10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                   

Commission File No. 000-26408

Climb Global Solutions, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3136104
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

4 Industrial Way West, Suite 300, Eatontown, New Jersey 07724

(Address of principal executive offices)

(732) 389-8950

Registrant’s Telephone Number

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common stock, $.01 par value per share	CLMB	The Nasdaq Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☒
	Smaller Reporting Company ☒
Non-Accelerated Filer ☐	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☒  

There were 4,553,240 outstanding shares of common stock, par value $.01 per share (“Common Stock”) as of May 1, 2023.

CLIMB GLOBAL SOLUTIONS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023

Table of Contents

		Page
	PART I FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022	4
	Condensed Consolidated Statements of Earnings for the three months ended March 31, 2023 and 2022 (unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022 (unaudited)	6
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2023 and 2022 (unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4.	Controls and Procedures	29
	PART II OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6.	Exhibits, Financial Statement Schedules	31
SIGNATURES		32

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (“Quarterly Report”) includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to come within the safe harbor protection provided by those sections. The statements, other than statements of historical fact, included in this Quarterly Report are forward-looking statements.  Many of the forward-looking statements contained in this Quarterly Report  may be identified by the use of forward-looking words such as “believes,” “expects,” “intends,” “anticipates,” “plans,” “estimates,” “projects,” “forecasts,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “in process,” “under construction,” “in development,” “opportunity,” “target,” “outlook,” “maintain,” “continue,” “goal,” “aim,” “commit,” or similar expressions or when we discuss our future operating results, priorities, strategy, goals, vision, mission, opportunities, projections, intentions or expectations.  Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Because these forward-looking statements are subject to risks and uncertainties, actual results could differ materially from those indicated by such forward-looking statements. These risks and uncertainties include, but are not limited to, the continued acceptance of the Company’s distribution channel by vendors and customers, the timely availability and acceptance of new products, product mix, market conditions, competitive pricing pressures, the successful integration of acquisitions, contribution of key vendor relationships and support programs, including vendor rebates and discounts, as well as factors that affect the software industry in general and other factors generally. We strongly urge current and prospective investors to carefully consider the cautionary statements and risk factors contained in this report and our annual report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 16, 2023.

The Company operates in a rapidly changing business, and new risk factors emerge from time to time. Management cannot predict every risk factor, nor can it assess the impact, if any, of all such risk factors on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements.

Accordingly, forward-looking statements should not be relied upon as a prediction of actual results and readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except as may be required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The statements concerning future sales, future gross profit margin and future selling and administrative expenses are forward looking statements involving certain risks and uncertainties such as availability of products, product mix, pricing pressures, market conditions and other factors, which could result in a fluctuation of sales below recent experience.

Unless otherwise specified, the “Company,” “we,” “us” or “our” refers to Climb Global Solutions, Inc., a Delaware corporation, and its consolidated subsidiaries.

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PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Climb Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

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

	(Unaudited)
	March 31,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	61,741	$	20,245
Accounts receivable, net of allowance for doubtful accounts of $728 and $842, respectively		126,385		154,596
Inventory, net		4,064		4,766
Vendor prepayments and advances		—		890
Prepaid expenses and other current assets		7,837		4,141
Total current assets		200,027		184,638
Equipment and leasehold improvements, net		4,575		3,515
Goodwill		19,220		18,963
Other intangibles, net		19,485		19,693
Right-of-use assets, net		1,137		1,235
Accounts receivable-long-term, net		1,524		3,114
Other assets		472		350
Deferred income tax assets		92		348
Total assets	$	246,532	$	231,856
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	173,060	$	160,650
Lease liability, current portion		497		521
Term loan, current portion		525		520
Total current liabilities		174,082		161,691
Lease liability, net of current portion		1,190		1,296
Deferred income tax liabilities		4,183		4,137
Term loan, net of current portion		1,159		1,292
Non-current liabilities		1,825		2,866
Total liabilities		182,439		171,282
Commitments and contingencies
Stockholders’ equity:
Common stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued: 4,516,652 and 4,478,432 shares outstanding, respectively		53		53
Additional paid-in capital		32,495		32,715
Treasury stock, at cost, 767,848 and 806,068 shares, respectively		(12,679)		(13,230)
Retained earnings		46,479		43,904
Accumulated other comprehensive loss		(2,255)		(2,868)
Total stockholders’ equity		64,093		60,574
Total liabilities and stockholders' equity	$	246,532	$	231,856

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

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Climb Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(Unaudited)

(Amounts in thousands, except per share data)

	Three months ended
	March 31,
	2023		2022
Net sales	$	85,040	$	71,319
Cost of sales		69,831		59,338
Gross profit		15,209		11,981
Selling, general, and administrative expenses		10,263		8,249
Amortization and depreciation expense		713		357
Income from operations		4,233		3,375
Other income:
Interest, net		112		(10)
Foreign currency transaction gain		44		143
Income before provision for income taxes		4,389		3,508
Provision for income taxes		1,065		796
Net income	$	3,324	$	2,712
Income per common share-Basic	$	0.74	$	0.61
Income per common share-Diluted	$	0.74	$	0.61
Weighted average common shares outstanding — Basic		4,366		4,309
Weighted average common shares outstanding — Diluted		4,366		4,309
Dividends paid per common share	$	0.17	$	0.17

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

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Climb Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Amounts in thousands)

	Three months ended
	March 31,
	2023		2022
Net income	$	3,324	$	2,712
Other comprehensive income (loss):
Foreign currency translation adjustments		613		(626)
Other comprehensive income (loss)		613		(626)
Comprehensive income	$	3,937	$	2,086

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

6

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, 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	—		—		—	—		—		(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
											Accumulated
				Additional							Other
	Common Stock			Paid-In		Treasury			Retained		Comprehensive
	Shares	Amount		Capital		Shares	Amount		Earnings		(Loss) Income		Total
Balance at January 1, 2022	5,284,500		53		32,087	859,828		(13,870)		34,396		(250)	$	52,416
Net income	—		—		—	—		—		2,712		—		2,712
Translation adjustment	—		—		—	—		—		—		(626)		(626)
Dividends paid	—		—		—	—		—		(746)		—		(746)
Share-based compensation expense	—		—		369	—		—		—		—		369
Restricted stock grants (net of forfeitures)	—		—		(502)	(29,499)		502		—		—		—
Treasury shares repurchased	—		—		—	7,118		(216)		—		—		(216)
Balance at March 31, 2022	5,284,500	$	53	$	31,954	837,447	$	(13,584)	$	36,362	$	(876)	$	53,909

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

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Climb Global Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)

	Three months ended
	March 31,
	2023		2022
Cash flows from operating activities
Net income	$	3,324	$	2,712
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation and amortization expense		716		357
Provision for doubtful accounts		9		4
Deferred income tax expense		241		210
Share-based compensation expense		529		369
Amortization of discount on accounts receivable		(11)		(3)
Amortization of right-of-use assets		101		110
Changes in operating assets and liabilities:
Accounts receivable		30,345		8,059
Inventory		703		280
Prepaid expenses and other current assets		(3,696)		489
Vendor prepayments		890		(99)
Accounts payable and accrued expenses		9,994		(3,183)
Lease liability, net		(133)		(138)
Other assets and liabilities		598		64
Net cash and cash equivalents provided by operating activities		43,610		9,231
Cash flows from investing activities
Purchase of equipment and leasehold improvements		(1,270)		(177)
Net cash and cash equivalents used in investing activities		(1,270)		(177)
Cash flows from financing activities
Purchase of treasury stock		(214)		(216)
Borrowings under revolving credit facility		10,000		—
Repayments of borrowings under revolving credit facility		(10,000)		—
Repayments of borrowings under term loan		(128)		—
Dividends paid		(749)		(746)
Net cash and cash equivalents used in financing activities		(1,091)		(962)
Effect of foreign exchange rate on cash and cash equivalents		247		(317)
Net increase in cash and cash equivalents		41,496		7,775
Cash and cash equivalents at beginning of period		20,245		29,272
Cash and cash equivalents at end of period	$	61,741	$	37,047
Supplementary disclosure of cash flow information:
Income taxes paid	$	222	$	145
Interest paid	$	22	$	10

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

8

Climb Global Solutions, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2023

(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, 2022.

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.

2.           Recently Issued Accounting Standards:

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13"). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. 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. 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. Effective January 1, 2023, the Company adopted the new credit loss standard and it did not have an impact on the Company’s 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. 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, 2023, and 2022 were $24.6 million and $15.7 million, respectively.

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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 segment Note 16.

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,

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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 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. For freight not billed to its customers, the Company records the freight costs as cost of sales. The Company’s typical shipping terms result in shipping being performed before the customer obtains control of the product. The Company considers shipping to be a fulfillment activity and not a separate performance obligation.

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 August 18, 2022, the Company entered into a Share Purchase Agreement and purchased the entire share capital of Spinnakar Limited (“Spinnakar”) for an aggregate purchase price of approximately £9.8 million (equivalent to $11.8 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 upon the estimated fair value of Spinnakar’s 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 price allocation is final, with no measurement period adjustment made to the account balances recorded at the acquisition date.

The purchase consideration included approximately $1.8 million fair value for potential earn-out consideration if certain targets are achieved, payable in cash, with $1.1 million included in accounts payable and accrued expenses and $0.7 million included in non-current liabilities as of March 31, 2023.

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, 2023:

Balance at January 1, 2023	$	18,963
Translation adjustments		257
Balance March 31, 2023	$	19,220

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

	As of March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer and vendor relationships	$	21,752	$	2,666	$	19,086
Trade name		475		76		399
Total	$	22,227	$	2,742	$	19,485
	As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer and vendor relationships	$	21,457	$	2,165	$	19,292
Trade name		468		67		401
Total	$	21,925	$	2,232	$	19,693

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, 2023 and 2022, the Company recognized total amortization expense for other intangibles, net of $0.5 million and $0.2 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of March 31, 2023 is as follows:

2022 (excluding the three months ended March 31, 2023)	$	1,424
2023		1,898
2024		1,898
2025		1,898
2026		1,898
Thereafter		10,469
Total	$	19,485

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.

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.

