Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 20, 2020 | Jun. 28, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Registrant Name | Wayside Technology Group, Inc. | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Central Index Key | 0000945983 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 47,485,650 | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 4,562,444 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 14,984 | $ 14,883 |
Accounts receivable, net of allowances of $765 and $785, respectively | 100,987 | 81,351 |
Inventory, net | 2,760 | 1,473 |
Vendor prepayments | 100 | 3,172 |
Prepaid expenses and other current assets | 2,718 | 1,988 |
Total current assets | 121,549 | 102,867 |
Equipment and leasehold improvements, net | 1,215 | 1,588 |
Right-of-use assets, net | 1,792 | |
Accounts receivable-long-term, net | 1,358 | 3,156 |
Other assets | 111 | 215 |
Deferred income taxes | 256 | 145 |
Total assets | 126,281 | 107,971 |
Current liabilities: | ||
Accounts payable and accrued expenses | 78,364 | 66,653 |
Lease liability, current portion | 383 | |
Total current liabilities | 78,747 | 66,653 |
Lease liability, net of current portion | 2,189 | |
Non-current liabilities | 89 | 745 |
Total liabilities | 81,025 | 67,398 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued: 4,505,693 and 4,496,494 shares outstanding, respectively | 53 | 53 |
Additional paid-in capital | 32,874 | 32,392 |
Treasury stock, at cost, 778,807 and 788,006 shares, respectively | (13,256) | (13,447) |
Retained earnings | 26,715 | 22,994 |
Accumulated other comprehensive loss | (1,130) | (1,419) |
Total stockholders' equity | 45,256 | 40,573 |
Total liabilities and stockholders' equity | $ 126,281 | $ 107,971 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Consolidated Balance Sheets | ||
Accounts receivable, allowances (in dollars) | $ 765 | $ 785 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 10,000,000 | 10,000,000 |
Common Stock, shares issued | 5,284,500 | 5,284,500 |
Common Stock, shares outstanding | 4,505,693 | 4,496,494 |
Treasury stock, shares | 778,807 | 788,006 |
Consolidated Statements of Earn
Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated Statements of Earnings | ||
Net sales | $ 208,759 | $ 181,444 |
Cost of sales | 178,792 | 154,524 |
Gross profit | 29,967 | 26,920 |
Selling, general, and administrative expenses | 21,401 | 20,319 |
Separation expenses | 100 | 2,446 |
Income from operations | 8,466 | 4,155 |
Other income: | ||
Interest, net | 500 | 907 |
Foreign currency transaction gain | 82 | 55 |
Income before provision for income taxes | 9,048 | 5,117 |
Provision for income taxes | 2,261 | 1,579 |
Net income | $ 6,787 | $ 3,538 |
Income per common share-Basic | $ 1.51 | $ 0.78 |
Income per common share-Diluted | $ 1.51 | $ 0.78 |
Weighted average common shares outstanding — Basic (in shares) | 4,421 | 4,358 |
Weighted average common shares outstanding — Diluted (in shares) | 4,421 | 4,358 |
Dividends paid per common share (in dollars per share) | $ 0.68 | $ 0.68 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated Statements of Comprehensive Income | ||
Net income | $ 6,787 | $ 3,538 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 289 | (506) |
Other comprehensive income (loss) | 289 | (506) |
Comprehensive income | $ 7,076 | $ 3,032 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Treasury | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2017 | $ 53 | $ 31,257 | $ (14,207) | $ 22,522 | $ (913) | $ 38,712 |
Balance (in shares) at Dec. 31, 2017 | 5,284,500 | |||||
Balance (in shares) at Dec. 31, 2017 | 829,671 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 3,538 | 3,538 | ||||
Translation adjustment | (506) | (506) | ||||
Dividends paid | (3,066) | (3,066) | ||||
Share-based compensation expense | 2,769 | 2,769 | ||||
Restricted stock grants (net of forfeitures) | (1,634) | $ 1,799 | 165 | |||
Restricted stock grants (net of forfeitures) (in shares) | (115,824) | |||||
Treasury shares repurchased | $ (1,039) | (1,039) | ||||
Treasury shares repurchased (in shares) | 74,159 | |||||
Balance at Dec. 31, 2018 | $ 53 | 32,392 | $ (13,447) | 22,994 | (1,419) | $ 40,573 |
Balance (in shares) at Dec. 31, 2018 | 5,284,500 | 5,284,500 | ||||
Balance (in shares) at Dec. 31, 2018 | 788,006 | 788,006 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 6,787 | $ 6,787 | ||||
Translation adjustment | 289 | 289 | ||||
Dividends paid | (3,066) | (3,066) | ||||
Share-based compensation expense | 759 | 759 | ||||
Restricted stock grants (net of forfeitures) | (277) | $ 277 | ||||
Restricted stock grants (net of forfeitures) (in shares) | (16,375) | |||||
Treasury shares repurchased | $ (86) | (86) | ||||
Treasury shares repurchased (in shares) | 7,176 | |||||
Balance at Dec. 31, 2019 | $ 53 | $ 32,874 | $ (13,256) | $ 26,715 | $ (1,130) | $ 45,256 |
Balance (in shares) at Dec. 31, 2019 | 5,284,500 | 5,284,500 | ||||
Balance (in shares) at Dec. 31, 2019 | 778,807 | 778,807 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | ||
Net income | $ 6,787 | $ 3,538 |
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: | ||
Depreciation and amortization expense | 488 | 482 |
Benefit from doubtful accounts receivable | (75) | |
Deferred income tax benefit | (111) | (7) |
Share-based compensation expense | 759 | 2,769 |
Loss on disposal of fixed assets | 3 | 17 |
Amortization of discount on accounts receivable | (457) | (869) |
Amortization of right-of-use assets | 370 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (17,134) | 1,538 |
Inventory | (1,284) | 1,312 |
Prepaid expenses and other current assets | (724) | (280) |
Vendor prepayments | 3,072 | 3,665 |
Accounts payable and accrued expenses | 11,636 | 1,841 |
Lease liability, net | (336) | |
Other assets and liabilities | 180 | (30) |
Net cash and cash equivalents provided by operating activities | 3,249 | 13,901 |
Cash flows from investing activities | ||
Purchase of equipment and leasehold improvements | (106) | (266) |
Net cash and cash equivalents used in investing activities | (106) | (266) |
Cash flows from financing activities | ||
Purchase of treasury stock | (86) | (1,039) |
Borrowings under revolving credit facility | 10,000 | |
Repayments of borrowings under revolving credit facility | (10,000) | |
Dividends paid | (3,066) | (3,066) |
Net cash and cash equivalents used in financing activities | (3,152) | (4,105) |
Effect of foreign exchange rate on cash and cash equivalents | 110 | (177) |
Net increase in cash and cash equivalents | 101 | 9,353 |
Cash and cash equivalents at beginning of period | 14,883 | 5,530 |
Cash and cash equivalents at end of period | 14,984 | 14,883 |
Supplementary disclosure of cash flow information: | ||
Income taxes paid | $ 2,394 | $ 2,338 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2019 | |
Description of Business | |
Description of Business | Note 1. Description of Business Wayside Technology Group, Inc. and Subsidiaries (the “Company”), was incorporated in Delaware in 1982. The Company distributes technology products developed by others to resellers who in turn sell to end customers worldwide. The Company also resells computer software and hardware developed by others and provides technical services directly to customers in the United States of America (“USA”) and Canada. The Company also operates a sales branch in Europe to serve our customers in this region of the world. The Company offers an extensive line of products from leading software vendors and tools for virtualization/cloud computing, security, networking, storage & infrastructure management, application lifecycle management and other technically sophisticated domains as well as computer hardware. The Company is organized into two reportable operating segments. The “Lifeboat Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “TechXtend” segment is a value-added reseller of software, hardware and services, selling to end user corporations, government organizations and academic institutions in the USA and Canada. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Principles of Consolidation and Operations The consolidated financial statements include the accounts of Wayside Technology Group, Inc. and its wholly owned subsidiaries . All intercompany transactions and balances have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make extensive use of certain estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The significant areas of estimation include but are not limited to accounting for allowance for doubtful accounts, sales returns, allocation of revenue in multiple deliverable arrangements, principal vs. agent considerations, discount rates applicable to long term receivables, inventory obsolescence, income taxes, depreciation, contingencies and stock-based compensation. Actual results could differ from those estimates. Net Income Per Common Share Our basic and diluted earnings per share are computed using the two-class method. The ck and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities. Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding during each period. Diluted and basic earnings per share are the same because the restricted shares are the only potentially dilutive security. A reconciliation of the numerators and denominators of the basic and diluted per share computations follows: Year ended December 31, 2019 2018 Numerator: Net income $ 6,787 $ 3,538 Less distributed and undistributed income allocated to participating securities 130 118 Net income attributable to common shareholders 6,657 3,420 Denominator: Weighted average common shares (Basic) 4,421 4,358 Weighted average common shares including assumed conversions (Diluted) 4,421 4,358 Basic net income per share $ 1.51 $ 0.78 Diluted net income per share $ 1.51 $ 0.78 Cash Equivalents The Company considers all liquid short-term investments with maturities of 90 days or less when purchased to be cash equivalents. Accounts Receivable Accounts receivable principally represents amounts collectible from our customers. The Company performs ongoing credit evaluations of its customers but generally does not require collateral to support any outstanding obligation. From time to time, we sell accounts receivable to a financial institution on a non-recourse basis for cash, less a discount. The Company has no significant retained interests or servicing liabilities related to the accounts receivable sold. Proceeds from the sale of receivables approximated their discounted book value and were included in operating cash flows on the Consolidated Statements of Cash Flows. Allowance for Accounts Receivable We provide allowances for doubtful accounts related to accounts receivable for estimated losses resulting from the inability of our customers to make required payments. We take into consideration the overall quality and aging of the receivable portfolio along with specifically identified customer risks. If actual customer payment performance were to deteriorate to an extent not expected, additional allowances may be required. At the time of sale, we record an estimate for sales returns based on historical experience. If actual sales returns are greater than estimated by management, additional expense may be incurred. Foreign Currency Translation Assets and liabilities of the Company’s foreign subsidiaries have been translated using the end of the reporting period exchange rates, and related revenues and expenses have been translated at average rates of exchange in effect during the period. Cumulative translation adjustments have been classified within accumulated other comprehensive income, which is a separate component of stockholders’ equity in accordance FASB ASC Topic No. 220, “Comprehensive Income”. Foreign currency transaction gains and losses are recorded as income or expenses as amounts are settled. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations in credit risk consist of cash and cash equivalents. The Company’s cash and cash equivalents, at times, may exceed federally insured limits. The Company’s cash and cash equivalents are deposited primarily in banking institutions with global operations. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Financial Instruments The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of December 31, 2019 and 2018, because of the relative short maturity of these instruments. The Company’s accounts receivable-long-term is discounted to their present value at prevailing market rates at the time of sale which, approximates fair value as of December 31, 2019 and 2018. Inventory Inventory, consisting primarily of finished products held for resale, is stated at the lower of cost or net realizable value. Vendor Prepayments Vendor prepayments represents advance payments made to vendors to be applied against future purchases. Any amounts not expected to be utilized to apply against purchases within one year are reclassified to other long-term assets. Equipment and Leasehold Improvements Equipment and leasehold improvements are stated at cost. Equipment depreciation is calculated using the straight-line method over three to five years. