What changed in Climb Global Solutions, Inc.'s 2023 10-K compared to 2022?

Across the narrative sections we track, Climb Global Solutions, Inc. (CLMB) added 156 paragraphs, removed 158, and edited 125 between the 2022 and 2023 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+78/−73), Item 1A. Risk Factors (+42/−47), Item 1. Business (+28/−30).

Did Climb Global Solutions, Inc. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 42 new/edited paragraphs and 47 removed paragraphs versus the 2022 10-K.

What changed in Climb Global Solutions, Inc.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 78 new/edited paragraphs and 73 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this CLMB 10-K diff come from?

The source filings are Climb Global Solutions, Inc.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

Climb Global Solutions, Inc.CLMB财报

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Univar Solutions Inc. is a global chemical and ingredients distributor and provider of value-added services.

What changed in Climb Global Solutions, Inc.'s 10-K — 2022 vs 2023

Item 1. Business

Business — how the company describes what it does

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2022 filing

2023 filing

Generally, a vendor authorizes a limited number of companies to act as distributors of their product and sell to resellers of their product. Our reseller customers include value-added resellers, or VARs, corporate resellers, government resellers, system integrators, direct marketers, and national IT superstores.

Generally, a vendor authorizes a limited number of companies to act as distributors of their product and sell their product to resellers. Our reseller customers include value-added resellers, or VARs, corporate resellers, government resellers, system integrators, direct marketers, and national IT superstores.

The Company protects these trademarks and service marks and believes that they have significant value to us and are important factors in our marketing programs. 4 Table of Contents We have registered and maintained Internet domain names, including “climbglobalsolutions.com”. Government Regulation The Company is subject to and endeavors to comply with various government regulations in the United States as well as various jurisdictions where it operates.

The Company protects these 4 Table of Contents trademarks and service marks and believes that they have significant value to us and are important factors in our marketing programs. We have registered and maintained Internet domain names, including “climbglobalsolutions.com”. Government Regulation The Company is subject to and endeavors to comply with various government regulations in the United States as well as various jurisdictions where it operates.

These programs provide a cost-effective and service-oriented means to market and sell and fulfill software products and meet the needs of users. We sell products to large, multi-national broad line resellers, sometimes referred to as direct market resellers (DMRs), as well as thousands of VARs, which tend to be smaller and focus on value added services to their customers.

These programs provide a cost-effective and service-oriented means to market and sell and fulfill software products and meet the needs of users. We sell products to large, multi-national broad line resellers, sometimes referred to as direct market resellers (“DMRs”), as well as thousands of VARs, which tend to be smaller and focus on value added services to their customers.

We currently have the ability to provide support for these cloud services in the United Kingdom and Europe, and plan to continue to leverage these capabilities to provide cloud support services throughout our worldwide operations. Marketing and Distribution We market products through creative marketing communications, including our web sites, local and on-line seminars, events, webinars, and social media.

We currently have the ability to provide support for these cloud services in North America, United Kingdom and Europe, and plan to continue to leverage these capabilities to provide cloud support services throughout our worldwide operations. Marketing and Distribution We market products through creative marketing communications, including our web sites, local and on-line seminars, events, webinars, and social media.

Item 1. Business General The Company is a value added information technology (“IT”) distribution and solutions company. The Company primarily operates through its “Distribution” segment, which distributes emerging technologies to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide under the name “Climb Channel Solutions”.

Item 1. Business General The Company is a value added information technology (“IT”) distribution and solutions company. The Company primarily operates through its “Distribution” segment, which distributes emerging technologies to corporate resellers, value added resellers (“VARs”), consultants and systems integrators worldwide under the name “Climb Channel Solutions”.

Inventory management techniques, such as “drop shipping” allow the Company to offer a greater range of products without increased inventory requirements or cost of carrying inventory. Inventory levels may vary from period to period, due in part to increases or decreases in sales levels, the Company’s practice of making advance purchases when it deems the terms of such purchases to be attractive, and the addition of new vendor partners and products.

As a result, an increasing proportion of our sales in 2022 were from VARs, driven by a continued focus on increasing sales to larger VARs with more than $1 million in annual sales.

As a result, an increasing proportion of our sales in 2023 were from VARs, driven by a continued focus on increasing sales to larger VARs with more than $1 million in annual sales.

In addition to competitive base wages, additional programs include the 2021 Omnibus Incentive Plan, a company matched 401(k) Plan, healthcare and insurance benefits, flexible spending accounts, paid time off and employee assistance programs. Diversity and Inclusion We are committed to our continued efforts to increase diversity and foster an inclusive work environment that supports the workforce and the communities we serve.

In addition to 5 Table of Contents competitive base wages, additional programs include the 2021 Omnibus Incentive Plan, a company matched 401(k) Plan, healthcare and insurance benefits, flexible spending accounts, paid time off and employee assistance programs. Diversity and Inclusion We are committed to our continued efforts to increase diversity and foster an inclusive work environment that supports the workforce and the communities we serve.

Information contained on or accessible through our websites is neither a part of this Annual Report nor incorporated by reference herein, and any references to our website and the inclusion of our website address in this Annual Report are intended to be inactive textual references only. Available Information Under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is required to file annual, quarterly and current reports, proxy and information statements and other information with the Securities and Exchange Commission (“SEC”).

Information contained on or accessible through our websites is neither a part of this Annual Report nor incorporated by reference herein, and any references to our website and the inclusion of our website address in this Annual Report are intended to be inactive textual references only. Available Information Under the Exchange Act, the Company is required to file annual, quarterly and current reports, proxy and information statements and other information with the Securities and Exchange Commission (“SEC”).

Our common stock, par value $0.01 per share (“Common Stock”) is listed on The NASDAQ Global Market under the symbol “CLMB”. Distribution Segment In our Distribution segment, which accounted for approximately 93% of our consolidated net sales and 83% of our consolidated gross profit during the year ended December 31, 2022, we distribute technology products from software developers, software vendors or original equipment manufacturers (OEMs) to resellers, and system integrators worldwide.

Our common stock, par value $0.01 per share (“Common Stock”) is listed on The NASDAQ Global Market under the symbol “CLMB”. Distribution Segment In our Distribution segment, which accounted for approximately 92% of our consolidated net sales and 83% of our consolidated gross profit during the year ended December 31, 2023, we distribute technology products from software developers, software vendors or original equipment manufacturers (“OEMs”) to resellers, and system integrators worldwide.

The Company also operates a smaller segment called “Solutions”, which is a cloud solutions provider and value-added reseller of software, hardware and services for customers worldwide under the name “GreyMatter”.

Sales of hardware and peripherals represented 6% and 5% of our adjusted gross billings in 2022 and 2021, respectively. Cloud Our vendor and reseller partners are increasingly incorporating cloud and hybrid cloud products into their portfolios.

Sales of hardware and peripherals represented 6% of our adjusted gross billings in 2023 and 2022, respectively. Cloud Our vendor and reseller partners are increasingly incorporating cloud and hybrid cloud products into their portfolios.

We have operations throughout North America and Europe. Our website address is www.climbglobalsolutions.com, and the other web sites maintained by our business include www.climbcs.com and www.greymatter.com.

From time to time, we may make advance payments to vendors to apply 3 Table of Contents against future purchases from the vendor. Moreover, the Company’s order fulfillment and inventory control systems allow the Company to order certain products in time for next day shipping.

From time to time, we may make advance payments to vendors to apply against future purchases from the vendor. Moreover, the Company’s order fulfillment and inventory control systems allow the Company to order certain products in time for next day shipping.

In that regard, the Company anticipates that it will, from time to time, require software and hardware upgrades for its present IT systems. Trademarks, Service Marks and Domain Names The Company conducts its business under various trademarks and service marks including Climb Channel Solutions, Grey Matter, Cloud Know How and International Software Partners.

We intend to disclose any amendment to, or waiver from, a provision of the Code of Ethical Conduct that applies to its Chief Executive Officer or Chief Financial Officer on our web site. 6 Table of Contents

The Company intends to disclose any amendment to, or waiver from, a provision of the Code of Ethical Conduct that applies to its Chief Executive Officer or Chief Financial Officer on our web site. 6 Table of Contents

Factors that may affect the Company's ability to attract and retain qualified employees include employee morale, its reputation, competition from other employers, and availability of qualified individuals. As of December 31, 2022, the Company had 300 total employees, including 284 full-time employees.

Factors that may affect the Company's ability to attract and retain qualified employees include employee morale, its reputation, competition from other employers, and availability of qualified individuals. As of December 31, 2023, the Company had 365 total employees, including 342 full-time employees.