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

	Three months ended
	March 31,
		2023		2022
Cash paid for operating lease liabilities	$	156	$	157
Right-of-use assets obtained in exchange for new operating lease obligations	$	—	$	63
Weighted-average remaining lease term		3.9 years		4.8 years
Weighted-average discount rate		3.5%		3.4%

Maturities of lease liabilities as of March 31, 2023 were as follows:

2023 (excluding the three months ended March 31, 2023)	$	469
2024		541
2025		549
2026		547
2027		118
		2,224
Less: imputed interest		(537)
Total lease liabilities	$	1,687
Lease liabilities, current portion		497
Lease liabilities, net of current portion		1,190
Total lease liabilities	$	1,687

9.            Fair Value:

The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable and accounts payable approximated fair value at March 31, 2023 and December 31, 2022 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.

10.           Balance Sheet Detail:

Equipment and leasehold improvements consist of the following:

	March 31,		December 31,
	2023		2022
Equipment	$	1,717	$	2,720
Capitalized software		4,274		2,997
Leasehold improvements		1,854		1,848
		7,845		7,565
Less accumulated depreciation and amortization		(3,270)		(4,050)
	$	4,575	$	3,515

During the three months ended March 31, 2023 and 2022, the Company recorded depreciation and amortization expense of $0.2 million and $0.1 million, respectively.

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

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	March 31,		December 31,
	2023		2022
Total amount due from customer	$	2,424	$	5,213
Less: unamortized discount		(34)		(188)
Less: current portion included in accounts receivable		(866)		(1,911)
	$	1,524	$	3,114

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $0.9 million, $0.8 million, $0.4 million and $0.4 million during each of the 12-month periods ending March 31, 2024, 2025, 2026 and 2027, respectively.

Accounts payable and accrued expenses consist of the following:

	March 31,		December 31,
	2023		2022
Trade accounts payable	$	161,859	$	151,180
Accrued expenses		11,201		9,470
	$	173,060	$	160,650

11.            Credit Facility:

On November 15, 2017, the Company entered into a $20,000,000 revolving credit facility (the “Credit Facility”) with Citibank, N.A. (“Citibank”) pursuant to a Second Amended and Restated Revolving Credit Loan Agreement (the “Loan Agreement”), Second Amended and Restated Revolving Credit Loan Note (the “Note”), Second Amended and Restated Security Agreement and Second Amended and Restated Pledge and Security Agreement. On August 31, 2020, the Company entered into an amendment to the Credit Facility (the “Amended Credit Facility”) pursuant to a First Amendment to Second Amended and Restated Revolving Credit Loan Agreement and Other Loan Documents (collectively, the “Amended Loan Agreement”) and First Allonge to Second Amended and Restated Revolving Credit Loan Note (the “Amended Note”).

The Amended Credit Facility, which will continue to be used for working capital and general corporate purposes, matures on June 30, 2023, at which time the Company must pay all outstanding principal of all outstanding loans plus all accrued and unpaid interest, and any fees, costs and expenses. In addition, the Company will pay regular monthly payments of all accrued and unpaid interest. 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. Interest on the unpaid principal balance of the Amended Note will be calculated using a rate of 1.75 percentage points over the Index. 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. The Amended Credit Facility is secured by the assets of the Company.

Among other affirmative covenants set forth in the Loan Agreement, which were not amended as part of the Amended Credit Facility, the Company must maintain (i) a minimum Debt Service Coverage Ratio (as defined in the Loan Agreement) of not less than 2.0 to 1.0, (ii) a maximum Leverage Ratio (as defined in the Loan Agreement) of at least 2.5 to 1.0, and (iii) a minimum Collateral Coverage Ratio (as defined in the Loan Agreement) of not less than 1.5 to 1.0. 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, 2023 and December 31, 2022.

At March 31, 2023 and December 31, 2022, the Company had no borrowings outstanding under the Amended Credit Facility.

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On April 13, 2021, Climb Global Solutions UK Holdings Limited (“Climb 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 pursuant to certain terms and conditions. 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, 2024, at which time Climb 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.

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. Amounts borrowed under the Uncommitted Credit Facility will be guaranteed by the Company.   The Uncommitted Credit Facility may be cancelled at any time by Citibank London.  Citibank London has the sole discretion to accept or reject any requested utilization of the Uncommitted Credit Facilitation.

As of March 31, 2023 and December 31, 2022, the Company 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 monthly installments of principal and interest through April 2026.

At March 31, 2023 and December 31, 2022, the Company had $1.7 million and $1.8 million outstanding under the Term Loan, respectively. At March 31, 2023, future principal payments under the Term Loan are as follows:

2023 (excluding the three months ended March 31, 2023)		392
2024		540
2025		560
2026		192
Total	$	1,684

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.

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

	Three months ended March 31,
	2023		2022
Numerator:
Net income	$	3,324	$	2,712
Less distributed and undistributed income allocated to participating securities		83		70
Net income attributable to common shareholders		3,241		2,642
Denominator:
Weighted average common shares (Basic)		4,366		4,309
Weighted average common shares including assumed conversions (Diluted)		4,366		4,309
Basic net income per share	$	0.74	$	0.61
Diluted net income per share	$	0.74	$	0.61

13.        Major Customers and Vendors:

The Company had two major vendors that accounted for 21% and 10%, respectively, of total purchases during the three months ended March 31, 2023, and 22% and 10%, respectively, of total purchases during the three months ended March 31, 2022.

The Company had two major customers that accounted for 19% and 14%, respectively, of its net sales during the three months ended March 31, 2023, and 24% and 14%, respectively, of its net sales during the three months ended March 31, 2022. These same customers accounted for 14% and 12%, respectively, of total net accounts receivable as of March 31, 2023 and 16% and 18%, respectively, of total net accounts receivable as of December 31, 2022.

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, 2023, the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 329,770.

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

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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, 2023, the number of shares of Common Stock available under the 2012 Plan was zero.

During the three months ended March 31, 2023, the Company granted a total of 43,824 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, the Company granted a total of 30,999 shares of Restricted Stock to officers. 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.

A summary of nonvested shares of Restricted Stock awards outstanding under the 2012 and 2021 Plans as of March 31, 2023, and changes during the three months then ended is as follows:

		Weighted
		Average Grant
		Date
	Shares	Fair Value
Nonvested shares at January 1, 2023	121,059	$	24.83
Granted in 2023	43,824		39.75
Vested in 2023	(17,667)		24.23
Forfeited in 2023	—		—
Nonvested shares at March 31, 2023	147,216	$	29.34

As of March 31, 2023, there is approximately $3.8 million of total unrecognized compensation costs related to nonvested share-based compensation arrangements. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.4 years.

During the three months ended March 31, 2023 and 2022, the Company recognized share-based compensation expense of $0.5 million and $0.4 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 CODM is the Chief Executive Officer.

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 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.

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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 and inventory 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,
	2023		2022
Net Sales:
Distribution	$	78,550	$	65,784
Solutions		6,490		5,535
		85,040		71,319
Gross Profit:
Distribution	$	12,728	$	9,593
Solutions		2,481		2,388
		15,209		11,981
Direct Costs:
Distribution	$	4,777	$	3,664
Solutions		1,301		1,138
		6,078		4,802
Segment Income Before Taxes: (1)
Distribution	$	7,951	$	5,929
Solutions		1,180		1,250
Segment Income Before Taxes		9,131		7,179
General and administrative	$	4,185	$	3,447
Amortization and depreciation expense		713		357
Interest, net		112		(10)
Foreign currency transaction gain		44		143
Income before taxes	$	4,389	$	3,508

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

	As of		As of
	March 31,		December 31,
Selected Assets by Segment:	2023		2022
Distribution	$	148,633	$	180,602
Solutions		22,044		21,420
Segment Select Assets		170,677		202,022
Corporate Assets		75,855		29,834
Total Assets	$	246,532	$	231,856

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Geographic areas and net sales mix related to operations for the three months ended March 31, 2023 and 2022 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, 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
	Three months ended
	March 31, 2022
	Distribution		Solutions		Total
Geography
USA	$	53,116	$	2,512	$	55,628
Europe and United Kingdom		7,437		2,557		9,994
Canada		5,231		466		5,697
Total net sales	$	65,784	$	5,535	$	71,319
Timing of Revenue Recognition
Transferred at a point in time where the Company is principal (1)	$	59,140	$	4,010	$	63,150
Transferred at a point in time where the Company is agent (2)		6,644		1,525		8,169
Total net sales	$	65,784	$	5,535	$	71,319

(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, 2023 and December 31, 2022 were as follows.

	March 31,		December 31,
Identifiable Assets by Geographic Areas	2023		2022
USA	$	140,205	$	137,877
Canada		30,990		27,597
Europe and United Kingdom		75,337		66,382
Total	$	246,532	$	231,856

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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, 2023 and 2022, net sales to this customer totaled approximately $0.5 million and $0.3 million, respectively. Amounts due from this customer as of March 31, 2023 and December 31, 2022 were approximately $0.2 million and $0.1 million, respectively, which were or are expected to be settled in cash subsequent to each period end.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This following information should be read in conjunction with the consolidated financial statements and the notes included in Item 1 of Part I of this 10-Q and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the 10-K filed with the SEC on for the fiscal year ended December 31, 2022.  In addition to historical information, the following discussion contains certain forward-looking information.  See “Cautionary Note Regarding Forward Looking Statements” above for certain information concerning  forward-looking statements.

Overview

Our Company is a value added IT distribution and solutions company, primarily selling software and other third-party IT products and services through two reportable operating segments. Through our “Distribution” segment we sell products and services to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide, who in turn sell these products to end users. Through our “Solutions” segment we act as a cloud solutions provider and value-added reseller, selling computer software and hardware developed by others and provide technical services directly to end user customers worldwide. We offer an extensive line of products from leading software vendors and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management and other technically sophisticated domains as well as computer hardware. We market these products through creative marketing communications, including our web sites, local and on-line seminars, webinars, social media, and direct e-mail.

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

Factors Influencing Our Financial Results

We derive the majority of our net sales though the sale of third-party software licenses, maintenance and service agreements. In our Distribution segment, sales are impacted by the number of product lines we distribute, and sales penetration of those products into the reseller channel, product lifecycle competition, and demand characteristics of the products which we are authorized to distribute. In our Solutions segment sales are generally driven by sales force effectiveness and success in providing superior customer service and cloud solutions support, competitive pricing, and flexible payment solutions to our customers. Our sales are also impacted by external factors such as levels of IT spending and customer demand for products we distribute.