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the assets or the related lease terms, whichever is shorter. Accounts Receivable-Long-Term Accounts receivable-long-term result from product sales with extended payment terms that are discounted to their present values at the prevailing market rates at the time of sale. In subsequent periods, the accounts receivable is increased to the amounts due and payable by the customers through the accretion of interest income on the unpaid accounts receivable due in future years. The amounts under these long-term accounts receivable due within one year are reclassified to the current portion of accounts receivable. Comprehensive Income Comprehensive income consists of net income for the period and the impact of unrealized foreign currency translation adjustments. The foreign currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in international subsidiaries. Revenue Recognition The core principle of the revenue recognition criteria is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services. This principle is achieved through applying the following five-step approach: Identification of the contract, or contracts, with a customer — A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. The Company considers customer purchase orders, which in some cases are governed by master agreements or general terms and conditions of sale, to be contracts with customers. All revenue is generated from contracts with customers. Identification of the performance obligations in the contract — Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, we apply judgment to determine whether promised goods or services are capable of being distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a single performance obligation. Determination of the transaction price —The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer, net of sales taxes collected from customers, which are subsequently remitted to governmental entities. Net sales are recorded net of estimated discounts, rebates, and returns. Vendor rebates are recorded when earned as a reduction to cost of sales or inventory, as applicable. Allocation of the transaction price to the performance obligations in the contract — If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price, or SSP, basis. We determine SSP based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through established standard prices, we use judgement and estimate the standalone selling price considering available information such as market pricing and pricing related to similar products. Contracts with a significant financing component are discounted to their present value at contract inception and accreted up to the expected payment amounts. These contracts generally offer customers extended payment terms of up to three years. — The Company recognizes revenue when its performance obligations are complete, and control of the specified goods or services pass to the customer. The Company considers the following indicators in determining when control passes to the customer: (i) the Company has a right to payment for the product or service (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product (iv) the Customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. Substantially all our performance obligations are satisfied at a point in time, as our obligation is to deliver a product or fulfill an order for a third party to deliver ongoing services, maintenance or support. Freight Stock-Based Compensation The Company has stockholder-approved stock incentive plans for employees and directors. Stock-based compensation is recognized based on the grant date fair value and is recognized as expense on a straight-line basis over the requisite service period. Treasury Stock Treasury stock is accounted for at cost. Shares repurchased by the Company are held in treasury for general corporate purposes, including issuances under equity incentive plans. The reissuance of shares from treasury stock is based on the weighted average purchase price of the shares. Separation Expenses Separation expenses during the year ended December 31, 2019 consist of expenses related to cash payments made to the Company’s former President, Chief Executive Officer and member of the Board pursuant to a separation agreement dated May 24, 2019. Separation expenses during the year ended December 31, 2018 consist of accelerated vesting of restricted stock and other cash payments made to the Company’s former Chairman of the Board, President and Chief Executive Officer pursuant to a separation agreement dated May 11, 2018. See Note 14 for additional details. Interest, net Interest, net consists primarily of income from the amortization of the discount on accounts receivable long term, net of interest expense on the Company’s credit facility. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. This method also requires a valuation allowance against the net deferred tax asset if, based on the weighted available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense when assessed. The Company accounts for uncertainties in accordance with FASB ASC 740 “Income Taxes”. This standard clarified the accounting for uncertainties in income taxes. The standard prescribes criteria for recognition and measurement of tax positions. It also provides guidance on derecognition, classification, interest and penalties, and disclosures related to income taxes associated with uncertain tax positions. The Company classifies all deferred tax asset or liabilities as non-current on the balance sheet in accordance with ASU 2015-17 which the Company has adopted. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, “Leases” ("ASU 2016-02"). ASU 2016-02 supersedes the lease guidance under FASB ASC Topic 840, Leases, resulting in the creation of FASB ASC Topic 842, Leases. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term from operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors were originally required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, FASB issued ASU 2018-11, Targeted Improvements. This update still requires modified retrospective transition; however, it adds the option to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment in the current period instead of at the beginning of the earliest period presented. Under this option, comparative periods presented in the financial statements in which the new lease standard is adopted will continue to be presented in accordance with prior guidance. The Company adopted the new accounting standard on January 1, 2019 using the modified retrospective transition option. The new standard provides optional practical expedients in transition, which the Company has elected as a package permitting the Company to not reassess under the new standard prior conclusions regarding lease identification, lease classification and initial direct costs. Also, in accordance with the new standard, the Company has elected in transition and for an ongoing basis not to apply the recognition requirements for all short-term leases. The adoption of the new standard had a material effect on the Company’s financial statements, with the most significant effects of adoption relating to (1) the recognition of new right-of-use assets and lease liabilities on its balance sheet for real estate operating leases; and (2) providing significant new disclosures about its leasing activities. Upon adoption, the Company recognized operating lease liabilities of approximately $3.0 million based on the present value of the remaining minimum rental payments for existing operating leases. The Company also recognized corresponding right-of-use assets, net of lease incentives of approximately $2.2 million. There was no impact to stockholders’ equity from the adoption. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13"). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. In November 2019, FASB issued ASU 2019-10, “ Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is planning to adopt this standard in the first quarter of fiscal 2023. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2016-13 on its Consolidated Financial Statements, particularly its recognition of allowances for accounts receivable. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which permits the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act (the “TCJA” or “U.S. tax reform”) from accumulated other comprehensive income (loss) to retained earnings. The new standard became effective for the Company beginning with the first quarter of 2019. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. In June 2018, the FASB issued ASU 2018-07, “Compensation — Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which aligns the measurement and classification guidance for share-based payments to nonemployees with that for employees, with certain exceptions. It expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in the entity’s own operations and supersedes the guidance in ASC 505-50. The ASU retains the existing cost attribution guidance, which requires entities to recognize compensation cost for nonemployee awards in the same period and in the same manner (i.e., capitalize or expense) they would if they paid cash for the goods or services, but it moves the guidance to ASC 718. The new standard became effective for the Company beginning with the first quarter of 2019. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. In July 2018, the FASB issued ASU 2018-09 – Codification Improvements, which facilitates amendments to a variety of topics to clarify, correct errors in, or make minor improvements to the accounting standards codification. The effective date of the standard is dependent on the facts and circumstances of each amendment. Some amendments do not require transition guidance and will be effective upon the issuance of this standard. A majority of the amendments in this standard became effective for the Company beginning with the first quarter of 2019. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” as part of its initiative to reduce complexity in the accounting standards. The standard eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also clarifies and simplifies other aspects of the accounting for income taxes. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have upon its financial position and results of operations, if any. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition | |
Revenue Recognition | 3. Revenue Recognition We generate revenue from the re-sale of third-party software licenses, subscriptions, hardware, and related service contracts. Finance fees related to sales are classified as interest income. The following table depicts the disaggregation of revenue according to revenue type and is consistent with how we evaluate our financial performance: Net sales: Year ended December 31, 2019 2018 Hardware, software and other products $ $ Software - security & highly interdependent with support Maintenance, support & other services Net sales $ $ See Note 12 for disaggregation of revenue by segment and geography. Hardware, software and other products - Hardware product consists of sales of hardware manufactured by third parties. Hardware product is delivered from our warehouse or drop shipped directly from the vendor. Revenue from our hardware products is recognized on a gross basis, with the selling price to the customer as net sales, and the cost of the related product as cost of sales, upon transfer of control to the customer, as the Company is acting as a principal in the transaction. Control is generally deemed to have passed to the customer upon transfer of title and risk of ownership. Software product consists of sales of perpetual and term software licenses for products developed by third party vendors, which are distinct from related maintenance and support. Software licenses are delivered via electronic license keys provided by the vendor to the end user. Revenue from the sale of software products is recognized on a gross basis, with the selling price to the customer as net sales, and the cost of the related product as cost of sales, upon transfer of control to our customers as the Company is a principal in the transaction. Control is deemed to have passed to the customer when they acquire the right to use or copy the software under license as substantially all product functionality is available to the customer at the time of sale. Other products include marketing revenues that are recorded on a gross basis as the Company is a principal in the arrangement. Software maintenance and support, commonly known as software assurance or post contract support, consists of software updates and technical support provided by the software vendor to the licensor over a period. In cases where the software maintenance is distinct from the related software license, software maintenance is accounted for as a separate performance obligation. In cases where the software maintenance is not distinct from the related software license, it is accounted for as a single performance obligation with the related license. We utilize judgement in determining whether the maintenance is distinct from the software itself. This involves considering if the software provides its original intended functionality without the updates, or is dependent on frequent, or continuous updates to maintain its functionality. See Allocation of the transaction price to the performance obligations in the contract in Note 2 for a discussion of the allocation of maintenance and support costs when they are distinct from the related software licenses and Software - security and highly interdependent with support below for a discussion of maintenance and support costs when they are not distinct from the related software license. Software - security and highly interdependent with support - Software - security software and software highly interdependent with support consists of sales of security subscriptions and other licensed software products whose functionality is highly interdependent with, and therefore not distinct from, related software maintenance. Delivery of the software license and related support over time is considered a single performance obligation of the third-party vendor for these products. The Company is an agent in these transactions, with revenue being recorded on a net basis when its performance obligation of processing a valid order between the supplier and customer contracting for the services is complete. Maintenance, support and other services revenue - Maintenance, support and other services revenue consists of third-party post-contract support that is not critical or essential to the core functionality of the related licensed software, and, to a lesser extent, from third-party professional services, software as a service, and cloud subscriptions. Revenue from maintenance, support and other service revenues is recognized on a net basis, upon fulfillment of an order to the customer, as the Company is an agent in the transaction, and its performance obligations are complete at the time a valid order between the parties is processed. Costs to obtain and fulfill a contract - We pay commissions and related payroll taxes to sales personnel when customers are invoiced. These costs are recorded as selling general and administrative expenses in the period earned as all our performance obligations are complete within a short window of processing the order. Contract balances - Accounts receivable is recorded at the invoiced amount, net of an allowance for doubtful accounts. A receivable is recognized in the period we deliver goods or provide services or when our right to consideration is unconditional. Payment terms on invoiced amounts are typically 30-75 days. The balance of accounts receivable, net of allowance for doubtful accounts as of December 31, 2019 and 2018 is presented in the accompanying Consolidated Balance Sheets. Accounts receivable-long-term result from product sales with extended payment terms that are discounted to their present values at the Company’s estimates of prevailing market rates at the time of the sale. The Company has determined that these amounts do not represent variable consideration as the amount earned is fixed. In subsequent periods, the accounts receivable is increased to the amounts due and payable by the customers through the accretion of interest income on the unpaid accounts receivable due in future years. The amounts due under these long-term accounts receivable due within one year are reclassified to the current portion of accounts receivable and are shown net of reserves. As our revenues are generally recognized at a point in time in the same period as they are billed, we have no deferred revenue balances. Provisions for doubtful accounts including long-term accounts receivable and returns are estimated based on historical write offs, sales returns and credit memo analysis which are adjusted to actual on a periodic basis. Refund liability – The Company records a refund liability for expected product returns with a corresponding asset for an amount representing any expected recovery from vendors regarding the return. Principal versus agent considerations – The Company determines whether it is acting as a principal or agent in a transaction by assessing whether it controls a good or service prior to it being transferred to a customer, with control being defined as having the ability to direct the use of and obtain the benefits from the asset. The Company considers the following indicators, among others, in making the determination: 1) the Company is primarily responsible for fulfilling the promise to provide the promised good or service, 2) the Company has inventory risk, before or after the specified good or service has been transferred to the customer, and 3) the Company has discretion in establishing price for the specified good or service. Generally, we conclude that we are a principal in transactions where software or hardware products containing their core functionality are delivered to the customer at the time of sale and are agents in transactions where we are arranging for the provision of future performance obligations by a third party. As we enter into distribution agreements with third-party service providers, we evaluate whether we are acting as a principal or agent for each product sold under the agreement based on the nature of the product or service, and our performance obligations. Products for which there are significant ongoing third-party performance obligations include software maintenance, which includes periodic software updates and support, security software that is highly interdependent with maintenance, software as a service, cloud and third-party professional services. Sales of hardware, software and other products where we are a principal are recorded on a gross basis with the selling price to the customer recorded as sales and the cost of the product or software recorded as cost of sales. Sales where we are acting as an agent are recognized on a net basis at the date our performance obligations are complete. Under net revenue recognition, the cost paid to the vendor or third-party service provider is recorded as a reduction to sales, resulting in revenue being equal to the gross profit on the transaction. |
Right-of-use Asset and Lease Li
Right-of-use Asset and Lease Liability | 12 Months Ended |
Dec. 31, 2019 | |
Right-of-use Asset and Lease Liability | |
Right-of-use Asset and Lease Liability | 4. Right-of-use Asset and Lease Liability The Company has entered into operating leases for office and warehouse facilities, which have terms at lease commencement that range from 3 years to 11 years. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets and lease expense for these leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date of the lease based on the present value of the lease payments over the lease term. As our leases do not provide a readily determinable implicit rate, we use an incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Operating lease expense is recognized on a straight-line basis over the lease term and included in selling, general and administrative expenses. Information related to the Company’s right-of-use assets and related lease liabilities were as follows: Year ended December 31, 2019 Cash paid for operating lease liabilities $ 460 Right-of-use assets obtained in exchange for new operating lease obligations (1) $ 2,163 Weighted-average remaining lease term 7.2 years Weighted-average discount rate (1) Represents operating leases existing on January 1, 2019 and recognized as part of the Company’s adoption of ASU 2016-02. No new operating leases commenced during the year ended December 31, 2019. Maturities of lease liabilities as of December 31, 2019 were as follows: 2020 $ 438 2021 405 2022 414 2023 463 2024 473 Thereafter 1,100 3,293 Less: imputed interest (721) Total lease liabilities $ 2,572 Lease liabilities, current portion 383 Lease liabilities, net of current portion 2,189 Total lease liabilities $ 2,572 |
Balance Sheet Detail
Balance Sheet Detail | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Detail | |
Balance Sheet Detail | 5. Balance Sheet Detail Equipment and leasehold improvements, net consist of the following: December 31, December 31, 2019 2018 Equipment $ 2,230 $ 2,146 Leasehold improvements 1,289 1,332 3,519 3,478 Less accumulated depreciation and amortization (2,304) (1,890) $ 1,215 $ 1,588 Depreciation expense relating to equipment and leasehold improvements, net was $0.5 million during the years ended December 31, 2019 and 2018, respectively. Accounts receivable – long term, net consist of the following: December 31, December 31, 2019 2018 Total amount due from customer $ 5,656 $ 11,169 Less: unamortized discount (194) (391) Less: current portion included in accounts receivable (4,104) (7,622) $ 1,358 $ 3,156 Accounts payable and accrued expenses consist of the following: December 31, December 31, 2019 2018 Trade accounts payable $ 73,310 $ 62,751 Accrued expenses 5,054 3,902 $ 78,364 $ 66,653 Accumulated other comprehensive loss consists of the following: December 31, December 31, 2019 2018 Foreign currency translation adjustments $ (1,130) $ (1,419) $ (1,130) $ (1,419) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 6. Income Taxes Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the consolidated balance sheet are as follows: December 31, December 31, 2019 2018 Deferred tax assets: Accruals and reserves $ 383 $ 331 Deferred rent credit 139 151 Total deferred tax assets 522 482 Deferred tax liabilities: Depreciation and amortization (266) (337) Total deferred tax liabilities (266) (337) Net deferred tax asset $ 256 $ 145 The provision for income taxes is as follows: Year ended December 31, 2019 2018 Current: Federal $ 1,740 $ 967 State 412 327 Foreign 220 292 2,372 1,586 Deferred: Federal (120) (11) State 9 4 (111) (7) $ 2,261 $ 1,579 Effective Tax Rate % % The Company’s effective tax rate for the year ended December 31, 2018 was impacted by limitations on the deductibility of executive compensation resulting from Section 162(m) of the Internal Revenue Code and adjustments to the accrual for state income taxes in states which have enacted economic nexus statutes. The Company recorded a $0.4 million tax benefit related to separation expenses during the year ended December 31, 2018, which were accounted for as a discrete item, resulting in a 19.4% effective tax benefit rate on that item. The Company also recorded an adjustment to its accrual for potential liabilities for state income taxes in states which have enacted economic nexus statutes of $0.2 million during the year ended December 31, 2018. The effective tax rate for ordinary income was 25.1% for the year ended December 31, 2018. The reasons for the difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes are as follows: Year ended December 31, 2019 2018 Statutory rate applied to pretax income $ 1,900 $ 1,075 Section 162(m) and other permanent items 27 203 Potential state tax obligations, net of federal tax benefit — 158 State income taxes, net of federal income tax benefit 269 99 Foreign income taxes over U.S. statutory rate 28 50 Other items 37 (6) Income tax expense $ 2,261 $ 1,579 The Company receives a tax deduction from the income realized by employees on the exercise of certain non-qualified stock options and restricted stock awards for which the tax effect of the difference between the book and tax deduction is recognized as a component of current income tax. Included in the table above is the net effect of the global intangible low-taxed income (“GILTI”) inclusion for the years ended December 31, 2019 and 2018 of $0.1 million, respectively, which is fully offset by a foreign tax credit. The Company has analyzed filing positions in all the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its federal consolidated tax return, its state tax return in New Jersey and its Canadian tax return as major tax jurisdictions. As of December 31, 2019, the Company’s 2016 through 2018 Federal tax returns remain open for examination. The Company’s New Jersey and Canadian tax returns are open for examination for the years 2015 through 2018. As of December 31, 2018, the Company recorded an accrual of $0.6 million, net of federal tax benefit, for potential liabilities for state income taxes in states which have enacted economic nexus statutes and the Company has not filed income tax returns. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including experience and interpretations of tax law applied to the facts of each matter. For financial reporting purposes, income before income taxes includes the following components: Year ended December 31, 2019 2018 United States $ 8,155 $ 3,960 Foreign 893 1,157 $ 9,048 $ 5,117 The following table summarizes the activity related to the Company’s unrecognized tax benefits as of December 31, 2019 and 2018: 2019 2018 Balance as of January 1 $ 541 $ 443 Additions related to prior period tax positions - 200 Reductions related to settlements with tax authorities (492) (102) Balance as of December 31 $ 49 $ 541 All of the unrecognized income tax benefits at December 31, 2019 and 2018 would have affected the Company’s effective income tax rate if recognized. The Company believes that it is reasonably possible that a significant decrease in the total amount of unrecognized income tax benefits related to state exposures may be necessary within the next twelve months. During the years ended December 31, 2019 and 2018, the Company incurred interest and penalties of less than $0.1 million, respectively, related to these uncertain tax benefits. |