For the year ended December 31, 2021, these same two vendors accounted for 20% and 10%, respectively, of our consolidated purchases. The loss of a key vendor or group of vendors could disrupt our product availability and otherwise have an adverse effect on the Company. The Company predominantly sells third party software, software subscriptions, and maintenance.

For the year ended December 31, 2022, this same vendor accounted for 17% of our consolidated purchases. The loss of a key vendor or group of vendors could disrupt our product availability and otherwise have an adverse effect on the Company. The Company predominantly sells third party software, software subscriptions, and maintenance.

For the year ended December 31, 2022, the Company had two customers, both of whom are considered DMRs, that accounted for 21%, and 16%, respectively, of consolidated net sales and as of December 31, 2022, 16% and 18%, respectively, of total net accounts receivable.

For the year ended December 31, 2023, the Company had two customers, both of whom are considered DMRs, that accounted for 20%, and 15%, respectively, of consolidated net sales and as of December 31, 2023, 15% and 6%, respectively, of total net accounts receivable.

We continually review the marketplace to identify new and emerging vendors and products to potentially add to our vendor partners. Solution Segment We also provide comprehensive IT solutions directly to end users through our Solutions segment, which accounted for approximately 7% of our consolidated net sales and 17% of our consolidated gross profit during the year ended December 31, 2022.

We continually review the marketplace to identify new and emerging vendors and products to potentially add to our vendor partners. The Company operates a distribution facility in Eatontown, New Jersey and Dublin, Ireland. Solutions Segment We also provide comprehensive IT solutions directly to end users through our Solutions segment, which accounted for approximately 8% of our consolidated net sales and 17% of our consolidated gross profit during the year 1 Table of Contents ended December 31, 2023.

Our strategic growth plan is to expand our cloud offerings by leveraging these support services to other markets and products. For the year ended December 31, 2022, the Company had two vendors that accounted for 17% and 9%, respectively, of our consolidated purchases.

Our strategic growth plan is to expand our cloud offerings by leveraging these support services to other markets and products. For the year ended December 31, 2023, we had one vendor that accounted for 14% of our consolidated purchases and our largest five vendors generated approximately 40% of our consolidated purchases.

The Company is not a party to any collective bargaining agreements with its employees, has experienced no work stoppages and considers its relationships with its employees to be satisfactory. The following table shows the Company’s approximate headcount by region: Americas EMEA Headcount 162 138 Workforce Health and Safety We take workplace safety very seriously and our robust safety program means that we are constantly evaluating our safety protocols in an effort to keep our facilities safe for our employees. The Company continued to provide a safe work environment as the COVID-19 pandemic persisted during 2022.

The Company is not a party to any collective bargaining agreements with its employees, has experienced no work stoppages and considers its relationships with its employees to be satisfactory. The following table shows the Company’s approximate headcount by region: Americas EMEA Headcount 181 184 Workforce Health and Safety We take workplace safety very seriously and our robust safety program means that we are constantly evaluating our safety protocols in an effort to keep our facilities safe for our employees. Compensation and Benefits As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefit programs for our employees in order to attract and retain superior talent.

For the year ended December 31, 2021, these same two customers accounted for 18%, and 17%, respectively, of consolidated net sales and as of December 31, 2021, 18% and 22%, respectively, of total net accounts receivable.

For the year ended December 31, 2022, these same two customers accounted for 21%, and 16%, respectively, of consolidated net sales and as of December 31, 2022, 16% and 18%, respectively, of total net accounts receivable. Our top five customers accounted for 51% and 52% of consolidated net sales in 2023 and 2022, respectively.

In 2020, we completed two acquisitions to add scale, broaden our geographic footprint, expand partner relationships and add cloud support capabilities. In 2022, we completed the acquisition of Spinnakar Limited (“Spinnakar”), which expanded our sales presence in the United Kingdom distribution operations and brought key vendor partner relationships to our portfolio. We plan to continue to evaluate acquisition opportunities as part of our strategic growth plan going forward. Products An essential part of our ongoing operations and strategic growth plan in our Distribution segment is the continued recruitment of software vendors for which we become authorized distributors of their products.

In 2022, we completed an acquisition that expanded our sales presence in the United Kingdom distribution operations. In 2023, we completed the acquisition of Data Solutions Holdings Limited (“Data Solutions”), which further expanded our geographic footprint and partner relationships in the United Kingdom and Ireland distribution operations. We plan to continue to evaluate acquisition opportunities as part of our overall capital allocation strategy and continuing growth plan. Products An essential part of our ongoing operations and strategic growth plan in our Distribution segment is the continued recruitment of software vendors for which we become authorized distributors of their products.

Our top five customers accounted for 52% and 51% of consolidated net sales in 2022 and 2021, respectively. Net sales to customers in Canada represented 8% and 9% of our consolidated net sales in 2022 and 2021, respectively.

Net sales to customers in Canada represented 7% and 8% of our consolidated net sales in 2023 and 2022, respectively.

We provide customer service, billing, sales and marketing support in this segment and provide extended payment terms to facilitate sales. The Company operates a distribution facility in Eatontown, New Jersey. Acquisitions We view acquisitions as an important part of our strategic growth plan.

Products in this segment are acquired directly from OEMS, software developers or distributors and sold to end users. We provide customer service, billing, sales and marketing support in this segment and provide extended payment terms to facilitate sales. Acquisitions We view acquisitions as an important part of our strategic growth plan.

Net sales in Europe and the rest of the world represented 14% and 13% of our consolidated net sales in 2022 and 2021, respectively.

The loss of a key customer or a group of customers could have an adverse effect on the Company. Net sales in Europe and the UK represented 19% and 14% of our consolidated net sales in 2023 and 2022, respectively.

Removed

On October 31, 2022, the Company adopted its current name, Climb Global Solutions, Inc.

Added

In 2020, we completed two acquisitions to add scale, broaden our geographic footprint, expand partner relationships and add cloud support capabilities.

Removed

Products in this segment are acquired directly from OEMS, software developers or distributors 1 Table of Contents and sold to end users.

Removed

It aligned with and followed the guidance of the world’s leading health authorities, as well as related local, regional, and national government directives. We continue to monitor the impact of the COVID-19 pandemic on our teammates and within our operations, and proactively modify or adopt new practices to promote their health and safety. 5 Table of Contents Compensation and Benefits As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefit programs for our employees in order to attract and retain superior talent.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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2022 filing

2023 filing

Item 1A. Risk Factors Investors should carefully consider the risk factors set forth below as well as the other information contained in this report. Any of the following risks could materially and adversely affect our business, financial condition or results of operations and could cause our results to differ from the “forward-looking statements” contained in this Annual Report.

Item 1A. Risk Factors Investors should carefully consider the risk factors set forth below as well as the other information contained in this Annual Report. Any of the following risks could materially and adversely affect our business, financial condition or results of operations and could cause our results to differ from the “forward-looking statements” contained in this Annual Report.

The Company evaluates, on a regular basis, whether events or circumstances have occurred that indicate all, or a portion, of the carrying amount of goodwill or identifiable intangible assets may no longer be recoverable, in which case an impairment charge to earnings would become necessary. A decline in general economic conditions, a substantial increase in market interest rates, and increase in income tax rates, or the company’s inability to meet long-term working capital or operating income projections could impact future valuations of the Company’s reporting units, and the company could be required to record an impairment charge in the future, which could impact the company’s consolidated balance sheets, as well as the Company’s consolidated statements of operations. The inability to obtain financing on favorable terms will adversely impact our business, financial position and results of operations.

The Company evaluates, on a regular basis, whether events or circumstances have occurred that indicate all, or a portion, of the carrying amount of goodwill or identifiable intangible assets may no longer be recoverable, in which case an impairment charge to earnings would become necessary. A decline in general economic conditions, a substantial increase in market interest rates, and increase in income tax rates, or the company’s inability to meet long-term working capital or operating income projections could impact future valuations of the Company’s reporting units, and the company could be required to record an impairment charge in the future, which could impact the company’s consolidated balance sheets, as well as the Company’s consolidated statements of operations. The inability to obtain financing on favorable terms may adversely impact our business, financial position and results of operations.

Although we did not have any material cybersecurity breaches in 2022, any failure on the part of us or our vendors to maintain the security of data we are required to protect, including via the penetration of our network security and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also result in deterioration in our employees’, partners’ and clients’ confidence in us and other competitive disadvantages, and thus could have a material adverse impact on our business, financial condition and results of operations. We depend on certain key personnel.

Although we did not have any material cybersecurity breaches in 2023, any failure on the part of us or our vendors to maintain the security of data we are required to protect, including via the penetration of our network security and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also result in deterioration in our employees’, partners’ and clients’ confidence in us and other competitive disadvantages, and thus could have a material adverse impact on our business, financial condition and results of operations. We depend on certain key personnel.