We sell in a competitive environment where gross product margins have historically declined due to competition and changes in product mix towards products where no delivery of a physical product is required. In addition, we grant discounts, allowances, and rebates to certain customers, which may vary from period to period, based on volume, payment terms and other criteria. To date, we have been able to implement cost efficiencies such as the use of drop shipments, electronic ordering (“EDI”) and other capabilities to be able to operate our business profitably as gross margins have declined. We evaluate the profitability of our business based on return on equity and effective margin.

Gross profit is calculated as net sales less cost of sales. We record customer rebates and discounts as a component of net sales and record vendor rebates and discounts as a component of cost of sales.

Selling, general and administrative expenses are comprised mainly of employee salaries, commissions and other employee related expenses, facility costs, costs to maintain our IT infrastructure, public company compliance costs and professional fees. We monitor our level of accounts payable, inventory turnover and accounts receivable turnover which are measures of how efficiently we utilize capital in our business.

The Company’s sales, gross profit and results of operations have fluctuated and are expected to continue to fluctuate on a quarterly basis as a result of a number of factors, including but not limited to: the condition of the software industry in general, shifts in demand for software products, pricing, industry shipments of new software products or upgrades, fluctuations in merchandise returns, adverse weather conditions that affect response, distribution or shipping, shifts in the timing of holidays and changes in the Company’s product offerings. The Company’s operating expenditures are based on sales forecasts. If sales do not meet expectations in any given quarter, operating results may be materially adversely affected.

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Dividend Policy and Share Repurchase Program. Historically we have sought to return value to investors through the payment of quarterly dividends and share repurchases. Total dividends paid and shares repurchased were $0.7 million and $0.2 million, during the three months ended March 31, 2023 and 2022, respectively. The payment of future dividends and share repurchases is at the discretion of our Board of Directors and dependent on results of operations, projected capital requirements, applicable legal, tax and regulatory restrictions, and other factors the Board of Directors may find relevant.

Stock Volatility. The technology, distribution and services sectors of the United States stock markets is subject to substantial volatility. Numerous conditions which impact these sectors or the stock market in general or the Company in particular, whether or not such events relate to or reflect upon the Company’s operating performance, could adversely affect the market price of the Company’s common stock, par value $0.01 per share (“Common Stock”). Furthermore, fluctuations in the Company’s operating results, announcements regarding litigation, the loss of a significant vendor or customer, increased competition, reduced vendor incentives and trade credit, higher operating expenses, and other developments, could have a significant impact on the market price of our Common Stock.

Inflation. We have historically not been adversely affected by inflation, as abrupt changes in technology, rapid changes in customer preferences, short product life cycles and evolving industry standards within the IT industry have generally caused the prices of the products we sell to decline. This requires us to sell new products and have growth in unit sales of existing products in order to increase our net sales. We believe that most price increases could be passed on to our customers, as prices charged by us are not set by long-term contracts; however, as a result of competitive pressure, there can be no assurance that the full effect of any such price increases could be passed on to our customers or cause a reduction in our customers spending.

Financial Overview

Net sales increased 19%, or $13.7 million, to $85.0 million for the three months ended March 31, 2023 compared to $71.3 million for the same period in the prior year. Gross profit increased 27%, or $3.2 million, to $15.2 million for the three months ended March 31, 2023 compared to $12.0 million for the same period in the prior year. Selling, general and administrative (“SG&A”) expenses increased 24%, or $2.0 million, to $10.2 million for the three months ended March 31, 2023 compared to $8.2 million for the same period in the prior year. Amortization and depreciation expense increased $0.3 million, to $0.7 million for the three months ended March 31, 2023 compared to $0.4 million for the same period in the prior year. Net income increased 23%, or $0.6 million, to $3.3 million for the three months ended March 31, 2023 compared to $2.7 million for the same period in the prior year. Diluted income per share increased 21%, or $0.13, to $0.74 for the three months ended March 31, 2023 compared to $0.61 for the same period in the prior year.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements that have been prepared in accordance with US GAAP. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

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, contingencies and litigation.

The Company bases its estimates on 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. Actual results may differ from these estimates.

The Company believes the following critical accounting policies used in the preparation of its consolidated financial statements affect its more significant judgments and estimates.

Revenue

The Company utilizes judgment regarding performance obligations inherent in the products for services it sells including, whether ongoing maintenance obligations performed by third party vendors are distinct from the related software licenses, and allocation of sales prices among distinct performance obligations. These estimates require significant judgment to determine whether the software’s functionality is dependent on ongoing maintenance or if substantially all functionality

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is available in the original software download. We also use judgment in the allocation of sales proceeds among performance obligations, utilizing observable data such as stand-alone selling prices, or market pricing for similar products and services.

Allowance for Accounts Receivable

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management determines the estimate of the allowance for doubtful accounts receivable by considering a number of factors, including historical experience, aging of the accounts receivable, and specific information obtained by the Company on the financial condition and the current creditworthiness of its customers. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. At the time of sale, we record an estimate for sales returns based on historical experience. If actual sales returns are greater than estimated by management, additional expense may be incurred.

Accounts Receivable – Long Term

The Company’s accounts receivable long-term are discounted to their present value at prevailing market rates at the time of sale. In doing so, the Company considers competitive market rates and other relevant factors.

Inventory Allowances

The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-offs may be required.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company may utilize third-party valuation specialists to assist the Company in the allocation. Initial purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition. Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred.

Goodwill

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.

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. If, after assessing the totality of events or circumstances, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary.

If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform the quantitative goodwill impairment test. We may also elect the unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test.

In the quantitative impairment test, we compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. 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.

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Intangible Assets

Intangible assets with determinable lives are amortized on a straight-line basis over their respective estimated useful lives, which is determined based on their expected period of benefit. Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset's carrying amount over its fair value. In addition, each quarter, the Company evaluates whether events and circumstances warrant a revision to the remaining estimated useful life of each of these intangible assets. If the Company were to determine that a change to the remaining estimated useful life of an intangible asset was necessary, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life.

Income Taxes

The Company considers future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance related to deferred tax assets. In the event the Company were to determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made.

Share-Based Payments

Under the fair value recognition provision, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period. We record the impact of forfeitures when they occur. We review our valuation assumptions periodically and, as a result, we may change our valuation assumptions used to value stock-based awards granted in future periods. Such changes may lead to a significant change in the expense we recognize in connection with share-based payments.

Foreign Exchange

The Company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase the product. In cases where the Company is not able to create a natural hedge by maintaining offsetting asset and liability amounts in the same currency, it may enter into foreign exchange contracts, typically in the form of forward purchase agreements, to facilitate the hedging of foreign currency exposures to mitigate the impact of changes in foreign currency exchange rates. These contracts generally have terms of no more than two months. The Company does not apply hedge accounting to these contracts and therefore the changes in fair value are recorded in earnings. The Company does not enter into foreign exchange contracts for trading purposes and the risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the Company minimizes by limiting its counterparties to major financial institutions. There were no contracts outstanding as of March 31, 2023.

Interest, Net

Interest, net consists primarily of income from the amortization of the discount on accounts receivable long term, net of interest expense on the Company’s credit facility.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13"). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. 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. 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. Effective January 1, 2023, the Company adopted the new credit loss standard and it did not have an impact on the Company’s financial statements.

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Results of Operations

The following table sets forth for the periods indicated certain financial information derived from the Company’s unaudited condensed consolidated statements of earnings expressed as a percentage of net sales. This comparison of financial results is not necessarily indicative of future results:

	Three months ended
	March 31,
	2023		2022
Net sales	100.0	%	100.0	%
Cost of sales	82.1		83.2
Gross profit	17.9		16.8
Selling, general and administrative expenses	12.1		11.6
Amortization and depreciation expense	0.8		0.5
Income from operations	5.0		4.7
Other income (expense)	0.2		0.2
Income before income taxes	5.2		4.9
Income tax provision	1.3		1.1
Net income	3.9	%	3.8	%

Key Operating Metrics

Our management monitors several financial and non-financial measures and ratios on a regular basis in order to track the progress of our business. We believe that the most important of these measures and ratios include net sales, adjusted gross billings, gross profit, adjusted EBITDA, gross profit as a percentage of adjusted gross billings and adjusted EBITDA as a percentage of gross profit. We use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve annual budgets. These key indicators include financial information that is prepared in accordance with US GAAP and presented in our Consolidated Financial Statements as well as non-US GAAP performance measurement tools. 

	Three months ended
	March 31,		March 31,
	2023		2022
Net sales	$	85,040	$	71,319
Adjusted gross billings (Non-GAAP)	$	306,712	$	238,697
Gross profit	$	15,209	$	11,981
Gross profit - Distribution	$	12,728	$	9,593
Gross profit - Solutions	$	2,481	$	2,388
Adjusted EBITDA (Non-GAAP)	$	5,659	$	4,249
Gross margin % - Adjusted gross billings (Non-GAAP)		5.0%		5.0%
Effective margin % - Adjusted EBITDA (Non-GAAP)		37.2%		35.5%

We consider gross profit growth and effective margin to be key metrics in evaluating our business. During the three months ended March 31, 2023, gross profit increased 27%, or $3.2 million, to $15.2 million compared to $12.0 million for the same period in the prior year while effective margin increased to 37.2% compared to 35.5% for the same period in the prior year.

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Reconciliations of Non-GAAP Financial Measures

	Three months ended
	March 31,		March 31,
Reconciliation of net sales to adjusted gross billings (Non-GAAP):	2023		2022
Net sales	$	85,040	$	71,319
Costs of sales related to sales where the Company is an agent		221,672		167,378
Adjusted gross billings	$	306,712	$	238,697

We define adjusted gross billings as net sales in accordance with US GAAP, adjusted for the cost of sales related to sales where the Company is an agent. We provided a reconciliation of adjusted gross billings to net sales, which is the most directly comparable US GAAP measure. We use adjusted gross billings of product and services as a supplemental measure of our performance to gain insight into the volume of business generated by our business, and to analyze the changes to our accounts receivable and accounts payable. Our use of adjusted gross billings of product and services as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate adjusted gross billings of product and services or similarly titled measures differently, which may reduce their usefulness as comparative measures.

