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WSTG Wayside Technology

Document and Entity Information

Document and Entity Information - shares9 Months Ended
Sep. 30, 2020Nov. 05, 2020
Document and Entity Information
Document Type10-Q
Document Period End DateSep. 30,
2020
Entity Registrant NameWayside Technology Group, Inc.
Title of 12(b) SecurityCommon stock, $.01 par value
Trading SymbolWSTG
Security Exchange NameNASDAQ
Entity Current Reporting StatusYes
Entity Interactive Data CurrentYes
Entity Filer CategoryNon-accelerated Filer
Entity Central Index Key0000945983
Amendment Flagfalse
Current Fiscal Year End Date--12-31
Entity Small Businesstrue
Entity Emerging Growth Companyfalse
Entity Shell Companyfalse
Entity Common Stock, Shares Outstanding4,362,197
Document Fiscal Year Focus2020
Document Fiscal Period FocusQ3

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in ThousandsSep. 30, 2020Dec. 31, 2019
Current assets:
Cash and cash equivalents $ 40,296 $ 14,984
Accounts receivable, net of allowances of $850 and $765, respectively74,892 100,987
Inventory, net3,138 2,760
Vendor prepayments3,366 100
Prepaid expenses and other current assets3,510 2,718
Total current assets125,202 121,549
Equipment and leasehold improvements, net1,028 1,215
Goodwill3,999
Other intangibles, net3,772
Right-of-use assets, net1,643 1,792
Accounts receivable-long-term, net388 1,358
Other assets176 111
Deferred income tax assets256
Total assets136,208 126,281
Current liabilities:
Accounts payable and accrued expenses91,455 78,364
Lease liability, current portion428 383
Total current liabilities91,883 78,747
Lease liability, net of current portion1,926 2,189
Non-current liabilities89 89
Deferred income tax liabilities82
Total liabilities93,980 81,025
Commitments and contingencies
Stockholders’ equity:
Common stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued: 4,365,613 and 4,505,693 shares outstanding, respectively53 53
Additional paid-in capital31,720 32,874
Treasury stock, at cost, 918,887 and 778,807 shares, respectively(14,668)(13,256)
Retained earnings26,405 26,715
Accumulated other comprehensive loss(1,282)(1,130)
Total stockholders' equity42,228 45,256
Total liabilities and stockholders' equity $ 136,208 $ 126,281

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in ThousandsSep. 30, 2020Dec. 31, 2019
Condensed Consolidated Balance Sheets
Accounts receivable, allowances (in dollars) $ 850 $ 765
Common Stock, par value (in dollars per share) $ 0.01 $ 0.01
Common Stock, shares authorized10,000,000 10,000,000
Common Stock, shares issued5,284,500 5,284,500
Common Stock, shares outstanding4,365,613 4,505,693
Treasury stock, shares918,887 778,807

Condensed Consolidated Statemen

Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019
Condensed Consolidated Statements of Earnings
Net sales $ 60,919 $ 52,363 $ 180,124 $ 147,897
Cost of sales53,682 45,308 157,609 125,789
Gross profit7,237 7,055 22,515 22,108
Selling, general, and administrative expenses6,157 5,087 17,269 16,175
Legal and financial advisory expenses - unsolicited bid and related matters(81)1,752
Acquisition related costs344 982
Income from operations817 1,968 2,512 5,933
Other income:
Interest, net19 118 105 416
Foreign currency transaction gain (loss)(67)(52)211 39
Income before provision for income taxes769 2,034 2,828 6,388
Provision for income taxes239 589 881 1,624
Net income $ 530 $ 1,445 $ 1,947 $ 4,764
Income per common share-Basic $ 0.13 $ 0.32 $ 0.44 $ 1.06
Income per common share-Diluted $ 0.13 $ 0.32 $ 0.44 $ 1.06
Weighted average common shares outstanding — Basic (in shares)4,218 4,428 4,306 4,415
Weighted average common shares outstanding — Diluted (in shares)4,218 4,428 4,306 4,415
Dividends paid per common share (in dollars per share) $ 0.17 $ 0.17 $ 0.51 $ 0.51

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019
Condensed Consolidated Statements of Comprehensive Income
Net income $ 530 $ 1,445 $ 1,947 $ 4,764
Other comprehensive (loss) income:
Foreign currency translation adjustments127 58 (152)225
Other comprehensive (loss) income127 58 (152)225
Comprehensive income $ 657 $ 1,503 $ 1,795 $ 4,989