Goodwill represents the excess of the cost of an acquisition over the fair value of the assets acquired. The Company also ascribes value to certain identifiable intangible assets, which consist primarily of customer relationships and trade names, among others, as a result of acquisitions.

Goodwill represents the excess of the cost of an acquisition over the fair value of the assets acquired. The Company also ascribes value to certain identifiable intangible assets, which consist primarily of vendor relationships, customer relationships and trade names, among others, as a result of acquisitions.

Acquisitions involve numerous risks, including the following: ● effectively combining the acquired operations, technologies, or products; ● unanticipated costs or assumed liabilities, including those associated with regulatory actions or investigations; ● not realizing the anticipated financial benefit from the acquired companies; ● diversion of management’s attention; ● negative effects on existing customer and vendor partner relationships; and ● potential loss of key employees of the acquired companies. Further, the Company has made, and may continue to make acquisitions of, or investments in new services, businesses or technologies to expand its current service offerings and product lines.

Acquisitions involve numerous risks, including the following: ● effectively combining the acquired operations, technologies, or products; ● unanticipated costs or assumed liabilities, including those associated with regulatory actions or investigations; 9 Table of Contents ● not realizing the anticipated financial benefit from the acquired companies; ● diversion of management’s attention; ● negative effects on existing customer and vendor partner relationships; and ● potential loss of key employees of the acquired companies. Further, the Company has made, and may continue to make acquisitions of, or investments in new services, businesses or technologies to expand its current service offerings and product lines.

Among other things, trading of a relatively small volume of our Common Stock may have a greater impact on the trading price of our stock than would be the case if our public float were larger. Our Common Stock is listed on The NASDAQ Global Market tier of the Nasdaq Stock Market, and we therefore are subject to continued listing requirements, including requirements with respect to the market value and number of publicly-held shares, number of stockholders, minimum bid price, number of market makers and either (i) stockholders’ equity or (ii) total market value of stock, total assets and total revenues.

Among other things, trading of a relatively small 13 Table of Contents volume of our Common Stock may have a greater impact on the trading price of our stock than would be the case if our public float were larger. Our Common Stock is listed on The NASDAQ Global Market tier of the Nasdaq Stock Market, and we therefore are subject to continued listing requirements, including requirements with respect to the market value and number of publicly-held shares, number of stockholders, minimum bid price, number of market makers and either (i) stockholders’ equity or (ii) total market value of stock, total assets and total revenues.

Factors that are likely to cause our revenue and operating results to fluctuate include the risk factors discussed throughout this section. The Company’s goodwill and identifiable intangible assets could become impaired, which could reduce the value of its assets and reduce its net income in the year in which the write-off occurs.

Factors that are likely to cause our revenue and operating results to fluctuate include the risk factors discussed throughout this section. Our goodwill and identifiable intangible assets could become impaired, which could reduce the value of our assets and reduce net income in the year in which the write-off occurs.

Our inability to retain such personnel or to train them either rapidly enough to meet our expanding needs or in an effective manner for quickly changing market conditions could cause a decrease in the overall quality and efficiency of our sales staff, which, in turn, could have a material adverse effect on our business, results of operations and financial condition. 9 Table of Contents We may explore additional growth through acquisitions.

Our inability to retain such personnel or to train them either rapidly enough to meet our expanding needs or in an effective manner for quickly changing market conditions could cause a decrease in the overall quality and efficiency of our sales staff, which, in turn, could have a material adverse effect on our business, results of operations and financial condition. We may explore additional growth through acquisitions.

The realization of any or all these risks could have a material adverse effect on our business, results of operations and financial condition. 14 Table of Contents If the Company fails to maintain an effective system of internal controls or discovers material weaknesses in its internal controls over financial reporting, it may not be able to report its financial results accurately or timely or detect fraud, which could have a material adverse effect on its business.

The realization of any or all these risks could have a material adverse effect on our business, results of operations and financial condition. If the Company fails to maintain an effective system of internal controls or discovers material weaknesses in its internal controls over financial reporting, it may not be able to report its financial results accurately or timely or detect fraud, which could have a material adverse effect on its business.

There can be no assurance that we will be able to negotiate prices as favorable as those negotiated by our competitors or that we will be able to offset the effects of price reductions with an increase in the number of clients, higher net sales, cost reductions, or greater sales of services, which service sales typically are delivered at higher gross margins, or otherwise.

There can be no assurance that we will be able to negotiate prices as favorable as those negotiated by our competitors or that we will be able to offset the effects of price reductions with an increase in the number of clients, higher net sales, cost reductions, or greater sales of 7 Table of Contents services, which service sales typically are delivered at higher gross margins, or otherwise.

In addition, we do not have guaranteed purchasing volume commitments from our customers and, therefore, our sales volume may be volatile. 8 Table of Contents Our business is substantially dependent on a limited number of customers and vendors, and the loss or any change in the business habits of such key customers or vendors may have a material adverse effect on our financial position and results of operations.

In addition, we do not have guaranteed purchasing volume commitments from our customers and, therefore, our sales volume may be volatile. Our business is substantially dependent on a limited number of customers and vendors, and the loss or any change in the business habits of such key customers or vendors may have a material adverse effect on our financial position and results of operations.

The payment of any such damages or royalties may significantly increase the Company's operating expenses and harm the Company's operating results and financial condition. Also, royalty or license arrangements may not be available at all.

The payment of any such damages or royalties may significantly increase the Company's operating expenses and impact the Company's operating results and financial condition. Also, royalty or license arrangements may not be available at all.

We have paid a quarterly dividend on our Common Stock since the first quarter of 2003. Any future declaration of dividends remains subject to further determination from time to time by our Board of Directors. 13 Table of Contents Our ability to pay dividends in the future will depend on our financial results, liquidity and financial condition.

We have paid a quarterly dividend on our Common Stock since the first quarter of 2003. Any future declaration of dividends remains subject to further determination from time to time by our Board of Directors. Our ability to pay dividends in the future will depend on our financial results, liquidity and financial condition.

Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats. As our employees continue to work on a hybrid environment, which includes splitting time between working from the office and working from home, we are highly reliant on the availability and functionality of our information systems to enable for our operations.

Attacks may range from random attempts to coordinated and targeted attacks, including sophisticated computer crime and advanced persistent threats. Our employees work in a hybrid environment, which includes splitting time between working from the office and working from home, we are highly reliant on the availability and functionality of our information systems to enable our operations.

Additional risks and uncertainties not currently known to us or those currently viewed by us to be immaterial may also materially and adversely affect our business, financial condition or results of operations. Risks Related to our Business and Industry We serve customers and have locations throughout the world and are subject to terrorist attacks, acts of war, natural disasters, global pandemic and other similar risks, including without limitation, COVID-19, which could materially adversely affect our business, financial condition, and results of operations.

Additional risks and uncertainties not currently known to us or those currently viewed by us to be immaterial may also materially and adversely affect our business, financial condition or results of operations. Risks Related to our Business and Industry We serve customers and have locations throughout the world and are subject to terrorist attacks, acts of war, natural disasters, global pandemic and other similar risks, which could materially adversely affect our business, financial condition, and results of operations.

Our vendors are subject to many if not all of the same (or similar) risks and uncertainties to which we are subject, as well as other risks and uncertainties, and we compete with others for their business.

Our vendors are subject to many if not all of the same (or similar) risks and uncertainties to which we are subject, 8 Table of Contents as well as other risks and uncertainties, and we compete with others for their business.

Certain of the Company's products and services include intellectual property owned primarily by the Company's third-party vendor partners. Substantial litigation and threats of litigation regarding intellectual property rights exist in the 11 Table of Contents software and some service industries.

The evaluation of, and compliance with these laws, regulations and similar requirements may be onerous and expensive, and these laws and regulations may have other adverse impacts on our business, results of operations or cash flows.

If we discontinue or reduce the amount or frequency of dividends, the value of our Common Stock may be impaired. Risks related to our Common Stock . The exercise of options or any other issuance of shares by us may dilute your ownership of our Common Stock.

If we discontinue or reduce the amount or frequency of dividends, the value of our Common Stock may be impaired. Risks related to our Common Stock . The issuance of shares by us may dilute your ownership of our Common Stock.

During the current year, we completed one acquisition to expand our sales presence in the United Kingdom distribution operations and bring key vendor partner relationships to our portfolio. As part of our strategic growth plan, we may pursue the acquisition of companies that either complement or expand our existing business.

During the year ended December 31, 2023, we completed one acquisition to expand our sales presence in Ireland and the United Kingdom distribution operations and bring key vendor partner relationships to our portfolio. As part of our strategic growth plan, we may pursue the acquisition of companies that either complement or expand our existing business.