	Three months ended
	March 31,		March 31,
Net income reconciled to adjusted EBITDA:	2023		2022
Net income	$	3,324	$	2,712
Provision for income taxes		1,065		796
Amortization and depreciation		713		357
Interest expense		28		15
EBITDA		5,130		3,880
Share-based compensation		529		369
Adjusted EBITDA	$	5,659	$	4,249

We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation and interest. We define effective margin as adjusted EBITDA as a percentage of gross profit. We provided a reconciliation of adjusted EBITDA to net income, which is the most directly comparable US GAAP measure. We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our businesses profitability when compared to the prior year and our competitors. Adjusted EBITDA is also a component to our financial covenants in our credit facility. Our use of adjusted EBITDA has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Acquisitions

On August 18, 2022, we completed the acquisition of Spinnakar Limited (“Spinnakar”) for an aggregate purchase price of approximately £9.8 million (equivalent to $11.8 million USD), subject to certain working capital and other adjustments, paid at closing plus a potential post-closing earn-out. The operating results of Spinnakar are included in our operating results from the date of acquisition.

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Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Net Sales and Adjusted Gross Billings

Net sales for the three months ended March 31, 2023 increased 19%, or $13.7 million, to $85.0 million compared to $71.3 million for the same period in the prior year. Adjusted gross billings for the three months ended March 31, 2023 increased 28%, or $68.0 million, to $306.7 million compared to $238.7 million for the same period in the prior year. Adjusted gross billings increased at a greater rate than net sales due to differences in the product mix between the two periods and an unfavorable impact of foreign exchange rates. During the three months ended March 31, 2023, adjusted gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales, while during the three months ended March 31, 2022, adjusted gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis.

Distribution segment net sales for the three months ended March 31, 2023 increased 19%, or $12.8 million, to $78.6 million compared to $65.8 million for the same period in the prior year. Adjusted gross billings for the Distribution segment for the three months ended March 31, 2023 increased 30%, or $65.9 million, to $287.7 million compared to $221.8 million for the same period in the prior year. Adjusted gross billings increased at a greater rate than net sales due to the aforementioned differences in the product mix between the two periods and the unfavorable impact of foreign exchange rates in our Distribution segment.

Solutions segment net sales for the three months ended March 31, 2023, increased 17%, or $1.0 million, to $6.5 million compared to $5.5 million for the same period in the prior year. Adjusted gross billings for the Solutions segment for the three months ended March 31, 2023 increased 12%, or $2.1 million, to $19.0 million compared to $16.9 million for the same period in the prior year. Net sales increased at a rate greater than adjusted gross billings due to the impact of hardware sales recognized during the current period in our Solutions segment, which are recorded on a gross basis.

During the three months ended March 31, 2023, the Company had two major customers that accounted for 19% and 14%, respectively, of our total net sales. During the three months ended March 31, 2022, the Company had two major customers that accounted for 24% and 14%, respectively, of our total net sales. The Company had two major vendors that accounted for 21% and 10%, respectively, of total purchases during the three months ended March 31, 2023, and 22% and 10%, respectively, of total purchases during the three months ended March 31, 2022.

Gross Profit

Gross profit for the three months ended March 31, 2023 increased 27%, or $3.2 million, to $15.2 million compared to $12.0 million for the same period in the prior year.

Distribution segment gross profit for the three months ended March 31, 2023 increased 33%, or $3.1 million, to $12.7 million compared to $9.6 million for the same period in the prior year. The increase in Distribution segment gross profit was due to organic growth from our existing vendor partnerships and lower early pay discounts and fewer other rebates and discounts offered to our customers as a percentage of adjusted gross billings.

Solutions segment gross profit for the three months ended March 31, 2023 increased 4%, or $0.1 million, to $2.5 million compared to $2.4 million for the same period in the prior year.

Customer rebates and discounts for the three months ended March 31, 2023 were $3.9 million compared to $1.9 million for the same period in the prior year. Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.

Vendor rebates and discounts for the three months ended March 31, 2023 were $1.7 million compared to $1.0 million for the same period in the prior year. Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors or meeting certain early payment programs offered by our vendors. The Company monitors vendor rebate levels, competitive pricing, and gross profit margins carefully.

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Selling, General and Administrative Expenses

SG&A expenses for the three months ended March 31, 2023 increased 24%, or $2.0 million, to $10.2 million compared to $8.2 million for the same period in the prior year. SG&A expenses remained consistent at 3.4% of adjusted gross billings for the three months ended March 31, 2023 and 2022, respectively.

The increase in SG&A expenses were primarily due to increased commission and personnel costs in support of the increased gross profit compared to the same period in the prior year. The Company expects that its SG&A expenses, as a percentage of adjusted gross billings, may vary depending on changes in sales volume, as well as the levels of continuing investments in key growth initiatives.

Amortization and Depreciation Expense

Amortization and depreciation expense for the three months ended March 31, 2023, increased 100%, or $0.3 million, to $0.7 million compared to $0.4 million for the same period in the prior year, primarily due to the amortization of intangible assets acquired in the Spinnakar acquisition.

Income Taxes

For the three months ended March 31, 2023 and 2022, the Company recorded a provision for income taxes of $1.1 million and $0.8 million, respectively. The effective tax rate for the three months ended March 31, 2023 and 2022 was 24.3% and 22.7%, respectively. The change in the effective tax rate for the three months ended March 31, 2023 compared to the same period in the prior year is a result of changes in the mix of jurisdictions in which taxable income was earned.

Liquidity and Capital Resources

Our cash and cash equivalents as of March 31, 2023 increased 205%, or $41.5 million, to $61.7 million compared to $20.2 million as of December 31, 2022.

Net cash and cash equivalents provided by operating activities for the three months ended March 31, 2023 was $43.6 million, comprised primarily of changes in operating assets and liabilities of $38.7 million and net income adjusted for non-cash items of $4.9 million.

Net cash and cash equivalents used in investing activities during the three months ended March 31, 2023 consisted of $1.3 million purchases of fixed assets.

Net cash and cash equivalents used in financing activities during the three months ended March 31, 2023 was $1.1 million, comprised of dividend payments on our Common Stock of $0.8 million, purchases of treasury stock of $0.2 million and repayments of borrowings under term loan of $0.1 million.

On November 15, 2017, the Company entered into a $20,000,000 revolving credit facility (the “Credit Facility”) with Citibank, N.A. (“Citibank”) pursuant to a Second Amended and Restated Revolving Credit Loan Agreement (the “Loan

Agreement”), Second Amended and Restated Revolving Credit Loan Note (the “Note”), Second Amended and Restated Security Agreement and Second Amended and Restated Pledge and Security Agreement. On August 31, 2020, the Company entered into an amendment to the Credit Facility (the “Amended Credit Facility”) pursuant to a First Amendment to Second Amended and Restated Revolving Credit Loan Agreement and Other Loan Documents (the “Amended Loan Agreement”) and First Allonge to Second Amended and Restated Revolving Credit Loan Note (the “Amended Note”). The Amended Credit Facility, which will continue to be used for working capital and general corporate purposes, matures on June 30, 2023, at which time the Company must pay all outstanding principal of all outstanding loans plus all accrued and unpaid interest, and any, fees, costs and expenses. As of March 31, 2023, no borrowings were outstanding under the Credit Facility.

On April 13, 2021, Climb Global Solutions UK Holdings Limited (“Climb 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. 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, 2024, at which time Climb UK must pay all outstanding principal of all

28

outstanding loans plus all accrued and unpaid interest, and any interest, fees, costs and expenses, if any. As of March 31, 2023, no borrowings were 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 monthly installments of principal and interest through April 2026.  As of March 31, 2023, the Company had $1.7 million outstanding under the Term Loan.

We anticipate that our working capital needs will increase as we invest in the growth of our business. We believe that the funds held in cash and cash equivalents and our unused borrowings under our Credit Facility and Uncommitted Credit Facility will be sufficient to fund our working capital and cash requirements for the next 12 months.

Foreign Exchange

The Company’s foreign subsidiaries are subject to changes in demand or pricing resulting from fluctuations in currency exchange rates or other factors. We are subject to fluctuations primarily in the Canadian Dollar, Euro Dollar and British Pound-to-U.S. Dollar exchange rate.

Off-Balance Sheet Arrangements

As of March 31, 2023, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934, as amended.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that material information relating to us is made known to the officers who certify as to our financial reports and to other members of senior management and the Board of Directors.  These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act, are recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  

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 of the end of the period covered by this report.  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), Vice President and Chief Financial Officer (principal financial officer) and Vice President and Chief Accounting Officer (principal accounting officer). 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 Securities and Exchange Commission’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.

Changes in Internal Control Over Financial Reporting. There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act, that occurred during the three months ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds

The table below sets forth the repurchase of Common Stock by the Company and its affiliated purchasers during the first quarter of 2023.

ISSUER PURCHASE OF EQUITY SECURITIES

								Maximum
								Number of
					Total Number			Shares That
					of Shares			May Yet Be
					Purchased as			Purchased
	Total		Average		Part of Publicly			Under the
	Number		Price Paid		Announced	Average		Plans or
	of Shares		Per Share		Plans or	Price Paid		Programs
Period	Purchased		(2)		Programs	Per Share		(3)
January 1, 2023 - January 31, 2023	—		$	—	—	$	—	547,288
February 1, 2023 - February 28, 2023	5,604	(1)	$	38.21	—	$	—	547,288
March 1, 2023 - March 31, 2023	—	(1)	$	—	—	$	—	545,786
Total	5,604		$	38.21	—	$	—	545,786

(1) Includes 5,604 shares surrendered to the Company by employees to satisfy individual tax withholding obligations upon vesting of previously issued shares of Restricted Stock. These shares are not included in the Common Stock repurchase program referred to in footnote (3) below.

(2) Average price paid per share reflects the closing price the Company’s Common Stock on the business date the shares were surrendered by the employee stockholder to satisfy individual tax withholding obligations upon vesting of Restricted Stock or the price of the Common Stock paid on the open market purchase, as applicable.

(3) On December 3, 2014, the Board of Directors of the Company approved an increase of 500,000 shares of Common Stock to the number of shares of Common Stock available for repurchase under its repurchase plans. On February 2, 2017, the Board of Directors of the Company approved an increase of 500,000 shares of Common Stock to the number of shares of Common Stock available for repurchase under its repurchase plans. The Company expects to purchase shares of its Common Stock from time to time in the market or otherwise subject to market conditions. The timing, number and value of shares of Common Stock repurchased are subject to the Company’s discretion. The Common Stock repurchase program does not have an expiration date.