Condensed Consolidated Statem_3

Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in ThousandsCommon StockAdditional Paid-In CapitalTreasuryRetained EarningsAccumulated Other Comprehensive LossTotal
Balance at Dec. 31, 2018 $ 53 $ 32,392 $ (13,447) $ 22,994 $ (1,419) $ 40,573
Balance (in shares) at Dec. 31, 20185,284,500
Balance (in shares) at Dec. 31, 2018788,006
Increase (Decrease) in Stockholders' Equity
Net income1,463 1,463
Translation adjustment127 127
Dividends paid(767)(767)
Share-based compensation expense165 165
Restricted stock grants (net of forfeitures)(318) $ 318
Restricted stock grants (net of forfeitures) (in shares)(18,780)
Treasury shares repurchased $ (20)(20)
Treasury shares repurchased (in shares)1,905
Balance at Mar. 31, 2019 $ 53 32,239 $ (13,149)23,690 (1,292)41,541
Balance (in shares) at Mar. 31, 20195,284,500
Balance (in shares) at Mar. 31, 2019771,131
Balance at Dec. 31, 2018 $ 53 32,392 $ (13,447)22,994 (1,419)40,573
Balance (in shares) at Dec. 31, 20185,284,500
Balance (in shares) at Dec. 31, 2018788,006
Increase (Decrease) in Stockholders' Equity
Net income4,764
Translation adjustment225
Balance at Sep. 30, 2019 $ 53 32,735 $ (13,235)25,458 (1,194)43,817
Balance (in shares) at Sep. 30, 20195,284,500
Balance (in shares) at Sep. 30, 2019777,285
Balance at Mar. 31, 2019 $ 53 32,239 $ (13,149)23,690 (1,292)41,541
Balance (in shares) at Mar. 31, 20195,284,500
Balance (in shares) at Mar. 31, 2019771,131
Increase (Decrease) in Stockholders' Equity
Net income1,857 1,857
Translation adjustment40 40
Dividends paid(767)(767)
Share-based compensation expense169 169
Restricted stock grants (net of forfeitures)59 $ (59)
Restricted stock grants (net of forfeitures) (in shares)3,500
Treasury shares repurchased $ (24)(24)
Treasury shares repurchased (in shares)1,887
Balance at Jun. 30, 2019 $ 53 32,467 $ (13,232)24,780 (1,252)42,816
Balance (in shares) at Jun. 30, 20195,284,500
Balance (in shares) at Jun. 30, 2019776,518
Increase (Decrease) in Stockholders' Equity
Net income1,445 1,445
Translation adjustment58 58
Dividends paid(767)(767)
Share-based compensation expense287 287
Restricted stock grants (net of forfeitures)(19) $ 19
Restricted stock grants (net of forfeitures) (in shares)(1,095)
Treasury shares repurchased $ (22)(22)
Treasury shares repurchased (in shares)1,862
Balance at Sep. 30, 2019 $ 53 32,735 $ (13,235)25,458 (1,194)43,817
Balance (in shares) at Sep. 30, 20195,284,500
Balance (in shares) at Sep. 30, 2019777,285
Balance at Dec. 31, 2019 $ 53 32,874 $ (13,256)26,715 (1,130) $ 45,256
Balance (in shares) at Dec. 31, 20195,284,500 5,284,500
Balance (in shares) at Dec. 31, 2019778,807 778,807
Increase (Decrease) in Stockholders' Equity
Net income836 $ 836
Translation adjustment(501)(501)
Dividends paid(775)(775)
Share-based compensation expense167 167
Restricted stock grants (net of forfeitures)(1,080) $ 1,079 (1)
Restricted stock grants (net of forfeitures) (in shares)(63,810)
Treasury shares repurchased $ (32)(32)
Treasury shares repurchased (in shares)2,059
Balance at Mar. 31, 2020 $ 53 31,961 $ (12,209)26,776 (1,631)44,950
Balance (in shares) at Mar. 31, 20205,284,500
Balance (in shares) at Mar. 31, 2020717,056
Balance at Dec. 31, 2019 $ 53 32,874 $ (13,256)26,715 (1,130) $ 45,256
Balance (in shares) at Dec. 31, 20195,284,500 5,284,500
Balance (in shares) at Dec. 31, 2019778,807 778,807
Increase (Decrease) in Stockholders' Equity
Net income $ 1,947
Translation adjustment(152)
Balance at Sep. 30, 2020 $ 53 31,720 $ (14,668)26,405 (1,282) $ 42,228
Balance (in shares) at Sep. 30, 20205,284,500 5,284,500
Balance (in shares) at Sep. 30, 2020918,887 918,887
Balance at Mar. 31, 2020 $ 53 31,961 $ (12,209)26,776 (1,631) $ 44,950
Balance (in shares) at Mar. 31, 20205,284,500
Balance (in shares) at Mar. 31, 2020717,056
Increase (Decrease) in Stockholders' Equity
Net income581 581
Translation adjustment222 222
Dividends paid(740)(740)
Share-based compensation expense234 234
Restricted stock grants (net of forfeitures)(813) $ 813
Restricted stock grants (net of forfeitures) (in shares)(48,068)
Treasury shares repurchased $ (3,489)(3,489)
Treasury shares repurchased (in shares)264,039
Balance at Jun. 30, 2020 $ 53 31,382 $ (14,885)26,617 (1,409)41,758
Balance (in shares) at Jun. 30, 20205,284,500
Balance (in shares) at Jun. 30, 2020933,027
Increase (Decrease) in Stockholders' Equity
Net income530 530
Translation adjustment127 127
Dividends paid(742)(742)
Share-based compensation expense636 636
Restricted stock grants (net of forfeitures)(298) $ 298
Restricted stock grants (net of forfeitures) (in shares)(17,605)
Treasury shares repurchased $ (81)(81)
Treasury shares repurchased (in shares)3,465
Balance at Sep. 30, 2020 $ 53 $ 31,720 $ (14,668) $ 26,405 $ (1,282) $ 42,228
Balance (in shares) at Sep. 30, 20205,284,500 5,284,500
Balance (in shares) at Sep. 30, 2020918,887 918,887