We have experienced the loss and changes in the business habits of key customer and vendor relationships in the past and expect to do so again in the future. Sales of products purchased from our largest two vendors accounted for 26% of our 2022 purchases and sales from our largest five vendors generated approximately 42% of 2022 purchases.

We have experienced the loss and changes in the business habits of key customer and vendor relationships in the past and expect to do so again in the future. Sales of products purchased from our largest two vendors accounted for 23% of our 2023 purchases and sales from our largest five vendors generated approximately 40% of 2023 purchases.

We also rely on our vendor partners 7 Table of Contents to provide funds for us to market their products, including through our on-line marketing efforts, and to provide purchasing incentives to us.

We also rely on our vendor partners to provide funds for us to market their products, including through our on-line marketing efforts, and to provide purchasing incentives to us.

Accordingly, we are at a continual risk of loss of their business on account of a number of factors and forces, many of which are largely beyond our control. In 2022, our two largest customers accounted for 37% of our net sales and our largest five customers accounted for 52% of our net sales.

Accordingly, we are at a continual risk of loss of their business on account of a number of factors and forces, many of which are largely beyond our control. In 2023, our two largest customers accounted for 35% of our net sales and our largest five customers accounted for 51% of our net sales.

In 2022 and 2021, approximately 22% of the Company’s net sales came from its operations outside the United States.

In 2023 and 2022, approximately 26% and 22% of the Company’s net sales came from its operations outside the United States, respectively.

We may be subject to legal claims or regulatory matters involving stockholder, consumer, antitrust, intellectual property and other issues. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or other adverse effects.

Such changes in legislation may have an adverse effect on our business. We may be subject to litigation. We may be subject to legal claims or regulatory matters involving stockholder, consumer, antitrust, intellectual property and other issues. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or other adverse effects.

As a result of the Company’s international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following: ● import and export regulations that could erode profit margins or restrict exports; ● the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; ● potential restrictions on transfers of funds; ● import and export tariffs, duties and value-added taxes; ● transportation delays and interruptions; ● the burden and cost of compliance with complex multi-national tax laws and regulations; ● uncertainties arising from local business practices and cultural considerations; ● foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction; ● stringent antitrust regulations in local jurisdictions; ● volatility associated with sovereign debt of certain international economies; 10 Table of Contents ● the uncertainty surrounding the implementation and effects of Brexit; ● potential military conflicts and political risks; and ● currency fluctuations, which the company attempts to minimize through traditional hedging instruments. Legal and Regulatory Risks We may be liable for misuse of our customers’ or employees’ information.

As a result of the Company’s international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following: ● import and export regulations that could erode profit margins or restrict exports; ● the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; ● potential restrictions on transfers of funds; ● import and export tariffs, duties and value-added taxes; ● transportation delays and interruptions; ● the burden and cost of compliance with complex multi-national tax laws and regulations; ● uncertainties arising from local business practices and cultural considerations; ● foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction; ● stringent antitrust regulations in local jurisdictions; ● volatility associated with sovereign debt of certain international economies; ● potential military conflicts and political risks; and ● currency fluctuations, which the company attempts to minimize through traditional hedging instruments. The terms of our debt arrangement impose restrictions on our ability to operate which in turn could negatively affect our ability to respond to business and market conditions and therefore could have an adverse effect on our business and operating results.

Terrorist attacks, acts of war, natural disasters, global pandemics or other disasters or public health concerns in regions of the world where we have operations could result in the disruption of our business. Such acts, including Russia’s February 2022 invasion of Ukraine, have created, and continue to create, economic and political uncertainties and have contributed to global economic instability.

Specifically, these acts, pandemics, disasters and health concerns can result in increased travel restrictions and extended shutdowns of certain businesses in the region, as well as social, economic, or labor instability.

Such acts, including Russia’s military invasion of Ukraine and the Israel-Hamas war, have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Specifically, these acts, pandemics, disasters and health concerns can result in increased travel restrictions and extended shutdowns of certain businesses in the region, as well as social, economic, or labor instability.

Additionally, actions by activist shareholders may be exploited by our competitors, cause concern to our current or potential customers, make it more difficult to attract and retain qualified personnel and may create adverse uncertainty for our employees. The interest rate of our current credit facility is priced using LIBOR and is subject to risks associated with the transition from LIBOR to an alternative reference rate that could adversely affect our business, operating results, and financial condition.

Additionally, actions by activist shareholders may be exploited by our competitors, cause concern to our current or potential customers, make it more difficult to attract and retain qualified personnel and may create adverse uncertainty for our employees. Changes in accounting rules, or the misapplication of current accounting rules, may adversely affect our future financial results.

We operate in compliance with applicable laws and regulations and make plans for our structure and operations based upon existing laws and anticipated future changes in the law. When new legislation is enacted with minimal advance notice, or when new interpretations or applications of existing laws are made, we may need to implement changes in our policies or structure.

We operate in compliance with applicable laws and regulations and make plans for our structure and operations based upon existing laws and anticipated future changes in the 14 Table of Contents law.

The voluminous number of products and services we sell, and the manner in which they are bundled, are technologically complex. Mischaracterization of these products and services could result in misapplication of revenue recognition polices. We use estimates where necessary, such as allowance for doubtful accounts and product returns, which require judgment and are based on best available information.

The voluminous number of products and services we sell, and the manner in which they are bundled, are technologically 12 Table of Contents complex. Mischaracterization of these products and services could result in misapplication of revenue recognition polices.

We are susceptible to unanticipated changes in legislation, especially relating to income and other taxes, import/export laws, hazardous materials and other laws related to trade, accounting and business activities. Such changes in legislation may have an adverse effect on our business. We may be subject to litigation.

When new legislation is enacted with minimal advance notice, or when new interpretations or applications of existing laws are made, we may need to implement changes in our policies or structure. We are susceptible to unanticipated changes in legislation, especially relating to income and other taxes, import/export laws, hazardous materials and other laws related to trade, accounting and business activities.

Refer to "COVID-19 Pandemic Update" in Management's Discussion & Analysis of Financial Condition and Results of Operations for a further discussion about the Company's description about the impacts of COVID-19. Changes in the information technology industry and/or economic environment may reduce demand for the products and services we sell.

Disruptions in affected regions over a prolonged period could have a material adverse impact on our business and our financial results. Changes in the information technology industry and/or economic environment may reduce demand for the products and services we sell.

Removed

Disruptions in affected regions over a prolonged period could have a material adverse impact on our business and our financial results. The global COVID-19 pandemic continues to impact the Company's business, through significant shortages, disruptions, constraints, extended lead times, and unpredictability across the global supply chain; which has resulted in rapidly changing market conditions, including frequent, and unpredictable, increases in the price of products and services the Company sells.

Added

As of December 31, 2023, we had approximately $1.3 million outstanding under our term loan with First American Commercial Bancorp and there were no amounts outstanding under our revolving credit agreement with JPMorgan Chase Bank, N.A.

Removed

Further disruptions to the supply chain due to the COVID-19 pandemic and its variants, or other global or domestic events could materially adversely impact the Company’s business, and the Company may not be able to mitigate or prevent disruptions that may arise from shortages, or the other related impacts discussed above, particularly if the Company is unable to pass price increases on to customers, or if the Company experiences significant decreases in price, or other pricing pressures caused by disruption of the global markets in which it operates.

Added

The terms of one or more of the agreements under which this indebtedness was incurred may limit or restrict, among other things, our (or our subsidiaries', as applicable) ability to incur additional indebtedness or liens, or enter into certain transactions. We are also required to maintain specified financial ratios and satisfy certain financial condition tests under certain of our debt facilities.

Removed

Even after the COVID-19 pandemic has subsided and the U.S. Administration announced that the Covid public health emergency is set to expire on May 11, 2023, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

Added

Our inability to meet these ratios and tests could result in the acceleration of the repayment 10 Table of Contents of the related debt, termination of the applicable facility, an increase in our effective cost of funds or the cross-default of other debt facilities and securitization arrangements.

Removed

LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We use LIBOR as a reference rate in our current credit facility. In July 2017, the U.

Added

As a result, our ability to operate may be restricted and our ability to respond to business and market conditions may be limited, which could have an adverse effect on our business and operating results. Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

Removed

K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR and while the transition period for many LIBOR tenors has been extended to June 2023, the U.S. Federal Reserve advised banks to stop new LIBOR issuances.

Added

Interest rates have increased and may continue to increase in the future. As a result, interest rates on the obligations under certain of our credit facilities, or other variable rate debt incurrences or offerings could increase. If interest rates increase and we borrow amounts under certain of our credit facilities, debt service obligations and our interest expense will increase.

Removed

The Alternative Reference Rates Committee, a steering committee comprised of U.S. financial market participants, has identified the secured overnight financing rate, or SOFR, as the recommended alternative rate for all LIBOR.