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Item 6. Exhibits

(a)	Exhibits
3.1 3.1(a) 3.2 31.1	Form of Amended and Restated Certificate of Incorporation of the Company. (1) Certificate of Amendment of Restated Certificate of Incorporation of the Company. (2) Amended and Restated Bylaws of the Company. (3) Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Dale Foster, the Chief Executive Officer (principal executive officer) of the Company (filed herewith).
31.2	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 (principal financial officer) of the Company (filed herewith).
31.3	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 (principal accounting officer) of the Company (filed herewith).
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Dale Foster, the Chief Executive Officer (principal executive officer) of the Company (filed herewith).
32.2	Certification pursuant to 18 U.S.C. 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 (principal financial officer) of the Company (filed herewith).
32.3	Certification pursuant to 18 U.S.C. 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 (principal accounting officer) of the Company (filed herewith).
101	The following financial information from Climb Global Solutions, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 4, 2023, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (1) Condensed Consolidated Balance Sheets, (2) Condensed Consolidated Statements of Income, (3) Condensed Consolidated Statements of Stockholders’ Equity, (4) Condensed Consolidated Statements of Comprehensive Income, (5) Condensed Consolidated Statements of Cash Flows, and (6) the Notes to the Unaudited Condensed Consolidated Financial Statements.
104	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 Exhibit 3.1 to the Company’s Registration Statement on Form S-1 or amendments thereto (File No. 333-92810) filed on May 30, 1995, July 7, 1995 and July 18, 1995

(2) Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on October 27, 2022.

(3) Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on October 27, 2022.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CLIMB GLOBAL SOLUTIONS, INC
May 4, 2023	By:	/s/ Dale Foster
Date		Dale Foster, Chief Executive Officer (Principal Executive Officer)
May 4, 2023	By:	/s/ Andrew Clark
Date		Andrew Clark, Vice President and Chief Financial Officer (Principal Financial Officer)
May 4, 2023	By:	/s/ Matthew Sullivan
Date		Matthew Sullivan, Vice President and Chief Accounting Officer (Principal Accounting Officer)

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Dale Foster, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Climb Global Solutions, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting ( as defined in Exchange Act Rules 13a-15(f) and 15(d) -15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2023

/s/ Dale Foster

Dale Foster

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Andrew Clark, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Climb Global Solutions, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting ( as defined in Exchange Act Rules 13a-15(f) and 15(d) -15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2023

/s/ Andrew Clark

Andrew Clark

Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-31.3

Exhibit 31.3

CERTIFICATION

I, Matthew Sullivan, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Climb Global Solutions, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting ( as defined in Exchange Act Rules 13a-15(f) and 15(d) -15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2023

/s/ Matthew Sullivan

Matthew Sullivan

Vice President and Chief Accounting Officer

(Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Climb Global Solutions, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dale Foster, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Dale Foster

Dale Foster

Chief Executive Officer

(Principal Executive Officer)

May 4, 2023

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Climb Global Solutions, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew Clark, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Andrew Clark

Andrew Clark

Vice President and Chief Financial Officer

(Principal Financial Officer)

May 4, 2023

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.3

Exhibit 32.3

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Climb Global Solutions, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew Sullivan, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Matthew Sullivan

Matthew Sullivan

Vice President and Chief Accounting Officer

(Principal Accounting Officer)

May 4, 2023

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2023	May 01, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2023
Entity Registrant Name	Climb Global Solutions, Inc.
Entity File Number	000-26408
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	13-3136104
Entity Address, Address Line One	4 Industrial Way West, Suite 300
Entity Address, City or Town	Eatontown
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07724
City Area Code	732
Local Phone Number	389-8950
Title of 12(b) Security	Common stock, $.01 par value per share
Trading Symbol	CLMB
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Central Index Key	0000945983
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,553,240
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 61,741	$ 20,245
Accounts receivable, net of allowance for doubtful accounts of $728 and $842, respectively	126,385	154,596
Inventory, net	4,064	4,766
Vendor prepayments and advances		890
Prepaid expenses and other current assets	7,837	4,141
Total current assets	200,027	184,638
Equipment and leasehold improvements, net	4,575	3,515
Goodwill	19,220	18,963
Other intangibles, net	19,485	19,693
Right-of-use assets, net	1,137	1,235
Accounts receivable-long-term, net	1,524	3,114
Other assets	472	350
Deferred income tax assets	92	348
Total assets	246,532	231,856
Current liabilities:
Accounts payable and accrued expenses	173,060	160,650
Lease liability, current portion	497	521
Term loan, current portion	525	520
Total current liabilities	174,082	161,691
Lease liability, net of current portion	1,190	1,296
Deferred income tax liabilities	4,183	4,137
Term loan, net of current portion	1,159	1,292
Non-current liabilities	1,825	2,866
Total liabilities	182,439	171,282
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued: 4,516,652 and 4,478,432 shares outstanding, respectively	53	53
Additional paid-in capital	32,495	32,715
Treasury stock, at cost, 767,848 and 806,068 shares, respectively	(12,679)	(13,230)
Retained earnings	46,479	43,904
Accumulated other comprehensive loss	(2,255)	(2,868)
Total stockholders' equity	64,093	60,574
Total liabilities and stockholders' equity	$ 246,532	$ 231,856

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheets
Accounts receivable, allowances (in dollars)	$ 728	$ 842
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized	10,000,000	10,000,000
Common Stock, shares issued	5,284,500	5,284,500
Common Stock, shares outstanding	4,516,652	4,478,432
Treasury stock, shares	767,848	806,068

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Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Condensed Consolidated Statements of Earnings
Net sales	$ 85,040	$ 71,319
Cost of sales	69,831	59,338
Gross profit	15,209	11,981
Selling, general, and administrative expenses	10,263	8,249
Amortization and depreciation expense	713	357
Income from operations	4,233	3,375
Other income:
Interest, net	112	(10)
Foreign currency transaction gain	44	143
Income before provision for income taxes	4,389	3,508
Provision for income taxes	1,065	796
Net income	$ 3,324	$ 2,712
Income per common share-Basic	$ 0.74	$ 0.61
Income per common share-Diluted	$ 0.74	$ 0.61
Weighted average common shares outstanding - Basic (in shares)	4,366	4,309
Weighted average common shares outstanding - Diluted (in shares)	4,366	4,309
Dividends paid per common share (in dollars per share)	$ 0.17	$ 0.17

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Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Condensed Consolidated Statements of Comprehensive Income (Loss)
Net income	$ 3,324	$ 2,712
Other comprehensive income (loss):
Foreign currency translation adjustments	613	(626)
Other comprehensive income (loss)	613	(626)
Comprehensive income	$ 3,937	$ 2,086

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Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Treasury	Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Total
Balance at Dec. 31, 2021	$ 53	$ 32,087	$ (13,870)	$ 34,396	$ (250)	$ 52,416
Balance (in shares) at Dec. 31, 2021	5,284,500
Treasury Stock, balance (in shares) at Dec. 31, 2021			859,828
Increase (Decrease) in Stockholders' Equity
Net income				2,712		2,712
Translation adjustment					(626)	(626)
Dividends paid				(746)		(746)
Share-based compensation expense		369				369
Restricted stock grants (net of forfeitures)		(502)	$ 502
Restricted stock grants (net of forfeitures) (in shares)			(29,499)
Treasury shares repurchased			$ (216)			(216)
Treasury shares repurchased (in shares)			7,118
Balance at Mar. 31, 2022	$ 53	31,954	$ (13,584)	36,362	(876)	53,909
Balance (in shares) at Mar. 31, 2022	5,284,500
Treasury Stock, balance (in shares) at Mar. 31, 2022			837,447
Balance at Dec. 31, 2022	$ 53	32,715	$ (13,230)	43,904	(2,868)	$ 60,574
Balance (in shares) at Dec. 31, 2022	5,284,500					5,284,500
Treasury Stock, balance (in shares) at Dec. 31, 2022			806,068			806,068
Increase (Decrease) in Stockholders' Equity
Net income				3,324		$ 3,324
Translation adjustment					613	613
Dividends paid				(749)		(749)
Share-based compensation expense		545				545
Restricted stock grants (net of forfeitures)		(765)	$ 765
Restricted stock grants (net of forfeitures) (in shares)			(43,824)
Treasury shares repurchased			$ (214)			(214)
Treasury shares repurchased (in shares)			5,604
Balance at Mar. 31, 2023	$ 53	$ 32,495	$ (12,679)	$ 46,479	$ (2,255)	$ 64,093
Balance (in shares) at Mar. 31, 2023	5,284,500					5,284,500
Treasury Stock, balance (in shares) at Mar. 31, 2023			767,848			767,848

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities
Net income	$ 3,324	$ 2,712
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation and amortization expense	716	357
Provision for doubtful accounts	9	4
Deferred income tax expense	241	210
Share-based compensation expense	529	369
Amortization of discount on accounts receivable	(11)	(3)
Amortization of right-of-use assets	101	110
Changes in operating assets and liabilities:
Accounts receivable	30,345	8,059
Inventory	703	280
Prepaid expenses and other current assets	(3,696)	489
Vendor prepayments	890	(99)
Accounts payable and accrued expenses	9,994	(3,183)
Lease liability, net	(133)	(138)
Other assets and liabilities	598	64
Net cash and cash equivalents provided by operating activities	43,610	9,231
Cash flows from investing activities
Purchase of equipment and leasehold improvements	(1,270)	(177)
Net cash and cash equivalents used in investing activities	(1,270)	(177)
Cash flows from financing activities
Purchase of treasury stock	(214)	(216)
Borrowings under revolving credit facility	10,000
Repayments of borrowings under revolving credit facility	(10,000)
Repayments of borrowings under term loan	(128)
Dividends paid	(749)	(746)
Net cash and cash equivalents used in financing activities	(1,091)	(962)
Effect of foreign exchange rate on cash and cash equivalents	247	(317)
Net increase in cash and cash equivalents	41,496	7,775
Cash and cash equivalents at beginning of period	20,245	29,272
Cash and cash equivalents at end of period	61,741	37,047
Supplementary disclosure of cash flow information:
Income taxes paid	222	145
Interest paid	$ 22	$ 10

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Basis of Presentation

3 Months Ended

Mar. 31, 2023

Basis of Presentation

Basis of Presentation

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, 2022.