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands9 Months Ended
Sep. 30, 2020Sep. 30, 2019
Cash flows from operating activities
Net income $ 1,947 $ 4,764
Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:
Depreciation and amortization expense403 380
Provision for doubtful accounts130
Deferred income tax expense(53)47
Share-based compensation expense1,037 620
Amortization of discount on accounts receivable(136)(389)
Amortization of right-of-use assets280 282
Change in fair value of contingent earn-out consideration24
Changes in operating assets and liabilities:
Accounts receivable36,608 (3,406)
Inventory(235)(881)
Prepaid expenses and other current assets(225)(231)
Vendor prepayments(2,896)2,984
Accounts payable and accrued expenses(3,991)(6,341)
Lease liability, net(348)(260)
Other assets and liabilities(14)67
Net cash and cash equivalents provided by (used in) operating activities32,531 (2,364)
Cash flows from investing activities
Purchase of equipment and leasehold improvements(20)(92)
Payment for acquisition, net of cash acquired(1,141)
Net cash and cash equivalents used in investing activities(1,161)(92)
Cash flows from financing activities
Purchase of treasury stock(3,602)(66)
Borrowings under revolving credit facility6,800
Repayments of borrowings under revolving credit facility(6,800)
Dividends paid(2,257)(2,301)
Payments of deferred financing costs(61)
Net cash and cash equivalents used in financing activities(5,920)(2,367)
Effect of foreign exchange rate on cash and cash equivalents(138)97
Net increase (decrease) in cash and cash equivalents25,312 (4,726)
Cash and cash equivalents at beginning of period14,984 14,883
Cash and cash equivalents at end of period40,296 10,157
Supplementary disclosure of cash flow information:
Income taxes paid $ 2,167 $ 1,982

Basis of Presentation

Basis of Presentation9 Months Ended
Sep. 30, 2020
Basis of Presentation
Basis of Presentation1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements of Wayside Technology Group, Inc. and its subsidiaries (collectively, the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, as permitted by the rules and regulation of the Securities and Exchange Commission, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete audited financial statements.
The preparation of these condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to product returns, bad debts, inventories, intangible assets, income taxes, stock-based compensation, evaluation of performance obligations and allocation of revenue to distinct items, contingencies and litigation. The Company bases its estimates on its historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In the opinion of the Company’s management, all adjustments that are of a normal recurring nature, considered necessary for fair presentation of the results for the periods presented, have been included in the accompanying condensed consolidated financial statements. The Company’s actual results may differ from these estimates under different assumptions or conditions. The unaudited condensed consolidated statements of earnings for the interim periods are not necessarily indicative of results for the full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K filed with the Securities Exchange Commission for the year ended December 31, 2019.
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.