Added

Our net income and cash flows, including cash available for servicing indebtedness, will correspondingly decrease. An increase in interest rates may increase our future borrowing costs and restrict our access to capital.

Removed

At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates as the transition away from the LIBOR benchmarks is anticipated in coming years.

Added

Additionally, current market conditions, the global economy, and overall credit conditions could limit our availability of capital, which could cause increases in interest margin spreads over underlying indices, effectively increasing the cost of our borrowing. Legal and Regulatory Risks We may be liable for misuse of our customers’ or employees’ information.

Removed

Accordingly, the outcome of these reforms is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phaseout could cause LIBOR to perform differently than in the past or cease to exist.

Added

We use estimates where necessary, such as allowance for doubtful accounts and product returns, which require judgment and are based on best available information.

Removed

The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our borrowings under the current credit facility.

Added

The potentially divergent laws and regulations as a result of Brexit may continue to lead to economic and legal uncertainty, causing increased economic volatility or disrupting the markets and clients we serve. General economic weakness may reduce our revenues and profits.

Removed

Further, the consequences of these developments, or any alternative reference rate that is adopted, cannot be entirely predicted but could include an increase in the cost of our variable rate debt, which could adversely impact our interest expense, results of operations and cash flows. 12 Table of Contents Changes in accounting rules, or the misapplication of current accounting rules, may adversely affect our future financial results.

Removed

The UK formally withdrew from EU membership on January 31, 2020 and commenced a transition period during which the trading relationship between the UK and the EU will remain the same and the UK and EU will begin negotiations to determine their future relationship.

Removed

Although the full effects of Brexit are uncertain and will be dependent on the outcome of such negotiations, potential adverse consequences of Brexit include global market uncertainty, volatility in currency exchange rates, greater restrictions on imports and exports between the UK and other countries, and increased regulatory complexities, each of which could have a negative impact on our business, financial condition or results of operations.

Removed

These effects may be amplified if the UK and the EU fail to agree on a future trade relationship, which could result in significant market and economic disruption.

Removed

We have established a presence in the Netherlands to help address future developments, as needed, for Brexit, which could add complexity to our European operations as well as result in higher costs associated with serving our customers following the transition period. General economic weakness may reduce our revenues and profits.

Item 2. Properties

Properties — owned and leased real estate

4 edited+1 added−0 removed0 unchanged

2022 filing

2023 filing

Total annual rent expense for the satellite office is approximately $30,000. The Company also leases office space in the United Kingdom under a lease expiring in April 2026.

Total annual rent expense for the satellite offices is approximately $72,000. The Company also leases office space in the United Kingdom under a lease expiring in April 2026.

Item 2. Properties The Company leases approximately 20,000 square feet of space in Eatontown, New Jersey for its corporate headquarters under a lease expiring in April 2027. Total annual rent expense for this premise is approximately $460,000. The Company subleases approximately 7,165 square feet of this space under a sublease expiring in April 2027.

Item 2. Properties The Company leases approximately 20,000 square feet of space in Eatontown, New Jersey for its corporate headquarters under a lease expiring in April 2027. Total annual rent expense for this premise is approximately $470,000. 15 Table of Contents The Company subleases approximately 7,165 square feet of this space under a sublease expiring in April 2027.

Total annual sublease income for this space is approximately $150,000. The Company also leases 7,800 square feet of warehouse space in Eatontown, New Jersey under a lease expiring in December 2023. Total annual rent expense for such warehouse space is approximately $64,000. The Company also subleases a satellite office in Maryland.

Total annual sublease income for this space is approximately $160,000. The Company also leases 7,800 square feet of warehouse space in Eatontown, New Jersey under a lease expiring in December 2024. Total annual rent expense for such warehouse space is approximately $64,000. The Company also leases satellite offices in Colorado and Maryland.

Total annual rent expense for this premise is approximately $65,000. We believe that each of the properties is in good operating condition and that such properties are adequate for the operation of the Company’s business as currently conducted. We also rent smaller satellite offices on a short-term basis. 15 Table of Contents

Total annual rent expense for this premise is approximately $65,000. The Company owns approximately 5,800 square feet of office and warehouse space in Dublin, Ireland, which was acquired through the acquisition of Data Solutions. We believe that each of the properties is in good operating condition and that such properties are adequate for the operation of the Company’s business as currently conducted.

Added

We also rent smaller satellite offices on a short-term basis.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−1 removed3 unchanged

2022 filing

2023 filing

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our Common Stock, par value $0.01, trade on The Nasdaq Global Market tier of The Nasdaq Stock Marker under the symbol “CLMB”. Dividends In each of 2022 and 2021, we declared dividends totaling $0.68 per share on our Common Stock.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our Common Stock, par value $0.01, trade on The Nasdaq Global Market tier of The Nasdaq Stock Market under the symbol “CLMB”. Dividends In each of 2023 and 2022, we declared dividends totaling $0.68 per share on our Common Stock.

There can be no assurance that we will continue to pay comparable cash dividends in the future. Shareholder Information As of February 9, 2023, there were approximately 19 record holders of our Common Stock.

There can be no assurance that we will continue to pay comparable cash dividends in the future. Shareholder Information As of February 5, 2024, there were approximately 18 record holders of our Common Stock.

This figure does not include an estimate of the number of beneficial holders whose shares are held of record by banks, broker or other nominees. 16 Table of Contents Purchases of Equity Securities During the fourth quarter of 2022, we repurchased shares of our Common Stock as follows: 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) October 1, 2022 - October 31, 2022 — $ — — $ — 545,786 November 1, 2022 - November 30, 2022 4,321 (1) $ 31.13 — $ — 545,786 December 1, 2022 - December 31, 2022 — $ — — $ — 545,786 Total 4,321 $ 31.13 — $ — 545,786 (1) Represents 4,321 shares surrendered to the Company by employees to satisfy individual tax withholding obligations upon vesting of previously issued shares of Restricted Stock.

This figure does not include an estimate of the number of beneficial holders whose shares are held of record by banks, broker or other nominees. 16 Table of Contents Purchases of Equity Securities During the fourth quarter of 2023, we repurchased shares of our Common Stock as follows: Maximum Number of Total Number Shares That of Shares May Yet Be Total Purchased as Purchased Number Part of Publicly Under the of Shares Average Announced Average Plans or Purchased Price Paid Plans or Price Paid Programs Period (1) Per Share Programs Per Share (2) October 1, 2023 - October 31, 2023 — $ — — $ — 545,786 November 1, 2023 - November 30, 2023 — $ — — $ — 545,786 December 1, 2023 - December 31, 2023 — $ — — $ — 545,786 Total — $ — — $ — 545,786 (1) For the year ended December 31, 2023, we did not repurchase any shares of our Common Stock under our share repurchase plans referred to in footnote (2) below. (2) 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.

Removed

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 of 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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

58 edited+20 added−15 removed35 unchanged

2022 filing

2023 filing

These estimates require significant judgment to determine whether the software’s functionality is dependent on ongoing maintenance or if substantially all functionality is available in the original software download.

These estimates require judgment to determine whether the software’s functionality is dependent on ongoing maintenance or if substantially all functionality is available in the original software download.

On August 18, 2022, we completed the acquisition of 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.

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.

Actual results may differ from these estimates. The Company believes the following critical accounting policies and estimates 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 19 Table of Contents software licenses, and allocation of sales prices among distinct performance obligations.

Actual results may differ from these estimates. The Company believes the following critical accounting policies and estimates 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.

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. Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13").

On February 2, 2017, the Board of Directors 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 is authorized to purchase 545,786 shares of Common Stock as of December 31, 2022.

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 December 31, 2022, we did not have any off-balance sheet arrangements.

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 December 31, 2023, we did not have any off-balance sheet arrangements.

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 competitive, and demand characteristics of the products which we are authorized to distribute.

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.

Goodwill is not amortized but is subject to periodic testing for impairment at the reporting unit level. In a qualitative assessment, we assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill.

Furthermore, fluctuations in the Company’s operating results, announcements regarding litigation, the loss of a significant vendor partner 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.

Furthermore, fluctuations in the Company’s operating results, announcements regarding litigation, the loss of a significant vendor partner or customer, increased competition, reduced 18 Table of Contents 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.

SG&A expenses were 3.5% of adjusted gross billings, a non-GAAP financial measure, for the year ended December 31, 2022, compared to 3.4% for the same period in the prior year. The Company expects that its SG&A expenses, as a percentage of adjusted gross billings, a non-GAAP financial measure, may vary depending on changes in sales volume, as well as the levels of continuing investments in key growth initiatives.