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.

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Recently Issued Accounting Standards

3 Months Ended

Mar. 31, 2023

Recently Issued Accounting Standards

Recently Issued Accounting Standards

2.           Recently Issued Accounting Standards:

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13"). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. 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. 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. Effective January 1, 2023, the Company adopted the new credit loss standard and it did not have an impact on the Company’s financial statements.

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Foreign Currency Translation

3 Months Ended

Mar. 31, 2023

Foreign Currency Translation

Foreign Currency Translation

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. 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, 2023, and 2022 were $24.6 million and $15.7 million, respectively.

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Comprehensive Income

3 Months Ended

Mar. 31, 2023

Comprehensive Income

Comprehensive Income

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.”

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Revenue Recognition

3 Months Ended

Mar. 31, 2023

Revenue Recognition

Revenue Recognition

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 segment Note 16.

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,

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 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. For freight not billed to its customers, the Company records the freight costs as cost of sales. The Company’s typical shipping terms result in shipping being performed before the customer obtains control of the product. The Company considers shipping to be a fulfillment activity and not a separate performance obligation.

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.

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Acquisition

3 Months Ended

Mar. 31, 2023

Acquisition

Acquisition

6.            Acquisition:

On August 18, 2022, the Company entered into a Share Purchase Agreement and purchased the entire share capital of Spinnakar Limited (“Spinnakar”) for an aggregate purchase price of approximately £9.8 million (equivalent to $11.8 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 upon the estimated fair value of Spinnakar’s 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 price allocation is final, with no measurement period adjustment made to the account balances recorded at the acquisition date.

The purchase consideration included approximately $1.8 million fair value for potential earn-out consideration if certain targets are achieved, payable in cash, with $1.1 million included in accounts payable and accrued expenses and $0.7 million included in non-current liabilities as of March 31, 2023.

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2023

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

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, 2023:

Balance at January 1, 2023	$	18,963
Translation adjustments		257
Balance March 31, 2023	$	19,220

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

	As of March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer and vendor relationships	$	21,752	$	2,666	$	19,086
Trade name		475		76		399
Total	$	22,227	$	2,742	$	19,485
	As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer and vendor relationships	$	21,457	$	2,165	$	19,292
Trade name		468		67		401
Total	$	21,925	$	2,232	$	19,693

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, 2023 and 2022, the Company recognized total amortization expense for other intangibles, net of $0.5 million and $0.2 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of March 31, 2023 is as follows:

2022 (excluding the three months ended March 31, 2023)	$	1,424
2023		1,898
2024		1,898
2025		1,898
2026		1,898
Thereafter		10,469
Total	$	19,485

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Right-of-use Asset and Lease Liability

3 Months Ended

Mar. 31, 2023

Right-of-use Asset and Lease Liability

Right-of-use Asset and Lease Liability

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.

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,
		2023		2022
Cash paid for operating lease liabilities	$	156	$	157
Right-of-use assets obtained in exchange for new operating lease obligations	$	—	$	63
Weighted-average remaining lease term		3.9 years		4.8 years
Weighted-average discount rate		3.5%		3.4%

Maturities of lease liabilities as of March 31, 2023 were as follows:

2023 (excluding the three months ended March 31, 2023)	$	469
2024		541
2025		549
2026		547
2027		118
		2,224
Less: imputed interest		(537)
Total lease liabilities	$	1,687
Lease liabilities, current portion		497
Lease liabilities, net of current portion		1,190
Total lease liabilities	$	1,687

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Fair Value

3 Months Ended

Mar. 31, 2023

Fair Value

Fair Value

9.            Fair Value:

The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable and accounts payable approximated fair value at March 31, 2023 and December 31, 2022 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.

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Balance Sheet Detail

3 Months Ended

Mar. 31, 2023

Balance Sheet Detail

Balance Sheet Detail

10.           Balance Sheet Detail:

Equipment and leasehold improvements consist of the following:

	March 31,		December 31,
	2023		2022
Equipment	$	1,717	$	2,720
Capitalized software		4,274		2,997
Leasehold improvements		1,854		1,848
		7,845		7,565
Less accumulated depreciation and amortization		(3,270)		(4,050)
	$	4,575	$	3,515

During the three months ended March 31, 2023 and 2022, the Company recorded depreciation and amortization expense of $0.2 million and $0.1 million, respectively.

In limited circumstances, the Company offers extended payment terms to customers for periods of 12 to 24 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,
	2023		2022
Total amount due from customer	$	2,424	$	5,213
Less: unamortized discount		(34)		(188)
Less: current portion included in accounts receivable		(866)		(1,911)
	$	1,524	$	3,114

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $0.9 million, $0.8 million, $0.4 million and $0.4 million during each of the 12-month periods ending March 31, 2024, 2025, 2026 and 2027, respectively.

Accounts payable and accrued expenses consist of the following:

	March 31,		December 31,
	2023		2022
Trade accounts payable	$	161,859	$	151,180
Accrued expenses		11,201		9,470
	$	173,060	$	160,650

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Credit Facility

3 Months Ended

Mar. 31, 2023

Credit Facility.

Credit Facility

11.            Credit Facility:

On November 15, 2017, the Company entered into a $20,000,000 revolving credit facility (the “Credit Facility”) with Citibank, N.A. (“Citibank”) pursuant to a Second Amended and Restated Revolving Credit Loan Agreement (the “Loan Agreement”), Second Amended and Restated Revolving Credit Loan Note (the “Note”), Second Amended and Restated Security Agreement and Second Amended and Restated Pledge and Security Agreement. On August 31, 2020, the Company entered into an amendment to the Credit Facility (the “Amended Credit Facility”) pursuant to a First Amendment to Second Amended and Restated Revolving Credit Loan Agreement and Other Loan Documents (collectively, the “Amended Loan Agreement”) and First Allonge to Second Amended and Restated Revolving Credit Loan Note (the “Amended Note”).

The Amended Credit Facility, which will continue to be used for working capital and general corporate purposes, matures on June 30, 2023, at which time the Company must pay all outstanding principal of all outstanding loans plus all accrued and unpaid interest, and any fees, costs and expenses. In addition, the Company will pay regular monthly payments of all accrued and unpaid interest. 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. Interest on the unpaid principal balance of the Amended Note will be calculated using a rate of 1.75 percentage points over the Index. 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. The Amended Credit Facility is secured by the assets of the Company.

Among other affirmative covenants set forth in the Loan Agreement, which were not amended as part of the Amended Credit Facility, the Company must maintain (i) a minimum Debt Service Coverage Ratio (as defined in the Loan Agreement) of not less than 2.0 to 1.0, (ii) a maximum Leverage Ratio (as defined in the Loan Agreement) of at least 2.5 to 1.0, and (iii) a minimum Collateral Coverage Ratio (as defined in the Loan Agreement) of not less than 1.5 to 1.0. 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, 2023 and December 31, 2022.

At March 31, 2023 and December 31, 2022, the Company had no borrowings outstanding under the Amended Credit Facility.

On April 13, 2021, Climb Global Solutions UK Holdings Limited (“Climb 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 pursuant to certain terms and conditions. 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, 2024, at which time Climb 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.

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. Amounts borrowed under the Uncommitted Credit Facility will be guaranteed by the Company.   The Uncommitted Credit Facility may be cancelled at any time by Citibank London.  Citibank London has the sole discretion to accept or reject any requested utilization of the Uncommitted Credit Facilitation.

As of March 31, 2023 and December 31, 2022, the Company 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 monthly installments of principal and interest through April 2026.

At March 31, 2023 and December 31, 2022, the Company had $1.7 million and $1.8 million outstanding under the Term Loan, respectively. At March 31, 2023, future principal payments under the Term Loan are as follows:

2023 (excluding the three months ended March 31, 2023)		392
2024		540
2025		560
2026		192
Total	$	1,684

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Earnings Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share

Earnings Per Share

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.

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

	Three months ended March 31,
	2023		2022
Numerator:
Net income	$	3,324	$	2,712
Less distributed and undistributed income allocated to participating securities		83		70
Net income attributable to common shareholders		3,241		2,642
Denominator:
Weighted average common shares (Basic)		4,366		4,309
Weighted average common shares including assumed conversions (Diluted)		4,366		4,309
Basic net income per share	$	0.74	$	0.61
Diluted net income per share	$	0.74	$	0.61

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Major Customers and Vendors

3 Months Ended

Mar. 31, 2023

Major Customers and Vendors

Major Customers and Vendors

13.        Major Customers and Vendors:

The Company had two major vendors that accounted for 21% and 10%, respectively, of total purchases during the three months ended March 31, 2023, and 22% and 10%, respectively, of total purchases during the three months ended March 31, 2022.

The Company had two major customers that accounted for 19% and 14%, respectively, of its net sales during the three months ended March 31, 2023, and 24% and 14%, respectively, of its net sales during the three months ended March 31, 2022. These same customers accounted for 14% and 12%, respectively, of total net accounts receivable as of March 31, 2023 and 16% and 18%, respectively, of total net accounts receivable as of December 31, 2022.

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Income Taxes

3 Months Ended

Mar. 31, 2023

Income Taxes

Income Taxes

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.

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Stockholders' Equity and Stock Based Compensation

3 Months Ended

Mar. 31, 2023

Stockholders' Equity and Stock Based Compensation

Stockholders' Equity and Stock Based Compensation

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, 2023, the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 329,770.

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. 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, 2023, the number of shares of Common Stock available under the 2012 Plan was zero.

During the three months ended March 31, 2023, the Company granted a total of 43,824 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, the Company granted a total of 30,999 shares of Restricted Stock to officers. 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.

A summary of nonvested shares of Restricted Stock awards outstanding under the 2012 and 2021 Plans as of March 31, 2023, and changes during the three months then ended is as follows:

		Weighted
		Average Grant
		Date
	Shares	Fair Value
Nonvested shares at January 1, 2023	121,059	$	24.83
Granted in 2023	43,824		39.75
Vested in 2023	(17,667)		24.23
Forfeited in 2023	—		—
Nonvested shares at March 31, 2023	147,216	$	29.34

As of March 31, 2023, there is approximately $3.8 million of total unrecognized compensation costs related to nonvested share-based compensation arrangements. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.4 years.