Recently Issued Accounting Stan

Recently Issued Accounting Standards9 Months Ended
Sep. 30, 2020
Recently Issued Accounting Standards
Recently Issued Accounting Standards2. Recently Issued Accounting Standards:
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13"). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. In November 2019, FASB issued ASU 2019-10, “ Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. 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 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.

Foreign Currency Translation

Foreign Currency Translation9 Months Ended
Sep. 30, 2020
Foreign Currency Translation
Foreign Currency Translation3. Foreign Currency Translation:
Assets and liabilities of the Company’s foreign subsidiaries have been translated using the end of the reporting period exchange rates, and related revenues and expenses have been translated at average rates of exchange in effect during the period. Foreign currency transaction gains and losses are recorded as income or expenses as amounts are settled. The net sales from our foreign operations for the three months ended September 30, 2020 and 2019 were $5.0 million and $4.2 million, respectively. The net sales from our foreign operations for the nine months ended September 30, 2020 and 2019 were $16.6 million and $13.6 million, respectively.

Comprehensive Income

Comprehensive Income9 Months Ended
Sep. 30, 2020
Comprehensive Income
Comprehensive Income4. Comprehensive Income:
Cumulative translation adjustments have been classified within accumulated other comprehensive loss, which is a separate component of stockholders’ equity in accordance with FASB ASC Topic 220, “Comprehensive Income.”

Revenue Recognition

Revenue Recognition9 Months Ended
Sep. 30, 2020
Revenue Recognition
Revenue Recognition5. 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 to 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.
Recognition of revenue when, or as, we satisfy a performance obligation — 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.
Disaggregation of Revenue
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:
(Unaudited)
(Unaudited)
Nine months ended
Three months ended
Net sales:
September 30,
September 30,
September 30,
September 30,
2020
2019
2020
2019
Hardware, software and other products
$
$
$
$
47,508
Software - security & highly interdependent with support
1,798
Maintenance, support & other services
3,057
Net sales
$
$
$
$
52,363
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 products consist 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 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 above 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 and 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 September 30, 2020 and December 31, 2019 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.
Sales In-Transit – The Company performs an analysis of the number of days of sales in-transit to customers at the end of each reporting period based on an analysis of commercial delivery terms that include drop-shipment arrangements. This analysis is the basis upon which the Company estimates the amount of net sales in-transit at the end of the period and adjusts revenue and the related costs to reflect only what has been delivered to the customer.
The Company performs a weighted average analysis of the estimated number of days between order fulfillment and beginning of the renewal term for term licenses recorded on a gross basis to determine the amount of potential deferred net sales. Prior to the quarter ended September 30, 2020 it had been determined that this amount was not material. Due to increased sales of term licenses we have recorded an estimate of the impact of term license renewals fulfilled prior to commencement date during the three months ended September 30, 2020. In conjunction with this amount recorded in the current period, the Company also corrected within the current period a similar sales in-transit estimate amount that existed in the prior year. As part of the Company’s analysis, it determined that there was an inconsequential impact to previously reported interim and annual financial statements and as such, no adjustments were required to be made to any prior period financial statements.