SG&A expenses were 3.7% of adjusted gross billings, a non-GAAP financial measure, for the year ended December 31, 2023, compared to 3.5% for the same period in the prior year. The Company expects that its SG&A expenses, as a percentage of adjusted gross billings, a non-GAAP financial measure, may vary depending on changes in sales volume, as well as the levels of continuing investments in key growth initiatives.

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. 20 Table of Contents 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.

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 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 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 17 Table of Contents technically sophisticated domains as well as computer hardware.

Income per diluted share increased 34%, or $0.72, to $2.81 for the year ended December 31, 2022 compared to $2.09 for the same period in 2021. 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 generally accepted accounting principles in the United States of America (“US GAAP”).

Income per diluted share decreased 3%, or $0.09, to $2.72 for the year ended December 31, 2023 compared to $2.81 for the same period in 2022. 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 generally accepted accounting principles in the United States of America (“US GAAP”).

The year-to-year comparison of financial results is not necessarily indicative of future results: Year ended December 31, 2022 2021 Net sales 100 % 100 % Cost of sales 82.2 83.8 Gross profit 17.8 16.2 Selling, general and administrative expenses 11.2 11.4 Acquisition related costs 0.2 — Amortization and depreciation expense 0.7 0.5 Income from operations 5.7 4.3 Other income (expense) (0.3) 0.1 Income before income taxes 5.4 4.4 Income tax provision 1.3 1.1 Net income 4.1 % 3.3 % Non-GAAP Financial Measures Our management monitors several financial and non-financial measures and ratios on a regular basis in order to track the progress of our business.

The year-to-year comparison of financial results is not necessarily indicative of future results: Year ended December 31, 2023 2022 Net sales 100.0 % 100.0 % Cost of sales 81.7 82.2 Gross profit 18.3 17.8 Selling, general and administrative expenses 12.6 11.2 Acquisition related costs 0.2 0.2 Depreciation and amortization expense 0.8 0.7 Income from operations 4.7 5.7 Other income (expense) 0.1 (0.3) Income before income taxes 4.8 5.4 Income tax provision 1.3 1.3 Net income 3.5 % 4.1 % Non-GAAP Financial Measures 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 use a variety of operating and other information to evaluate the operating performance of our business, develop financial 22 Table of Contents forecasts, make strategic decisions, and prepare and approve annual budgets.

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.

Net sales and adjusted gross billings increased due to organic growth at our existing vendor lines as well as the impact of the Spinnakar acquisition in the current year.

Net sales and adjusted gross billings increased due to organic growth at our existing vendor lines as well as the impact of the Data Solutions acquisition in the current year.

These expenses primarily relate to the change in the value of accounts payable and other monetary assets and liabilities denominated in currencies other than their functional currency between the date of origination and settlement. Income Taxes For the year ended December 31, 2022, the Company recorded a provision for income taxes of $4.0 million, or 24.4% of income before taxes, compared to $3.2 million, or 25.6% of income before taxes for the same period in the prior year.

These expenses primarily relate to the change in the value of accounts payable and other monetary assets and liabilities denominated in currencies other than their functional currency between the date of origination and settlement. Income Taxes For the year ended December 31, 2023, the Company recorded a provision for income taxes of $4.5 million, or 26.6% of income before taxes, compared to $4.0 million, or 24.4% of income before taxes 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 year ended December 31, 2022, were $6.1 million compared to $4.5 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 year ended December 31, 2023, were $7.9 million compared to $6.1 million for the same period in the prior year.

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 8%, or $21.7 million, to $304.3 million for the year ended December 31, 2022, compared to $282.6 million for the same period in 2021.

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 16%, or $47.7 million, to $352.0 million for the year ended December 31, 2023, compared to $304.3 million for the same period in 2022.

Total dividends paid and the dollar value of shares repurchased were $3.0 million and $0.7 million for the year ended December 31, 2022, respectively, and $3.0 million and $0.5 million for the year ended December 31, 2021, respectively.

Total dividends paid and the dollar value of shares repurchased were $3.0 million and $1.7 million for the year ended December 31, 2023, respectively, and $3.0 million and $0.7 million for the year ended December 31, 2022, respectively.

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. Allowances for Accounts Receivable The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments.

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. 19 Table of Contents Allowances for Expected Credit Losses The Company maintains allowances for expected credit losses for estimated losses resulting from the inability of its customers to make required payments.

We anticipate that price competition in our market will continue in both of our business segments. Selling, General and Administrative Expenses SG&A expenses for the year ended December 31, 2022, increased 6%, or $2.0 million, to $34.1 million, compared to $32.1 million for the same period in the prior year.

We anticipate that price competition in our market will continue in both of our business segments. Selling, General and Administrative Expenses SG&A expenses for the year ended December 31, 2023, increased 30%, or $10.2 million, to $44.3 million, compared to $34.1 million for the same period in the prior year.

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 December 31, 2022, the Company had $1.8 million outstanding under the Term Loan.

The Common Stock repurchase program does not have an expiration date. As of December 31, 2022, we held 806,068 shares of our Common Stock in treasury at an average cost of $16.41 per share. As of December 31, 2021, we held 859,828 shares of our Common Stock in treasury at an average cost of $16.13 per share.

The Common Stock repurchase program does not have an expiration date. As of December 31, 2023, we held 711,052 shares of our Common Stock in treasury at an average cost of $17.75 per share. As of December 31, 2022, we held 806,068 shares of our Common Stock in treasury at an average cost of $16.41 per share.

Acquisition related costs for the year ended December 31, 2022 were $0.6 million compared to no expense for the same period in 2021. Amortization and depreciation expense increased $0.6 million to $2.1 million for the year ended December 31, 2022 compared to $1.5 million for the same period in the prior year.

Acquisition related costs for the years ended December 31, 2023 and 2022 were $0.6 million, respectively. Amortization and depreciation expense increased $0.7 million to $2.8 million for the year ended December 31, 2023 compared to $2.1 million for the same period in the prior year.

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. Year ended December 31, December 31, Reconciliation of net sales to adjusted gross billings (Non-GAAP): 2022 2021 Net sales $ 304,348 $ 282,582 Costs of sales related to sales where the Company is an agent 760,310 652,396 Adjusted gross billings $ 1,064,658 $ 934,978 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.

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. Year ended December 31, December 31, Reconciliation of net sales to adjusted gross billings (Non-GAAP): 2023 2022 Net sales $ 352,013 $ 304,348 Costs of sales related to sales where the Company is an agent 908,369 760,310 Adjusted gross billings $ 1,260,382 $ 1,064,658 23 Table of Contents 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.

Adjusted gross billings increased while net sales decreased due to differences in the product mix between the two periods. During the year ended December 31, 2022, we relied on two key customers for a total of 37% of our total net sales.

Adjusted gross billings increased at a greater rate than net sales due to differences in the product mix between the two periods. During the year ended December 31, 2023, we relied on two key customers for a total of 35% of our total net sales.

One major customer accounted for 21% and the other for 16%, of our total net sales during the year ended December 31, 2022.

One major customer accounted for 20% and the other for 15%, of our total net sales during the year ended December 31, 2023.

The increase was primarily driven by higher payroll and related costs consistent with higher gross profit, including the impact of the Spinnakar acquisition.

The increase was primarily driven by higher payroll and related costs consistent with higher gross profit, as well as the impact of the Data Solutions acquisition.

The increase in Distribution segment gross profit resulted primarily from the organic growth at our existing vendor lines, impact of Spinnakar since the date of acquisition, lower early pay discounts and other rebates and discounts offered to our customers as a percentage of adjusted gross billings and increased rebates and discounts from our vendor partners. Solutions segment gross profit for the year ended December 31, 2022, decreased 1%, or $0.1 million, to $9.1 million compared to $9.2 million for the same period in 2021. Customer rebates and discounts for the year ended December 31, 2022 were $8.8 million compared to $8.7 million for the same period in the prior year.

The increase in Distribution segment gross profit resulted primarily from the organic growth at our existing vendor lines, impact of Data Solutions since the date of acquisition, and increased rebates and discounts from our vendor partners partially offset by higher early pay discounts and other rebates and discounts offered to our customers as a percentage of adjusted gross billings. Solutions segment gross profit for the year ended December 31, 2023, increased 19%, or $1.8 million, to $10.9 million compared to $9.1 million for the same period in 2022.

Net income increased 36%, or $3.3 million, to $12.5 million for the year ended December 31, 2022 compared to $9.2 million for the same period in 2021.

Net income decreased 2%, or $0.2 million, to $12.3 million for the year ended December 31, 2023 compared to $12.5 million for the same period in 2022.

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.

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.