Credit Facility
Credit Facility | 12 Months Ended |
Dec. 31, 2019 | |
Credit Facility. | |
Credit Facility | 7. Credit Facility On November 15, 2017, the Company entered into a $20,000,000 revolving credit facility (the “Credit Facility”) with Citibank, N.A. (“Citibank”) pursuant to a Second Amended and Restated Revolving Credit Loan Agreement (the “Loan Agreement”), Second Amended and Restated Revolving Credit Loan Note (the “Note”), Second Amended and Restated Security Agreement (the “Security Agreement”) and Second Amended and Restated Pledge and Security Agreement (the “Pledge Agreement”). The Credit Facility, which will be used for working capital and general corporate purposes, matures on August 31, 2020, at which time the Company must pay all outstanding principal of all outstanding loans plus all accrued and unpaid interest, and any, fees, costs and expenses. In addition, the Company will pay regular monthly payments of all accrued and unpaid interest. The interest rate for any borrowings under the Credit Facility is subject to change from time to time based on the changes in the LIBOR Rate, as defined in the Loan Agreement (the “Index”). The Index was 3.04% at December 31, 2019. Interest on the unpaid principal balance of the Note will be calculated using a rate of 1.50 percentage points over the Index. If the Index becomes unavailable during the term of the Credit Facility, interest will be based upon the Prime Rate (as defined in the Loan Agreement) after notifying the Company. The Credit Facility is secured by the assets of the Company. Among other affirmative covenants set forth in the Loan Agreement, the Company must maintain (i) a minimum Debt Service Coverage Ratio (as defined in the Loan Agreement) of not less than 2.0 to 1.0, (ii) a maximum Leverage Ratio (as defined in the Loan Agreement) of at least 2.5 to 1.0, and (iii) a minimum Collateral Coverage Ratio (as defined in the Loan Agreement) of not less than 1.5 to 1.0. Additionally, the Loan Agreement contains negative covenants prohibiting, among other things, the creation of certain liens, the alteration of the nature or character of the Company’s business, and transactions with the Company’s shareholders, directors, officers, subsidiaries and/or affiliates other than with respect to (i) the repurchase of the issued and outstanding capital stock of the Company from the stockholders of the Company or (ii) the declaration and payment of dividends to the stockholders of the Company. At December 31, 2019 and 2018, the Company had no borrowings outstanding under the Credit Facility. The Company incurred $0.1 million and $0.1 million of interest expense, related to the Credit Facility during the years ended December 31, 2019 and 2018, respectively. |
Stockholders' Equity and Stock
Stockholders' Equity and Stock Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity and Stock Based Compensation | |
Stockholders' Equity and Stock Based Compensation | 8. Stockholders’ Equity and Stock-Based Compensation At the annual stockholder’s meeting held on June 6, 2012, the Company’s stockholders approved the 2012 Stock-Based Compensation Plan (the “2012 Plan”). The 2012 Plan authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards. The total number of shares of Common Stock initially available for award under the 2012 Plan was 600,000, which was increased to 1,000,000 shares by shareholder approval at the Company’s 2018 Annual Meeting in June 2018. As of December 31, 2019, the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2012 Plan is 513,647. During the year ended December 31, 2019, the Company granted a total of 32,905 shares of Restricted Stock to officers, directors and employees. These shares of Restricted Stock vest immediately or over time in up to sixteen equal quarterly installments. During the year ended December 31, 2019, 16,530 shares of Restricted Stock were forfeited as a result of officers, directors and employees terminating employment with the Company. During the year ended December 31, 2018, the Company granted a total of 123,000 shares of Restricted Stock to officers, directors and employees. These shares of Restricted Stock vest immediately or over time in up to twenty equal quarterly installments. During the year ended December 31, 2018, 7,176 shares of Restricted Stock were forfeited as a result of directors and employees terminating employment with the Company. There was no options activity during the year ended December 31, 2019 and 2018 and there were no options outstanding or exercisable at December 31, 2019 and 2018, respectively, under the Company’s 2012 Plan. Under the various plans, options that are cancelled can be reissued. At December 31, 2019, no cancelled options were reserved for future reissuance. A summary of nonvested shares of Restricted Stock awards outstanding under the Company’s 2012 Plan as of December 31, 2019, and 2018 and changes during the years ended December 31, 2019 and 2018 is as follows: Weighted Average Grant Date Shares Fair Value Nonvested shares at January 1, 2018 161,818 $ 17.26 Granted in 2018 123,000 14.97 Vested in 2018 (180,898) 16.62 Forfeited in 2018 (7,176) 15.44 Nonvested shares at December 31, 2018 96,744 $ 15.67 Granted in 2019 32,905 11.97 Vested in 2019 (49,197) 14.53 Forfeited in 2019 (16,530) 14.52 Nonvested shares at December 31, 2019 63,922 $ 14.94 As of December 31, 2019, there was approximately $0.9 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.2 years. For the years ended December 31, 2019 and 2018, the Company recognized share-based compensation cost of approximately $0.8 million and $2.8 million, respectively. During the year ended December 31, 2018, $1.7 million of stock compensation expense related to the accelerated vesting of shares upon resignation of the Company’s former Chief Executive Officer, was included in separation expense in the accompanying Consolidated Statements of Earnings. All other share-based compensation is included in selling, general and administrative expenses. The Company does not capitalize any share-based compensation cost. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Dec. 31, 2019 | |
Defined Contribution Plan | |
Defined Contribution Plan | 9. Defined Contribution Plan The Company maintains a defined contribution plan covering substantially all domestic employees. Participating employees may make contributions to the plan, through payroll deductions. Matching contributions are made by the Company equal to 50% of the employee’s contribution to the extent such employee contribution did not exceed 6% of their compensation. During the years ended December 31, 2019 and 2018, the Company expensed approximately $0.3 million, respectively, related to this plan. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. Commitments and Contingencies Leases Operating leases primarily relate to the lease of the space used for our operations in Eatontown, New Jersey; Mesa, Arizona; Oakville, Canada; and Amsterdam, Netherlands. Future minimum rental commitments under non-cancellable operating leases as of December 31, 2018 are as follows: 2019 $ 484 2020 438 2021 405 2022 414 2023 463 Thereafter 1,572 $ 3,776 Rent expense for the years ended December 31, 2019 and 2018 was approximately $483 thousand and $496 thousand, respectively. Employment Agreements The Company has entered into employment agreements with five of its executive officers. If the Company terminates their respective employment for any reason other than for cause, these executive officers are entitled to severance payments ranging from six to twelve months at each executive officer’s then applicable base salary. Certain of these executive officers are entitled to additional severance payments if the Company terminates their respective employment for any reason other than for cause during the term of their employment and on or within twelve months following a change in control. Other As of December 31, 2019, the Company has no standby letters of credit, has no standby repurchase obligations or other commercial commitments. The Company has a line of credit see Note 7 (Credit Facility). Other than employment arrangements, other management compensation arrangements and related party transactions as disclosed in Note 11, the Company is not engaged in any other transactions with related parties. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | 11. Related Party Transactions The Company made sales to a customer where a member of our Board of Directors is an executive. During the years ended December 31, 2019 and 2018, net sales to this customer totaled $0.1 million, respectively, and amounts due from this customer as of December 31, 2019 and 2018 totaled $0.1 million, respectively, which were settled in cash subsequent to each year end. |
Industry, Segment, and Geograph
Industry, Segment, and Geographic Financial Information | 12 Months Ended |
Dec. 31, 2019 | |
Industry, Segment, and Geographic Financial Information | |
Industry, Segment, and Geographic Financial Information | 12. Industry, Segment and Geographic Financial Information The Company distributes software developed by others through resellers indirectly to customers worldwide. We also resell computer software and hardware developed by others and provide technical services directly to customers in the USA and Canada. We also operate a sales branch in Europe to serve our customers in this region of the world. Geographic revenue and identifiable assets related to operations as of and for the years ended December 31, 2019 and 2018 were as follows. Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile. No one country other than the USA represents more than 10% of net sales for 2019 or 2018. 2019 2018 Net sales to Unaffiliated Customers: USA $ 186,488 $ 159,275 Canada 11,751 12,036 Rest of the world 10,520 10,133 Total $ 208,759 $ 181,444 2019 2018 Identifiable Assets by Geographic Areas at December 31, USA and rest of the world $ 117,913 $ 100,762 Canada 8,368 7,209 Total $ 126,281 $ 107,971 FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the Company’s Chief Operating Decision Maker (CODM) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s CODM is the Chief Executive Officer. The Company is organized into two reportable operating segments. The “Lifeboat Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “TechXtend” segment is a value-added reseller of software, hardware and services for corporations, government organizations and academic institutions in the USA and Canada. As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada with the domestic segments as they provide the same products and services to similar clients and are considered together when the CODM decides how to allocate resources. Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to a business unit. The Company only identifies accounts receivable and inventory by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. Year ended December 31, 2019 2018 Revenue: Lifeboat Distribution $ 193,558 $ 163,564 TechXtend 15,201 17,880 208,759 181,444 Gross Profit: Lifeboat Distribution $ 26,773 $ 23,441 TechXtend 3,194 3,479 29,967 26,920 Direct Costs: Lifeboat Distribution $ 10,104 $ 8,920 TechXtend 1,526 1,707 11,630 10,627 Segment Income Before Taxes: (1) Lifeboat Distribution $ 16,669 $ 14,521 TechXtend 1,668 1,772 Segment Income Before Taxes 18,337 16,293 General and administrative $ 9,771 $ 9,692 Separation expenses 100 2,446 Interest, net 500 907 Foreign currency transaction gain 82 55 Income before taxes $ 9,048 $ 5,117 (1) Excludes general corporate expenses including separation, interest, and foreign currency transaction expenses. December 31, Selected Assets by Segment: 2019 2018 Lifeboat Distribution $ 99,602 $ 77,610 TechXtend 5,603 11,542 Segment Select Assets 105,205 89,152 Corporate Assets 21,076 18,819 Total Assets $ 126,281 $ 107,971 Disaggregation of Revenue: Year ended December 31, 2019 2018 Lifeboat Distribution Hardware, software and other products $ $ Software - security & highly interdependent with support Maintenance, support & other services Net Sales $ $ TechXtend Hardware, software and other products $ $ 16,300 Software - security & highly interdependent with support 440 Maintenance, support & other services 1,140 Net Sales $ $ The Company had two customers that each accounted for more than 10% of total consolidated net sales for the year ended December 31, 2019. For the year ended December 31, 2019, CDW Corporation (“CDW”) and Software House International Corporation (“SHI”), accounted for 26%, and 16%, respectively, of consolidated net sales and as of December 31, 2019, 43% and 12%, respectively, of total net accounts receivable. For the year ended December 31, 2019, Sophos and SolarWinds accounted for 22% and 17%, respectively of our consolidated purchases. For the year ended December 31, 2018, CDW and SHI accounted for 26%, and 17%, respectively, of consolidated net sales and as of December 31, 2018, 36% and 15%, respectively, of total net accounts receivable. For the year ended December 31, 2018, Sophos and SolarWinds accounted for 24% and 15%, respectively of our consolidated purchases. Our top five customers accounted for 56% and 55% of consolidated net sales for the years ended December 31, 2019 and 2018, respectively. |
Quarterly Results of Operations
Quarterly Results of Operations (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Results of Operations (Unaudited) | |
Quarterly Results of Operations (Unaudited) | 13. Quarterly Results of Operations (Unaudited) The following table presents summarized quarterly results for 2019: First Second Third Fourth Net sales $ 44,858 $ 50,676 $ 52,363 $ 60,862 Gross profit 7,234 7,819 7,055 7,859 Net income 1,463 1,857 1,445 2,022 Basic net income per common share $ 0.32 $ 0.42 $ 0.32 $ 0.45 Diluted net income per common share $ 0.32 $ 0.42 $ 0.32 $ 0.45 The following table presents summarized quarterly results for 2018: First Second Third Fourth Net sales $ 40,552 $ 43,914 $ 47,923 $ 49,055 Gross profit 6,894 6,498 6,303 7,225 Net income (loss) 1,598 (1,117) 1,318 1,739 Basic net income (loss) per common share $ 0.36 $ (0.25) $ 0.29 $ 0.39 Diluted net income (loss) per common share $ 0.36 $ (0.25) $ 0.29 $ 0.39 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events Shareholder Demand Letter By letter dated January 22, 2020, a shareholder of the Company demanded that the Board of Directors investigate and bring an action against the Company’s former Chairman, President and Chief Executive Officer, Simon Nynens, for his breaches of certain restrictive covenants contained in the separation agreement he entered into with the Company on or about May 11, 2018. Following receipt of the shareholder demand, the Company filed a lawsuit against Mr. Nynens, Shepherd Kaplan Krochuk, LLC (“SKK”), and North & Webster SSG, LLC (“N&W,” and together with SKK, the “N&W Group”) on February 14, 2020, in the Superior Court of New Jersey Monmouth County. The Company’s complaint asserts claims against Mr. Nynens for his breaches of his separation agreement with the Company and claims for tortious interference against the N&W Group for inducing Mr. Nynens to commit those breaches. In connection with its claims, the Company seeks monetary damages, injunctive relief, and a declaratory judgment against Mr. Nynens and the N&W Group. The litigation is in its early stages. Previously, the Company had received unsolicited acquisition proposals from the N&W Group to acquire all of the outstanding shares of common stock of the Company. The Company received the most recent unsolicited acquisition proposal from the N&W Group on December 10, 2019, and that proposal expired on its own terms on December 16, 2019. Prior to that, Mr. Nynens entered into an agreement with the N&W Group on November 27, 2019, granting SKK an irrevocable proxy to vote his shares of our common stock in favor of any acquisition proposal by SKK, against any third-party acquisition, and as directed by SKK with respect to the election of directors nominated by persons other than the Company. On December 20, 2019, Mr. Nynens nominated four individuals for election to our Board of Directors at the 2020 annual meeting of stockholders. The Company and its Board of Directors have hired financial advisors and legal counsel to advise on resolution of the matters. The ultimate outcome of these matters and related costs cannot be determined at this time, and accordingly no provision has been recorded for estimated expenses to resolve the matter. |
Schedule II--Valuation and Qual
Schedule II--Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2019 | |
Schedule II--Valuation and Qualifying Accounts | |
Schedule II--Valuation and Qualifying Accounts | Charged to Beginning Cost and Ending Description Balance Expense Deductions Balance Year ended December 31, 2018 Allowances for accounts receivable $ 862 $ (75) $ 2 $ 785 Year ended December 31, 2019 Allowances for accounts receivable $ 785 $ — $ 20 $ 765 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation and Operations | Principles of Consolidation and Operations The consolidated financial statements include the accounts of Wayside Technology Group, Inc. and its wholly owned subsidiaries . All intercompany transactions and balances have been eliminated. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make extensive use of certain estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The significant areas of estimation include but are not limited to accounting for allowance for doubtful accounts, sales returns, allocation of revenue in multiple deliverable arrangements, principal vs. agent considerations, discount rates applicable to long term receivables, inventory obsolescence, income taxes, depreciation, contingencies and stock-based compensation. Actual results could differ from those estimates. |
Net Income Per Common Share | Net Income Per Common Share Our basic and diluted earnings per share are computed using the two-class method. The ck and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities. Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding during each period. Diluted and basic earnings per share are the same because the restricted shares are the only potentially dilutive security. A reconciliation of the numerators and denominators of the basic and diluted per share computations follows: Year ended December 31, 2019 2018 Numerator: Net income $ 6,787 $ 3,538 Less distributed and undistributed income allocated to participating securities 130 118 Net income attributable to common shareholders 6,657 3,420 Denominator: Weighted average common shares (Basic) 4,421 4,358 Weighted average common shares including assumed conversions (Diluted) 4,421 4,358 Basic net income per share $ 1.51 $ 0.78 Diluted net income per share $ 1.51 $ 0.78 |
Cash Equivalents | Cash Equivalents The Company considers all liquid short-term investments with maturities of 90 days or less when purchased to be cash equivalents. |
Accounts Receivable | Accounts Receivable Accounts receivable principally represents amounts collectible from our customers. The Company performs ongoing credit evaluations of its customers but generally does not require collateral to support any outstanding obligation. From time to time, we sell accounts receivable to a financial institution on a non-recourse basis for cash, less a discount. The Company has no significant retained interests or servicing liabilities related to the accounts receivable sold. Proceeds from the sale of receivables approximated their discounted book value and were included in operating cash flows on the Consolidated Statements of Cash Flows. |
Allowance for Accounts Receivable | Allowance for Accounts Receivable We provide allowances for doubtful accounts related to accounts receivable for estimated losses resulting from the inability of our customers to make required payments. We take into consideration the overall quality and aging of the receivable portfolio along with specifically identified customer risks. If actual customer payment performance were to deteriorate to an extent not expected, additional allowances may be required. At the time of sale, we record an estimate for sales returns based on historical experience. If actual sales returns are greater than estimated by management, additional expense may be incurred. |
Foreign Currency Translation | Foreign Currency Translation Assets and liabilities of the Company’s foreign subsidiaries have been translated using the end of the reporting period exchange rates, and related revenues and expenses have been translated at average rates of exchange in effect during the period. Cumulative translation adjustments have been classified within accumulated other comprehensive income, which is a separate component of stockholders’ equity in accordance FASB ASC Topic No. 220, “Comprehensive Income”. Foreign currency transaction gains and losses are recorded as income or expenses as amounts are settled. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations in credit risk consist of cash and cash equivalents. The Company’s cash and cash equivalents, at times, may exceed federally insured limits. The Company’s cash and cash equivalents are deposited primarily in banking institutions with global operations. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. |
Financial Instruments | Financial Instruments The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of December 31, 2019 and 2018, because of the relative short maturity of these instruments. The Company’s accounts receivable-long-term is discounted to their present value at prevailing market rates at the time of sale which, approximates fair value as of December 31, 2019 and 2018. |
Inventory | Inventory Inventory, consisting primarily of finished products held for resale, is stated at the lower of cost or net realizable value. |
Vendor Prepayments | Vendor Prepayments Vendor prepayments represents advance payments made to vendors to be applied against future purchases. Any amounts not expected to be utilized to apply against purchases within one year are reclassified to other long-term assets. |
Equipment and Leasehold Improvements | Equipment and Leasehold Improvements Equipment and leasehold improvements are stated at cost. Equipment depreciation is calculated using the straight-line method over three to five years. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the assets or the related lease terms, whichever is shorter. |
Accounts Receivable-Long-Term | Accounts Receivable-Long-Term Accounts receivable-long-term result from product sales with extended payment terms that are discounted to their present values at the prevailing market rates at the time of sale. In subsequent periods, the accounts receivable is increased to the amounts due and payable by the customers through the accretion of interest income on the unpaid accounts receivable due in future years. The amounts under these long-term accounts receivable due within one year are reclassified to the current portion of accounts receivable. |
Comprehensive Income | Comprehensive Income Comprehensive income consists of net income for the period and the impact of unrealized foreign currency translation adjustments. The foreign currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in international subsidiaries. |