Acquisition

Acquisition9 Months Ended
Sep. 30, 2020
Acquisition
Acquisition6. Acquisition:
On April 30, 2020, pursuant to a Stock Purchase Agreement dated April 20, 2020, CLIMB Channel Solutions (Canada) Inc. (“Buyer”), a newly-formed indirectly wholly-owned subsidiary of the Company completed the purchase of Interwork Technologies Inc., a Delaware corporation (“Interwork US”) and Interwork Technologies Inc., a corporation incorporated under the laws of the Province of Ontario, Canada (“Interwork Canada”). Buyer acquired Interwork US and Interwork Canada for an aggregate purchase price of $5 million Canadian dollar (equivalent to $3.6 million USD), subject to certain working capital adjustments, paid at closing plus a potential post-closing $1.1 million Canadian dollar (equivalent to $0.8 million USD) earn-out. The allocation of the purchase price was based upon the estimated fair value of Interwork US and Interwork Canada’s net tangible and identifiable intangible assets as of the date of the acquisition. The transaction was accounted for under the purchase method of accounting.
The Company incurred acquisition related costs of approximately $0.3 million and $1.0 million during the three and nine months ended September 30, 2020, respectively. These expenses relate to costs incurred in conjunction with the acquisition of Interwork US, Interwork Canada and CDF Group Limited (see Note 19) and are reflected in the accompanying three and nine months ended September 30, 2020 Condensed Consolidated Statements of Earnings.
The financial position and operating results of Interwork US and Interwork Canada are included in the Company’s condensed consolidated financial statements from the date of acquisition. The Company recorded net revenue for Interwork US and Interwork Canada of approximately $2.6 million and $6.3 million during the three and nine months ended September 30, 2020.
The impact of the acquisition’s preliminary purchase price allocations on the Company’s consolidated balance sheet and the acquisition date fair value of the total consideration transferred were as follows. The Company is in the process of obtaining third-party valuations of certain intangible assets; thus the provisional measurements of intangible assets, goodwill and deferred income taxes are subject to change:
(in thousands)
Cash
$
1,009
Trade accounts receivable
9,534
Other current assets
628
Intangible assets
Vendor relationships (14-year weighted average useful life)
3,797
Non-compete (1-year useful life)
8
Goodwill
3,857
Other assets
117
Accounts payable and other current liabilities
(15,051)
Deferred income tax liabilities
(389)
Taxes payable
(600)
Net assets
$
2,910
(in thousands)
Supplementary information:
Cash paid to sellers
$
2,150
Contingent earn-out
760
Total purchase consideration
$
2,910
Cash paid to sellers
2,150
Cash acquired in acquisition
(1,009)
Net cash paid for acquisition
$
1,141
Intangible assets are comprised of approximately $3.8 million of vendor relationships with a weighted average amortization period of 13.7 years, representing the expected period of benefits, of which $2.3 million is deductible for Canadian income tax purposes. Goodwill, which was allocated to the Climb Channel Solutions segment, is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is not deductible for income tax purposes.
The purchase consideration includes approximately $0.8 million of potential earn-out consideration if certain targets are achieved, payable in cash. As of September 30, 2020, the Company reassessed the earn-out liability and increased the fair value of the earn-out liability by less than $0.1 million, with the adjustment recognized within selling, general and administrative expenses during the three and nine months ended September 30, 2020. The earn-out liability is included in accounts payable and accrued expenses as of September 30, 2020 as payment would be due in the third quarter of 2021.
The preliminary allocation of the purchase price for the acquisition was allocated based on information that is currently available. The Company's estimates and assumptions underlying the initial allocations is subject to the collection of information necessary to complete its allocations within the measurement period, which is up to one year from the acquisition date.

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets9 Months Ended
Sep. 30, 2020
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets7. Goodwill and Other Intangible Assets:
The following table summarizes the changes in the carrying amount of goodwill for the nine months ended September 30, 2020:
Balance at January 1, 2020
$

Acquisition of Interwork US and Interwork Canada
3,857
Translation adjustments
142
Balance September 30, 2020
$
3,999
Goodwill represents the premium paid over the fair value of the net tangible and intangible assets that are individually identified and separately recognized in business combinations. The change in our goodwill balance during the nine months ended September 30, 2020 relates to our acquisition of Interwork US and Interwork Canada, which has been allocated to the Climb Channel Solutions segment.
Information related to the Company’s other intangibles, net is as follows:
September 30, 2020
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Vendor relationships
$
3,888
$
121
$
3,767
Non-compete
8
3
5
Total
$
3,896
$
124
$
3,772
Other intangibles, net was zero as of December 31, 2019.
Vendor relationships are amortized between eleven to fifteen years. Non-compete is amortized over one year.
During the three and nine months ended September 30, 2020, the Company recognized total amortization expense for other intangibles, net of $0.1 million. There was no amortization expense for other intangibles, net during the three and nine months ended September 30, 2019. Amortization expense is included in selling, general and administrative expense.
Estimated future amortization expense of the Company’s other intangibles, net as of September 30, 2020 is as follows:
2020 (excluding the nine months ended September 30, 2020)
$
75
2021
294
2022
291
2023
291
2024
291
Thereafter
2,530
Total
$
3,772