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. Year ended December 31, December 31, Net income reconciled to adjusted EBITDA: 2022 2021 Net income $ 12,497 $ 9,198 Provision for income taxes 4,035 3,166 Amortization and depreciation 2,054 1,529 Interest expense 71 68 EBITDA 18,657 13,961 Share-based compensation 1,897 1,546 Acquisition related costs 582 - Adjusted EBITDA $ 21,136 $ 15,507 We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation, interest, and acquisition related costs.

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. Year ended December 31, December 31, Net income reconciled to adjusted EBITDA (Non-GAAP): 2023 2022 Net income $ 12,323 $ 12,497 Provision for income taxes 4,458 4,035 Depreciation and amortization 2,798 2,054 Interest expense 264 71 EBITDA 19,843 18,657 Share-based compensation 4,148 1,897 Acquisition related costs 629 582 Adjusted EBITDA $ 24,620 $ 21,136 We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation, interest, and acquisition related costs.

These expenses relate to costs incurred in conjunction with the acquisition of Spinnakar. 25 Table of Contents Foreign Currency Transaction Loss Foreign currency transaction loss for the year ended December 31, 2022 was $0.9 million compared to a foreign currency transaction loss of $0.1 million for the same period in the prior year.

These expenses in the current year relate to costs incurred in conjunction with the acquisition of Data Solutions, while these expenses in the same period the prior year related to the acquisition of Spinnakar. Foreign Currency Transaction Loss Foreign currency transaction loss for the year ended December 31, 2023 was $0.6 million compared to a foreign currency transaction loss of $0.9 million for the same period in the prior year.

We plan to continue to expand our investment in information technology to support the growth of our business. Acquisition Related Costs Acquisition related costs for the year ended December 31, 2022 were $0.6 million compared to no expense for the same period in the prior year.

We plan to continue to expand our investment in information technology to support the growth of our business. Acquisition Related Costs Acquisition related costs for the years ended December 31, 2023 and 2022 were $0.6 million, respectively.

We market these products through creative marketing communications, including our web sites, local and on-line seminars, webinars, social media, direct e-mail, and printed materials. We have subsidiaries in the United States, Canada, Netherlands, United Kingdom and Ireland, through which sales are made. Name Change of Wayside Technology Group, Inc. to Climb Global Solutions, Inc. On October 31, 2022, the Company, formerly known as “Wayside Technology Group, Inc.”, amended its organizational documents to change its name to “Climb Global Solutions, Inc.” Factors Influencing Our Financial Results We derive most of our net sales though the sale of third-party software licenses, maintenance and service agreements.

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. 23 Table of Contents Key Financial Metrics Year ended December 31, December 31, 2022 2021 Net sales $ 304,348 $ 282,582 Adjusted gross billings (Non-GAAP) $ 1,064,658 $ 934,978 Gross profit $ 54,094 $ 45,716 Gross profit - Distribution $ 44,970 $ 36,526 Gross profit - Solutions $ 9,124 $ 9,190 Adjusted EBITDA (Non-GAAP) $ 21,136 $ 15,507 Gross margin % - Adjusted gross billings (Non-GAAP) 5.1% 4.9% Effective margin % - Adjusted EBITDA (Non-GAAP) 39.1% 33.9% We consider gross profit growth and effective margin to be key metrics in evaluating our business.

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. Key Financial Metrics Year ended December 31, December 31, 2023 2022 Net sales $ 352,013 $ 304,348 Adjusted gross billings (Non-GAAP) $ 1,260,382 $ 1,064,658 Gross profit $ 64,247 $ 54,094 Gross profit - Distribution $ 53,363 $ 44,970 Gross profit - Solutions $ 10,884 $ 9,124 Adjusted EBITDA (Non-GAAP) $ 24,620 $ 21,136 Gross margin % - Adjusted gross billings (Non-GAAP) 5.1% 5.1% Effective margin % - Adjusted EBITDA (Non-GAAP) 38.3% 39.1% 24 Table of Contents We consider gross profit growth and effective margin to be key metrics in evaluating our business.

The Company financed the acquisition from existing cash on the balance sheet. Net cash and cash equivalents used in financing activities during the year ended December 31, 2022 was $1.8 million, comprised of borrowings under term loan, net of $1.8 million, offset by dividend payments on our Common Stock of $3.0 million and purchases of treasury stock of $0.6 million. 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.

The operating results of Data Solutions are included in our operating results from the date of acquisition. Net cash and cash equivalents used in financing activities during the year ended December 31, 2023 was $8.9 million, comprised of net repayments of borrowings under credit facilities of $3.1 million, dividend payments on our Common Stock of $3.0 million, purchases of treasury stock of $1.7 million, payments of deferred financing costs of $0.6 million and repayments of borrowing under term loan of $0.5 million. 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.

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.

Through our “Distribution” segment we sell products and services to corporate resellers, VAR, 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.

The payment of future dividends and any share repurchases are at the 18 Table of Contents discretion of our Board of Directors and dependent on results of operations, projected capital requirements and other factors the Board of Directors may find relevant. Stock Volatility.

The payment of future dividends and any share repurchases are at the discretion of our Board of Directors and dependent on results of operations, projected capital requirements and other factors the Board of Directors may find relevant. Stock Volatility. The technology, distribution and services sectors of the United States stock markets is subject to substantial volatility.

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. Net sales in our Solutions segment for the year ended December 31, 2022 decreased 6%, or $1.4 million, to $21.8 million compared to $23.2 million for 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. Net sales in our Solutions segment for the year ended December 31, 2023 increased 22%, or $4.9 million, to $26.8 million compared to $21.8 million for the prior year.

Cash and cash equivalents decreasing was primarily the result of $4.5 million of cash and cash equivalents provided by operating activities, offset by $8.5 million payment for the Spinnakar acquisition, $2.5 million of cash used in other investing activities, $1.8 million of cash used in financing activities and $0.7 million negative impact of foreign exchange rates on cash and cash equivalents. Net cash provided by operating activities for the year ended December 31, 2022 was $4.6 million, comprised of net income adjusted for non-cash items of $16.3 million offset by changes in operating assets and liabilities of $11.8 million. Net cash and cash equivalents used in investing activities during the year ended December 31, 2022 was $11.0 million, comprised of $2.5 million of purchases of fixed assets and $8.5 million payment for the Spinnakar acquisition, net of cash acquired.

The increase in cash and cash equivalents was primarily the result of $42.1 million of cash and cash equivalents provided by operating activities, offset by $12.7 million payment for the Data Solutions acquisition, $5.0 million of cash used in other investing activities, $8.9 million of cash used in financing activities and $0.5 million positive impact of foreign exchange rates on cash and cash equivalents. Net cash provided by operating activities for the year ended December 31, 2023 was $42.1 million, comprised of net income adjusted for non-cash items of $19.2 million offset by changes in operating assets and liabilities of $22.9 million.

These same customers accounted for 16% and 18%, of total net accounts receivable as of December 31, 2022. Gross Profit Gross profit for the year ended December 31, 2022 increased 18%, or $8.4 million, to $54.1 million compared to $45.7 million for the same period in 2021. Distribution segment gross profit for the year ended December 31, 2022 increased 23%, or $8.5 million, to $45.0 million compared to $36.5 million for the same period in 2021.

These same customers accounted for 15% and 6%, of total net accounts receivable as of December 31, 2023. Gross Profit Gross profit for the year ended December 31, 2023 increased 19%, or $10.1 million, to $64.2 million compared to $54.1 million for the same period in 2022. 25 Table of Contents Distribution segment gross profit for the year ended December 31, 2023 increased 19%, or $8.4 million, to $53.4 million compared to $45.0 million for the same period in 2022.

During the year ended December 31, 2022, gross profit increased 18%, or $8.4 million, to $54.1 million compared to $45.7 million for the same period in 2021 while effective margin increased 520 basis points to 39.1% compared to 33.9% for the same period in 2021. Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Acquisition On August 18, 2022, we completed the acquisition of 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.

During the year ended December 31, 2023, gross profit increased 19%, or $10.1 million, to $64.2 million compared to $54.1 million for the same period in 2022 while effective margin decreased 80 basis points to 38.3% compared to 39.1% for the same period in 2022. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Acquisitions On October 6, 2023, we completed the acquisition of Data Solutions for an aggregate purchase of approximately €15.0 million (equivalent to $15.9 million USD), subject to certain working capital and other adjustments, paid at closing plus a potential post-closing earn-out.

Adjusted gross billings for the Distribution segment for the year ended December 31, 2022 increased 15%, or $126.5 million, to $998.8 million compared to $872.3 million for the same period in 2021.

Adjusted gross billings for the Distribution segment for the year ended December 31, 2023 increased 18%, or $178.1 million, to $1,176.9 million compared to $998.8 million for the same period in 2022.