During the three months ended March 31, 2023 and 2022, the Company recognized share-based compensation expense of $0.5 million and $0.4 million, respectively.

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Segment Information

3 Months Ended

Mar. 31, 2023

Segment Information

Segment Information

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 CODM is the Chief Executive Officer.

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 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.

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 and inventory 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,
	2023		2022
Net Sales:
Distribution	$	78,550	$	65,784
Solutions		6,490		5,535
		85,040		71,319
Gross Profit:
Distribution	$	12,728	$	9,593
Solutions		2,481		2,388
		15,209		11,981
Direct Costs:
Distribution	$	4,777	$	3,664
Solutions		1,301		1,138
		6,078		4,802
Segment Income Before Taxes: (1)
Distribution	$	7,951	$	5,929
Solutions		1,180		1,250
Segment Income Before Taxes		9,131		7,179
General and administrative	$	4,185	$	3,447
Amortization and depreciation expense		713		357
Interest, net		112		(10)
Foreign currency transaction gain		44		143
Income before taxes	$	4,389	$	3,508

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

	As of		As of
	March 31,		December 31,
Selected Assets by Segment:	2023		2022
Distribution	$	148,633	$	180,602
Solutions		22,044		21,420
Segment Select Assets		170,677		202,022
Corporate Assets		75,855		29,834
Total Assets	$	246,532	$	231,856

Geographic areas and net sales mix related to operations for the three months ended March 31, 2023 and 2022 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, 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
	Three months ended
	March 31, 2022
	Distribution		Solutions		Total
Geography
USA	$	53,116	$	2,512	$	55,628
Europe and United Kingdom		7,437		2,557		9,994
Canada		5,231		466		5,697
Total net sales	$	65,784	$	5,535	$	71,319
Timing of Revenue Recognition
Transferred at a point in time where the Company is principal (1)	$	59,140	$	4,010	$	63,150
Transferred at a point in time where the Company is agent (2)		6,644		1,525		8,169
Total net sales	$	65,784	$	5,535	$	71,319

(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, 2023 and December 31, 2022 were as follows.

	March 31,		December 31,
Identifiable Assets by Geographic Areas	2023		2022
USA	$	140,205	$	137,877
Canada		30,990		27,597
Europe and United Kingdom		75,337		66,382
Total	$	246,532	$	231,856

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Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions

Related Party Transactions

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, 2023 and 2022, net sales to this customer totaled approximately $0.5 million and $0.3 million, respectively. Amounts due from this customer as of March 31, 2023 and December 31, 2022 were approximately $0.2 million and $0.1 million, respectively, which were or are expected to be settled in cash subsequent to each period end.

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Recently Issued Accounting Standards (Policies)

3 Months Ended

Mar. 31, 2023

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13"). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. 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. 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. Effective January 1, 2023, the Company adopted the new credit loss standard and it did not have an impact on the Company’s financial statements.

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2023

Goodwill and Other Intangible Assets

Summary of goodwill

Balance at January 1, 2023	$	18,963
Translation adjustments		257
Balance March 31, 2023	$	19,220

Summary of other intangibles, net

	As of March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer and vendor relationships	$	21,752	$	2,666	$	19,086
Trade name		475		76		399
Total	$	22,227	$	2,742	$	19,485
	As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer and vendor relationships	$	21,457	$	2,165	$	19,292
Trade name		468		67		401
Total	$	21,925	$	2,232	$	19,693

Schedule of estimated future amortization expense of other intangible assets

2022 (excluding the three months ended March 31, 2023)	$	1,424
2023		1,898
2024		1,898
2025		1,898
2026		1,898
Thereafter		10,469
Total	$	19,485

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Right-of-use Asset and Lease Liability (Tables)

3 Months Ended

Mar. 31, 2023

Right-of-use Asset and Lease Liability

Schedule of information relating to right-of-use assets and related lease liabilities

	Three months ended
	March 31,
		2023		2022
Cash paid for operating lease liabilities	$	156	$	157
Right-of-use assets obtained in exchange for new operating lease obligations	$	—	$	63
Weighted-average remaining lease term		3.9 years		4.8 years
Weighted-average discount rate		3.5%		3.4%

Schedule of maturities of lease liabilities

2023 (excluding the three months ended March 31, 2023)	$	469
2024		541
2025		549
2026		547
2027		118
		2,224
Less: imputed interest		(537)
Total lease liabilities	$	1,687
Lease liabilities, current portion		497
Lease liabilities, net of current portion		1,190
Total lease liabilities	$	1,687

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Balance Sheet Detail (Tables)

3 Months Ended

Mar. 31, 2023

Balance Sheet Detail

Schedule of equipment and leasehold improvements

	March 31,		December 31,
	2023		2022
Equipment	$	1,717	$	2,720
Capitalized software		4,274		2,997
Leasehold improvements		1,854		1,848
		7,845		7,565
Less accumulated depreciation and amortization		(3,270)		(4,050)
	$	4,575	$	3,515

Schedule of accounts receivable - long term, net

	March 31,		December 31,
	2023		2022
Total amount due from customer	$	2,424	$	5,213
Less: unamortized discount		(34)		(188)
Less: current portion included in accounts receivable		(866)		(1,911)
	$	1,524	$	3,114

Schedule of accounts payable and accrued expenses

	March 31,		December 31,
	2023		2022
Trade accounts payable	$	161,859	$	151,180
Accrued expenses		11,201		9,470
	$	173,060	$	160,650

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Credit Facility (Tables)

3 Months Ended

Mar. 31, 2023

Credit Facility.

Schedule of future principal payments under the term loan

2023 (excluding the three months ended March 31, 2023)		392
2024		540
2025		560
2026		192
Total	$	1,684

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share

Schedule of reconciliation of the numerators and denominators of the basic and diluted per share computations

	Three months ended March 31,
	2023		2022
Numerator:
Net income	$	3,324	$	2,712
Less distributed and undistributed income allocated to participating securities		83		70
Net income attributable to common shareholders		3,241		2,642
Denominator:
Weighted average common shares (Basic)		4,366		4,309
Weighted average common shares including assumed conversions (Diluted)		4,366		4,309
Basic net income per share	$	0.74	$	0.61
Diluted net income per share	$	0.74	$	0.61

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Stockholders' Equity and Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Stockholders' Equity and Stock Based Compensation

Summary of nonvested shares of Restricted Stock awards outstanding and the changes during the period

		Weighted
		Average Grant
		Date
	Shares	Fair Value
Nonvested shares at January 1, 2023	121,059	$	24.83
Granted in 2023	43,824		39.75
Vested in 2023	(17,667)		24.23
Forfeited in 2023	—		—
Nonvested shares at March 31, 2023	147,216	$	29.34

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2023

Segment Information

Schedule of segment reporting information

	Three months ended
	March 31,
	2023		2022
Net Sales:
Distribution	$	78,550	$	65,784
Solutions		6,490		5,535
		85,040		71,319
Gross Profit:
Distribution	$	12,728	$	9,593
Solutions		2,481		2,388
		15,209		11,981
Direct Costs:
Distribution	$	4,777	$	3,664
Solutions		1,301		1,138
		6,078		4,802
Segment Income Before Taxes: (1)
Distribution	$	7,951	$	5,929
Solutions		1,180		1,250
Segment Income Before Taxes		9,131		7,179
General and administrative	$	4,185	$	3,447
Amortization and depreciation expense		713		357
Interest, net		112		(10)
Foreign currency transaction gain		44		143
Income before taxes	$	4,389	$	3,508

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

	As of		As of
	March 31,		December 31,
Selected Assets by Segment:	2023		2022
Distribution	$	148,633	$	180,602
Solutions		22,044		21,420
Segment Select Assets		170,677		202,022
Corporate Assets		75,855		29,834
Total Assets	$	246,532	$	231,856

Summary of disaggregation of revenue according to revenue type

	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
	Three months ended
	March 31, 2022
	Distribution		Solutions		Total
Geography
USA	$	53,116	$	2,512	$	55,628
Europe and United Kingdom		7,437		2,557		9,994
Canada		5,231		466		5,697
Total net sales	$	65,784	$	5,535	$	71,319
Timing of Revenue Recognition
Transferred at a point in time where the Company is principal (1)	$	59,140	$	4,010	$	63,150
Transferred at a point in time where the Company is agent (2)		6,644		1,525		8,169
Total net sales	$	65,784	$	5,535	$	71,319

(1) Includes net sales from third-party hardware and software products.

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

Schedule of net sales to identifiable assets by geographic areas

	March 31,		December 31,
Identifiable Assets by Geographic Areas	2023		2022
USA	$	140,205	$	137,877
Canada		30,990		27,597
Europe and United Kingdom		75,337		66,382
Total	$	246,532	$	231,856

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Foreign Currency Translation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenue from external customers
Net sales	$ 85,040	$ 71,319
Foreign operations
Revenue from external customers
Net sales	$ 24,600	$ 15,700

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Acquisition (Details) - Spinnakar Limited £ in Millions, $ in Millions	Aug. 18, 2022 GBP (£)	Aug. 18, 2022 USD ($)	Mar. 31, 2023 USD ($)
Acquisition of Spinnakar Limited
Aggregate purchase price	£ 9.8	$ 11.8
Contingent earn-out			$ 1.8
Cash			1.1
Non-current liabilities			$ 0.7

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Goodwill and Other Intangible Assets - Summary of goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Goodwill [Roll Forward]
Beginning Balance	$ 18,963
Translation adjustments	257
Ending Balance	$ 19,220

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Goodwill and Other Intangible Assets - Other intangibles, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 22,227		$ 21,925
Accumulated Amortization	2,742		2,232
Total	19,485		19,693
Amortization expense	500	$ 200
Customer and vendor relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	21,752		21,457
Accumulated Amortization	2,666		2,165
Total	19,086		19,292
Trade name
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	475		468
Accumulated Amortization	76		67
Total	$ 399		$ 401
Amortization period	15 years
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Amortization period	13 years
Vendor relationships | Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization period	8 years
Vendor relationships | Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization period	15 years

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Goodwill and Other Intangible Assets - Future amortization expense (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2022 (excluding the three months ended March 31, 2023)	$ 1,424
2023	1,898
2024	1,898
2025	1,898
2026	1,898
Thereafter	10,469
Total	$ 19,485	$ 19,693