Right-of-use Asset and Lease Li

Right-of-use Asset and Lease Liability9 Months Ended
Sep. 30, 2020
Right-of-use Asset and Lease Liability
Right-of-use Asset and Lease Liability8. Right-of-use Asset and Lease Liability:
The Company has entered into operating leases for office and warehouse facilities, which have terms at lease commencement that range from 2 years to 11 years. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets and lease expense for these leases is recognized on a straight-line basis over the lease term.
Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date of the lease based on the present value of the lease payments over the lease term. As our leases do not provide a readily determinable implicit rate, we use an incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Operating lease expense is recognized on a straight-line basis over the lease term and included in selling, general and administrative expenses.
Information related to the Company’s right-of-use assets and related lease liabilities were as follows:
(Unaudited)
Nine months ended
September 30,
2020
2019
Cash paid for operating lease liabilities
$
386
$
371
Right-of-use assets obtained in exchange for new operating lease obligations (1)
$
131
$
2,163
Weighted-average remaining lease term
6.3 years
7.4 years
Weighted-average discount rate
(1)
During the nine months ended September 30, 2019, represents operating leases existing on January 1, 2019 and recognized as part of the Company’s adoption of ASU 2016-02.
Maturities of lease liabilities as of September 30, 2020 were as follows:
2020 (excluding the nine months ended September 30, 2020)
$
103
2021
473
2022
426
2023
462
2024
472
Thereafter
1,100
3,036
Less: imputed interest
(682)
Total lease liabilities
$
2,354
Lease liabilities, current portion
428
Lease liabilities, net of current portion
1,926
Total lease liabilities
$
2,354

Fair Value

Fair Value9 Months Ended
Sep. 30, 2020
Fair Value
Fair Value9. Fair Value:
The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable and accounts payable approximated fair value at September 30, 2020 and December 31, 2019 because of the relative short maturity of these instruments. The Company’s accounts receivable long-term are discounted to their present value at prevailing market rates at the time of sale.

Balance Sheet Detail

Balance Sheet Detail9 Months Ended
Sep. 30, 2020
Balance Sheet Detail
Balance Sheet Detail10. Balance Sheet Detail:
Equipment and leasehold improvements consist of the following:
(Unaudited)
September 30,
December 31,
2020
2019
Equipment
$
2,653
$
2,230
Leasehold improvements
1,307
1,289
3,960
3,519
Less accumulated depreciation and amortization
(2,932)
(2,304)
$
1,028
$
1,215
During the three months ended September 30, 2020 and 2019, the Company recorded depreciation and amortization expense of $0.1 million. During the nine months ended September 30, 2020 and 2019, the Company recorded depreciation and amortization expense of $0.3 million and $0.4 million, respectively. Depreciation and amortization expense is included in selling, general and administrative expense.
In limited circumstances, the Company offers extended payment terms to customers for periods of 12 to 48 months. The related customer receivables are classified as accounts receivable long-term and discounted to their present value at prevailing market rates at the time of sale. In subsequent periods, the accounts receivable is increased to the amounts due and payable by the customers through the accretion of interest income on the unpaid accounts receivable due in future years. The amounts under these long-term accounts receivable due within one year are reclassified to the current portion of accounts receivable. At times the Company sells receivables to a financial institution on a non-recourse basis for cash, less a discount. The net proceeds from such sales are included in the operating section of the statement of cash flows as changes in accounts receivable. Accounts receivable long term, net consists of the following:
(Unaudited)
September 30,
December 31,
2020
2019
Total amount due from customer
$
2,957
$
5,656
Less: unamortized discount
(76)
(194)
Less: current portion included in accounts receivable
(2,493)
(4,104)
$
388
$
1,358
The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term expects to be $2.6 million and $0.4 million during the 12-month periods ending September 30, 2021 and 2022, respectively.
Accounts payable and accrued expenses consist of the following:
(Unaudited)
September 30,
December 31,
2020
2019
Trade accounts payable
$
85,255
$
73,310
Accrued expenses
6,200
5,054
$
91,455
$
78,364