We intend to hold the repurchased shares in treasury for general corporate purposes, including issuances under various stock plans. On November 15, 2017, the Company entered into a $20,000,000 revolving credit facility (the “Credit Facility”) with Citibank, N.A.

We intend to hold the repurchased shares in treasury for general corporate purposes, including issuances under various stock plans. On May 18, 2023, the Company entered into a revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A.

Gross profit increased 18%, or $8.4 million, to $54.1 million for the year ended December 31, 2022, compared to $45.7 million for the same period in 2021. Selling, general and administrative (“SG&A”) expenses increased 6%, or $2.0 million, to $34.1 million for the year ended December 31, 2022, compared to $32.1 million for the same period in 2021.

Gross profit increased 19%, or $10.1 million, to $64.2 million for the year ended December 31, 2023, compared to $54.1 million for the same period in 2022. Selling, general and administrative (“SG&A”) expenses increased 30%, or $10.2 million, to $44.3 million for the year ended December 31, 2023, compared to $34.1 million for the same period in 2022.

Adjusted gross billings for the Solutions segment for the year ended 24 Table of Contents December 31, 2022 increased 5%, or $3.2 million, to $65.9 million compared to $62.7 million for the same period in 2021.

Adjusted gross billings for the Solutions segment for the year ended December 31, 2023 increased 27%, or $17.6 million, to $83.5 million compared to $65.9 million for the same period in 2022.

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, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

At the time of sale, we record an estimate for sales returns based on historical experience, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

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.

Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in acquisition related costs in the consolidated statement of earnings. 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.

We believe that the funds held in cash and cash equivalents and our unused borrowings under our Credit Facility will be sufficient to fund our working capital and cash requirements for the next 12 months. Foreign Exchange The Company’s foreign business is subject to changes in demand or pricing resulting from fluctuations in currency exchange rates or other factors.

We believe that the funds held in cash and cash equivalents and our unused borrowings under our Credit Agreement will be sufficient to fund our working capital and cash requirements for at least the next 12 months.

The new credit loss standard is not expected to have a material effect on our financial position, results of operations or cash flows. Results of Operations The following table sets forth for the years indicated the percentage of net sales represented by selected items reflected in the Company’s Consolidated Statements of Earnings.

The Company will adopt the update in the first quarter of 2024 but does not expect there to be a material effect on our consolidated financial statements. 22 Table of Contents Results of Operations The following table sets forth for the years indicated the percentage of net sales represented by selected items reflected in the Company’s Consolidated Statements of Earnings.

The Company recorded net revenue for Spinnakar of approximately $6.0 million and net income of approximately $0.4 million during the year ended December 31, 2022. Net Sales Net sales for the year ended December 31, 2022 increased 8%, or $21.7 million, to $304.3 million compared to $282.6 million for the same period in 2021. Adjusted gross billings, a non-GAAP financial measure, for the year ended December 31, 2022 increased 14%, or $129.7 million, to $1,064.7 million compared to $935.0 million for the same period in 2021. Net sales in our Distribution segment for the year ended December 31, 2022 increased 9%, or $23.1 million, to $282.5 million compared to $259.4 million for the same period in the prior year.

The operating results of Spinnakar are included in our operating results from the date of acquisition. Operating results of Data Solutions and Spinnakar are included in our Distribution segment. Net Sales Net sales for the year ended December 31, 2023 increased 16%, or $47.7 million, to $352.0 million compared to $304.3 million for the same period in 2022. Adjusted gross billings, a non-GAAP financial measure, for the year ended December 31, 2023 increased 18%, or $195.7 million, to $1,260.4 million compared to $1,064.7 million for the same period in 2022. Net sales in our Distribution segment for the year ended December 31, 2023 increased 15%, or $42.8 million, to $325.3 million compared to $282.5 million for the same period in the prior year.

There were no amounts outstanding under the Term Loan as of December 31, 2021. We anticipate that our working capital needs will increase as we invest in the growth of our business.

The Company had $1.3 million and $1.8 million outstanding under the Term Loan as of December 31, 2023 and 2022, respectively. 27 Table of Contents We anticipate that our working capital needs will increase as we invest in the growth of our business.

As a percentage of adjusted gross billings, customer rebates and discounts decreased during the year ended December 31, 2022, compared to the same period in the prior year.

This increase was the result of the aforementioned increase in adjusted gross billings. Customer rebates and discounts for the year ended December 31, 2023 were $12.8 million compared to $8.8 million for the same period in the prior year.

As of December 31, 2022 and 2021, no borrowings were outstanding under the Uncommitted Credit Facility. On April 8, 2022, the Company entered into a $2.1 million term loan (the “Term Loan”) with First American Commercial Bancorp, Inc. pursuant to a Master Loan and Security Agreement.

In connection with entering into the Credit Agreement, the Company voluntarily terminated that certain existing revolving credit agreement, dated November 15, 2017, by and among the Company, certain subsidiaries of the Company and Citibank, N.A. On April 8, 2022, the Company entered into a $2.1 million term loan (the “Term Loan”) with First American Commercial Bancorp, Inc. pursuant to a Master Loan and Security Agreement.

Management determines the estimate of the allowance for uncollectible 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.

Management determines the estimate of the allowance for expected credit losses by considering a number of factors, including historical experience, aging of the accounts receivable, as well as current market conditions and future forecasts of our customers’ ability to make payments for goods and services.

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.

Based upon these assumptions, the initial contingent consideration is then valued using a Monte Carlo simulation. We have used third-party qualified specialists to assist management in determining the fair value of assets acquired and liabilities assumed.

Removed

Through our “Distribution” segment we sell products and services to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide, 17 Table of Contents who in turn sell these products to end users.

Added

If actual sales returns are greater than estimated by management, additional expense may be incurred. Business Combinations We apply the provisions of ASC 805, Business Combinations (“ASC 805”), in accounting for our acquisitions. ASC 805 requires that we evaluate whether a transaction pertains to an acquisition of assets, or to an acquisition of a business.

Removed

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.

Added

A business is defined as an integrated set of assets and activities that is capable of being conducted and managed for the purpose of providing a return to investors.

Removed

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.

Added

Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets and liabilities assumed on a relative fair value basis; whereas the acquisition of a business requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at the acquisition date fair values.

Removed

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.

Added

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Our valuation of acquired assets and assumed liabilities requires estimates, especially with respect to intangible assets that was derived using valuation techniques and models such as the income approach.

Removed

Initial purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition.

Added

Such models require use of estimates including discount rates, and future expected revenue. The approach to estimating an initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected cash flows over the term of the contingent earn-out period, discounted for the period over which the initial contingent consideration is measured and expected volatility.

Removed

Effective January 1, 2023, the company will adopt the update using a modified retrospective approach with a cumulative-effect adjustment to retained earnings.

Added

This includes assistance with the determination of economic useful lives and valuation of identifiable intangibles. We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from our estimates.

Removed

The operating results of Spinnakar are included in our operating results from the date of acquisition.

Added

Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.

Removed

As a percentage of adjusted gross billings, vendor rebates and discounts also increased during the year ended December 31, 2022 compared to the same period in the prior year.

Added

As a result, during the measurement period, which may be up to one year from the business acquisition date, we record certain adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. All acquisition-related costs are accounted for as expenses in the period in which they are incurred.

Removed

The provision for income taxes in the prior year was impacted by a deferred tax adjustment due to an increase in the corporate tax rate in a foreign jurisdiction the Company operates in that will impact the rate at which deferred taxes are reversed in future periods. Liquidity and Capital Resources Our cash and cash equivalents decreased by $9.1 million to $20.2 million at December 31, 2022 compared to $29.3 million at December 31, 2021.

Added

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. In July 2023, the FASB issued Accounting Standards Update 2023-03, “ Presentation of Financial Statements (Topic 205), Income Statement — Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), Compensation — Stock Compensation (Topic 718) .” This ASU amends various paragraphs in the accounting codification pursuant to the issuance of Commission Staff Accounting Bulletin (“SAB”) number 120.

Removed

(“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.

Added

The ASU provides clarifying guidance related to employee and non-employee share-based payment accounting, including guidance related to spring-loaded awards. ASU 2023-03 was effective upon issuance.

Removed

On August 31, 2020, the Company entered into an amendment to the Credit Facility (the “Amended Credit Facility”) pursuant to a First 26 Table of Contents 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”).

Added

The adoption of this ASU did not have an impact on the Company’s consolidated financial statements. In November 2023, the FASB issued Accounting Standards Update 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

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Climb Global Solutions, Inc.CLMB财报

What changed in Climb Global Solutions, Inc.'s 10-K — 2022 vs 2023

Top changes in Climb Global Solutions, Inc.'s 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other CLMB 10-K year-over-year comparisons