Revenue Recognition | Revenue Recognition The core principle of the revenue recognition criteria is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled in exchange for those goods or services. This principle is achieved through applying the following five-step approach: Identification of the contract, or contracts, with a customer — A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. The Company considers customer purchase orders, which in some cases are governed by master agreements or general terms and conditions of sale, to be contracts with customers. All revenue is generated from contracts with customers. Identification of the performance obligations in the contract — Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, we apply judgment to determine whether promised goods or services are capable of being distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a single performance obligation. Determination of the transaction price —The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer, net of sales taxes collected from customers, which are subsequently remitted to governmental entities. Net sales are recorded net of estimated discounts, rebates, and returns. Vendor rebates are recorded when earned as a reduction to cost of sales or inventory, as applicable. Allocation of the transaction price to the performance obligations in the contract — If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price, or SSP, basis. We determine SSP based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through established standard prices, we use judgement and estimate the standalone selling price considering available information such as market pricing and pricing related to similar products. Contracts with a significant financing component are discounted to their present value at contract inception and accreted up to the expected payment amounts. These contracts generally offer customers extended payment terms of up to three years. — The Company recognizes revenue when its performance obligations are complete, and control of the specified goods or services pass to the customer. The Company considers the following indicators in determining when control passes to the customer: (i) the Company has a right to payment for the product or service (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product (iv) the Customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. Substantially all our performance obligations are satisfied at a point in time, as our obligation is to deliver a product or fulfill an order for a third party to deliver ongoing services, maintenance or support. |
Freight | Freight |
Stock-Based Compensation | Freight Stock-Based Compensation The Company has stockholder-approved stock incentive plans for employees and directors. Stock-based compensation is recognized based on the grant date fair value and is recognized as expense on a straight-line basis over the requisite service period. Treasury Stock Treas |
Treasury Stock | Treasury Stock Treasury stock is accounted for at cost. Shares repurchased by the Company are held in treasury for general corporate purposes, including issuances under equity incentive plans. The reissuance of shares from treasury stock is based on the weighted average purchase price of the shares. |
Separation Expenses | Separation Expenses Separation expenses during the year ended December 31, 2019 consist of expenses related to cash payments made to the Company’s former President, Chief Executive Officer and member of the Board pursuant to a separation agreement dated May 24, 2019. Separation expenses during the year ended December 31, 2018 consist of accelerated vesting of restricted stock and other cash payments made to the Company’s former Chairman of the Board, President and Chief Executive Officer pursuant to a separation agreement dated May 11, 2018. See Note 14 for additional details. |
Interest, net | Interest, net Interest, net consists primarily of income from the amortization of the discount on accounts receivable long term, net of interest expense on the Company’s credit facility. |
Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. This method also requires a valuation allowance against the net deferred tax asset if, based on the weighted available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense when assessed. The Company accounts for uncertainties in accordance with FASB ASC 740 “Income Taxes”. This standard clarified the accounting for uncertainties in income taxes. The standard prescribes criteria for recognition and measurement of tax positions. It also provides guidance on derecognition, classification, interest and penalties, and disclosures related to income taxes associated with uncertain tax positions. The Company classifies all deferred tax asset or liabilities as non-current on the balance sheet in accordance with ASU 2015-17 which the Company has adopted. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, “Leases” ("ASU 2016-02"). ASU 2016-02 supersedes the lease guidance under FASB ASC Topic 840, Leases, resulting in the creation of FASB ASC Topic 842, Leases. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term from operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors were originally required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, FASB issued ASU 2018-11, Targeted Improvements. This update still requires modified retrospective transition; however, it adds the option to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment in the current period instead of at the beginning of the earliest period presented. Under this option, comparative periods presented in the financial statements in which the new lease standard is adopted will continue to be presented in accordance with prior guidance. The Company adopted the new accounting standard on January 1, 2019 using the modified retrospective transition option. The new standard provides optional practical expedients in transition, which the Company has elected as a package permitting the Company to not reassess under the new standard prior conclusions regarding lease identification, lease classification and initial direct costs. Also, in accordance with the new standard, the Company has elected in transition and for an ongoing basis not to apply the recognition requirements for all short-term leases. The adoption of the new standard had a material effect on the Company’s financial statements, with the most significant effects of adoption relating to (1) the recognition of new right-of-use assets and lease liabilities on its balance sheet for real estate operating leases; and (2) providing significant new disclosures about its leasing activities. Upon adoption, the Company recognized operating lease liabilities of approximately $3.0 million based on the present value of the remaining minimum rental payments for existing operating leases. The Company also recognized corresponding right-of-use assets, net of lease incentives of approximately $2.2 million. There was no impact to stockholders’ equity from the adoption. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13"). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. In November 2019, FASB issued ASU 2019-10, “ Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is planning to adopt this standard in the first quarter of fiscal 2023. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2016-13 on its Consolidated Financial Statements, particularly its recognition of allowances for accounts receivable. In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which permits the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act (the “TCJA” or “U.S. tax reform”) from accumulated other comprehensive income (loss) to retained earnings. The new standard became effective for the Company beginning with the first quarter of 2019. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. In June 2018, the FASB issued ASU 2018-07, “Compensation — Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which aligns the measurement and classification guidance for share-based payments to nonemployees with that for employees, with certain exceptions. It expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in the entity’s own operations and supersedes the guidance in ASC 505-50. The ASU retains the existing cost attribution guidance, which requires entities to recognize compensation cost for nonemployee awards in the same period and in the same manner (i.e., capitalize or expense) they would if they paid cash for the goods or services, but it moves the guidance to ASC 718. The new standard became effective for the Company beginning with the first quarter of 2019. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. In July 2018, the FASB issued ASU 2018-09 – Codification Improvements, which facilitates amendments to a variety of topics to clarify, correct errors in, or make minor improvements to the accounting standards codification. The effective date of the standard is dependent on the facts and circumstances of each amendment. Some amendments do not require transition guidance and will be effective upon the issuance of this standard. A majority of the amendments in this standard became effective for the Company beginning with the first quarter of 2019. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” as part of its initiative to reduce complexity in the accounting standards. The standard eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also clarifies and simplifies other aspects of the accounting for income taxes. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have upon its financial position and results of operations, if any. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of the numerators and denominators for computations of the basic and diluted per share | Year ended December 31, 2019 2018 Numerator: Net income $ 6,787 $ 3,538 Less distributed and undistributed income allocated to participating securities 130 118 Net income attributable to common shareholders 6,657 3,420 Denominator: Weighted average common shares (Basic) 4,421 4,358 Weighted average common shares including assumed conversions (Diluted) 4,421 4,358 Basic net income per share $ 1.51 $ 0.78 Diluted net income per share $ 1.51 $ 0.78 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition | |
Summary of disaggregation of revenue according to revenue type | Net sales: Year ended December 31, 2019 2018 Hardware, software and other products $ $ Software - security & highly interdependent with support Maintenance, support & other services Net sales $ $ |
Right-of-use Asset and Lease _2
Right-of-use Asset and Lease Liability (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Right-of-use Asset and Lease Liability | |
Schedule of information relating to right-of-use assets and related lease liabilities | Year ended December 31, 2019 Cash paid for operating lease liabilities $ 460 Right-of-use assets obtained in exchange for new operating lease obligations (1) $ 2,163 Weighted-average remaining lease term 7.2 years Weighted-average discount rate |
Schedule of maturities of lease liabilities | Maturities of lease liabilities as of December 31, 2019 were as follows: 2020 $ 438 2021 405 2022 414 2023 463 2024 473 Thereafter 1,100 3,293 Less: imputed interest (721) Total lease liabilities $ 2,572 Lease liabilities, current portion 383 Lease liabilities, net of current portion 2,189 Total lease liabilities $ 2,572 |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Detail | |
Schedule of equipment and leasehold improvements | December 31, December 31, 2019 2018 Equipment $ 2,230 $ 2,146 Leasehold improvements 1,289 1,332 3,519 3,478 Less accumulated depreciation and amortization (2,304) (1,890) $ 1,215 $ 1,588 |
Schedule of accounts receivable - long term, net | December 31, December 31, 2019 2018 Total amount due from customer $ 5,656 $ 11,169 Less: unamortized discount (194) (391) Less: current portion included in accounts receivable (4,104) (7,622) $ 1,358 $ 3,156 |
Schedule of accounts payable and accrued expenses | December 31, December 31, 2019 2018 Trade accounts payable $ 73,310 $ 62,751 Accrued expenses 5,054 3,902 $ 78,364 $ 66,653 |
Schedule of accumulated other comprehensive loss | December 31, December 31, 2019 2018 Foreign currency translation adjustments $ (1,130) $ (1,419) $ (1,130) $ (1,419) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of deferred tax assets and liabilities | December 31, December 31, 2019 2018 Deferred tax assets: Accruals and reserves $ 383 $ 331 Deferred rent credit 139 151 Total deferred tax assets 522 482 Deferred tax liabilities: Depreciation and amortization (266) (337) Total deferred tax liabilities (266) (337) Net deferred tax asset $ 256 $ 145 |
Schedule of provision (benefit) for income taxes | Year ended December 31, 2019 2018 Current: Federal $ 1,740 $ 967 State 412 327 Foreign 220 292 2,372 1,586 Deferred: Federal (120) (11) State 9 4 (111) (7) $ 2,261 $ 1,579 Effective Tax Rate % % |