Credit Facility

Credit Facility9 Months Ended
Sep. 30, 2020
Credit Facility.
Credit Facility11. Credit Facility:
On November 15, 2017, the Company entered into a $20,000,000 revolving credit facility (the “Credit Facility”) with Citibank, N.A. (“Citibank”) pursuant to a Second Amended and Restated Revolving Credit Loan Agreement (the “Loan Agreement”), Second Amended and Restated Revolving Credit Loan Note (the “Note”), Second Amended and Restated Security Agreement and Second Amended and Restated Pledge and Security Agreement. On August 31, 2020, the Company entered into an amendment to the Credit Facility (the “Amended Credit Facility”) pursuant to a First Amendment to Second Amended and Restated Revolving Credit Loan Agreement and Other Loan Documents (collectively, the “Amended Loan Agreement”) and First Allonge to Second Amended and Restated Revolving Credit Loan Note (the “Amended Note”).
The Amended Credit Facility, which will continue to be used for working capital and general corporate purposes, matures on June 30, 2023, at which time the Company must pay all outstanding principal of all outstanding loans plus all accrued and unpaid interest, and any, fees, costs and expenses. In addition, the Company will pay regular monthly payments of all accrued and unpaid interest. The interest rate for any borrowings under the Amended Credit Facility is subject to change from time to time based on the changes in the LIBOR Rate, as defined in the Amended Loan Agreement (the “Index”). The Index was 2.50% at September 30, 2020. Interest on the unpaid principal balance of the Amended Note will be calculated using a rate of 1.75 percentage points over the Index. If the Index becomes unavailable during the term of the Amended Credit Facility, interest will be based upon the Benchmark Replacement (as defined in the Amended Loan Agreement) selected by Citibank after notifying the Company. The Amended Credit Facility is secured by the assets of the Company.
Among other affirmative covenants set forth in the Loan Agreement, which were not amended as part of the Amended Credit Facility, the Company must maintain (i) a minimum Debt Service Coverage Ratio (as defined in the Loan Agreement) of not less than 2.0 to 1.0, (ii) a maximum Leverage Ratio (as defined in the Loan Agreement) of at least 2.5 to 1.0, and (iii) a minimum Collateral Coverage Ratio (as defined in the Loan Agreement) of not less than 1.5 to 1.0. Additionally, the Loan Agreement contains negative covenants, which were not amended as part of the Amended Credit Facility, prohibiting, among other things, the creation of certain liens, the alteration of the nature or character of the Company’s business, and transactions with the Company’s shareholders, directors, officers, subsidiaries and/or affiliates other than with respect to (i) the repurchase of the issued and outstanding capital stock of the Company from the stockholders of the Company or (ii) the declaration and payment of dividends to the stockholders of the Company. The Company was in compliance with all such covenants at September 30, 2020 and December 31, 2019.
At September 30, 2020 and December 31, 2019, the Company had no borrowings outstanding under the Credit Facility.

Earnings Per Share

Earnings Per Share9 Months Ended
Sep. 30, 2020
Earnings Per Share
Earnings Per Share12. Earnings Per Share:
Our basic and diluted earnings per share are computed using the two-class method in accordance with ASC 260. 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:
(Unaudited)
(Unaudited)
Nine months ended
Three months ended
September 30,
September 30,
2020
2019
2020
2019
Numerator:
Net income
$
1,947
$
$
530
$
Less distributed and undistributed income allocated to participating securities
59
16
Net income attributable to common shareholders
1,888
4,666
514
1,420
Denominator:
Weighted average common shares (Basic)
4,306
4,415
4,218
4,428
Weighted average common shares including assumed conversions (Diluted)
4,306
4,415
4,218
4,428
Basic net income per share
$
$
$
0.13
$
0.32
Diluted net income per share
$
$
$
0.13
$
0.32

Major Customers and Vendors

Major Customers and Vendors9 Months Ended
Sep. 30, 2020
Major Customers and Vendors
Major Customers and Vendors13. Major Customers and Vendors:
The Company had two major vendors that accounted for 21% and 12%, respectively, of total purchases during the three months ended September 30, 2020 and 22% and 18%, respectively, of total purchases during the three months ended September 30, 2019. The Company had two major vendors that accounted for 20% and 9%, respectively, of total purchases during the nine months ended September 30, 2020 and 24% and 16%, respectively, of total purchases during the nine months ended September 30, 2019.
The Company had two major customers that accounted for 22% and 12%, respectively, of its net sales during the three months ended September 30, 2020 and 19% and 17%, respectively, of its net sales during the three months ended September 30, 2019. The Company had two major customers that accounted for 26% and 14%, respectively, of its net sales during the nine months ended September 30, 2020 and 24% and 20%, respectively, of its net sales during the nine months ended September 30, 2019. These same customers accounted for 19% and 11%, respectively, of total net accounts receivable as of September 30, 2020 and 43% and 12%, respectively, of total net accounts receivable as of December 31, 2019.