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Right-of-use Asset and Lease Liability (Details)	Mar. 31, 2023
Minimum
Right-of-use Asset and Lease Liability
Lease term	2 years
Maximum
Right-of-use Asset and Lease Liability
Lease term	11 years

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Right-of-use Asset and Lease Liability - Operating lease information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Right-of-use Asset and Lease Liability
Cash paid for operating lease liabilities	$ 156	$ 157
Right-of-use assets obtained in exchange for new operating lease obligations		$ 63
Weighted-average remaining lease term	3 years 10 months 24 days	4 years 9 months 18 days
Weighted-average discount rate	3.50%	3.40%

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Right-of-use Asset and Lease Liability - Maturities of lease liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Maturities of lease liabilities
2023 (excluding the three months ended March 31, 2023)	$ 469
2024	541
2025	549
2026	547
2027	118
Total	2,224
Less: imputed interest	(537)
Total lease liabilities	1,687
Lease liability, current portion	497	$ 521
Lease liability, net of current portion	$ 1,190	$ 1,296

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Balance Sheet Detail (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Equipment and leasehold improvements
Equipment and leasehold improvements, gross	$ 7,845		$ 7,565
Less accumulated depreciation and amortization	(3,270)		(4,050)
Equipment and leasehold improvements, net	4,575		3,515
Depreciation and amortization expense	$ 200	$ 100
Minimum
Equipment and leasehold improvements
Payment extension term to customers	12 months
Maximum
Equipment and leasehold improvements
Payment extension term to customers	24 months
Equipment
Equipment and leasehold improvements
Equipment and leasehold improvements, gross	$ 1,717		2,720
Capitalized software
Equipment and leasehold improvements
Equipment and leasehold improvements, gross	4,274		2,997
Leasehold improvements
Equipment and leasehold improvements
Equipment and leasehold improvements, gross	$ 1,854		$ 1,848

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Balance Sheet Detail - Accounts receivable - long term, net (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Balance Sheet Detail
Undiscounted cash flows March 31, 2024	$ 900
Undiscounted cash flows March 31, 2025	800
Undiscounted cash flows March 31, 2026	400
Undiscounted cash flows March 31, 2027	400
Accounts receivable - long term
Total amount due from customer	2,424	$ 5,213
Less: unamortized discount	(34)	(188)
Less: current portion included in accounts receivable	(866)	(1,911)
Total of accounts receivable, long term, net	$ 1,524	$ 3,114

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Balance Sheet Detail - Accounts payable and accrued expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Accounts payable and accrued expenses
Trade accounts payable	$ 161,859	$ 151,180
Accrued expenses	11,201	9,470
Accounts payable and accrued expenses	$ 173,060	$ 160,650

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Credit Facility (Details)	Apr. 08, 2022 USD ($)	Apr. 13, 2021 GBP (£)	Nov. 15, 2017 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Credit Facility
Interest rate	3.73%
Borrowings outstanding				$ 0	$ 0
Debt Instrument, Face Amount	$ 2,148,000
Debt Instrument, Term	48 months
Long-term Debt				1,700,000	1,800,000
Uncommitted Credit Facility
Credit Facility
Maximum borrowing capacity | £		£ 8,000,000
Interest rate margin (as a percent)		1.85%
Credit Facility
Credit Facility
Maximum borrowing capacity			$ 20,000,000
Debt Service Coverage Ratio			2.0
Leverage Ratio			2.5
Collateral Coverage Ratio			1.5
Borrowings outstanding				$ 0	$ 0
Credit Facility | Index
Credit Facility
Interest rate margin (as a percent)			1.75%
Credit Facility | Minimum | Index
Credit Facility
Interest rate			0.75%

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Credit Facility - Future Principal Payments Under Term Loan (Details) - Term Loans	Mar. 31, 2023 USD ($)
Principal Payments Under The Term Loan
2023 (excluding the three months ended March 31, 2023)	$ 392
2024	540
2025	560
2026	192
Total	$ 1,684

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net income	$ 3,324	$ 2,712
Less distributed and undistributed income allocated to participating securities	83	70
Net income attributable to common shareholders	$ 3,241	$ 2,642
Denominator:
Weighted average common shares (Basic)	4,366	4,309
Weighted average common shares including assumed conversions (Diluted)	4,366	4,309
Basic net income per share	$ 0.74	$ 0.61
Diluted net income per share	$ 0.74	$ 0.61

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Major Customers and Vendors (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2023 item customer	Mar. 31, 2022	Dec. 31, 2022
Purchases | Vendor concentration risk
Significant Customers and Vendors
Number of vendors | item	2
Purchases | Vendor concentration risk | One major vendor
Significant Customers and Vendors
Percentage of concentration risk	21.00%	22.00%
Purchases | Vendor concentration risk | Two major vendor
Significant Customers and Vendors
Percentage of concentration risk	10.00%	10.00%
Net sales | Customer concentration risk
Significant Customers and Vendors
Number of customers | customer	2
Net sales | Customer one | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	19.00%	24.00%
Net sales | Customer two | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	14.00%	14.00%
Net accounts receivable | Customer one | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	14.00%		16.00%
Net accounts receivable | Customer two | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	12.00%		18.00%

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Stockholders' Equity and Stock Based Compensation - Plans and options (Details) - $ / shares	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2021	Jun. 30, 2018	May 31, 2018
Stock-based compensation
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
2021 Plan
Stock-based compensation
Common Stock, par value (in dollars per share)			$ 0.01
Number of shares of common stock initially available for award			500,000
Options reserved for future issuance (in shares)	329,770
2012 Plan
Stock-based compensation
Number of shares of common stock initially available for award				1,000,000	600,000
Options reserved for future issuance (in shares)	0			352,158

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Stockholders' Equity and Stock Based Compensation - Nonvested (Details) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) item $ / shares shares	Mar. 31, 2022 USD ($) item shares
Weighted Average Grant Date Fair Value
Share-based compensation expense | $	$ 0.5	$ 0.4
Restricted stock
Shares
Nonvested shares at the beginning of the period	121,059
Granted (in shares)	43,824	30,999
Vested (in shares)	(17,667)
Forfeited (in shares)		(1,500)
Nonvested shares at the end of the period	147,216
Number of equal quarterly installments for vesting of awards | item	16	16
Weighted Average Grant Date Fair Value
Nonvested shares at the beginning of period (in dollars per share) | $ / shares	$ 24.83
Granted (in dollars per share) | $ / shares	39.75
Vested (in dollars per share) | $ / shares	24.23
Nonvested shares at the end of period (in dollars per share) | $ / shares	$ 29.34
Unrecognized compensation cost (in dollars) | $	$ 3.8
Weighted average period for recognition of unrecognized compensation cost	1 year 4 months 24 days

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Segment Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) item	Mar. 31, 2022 USD ($)
Segment reporting information
Number of reportable operating segments | item	2
Revenue	$ 85,040	$ 71,319
Gross profit	15,209	11,981
Direct Costs	6,078	4,802
Segment Income Before Taxes	9,131	7,179
General and administrative	4,185	3,447
Amortization and depreciation expense	713	357
Interest, net	112	(10)
Foreign currency transaction gain	44	143
Income before provision for income taxes	4,389	3,508
Distribution
Segment reporting information
Revenue	78,550	65,784
Gross profit	12,728	9,593
Direct Costs	4,777	3,664
Segment Income Before Taxes	7,951	5,929
Solutions
Segment reporting information
Revenue	6,490	5,535
Gross profit	2,481	2,388
Direct Costs	1,301	1,138
Segment Income Before Taxes	$ 1,180	$ 1,250

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Segment Information - Selected Assets by Segment (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Segment Reporting Information [Line Items]
Total Assets	$ 246,532	$ 231,856
Segment Total
Segment Reporting Information [Line Items]
Total Assets	170,677	202,022
Corporate Assets
Segment Reporting Information [Line Items]
Total Assets	75,855	29,834
Distribution | Segment Total
Segment Reporting Information [Line Items]
Total Assets	148,633	180,602
Solutions | Segment Total
Segment Reporting Information [Line Items]
Total Assets	$ 22,044	$ 21,420

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Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation of Revenue [Line Items]
Net sales	$ 85,040	$ 71,319
Distribution
Disaggregation of Revenue [Line Items]
Net sales	78,550	65,784
Solutions
Disaggregation of Revenue [Line Items]
Net sales	6,490	5,535
USA
Disaggregation of Revenue [Line Items]
Net sales	60,409	55,628
USA | Distribution
Disaggregation of Revenue [Line Items]
Net sales	56,743	53,116
USA | Solutions
Disaggregation of Revenue [Line Items]
Net sales	3,666	2,512
Europe and United Kingdom
Disaggregation of Revenue [Line Items]
Net sales	17,917	9,994
Europe and United Kingdom | Distribution
Disaggregation of Revenue [Line Items]
Net sales	15,416	7,437
Europe and United Kingdom | Solutions
Disaggregation of Revenue [Line Items]
Net sales	2,501	2,557
Canada
Disaggregation of Revenue [Line Items]
Net sales	6,714	5,697
Canada | Distribution
Disaggregation of Revenue [Line Items]
Net sales	6,391	5,231
Canada | Solutions
Disaggregation of Revenue [Line Items]
Net sales	323	466
Company As Principal | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Net sales	73,401	63,150
Company As Principal | Distribution | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Net sales	68,568	59,140
Company As Principal | Solutions | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Net sales	4,833	4,010
Company As Agent | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Net sales	11,639	8,169
Company As Agent | Distribution | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Net sales	9,982	6,644
Company As Agent | Solutions | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Net sales	$ 1,657	$ 1,525

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Segment Information - Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Net sales to unaffiliated customers and identifiable assets by geographic areas
Identifiable Assets by Geographic Areas	$ 246,532	$ 231,856
USA
Net sales to unaffiliated customers and identifiable assets by geographic areas
Identifiable Assets by Geographic Areas	140,205	137,877
Canada
Net sales to unaffiliated customers and identifiable assets by geographic areas
Identifiable Assets by Geographic Areas	30,990	27,597
Europe and United Kingdom
Net sales to unaffiliated customers and identifiable assets by geographic areas
Identifiable Assets by Geographic Areas	$ 75,337	$ 66,382

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Related Party Transactions (Detail) - Family member of executive - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Sales to related party	$ 0.5	$ 0.3
Due from related party	$ 0.2		$ 0.1