Schedule of difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes | Year ended December 31, 2019 2018 Statutory rate applied to pretax income $ 1,900 $ 1,075 Section 162(m) and other permanent items 27 203 Potential state tax obligations, net of federal tax benefit — 158 State income taxes, net of federal income tax benefit 269 99 Foreign income taxes over U.S. statutory rate 28 50 Other items 37 (6) Income tax expense $ 2,261 $ 1,579 |
Schedule of components of income before income taxes | Year ended December 31, 2019 2018 United States $ 8,155 $ 3,960 Foreign 893 1,157 $ 9,048 $ 5,117 |
Schedule of activity related to unrecognized tax benefits | 2019 2018 Balance as of January 1 $ 541 $ 443 Additions related to prior period tax positions - 200 Reductions related to settlements with tax authorities (492) (102) Balance as of December 31 $ 49 $ 541 |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity and Stock Based Compensation | |
Summary of nonvested shares of Restricted Stock awards outstanding and the changes during the period | Weighted Average Grant Date Shares Fair Value Nonvested shares at January 1, 2018 161,818 $ 17.26 Granted in 2018 123,000 14.97 Vested in 2018 (180,898) 16.62 Forfeited in 2018 (7,176) 15.44 Nonvested shares at December 31, 2018 96,744 $ 15.67 Granted in 2019 32,905 11.97 Vested in 2019 (49,197) 14.53 Forfeited in 2019 (16,530) 14.52 Nonvested shares at December 31, 2019 63,922 $ 14.94 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Schedule of future minimum rental commitments under Topic 840 | Future minimum rental commitments under non-cancellable operating leases as of December 31, 2018 are as follows: 2019 $ 484 2020 438 2021 405 2022 414 2023 463 Thereafter 1,572 $ 3,776 |
Industry, Segment, and Geogra_2
Industry, Segment, and Geographic Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Industry, Segment, and Geographic Financial Information | |
Schedule of net sales to unaffiliated customers and identifiable assets by geographic areas | 2019 2018 Net sales to Unaffiliated Customers: USA $ 186,488 $ 159,275 Canada 11,751 12,036 Rest of the world 10,520 10,133 Total $ 208,759 $ 181,444 2019 2018 Identifiable Assets by Geographic Areas at December 31, USA and rest of the world $ 117,913 $ 100,762 Canada 8,368 7,209 Total $ 126,281 $ 107,971 |
Schedule of segment reporting information | Year ended December 31, 2019 2018 Revenue: Lifeboat Distribution $ 193,558 $ 163,564 TechXtend 15,201 17,880 208,759 181,444 Gross Profit: Lifeboat Distribution $ 26,773 $ 23,441 TechXtend 3,194 3,479 29,967 26,920 Direct Costs: Lifeboat Distribution $ 10,104 $ 8,920 TechXtend 1,526 1,707 11,630 10,627 Segment Income Before Taxes: (1) Lifeboat Distribution $ 16,669 $ 14,521 TechXtend 1,668 1,772 Segment Income Before Taxes 18,337 16,293 General and administrative $ 9,771 $ 9,692 Separation expenses 100 2,446 Interest, net 500 907 Foreign currency transaction gain 82 55 Income before taxes $ 9,048 $ 5,117 (1) Excludes general corporate expenses including separation, interest, and foreign currency transaction expenses. December 31, Selected Assets by Segment: 2019 2018 Lifeboat Distribution $ 99,602 $ 77,610 TechXtend 5,603 11,542 Segment Select Assets 105,205 89,152 Corporate Assets 21,076 18,819 Total Assets $ 126,281 $ 107,971 |
Summary of disaggregation of segment revenue | December 31, Selected Assets by Segment: 2019 2018 Lifeboat Distribution $ 99,602 $ 77,610 TechXtend 5,603 11,542 Segment Select Assets 105,205 89,152 Corporate Assets 21,076 18,819 Total Assets $ 126,281 $ 107,971 Disaggregation of Revenue: Year ended December 31, 2019 2018 Lifeboat Distribution Hardware, software and other products $ $ Software - security & highly interdependent with support Maintenance, support & other services Net Sales $ $ TechXtend Hardware, software and other products $ $ 16,300 Software - security & highly interdependent with support 440 Maintenance, support & other services 1,140 Net Sales $ $ |
Quarterly Results of Operatio_2
Quarterly Results of Operations (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of quarterly results | The following table presents summarized quarterly results for 2019: First Second Third Fourth Net sales $ 44,858 $ 50,676 $ 52,363 $ 60,862 Gross profit 7,234 7,819 7,055 7,859 Net income 1,463 1,857 1,445 2,022 Basic net income per common share $ 0.32 $ 0.42 $ 0.32 $ 0.45 Diluted net income per common share $ 0.32 $ 0.42 $ 0.32 $ 0.45 The following table presents summarized quarterly results for 2018: First Second Third Fourth Net sales $ 40,552 $ 43,914 $ 47,923 $ 49,055 Gross profit 6,894 6,498 6,303 7,225 Net income (loss) 1,598 (1,117) 1,318 1,739 Basic net income (loss) per common share $ 0.36 $ (0.25) $ 0.29 $ 0.39 Diluted net income (loss) per common share $ 0.36 $ (0.25) $ 0.29 $ 0.39 |
ASU 2014-09 | |
Summary of quarterly results | First Second Third Fourth Net sales $ 40,552 $ 43,914 $ 47,923 $ 49,055 Gross profit 6,894 6,498 6,303 7,225 Net income (loss) 1,598 (1,117) 1,318 1,739 Basic net income (loss) per common share $ 0.36 $ (0.25) $ 0.29 $ 0.39 Diluted net income (loss) per common share $ 0.36 $ (0.25) $ 0.29 $ 0.39 |
Description of Business (Detail
Description of Business (Details) | 12 Months Ended |
Dec. 31, 2019segment | |
Description of Business | |
Number of reportable operating segments | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Numerator: | ||||||||||
Net income | $ 2,022 | $ 1,445 | $ 1,857 | $ 1,463 | $ 1,739 | $ 1,318 | $ (1,117) | $ 1,598 | $ 6,787 | $ 3,538 |
Less distributed and undistributed income allocated to participating securities | 130 | 118 | ||||||||
Net income attributable to common shareholders | $ 6,657 | $ 3,420 | ||||||||
Denominator: | ||||||||||
Weighted average common shares (Basic) | 4,421 | 4,358 | ||||||||
Weighted average common shares including assumed conversions (Diluted) | 4,421 | 4,358 | ||||||||
Basic net income per common share (in dollars per share) | $ 0.45 | $ 0.32 | $ 0.42 | $ 0.32 | $ 0.39 | $ 0.29 | $ (0.25) | $ 0.36 | $ 1.51 | $ 0.78 |
Diluted net income per common share (in dollars per share) | $ 0.45 | $ 0.32 | $ 0.42 | $ 0.32 | $ 0.39 | $ 0.29 | $ (0.25) | $ 0.36 | $ 1.51 | $ 0.78 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Equipment and Revenue Recognition (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Equipment and leasehold improvements | |
Payment period | 3 years |
Equipment | Minimum | |
Equipment and leasehold improvements | |
Useful lives of assets | 3 years |
Equipment | Maximum | |
Equipment and leasehold improvements | |
Useful lives of assets | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease liabilities | $ 2,572 | |
Right-of-use assets, net | $ 1,792 | |
ASU 2016-02 | Restatement adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease liabilities | $ 3,000 | |
Right-of-use assets, net | $ 2,200 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | $ 60,862 | $ 52,363 | $ 50,676 | $ 44,858 | $ 49,055 | $ 47,923 | $ 43,914 | $ 40,552 | $ 208,759 | $ 181,444 |
Deferred revenue balances | $ 0 | $ 0 | ||||||||
Minimum | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Payment terms on invoiced amount | 30 days | |||||||||
Maximum | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Payment terms on invoiced amount | 75 days | |||||||||
Hardware, software and other products | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | $ 189,335 | 164,870 | ||||||||
Software - security and highly interdependent with support | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 7,186 | 6,527 | ||||||||
Maintenance, support and other services revenue | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | $ 12,238 | $ 10,047 |
Right-of-use Asset and Lease _3
Right-of-use Asset and Lease Liability (Details) | Dec. 31, 2019 |
Minimum | |
Right-of-use Asset and Lease Liability | |
Lease term | 3 years |
Maximum | |
Right-of-use Asset and Lease Liability | |
Lease term | 11 years |
Right-of-use Asset and Lease _4
Right-of-use Asset and Lease Liability - Operating lease information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)item | |
Right-of-use Asset and Lease Liability | |
Cash paid for operating lease liabilities | $ 460 |
Right-of-use assets obtained in exchange for new operating lease obligations | $ 2,163 |
Weighted-average remaining lease term | 7 years 2 months 12 days |
Weighted-average discount rate | 3.40% |
New operating leases which commenced | item | 0 |
Right-of-use Asset and Lease _5
Right-of-use Asset and Lease Liability - Maturities of lease liabilities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Maturities of lease liabilities | |
2020 | $ 438 |
2021 | 405 |
2022 | 414 |
2023 | 463 |
2024 | 473 |
Thereafter | 1,100 |
Total | 3,293 |
Less: imputed interest | (721) |
Total lease liabilities | 2,572 |
Lease liability, current portion | 383 |
Lease liability, net of current portion | $ 2,189 |
Balance Sheet Detail (Details)
Balance Sheet Detail (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | $ 3,519 | $ 3,478 |
Less accumulated depreciation and amortization | (2,304) | (1,890) |
Equipment and leasehold improvements, net | 1,215 | 1,588 |
Depreciation | 500 | 500 |
Equipment | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | 2,230 | 2,146 |
Leasehold improvements | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | $ 1,289 | $ 1,332 |
Balance Sheet Detail - Accounts
Balance Sheet Detail - Accounts receivable - long term, net (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts receivable - long term | ||
Total amount due from customer | $ 5,656 | $ 11,169 |
Less unamortized discount | (194) | (391) |
Less current portion included in accounts receivable | (4,104) | (7,622) |
Total of accounts receivable, long term, net | $ 1,358 | $ 3,156 |
Balance Sheet Detail - Accoun_2
Balance Sheet Detail - Accounts payable and accrued expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts payable and accrued expenses | ||
Trade accounts payable | $ 73,310 | $ 62,751 |
Accrued expenses | 5,054 | 3,902 |
Accounts payable and accrued expenses | 78,364 | 66,653 |
Accumulated other comprehensive loss | (1,130) | (1,419) |
Foreign currency translation adjustments | ||
Accounts payable and accrued expenses | ||
Accumulated other comprehensive loss | $ (1,130) | $ (1,419) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets - (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Accruals and reserves | $ 383 | $ 331 |
Deferred rent credit | 139 | 151 |
Total deferred tax assets | 522 | 482 |
Deferred tax liabilities: | ||
Depreciation and amortization | (266) | (337) |
Total deferred tax liabilities | (266) | (337) |
Net deferred tax asset | $ 256 | $ 145 |
Income Taxes - Provision for In
Income Taxes - Provision for Income Taxes - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | ||
Federal | $ 1,740 | $ 967 |
State | 412 | 327 |
Foreign | 220 | 292 |
Total current income tax | 2,372 | 1,586 |
Deferred: | ||
Federal | (120) | (11) |
State | 9 | 4 |
Total deferred income tax | (111) | (7) |
Income tax expense | $ 2,261 | $ 1,579 |
Effective tax rate (as a percent) | 25.00% | 30.90% |
Income Taxes - Internal Revenue
Income Taxes - Internal Revenue Code and Adjustments (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes | ||
Effective tax rate (as a percent) | 25.00% | 30.90% |
Tax benefit, separation expenses | $ (0.4) | |
Effective tax rate benefit, separation expenses | 19.40% | |
Tax liability increase | $ 0.2 | |
Effective tax rate, ordinary income (as a percent) | 25.10% |
Income Taxes - Reconciliations
Income Taxes - Reconciliations and Components of Income - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes | ||
Statutory rate applied to pretax income | $ 1,900 | $ 1,075 |
Section 162(m) and other permanent items | 27 | 203 |
Potential state tax obligations, net of federal tax benefit | 158 | |
State income taxes, net of federal income tax benefit | 269 | 99 |
Foreign income taxes over (under) U.S. statutory rate | 28 | 50 |
Other items | 37 | (6) |
Income tax expense | 2,261 | 1,579 |
GILTI net effect | 100 | 100 |
Components of income before income taxes | ||
United States | 8,155 | 3,960 |
Foreign | 893 | 1,157 |
Income before provision for income taxes | $ 9,048 | 5,117 |
State | ||
Reconciliation of difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes | ||
Accrual for potential tax liabilities | $ 600 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of unrecognized tax benefits | ||
Balance | $ 541 | $ 443 |
Additions related to prior period tax positions | 200 | |
Reductions related to settlements with tax authorities | (492) | (102) |
Balance | 49 | 541 |
Maximum | ||
Reconciliation of unrecognized tax benefits | ||
Interest and penalties related to uncertain tax positions | $ 100 | $ 100 |
