44 ​ Income before taxes ​ $ 3,621 ​ $ 4,389 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Excludes general corporate expenses including interest and foreign currency transaction loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ As of ​ ​ ​ March 31, ​ December 31, ​ Selected Assets by Segment: ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ Distribution ​ $ 196,893 ​ $ 242,927 ​ Solutions ​ 39,137 ​ 37,992 ​ Segment Select Assets ​ 236,030 ​ 280,919 ​ Corporate Assets ​ 62,292 ​ 54,179 ​ Total Assets ​ $ 298,322 ​ $ 335,098 ​ ​ ​ 18 Table of Contents Geographic areas and net sales mix related to operations for the three months ended March 31, 2024 and 2023 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ March 31, 2024 ​ ​ ​ Distribution Solutions ​ Total ​ Geography ​ ​ ​ ​ ​ ​ ​ ​ USA ​ $ 62,364 ​ $ 1,908 ​ $ 64,272 ​ Europe and United Kingdom ​ 18,285 ​ 3,406 ​ 21,691 ​ Canada ​ 6,173 ​ 286 ​ 6,459 ​ Total net sales ​ $ 86,822 ​ $ 5,600 ​ $ 92,422 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Timing of Revenue Recognition ​ ​ ​ ​ ​ ​ ​ ​ Transferred at a point in time where the Company is principal (1) ​ $ 75,733 ​ $ 3,558 ​ $ 79,291 ​ Transferred at a point in time where the Company is agent (2) ​ 11,089 ​ 2,042 ​ 13,131 ​ Total net sales ​ $ 86,822 ​ $ 5,600 ​ $ 92,422 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ March 31, 2023 ​ ​ ​ Distribution Solutions ​ Total ​ Geography ​ ​ ​ ​ ​ ​ ​ ​ USA ​ $ 56,743 ​ $ 3,666 ​ $ 60,409 ​ Europe and United Kingdom ​ 15,416 ​ 2,501 ​ 17,917 ​ Canada ​ 6,391 ​ 323 ​ 6,714 ​ Total net sales ​ $ 78,550 ​ $ 6,490 ​ $ 85,040 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Timing of Revenue Recognition ​ ​ ​ ​ ​ ​ ​ ​ Transferred at a point in time where the Company is principal (1) ​ $ 68,568 ​ $ 4,833 ​ $ 73,401 ​ Transferred at a point in time where the Company is agent (2) ​ 9,982 ​ 1,657 ​ 11,639 ​ Total net sales ​ $ 78,550 ​ $ 6,490 ​ $ 85,040 ​ ​ (1) Includes net sales from third-party hardware and software products. ​ (2) Includes net sales from third-party maintenance, software support and services. ​ Geographic identifiable assets related to operations as of March 31, 2024 and December 31, 2023 were as follows. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, Identifiable Assets by Geographic Areas ​ 2024 2023 ​ USA ​ $ 143,693 ​ $ 171,080 ​ Canada ​ ​ 30,151 ​ ​ 23,994 ​ Europe and United Kingdom ​ ​ 124,478 ​ ​ 140,024 ​ Total ​ $ 298,322 ​ $ 335,098 ​ ​ ​ ​ ​ ​ 19 Table of Contents 17. Related Party Transactions: 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 March 31, 2024 and 2023, net sales to this customer totaled approximately $ 0.7 million and $ 0.5 million, respectively. Amounts due from this customer as of March 31, 2024 and December 31, 2023 were approximately $ 0.5 million and less than $ 0.1 million, respectively, which were or are expected to be settled in cash subsequent to each period end. 18. Fair Value Measurements ​ Fair value is defined under US GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: ​ Level 1 – observable inputs such as quoted prices for identical instruments traded in active markets. ​ Level 2 – inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ​ Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. ​ The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of March 31, 2024 and December 31, 2023, respectively, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2024 ​ ​ Level 1 ​ Level 2 ​ Level 3 ​ Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Treasury bills ​ $ 5,160 ​ $ — ​ $ — ​ $ 5,160 Total assets ​ $ 5,160 ​ $ — ​ $ — ​ $ 5,160 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent earn-out ​ $ — ​ $ — ​ $ 4,122 ​ $ 4,122 Total liabilities ​ $ — ​ $ — ​ $ 4,122 ​ $ 4,122 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Treasury bills ​ $ 5,096 ​ $ — ​ $ — ​ $ 5,096 Total assets ​ $ 5,096 ​ $ — ​ $ — ​ $ 5,096 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent earn-out ​ $ — ​ $ — ​ $ 4,189 ​ $ 4,189 Total liabilities ​ $ — ​ $ — ​ $ 4,189 ​ $ 4,189 ​ In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions based on the best information available. The approach to estimating the contingent earn-out associated with the Company’s business combinations uses unobservable factors such as projected cash flows over the term of the contingent earn-out periods. ​ The Company’s investment in treasury bills are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy. The Company’s contingent earn-out 20 Table of Contents liability is measured at fair value on a recurring basis and is classified as level 3 within the fair value hierarchy. During the fourth quarter of each year, the Company evaluates goodwill for impairment at the reporting unit level. The Company uses qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a goodwill impairment test. This measurement is classified based on level 3 input. ​ The following table presents the changes in the Company’s level 3 financial instruments measured at fair value on a recurring basis: ​ ​ ​ ​ ​ Balance January 1, 2023 ​ $ 1,777 Data Solutions acquisition - contingent earn-out ​ ​ 2,227 Translation adjustments ​ ​ 185 Balance December 31, 2023 ​ $ 4,189 Translation adjustments ​ ​ ( 67 ) Balance March 31, 2024 ​ $ 4,122 ​ There were no material changes in fair value since the respective acquisition dates associated with the contingent earn-outs. ​ ​ ​ 21 Table of Contents