Credit Facility (Details)
Credit Facility (Details) - Credit Facility | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Nov. 15, 2017USD ($) | |
Credit Facility | |||
Maximum borrowing capacity | $ 20,000,000 | ||
Debt Service Coverage Ratio | 2 | ||
Leverage Ratio | 2.5 | ||
Collateral Coverage Ratio | 1.5 | ||
Borrowings outstanding | $ 0 | $ 0 | |
Interest expense | $ 100,000 | $ 100,000 | |
Index | |||
Credit Facility | |||
Interest rate | 3.04% | ||
Interest rate margin (as a percent) | 1.50% |
Stockholders' Equity and Stoc_3
Stockholders' Equity and Stock Based Compensation - Plans and options (Details) - shares | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | May 31, 2018 |
Stock-based compensation | ||||
Options reserved for future issuance (in shares) | 0 | |||
2012 Plan | ||||
Stock-based compensation | ||||
Number of shares of common stock initially available for award | 1,000,000 | 600,000 | ||
Options outstanding | 0 | 0 | ||
Options exercisable | 0 | 0 | ||
Options reserved for future issuance (in shares) | 513,647 |
Stockholders' Equity and Stoc_4
Stockholders' Equity and Stock Based Compensation - Nonvested (Details) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2019USD ($)installment$ / sharesshares | Dec. 31, 2018USD ($)installment$ / sharesshares | |
Weighted Average Grant Date Fair Value | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | $ | $ 0 | |
Selling, general and administrative expenses | ||
Weighted Average Grant Date Fair Value | ||
Share-based compensation cost | $ | $ 0.8 | $ 2.8 |
Separation expense | Chief Executive Officer | ||
Weighted Average Grant Date Fair Value | ||
Share-based compensation cost | $ | $ 1.7 | |
Restricted stock | ||
Shares | ||
Nonvested shares at the beginning of the period | shares | 96,744 | 161,818 |
Granted (in shares) | shares | 32,905 | 123,000 |
Vested (in shares) | shares | (49,197) | (180,898) |
Forfeited (in shares) | shares | (16,530) | (7,176) |
Nonvested shares at the end of the period | shares | 63,922 | 96,744 |
Weighted Average Grant Date Fair Value | ||
Nonvested shares at the beginning of period (in dollars per share) | $ / shares | $ 15.67 | $ 17.26 |
Granted (in dollars per share) | $ / shares | 11.97 | 14.97 |
Vested (in dollars per share) | $ / shares | 14.53 | 16.62 |
Forfeited (in dollars per share) | $ / shares | 14.52 | 15.44 |
Nonvested shares at the end of period (in dollars per share) | $ / shares | $ 14.94 | $ 15.67 |
Unrecognized compensation cost (in dollars) | $ | $ 0.9 | |
Weighted average period for recognition of unrecognized compensation cost | 2 years 2 months 12 days | |
Restricted stock | Maximum | ||
Shares | ||
Number of equal quarterly installments for vesting of awards | installment | 16 | 20 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Defined Contribution Plan | ||
Company's matching contributions equal to each employee's contribution (as a percent) | 50.00% | |
Maximum contribution of employees as a percentage of their compensation | 6.00% | |
Amount expensed | $ 0.3 | $ 0.3 |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Future minimum rental commitments under Topic 840 | ||
2019 | $ 484 | |
2020 | 438 | |
2021 | 405 | |
2022 | 414 | |
2023 | 463 | |
Thereafter | 1,572 | |
Total | 3,776 | |
Rent expense | $ 483 | |
Rent expense under Topic 840 | $ 496 |
Commitments and Contingencies_2
Commitments and Contingencies - Employment Agreements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other | ||
Standby letters of credit | $ 0 | |
Standby repurchase obligations or other commercial commitments | $ 0 | |
Restricted stock | ||
Employment Agreements | ||
Fully vested (in shares) | 49,197 | 180,898 |
Related Party Transactions (Det
Related Party Transactions (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Related Party Transactions [Abstract] | ||
Sales to related party | $ 0.1 | $ 0.1 |
Due from related party | $ 0.1 | $ 0.1 |
Industry, Segment, and Geogra_3
Industry, Segment, and Geographic Financial Information - Sales and Assets (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019USD ($)country | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($)country | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($)country | Dec. 31, 2018USD ($)country | |
Net sales to unaffiliated customers and identifiable assets by geographic areas | ||||||||||
Number of countries other than USA that make up 10% or more of net sales | country | 0 | 0 | 0 | 0 | ||||||
Net sales to Unaffiliated Customers | $ 60,862 | $ 52,363 | $ 50,676 | $ 44,858 | $ 49,055 | $ 47,923 | $ 43,914 | $ 40,552 | $ 208,759 | $ 181,444 |
Identifiable Assets by Geographic Areas | 126,281 | 107,971 | 126,281 | 107,971 | ||||||
USA | ||||||||||
Net sales to unaffiliated customers and identifiable assets by geographic areas | ||||||||||
Net sales to Unaffiliated Customers | 186,488 | 159,275 | ||||||||
USA and Rest of the world | ||||||||||
Net sales to unaffiliated customers and identifiable assets by geographic areas | ||||||||||
Identifiable Assets by Geographic Areas | 117,913 | 100,762 | 117,913 | 100,762 | ||||||
Canada | ||||||||||
Net sales to unaffiliated customers and identifiable assets by geographic areas | ||||||||||
Net sales to Unaffiliated Customers | 11,751 | 12,036 | ||||||||
Identifiable Assets by Geographic Areas | $ 8,368 | $ 7,209 | 8,368 | 7,209 | ||||||
Rest of the world | ||||||||||
Net sales to unaffiliated customers and identifiable assets by geographic areas | ||||||||||
Net sales to Unaffiliated Customers | $ 10,520 | $ 10,133 |
Industry, Segment, and Geogra_4
Industry, Segment, and Geographic Financial Information - Segment Income (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | |
Segment reporting information | ||||||||||
Number of reportable operating segments | segment | 2 | |||||||||
Revenue | $ 60,862 | $ 52,363 | $ 50,676 | $ 44,858 | $ 49,055 | $ 47,923 | $ 43,914 | $ 40,552 | $ 208,759 | $ 181,444 |
Gross profit | $ 7,859 | $ 7,055 | $ 7,819 | $ 7,234 | $ 7,225 | $ 6,303 | $ 6,498 | $ 6,894 | 29,967 | 26,920 |
Direct Costs | 11,630 | 10,627 | ||||||||
Segment Income Before Taxes | 18,337 | 16,293 | ||||||||
General and administrative | 9,771 | 9,692 | ||||||||
Separation expenses | 100 | 2,446 | ||||||||
Interest, net | 500 | 907 | ||||||||
Foreign currency transaction gain | 82 | 55 | ||||||||
Income before provision for income taxes | 9,048 | 5,117 | ||||||||
Lifeboat Distribution | ||||||||||
Segment reporting information | ||||||||||
Revenue | 193,558 | 163,564 | ||||||||
Gross profit | 26,773 | 23,441 | ||||||||
Direct Costs | 10,104 | 8,920 | ||||||||
Segment Income Before Taxes | 16,669 | 14,521 | ||||||||
TechXtend | ||||||||||
Segment reporting information | ||||||||||
Revenue | 15,201 | 17,880 | ||||||||
Gross profit | 3,194 | 3,479 | ||||||||
Direct Costs | 1,526 | 1,707 | ||||||||
Segment Income Before Taxes | $ 1,668 | $ 1,772 |
Industry, Segment, and Geogra_5
Industry, Segment, and Geographic Financial Information - Selected Assets by Segment (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Segment Reporting Information [Line Items] | ||
Total Assets | $ 126,281 | $ 107,971 |
Segment Total | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 105,205 | 89,152 |
Corporate Assets | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 21,076 | 18,819 |
Lifeboat Distribution | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 99,602 | 77,610 |
TechXtend | ||
Segment Reporting Information [Line Items] | ||
Total Assets | $ 5,603 | $ 11,542 |
Industry, Segment, and Geogra_6
Industry, Segment, and Geographic Financial Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | $ 60,862 | $ 52,363 | $ 50,676 | $ 44,858 | $ 49,055 | $ 47,923 | $ 43,914 | $ 40,552 | $ 208,759 | $ 181,444 |
Lifeboat Distribution | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 193,558 | 163,564 | ||||||||
TechXtend | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 15,201 | 17,880 | ||||||||
Hardware, software and other products | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 189,335 | 164,870 | ||||||||
Hardware, software and other products | Lifeboat Distribution | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 175,771 | 148,570 | ||||||||
Hardware, software and other products | TechXtend | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 13,564 | 16,300 | ||||||||
Software - security and highly interdependent with support | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 7,186 | 6,527 | ||||||||
Software - security and highly interdependent with support | Lifeboat Distribution | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 6,898 | 6,087 | ||||||||
Software - security and highly interdependent with support | TechXtend | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 288 | 440 | ||||||||
Maintenance, support and other services revenue | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 12,238 | 10,047 | ||||||||
Maintenance, support and other services revenue | Lifeboat Distribution | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | 10,889 | 8,907 | ||||||||
Maintenance, support and other services revenue | TechXtend | ||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||
Net sales | $ 1,349 | $ 1,140 |
Industry, Segment, and Geogra_7
Industry, Segment, and Geographic Financial Information - Concentration (Details) - customer | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Top five customers | ||
Significant Customers and Vendors | ||
Number of customers | 5 | 5 |
Net sales | Customer concentration risk | ||
Significant Customers and Vendors | ||
Number of customers | 2 | |
Net sales | SHI | Customer concentration risk | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 16.00% | 17.00% |
Net sales | CDW | Customer concentration risk | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 26.00% | |
Net sales | Top five customers | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 56.00% | 55.00% |
Net accounts receivable | SHI | Customer concentration risk | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 12.00% | 15.00% |
Net accounts receivable | CDW | Customer concentration risk | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 43.00% | 36.00% |
Purchases | Vendor concentration risk | SolarWinds | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 17.00% | 15.00% |
Purchases | Vendor concentration risk | Sophos | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 22.00% | 24.00% |
Quarterly Results of Operatio_3
Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Quarterly Results of Operations (Unaudited) | ||||||||||
Net sales | $ 60,862 | $ 52,363 | $ 50,676 | $ 44,858 | $ 49,055 | $ 47,923 | $ 43,914 | $ 40,552 | $ 208,759 | $ 181,444 |
Gross profit | 7,859 | 7,055 | 7,819 | 7,234 | 7,225 | 6,303 | 6,498 | 6,894 | 29,967 | 26,920 |
Net income (loss) | $ 2,022 | $ 1,445 | $ 1,857 | $ 1,463 | $ 1,739 | $ 1,318 | $ (1,117) | $ 1,598 | $ 6,787 | $ 3,538 |
Basic net income per share | $ 0.45 | $ 0.32 | $ 0.42 | $ 0.32 | $ 0.39 | $ 0.29 | $ (0.25) | $ 0.36 | $ 1.51 | $ 0.78 |
Diluted net income per share | $ 0.45 | $ 0.32 | $ 0.42 | $ 0.32 | $ 0.39 | $ 0.29 | $ (0.25) | $ 0.36 | $ 1.51 | $ 0.78 |
Separation Charges (Details)
Separation Charges (Details) - USD ($) $ in Thousands | May 24, 2019 | May 11, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Separation Charges | ||||
Separation expenses | $ 100 | $ 2,446 | ||
Former Chairman of the Board, President and Chief Executive Officer | 2018 Separation Agreement | ||||
Separation Charges | ||||
Cash payments to be paid in the next 12 months | $ 700 | |||
Period for consecutive equal monthly installments | 12 months | |||
Accelerated vesting of restricted stock grants | 1,700 | |||
Lump sum cash payment | $ 30 | |||
Separation expenses | 0 | 2,400 | ||
Employee severance cash payments | 700 | |||
Payment of accrued vacation | $ 40 | |||
Vested (in shares) | 109,084 | |||
Former Chairman of the Board, President and Chief Executive Officer | 2018 Separation Agreement | Maximum | ||||
Separation Charges | ||||
Period of lump sum payment | 30 days | |||
Former Chairman of the Board, President and Chief Executive Officer | 2019 Separation Agreement | ||||
Separation Charges | ||||
Period for consecutive equal monthly installments | 6 months | |||
Lump sum cash payment | $ 100 | |||
Separation expenses | $ 100 | $ 0 |
Schedule II--Valuation and Qu_2
Schedule II--Valuation and Qualifying Accounts (Details) - Allowances for accounts receivable - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Valuation and qualifying accounts | ||
Beginning Balance | $ 785 | $ 862 |
Charged to Cost and Expense | (75) | |
Deductions | 20 | 2 |
Ending Balance | $ 765 | $ 785 |