Income Taxes

Income Taxes9 Months Ended
Sep. 30, 2020
Income Taxes
Income Taxes14. Income Taxes:
The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.
The effective tax rate for the three months ended September 30, 2020 and 2019 was 31.1% and 29.0%, respectively. The effective tax rate for the nine months ended September 30, 2020 and 2019 was 31.1% and 25.4%, respectively. The Company’s effective tax rate for the three and nine months ended September 30, 2020 was impacted by limitations on the deductibility of certain facilitative acquisition related costs.
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The primary impact to the Company’s financial statements as a result of the CARES Act was the deferral of US corporate income tax payments from the second quarter of 2020 to the third quarter of 2020.

Stockholders' Equity and Stock

Stockholders' Equity and Stock Based Compensation9 Months Ended
Sep. 30, 2020
Stockholders' Equity and Stock Based Compensation
Stockholders' Equity and Stock Based Compensation15. Stockholders’ Equity and Stock Based Compensation:
The 2012 Stock-Based Compensation Plan (the “2012 Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards. The total number of shares of the Company’s common stock, par value $0.01 per share (“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 September 30, 2020, the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2012 Plan is 384,164.
During the nine months ended September 30, 2020, the Company granted a total of 134,165 shares of Restricted Stock to directors, officers and employees. These shares of Restricted Stock vest immediately or over time in sixteen equal quarterly installments. During the nine months ended September 30, 2020, a total of 4,682 shares of Restricted Stock were forfeited.
During the nine months ended September 30, 2019, the Company granted a total of 32,905 shares of Restricted Stock to directors, officers and employees. These shares of Restricted Stock vest immediately or over time in sixteen equal quarterly installments. During the nine months ended September 30, 2019, a total of 16,530 shares of Restricted Stock were forfeited.
A summary of nonvested shares of Restricted Stock awards outstanding under the 2012 Plan as of September 30, 2020, and changes during the nine months then ended is as follows:
Weighted
Average Grant
Date
Shares
Fair Value
Nonvested shares at January 1, 2020
63,922
$
14.94
Granted in 2020
134,165
14.31
Vested in 2020
(56,737)
16.93
Forfeited in 2020
(4,682)
16.85
Nonvested shares at September 30, 2020
136,668
$
13.43
As of September 30, 2020, there is approximately $1.7 million of total unrecognized compensation costs related to nonvested share-based compensation arrangements. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.8 years.
During the three months ended September 30, 2020 and 2019, the Company recognized share-based compensation expense of $0.6 million and $0.3 million, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized share-based compensation expense of $1.0 million and $0.6 million, respectively.

Segment Information

Segment Information9 Months Ended
Sep. 30, 2020
Segment Information
Segment Information16. Segment Information:
FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the public company’s Chief Operating Decision Maker (CODM) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s CODM is the Chief Executive Officer.
The Company is organized into two reportable operating segments. The “Climb Channel Solutions” segment (formerly Lifeboat Distribution) distributes technical software and hardware 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 United States 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 the Canadian operations provide the same products and services to similar clients and are considered together when the Company’s CODM decides how to allocate resources.
Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit. The Company only identifies accounts receivable, vendor prepayments and inventory by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided:
(Unaudited)
(Unaudited)
Nine months ended September 30,
Three months ended September 30,
2020
2019
2020
2019
Revenue:
Climb Channel Solutions
$
168,537
$
136,189
$
57,059
$
48,815
TechXtend
11,587
11,708
3,860
3,548
180,124
147,897
60,919
52,363
Gross Profit:
Climb Channel Solutions
$
20,390
$
19,708
$
6,585
$
6,386
TechXtend
2,125
2,400
652
669
22,515
22,108
7,237
7,055
Direct Costs:
Climb Channel Solutions
$
8,387
$
7,520
$
2,993
$
2,481
TechXtend
992
1,124
275
316
9,379
8,644
3,268
2,797
Segment Income Before Taxes: (1)
Climb Channel Solutions
$
12,003
$
12,188
$
3,592
$
3,905
TechXtend
1,133
1,276
377
353
Segment Income Before Taxes
13,136
13,464
3,969
4,258
General and administrative
$
7,890
$
7,531
$
2,889
$
2,290
Legal and financial advisory expenses, net - unsolicited bid and related matters
1,752

(81)

Acquisition related costs
982

344

Interest, net
105
416
19
118
Foreign currency transaction gain
211
39
(67)
(52)
Income before taxes
$
2,828
$
6,388
$
769
$
2,034
(1)
Excludes general corporate expenses including interest and foreign currency translation expenses.
(Unaudited)
As of
As of
September 30,
December 31,
Selected Assets by Segment:
2020
2019
Climb Channel Solutions
$
86,593
$
99,602
TechXtend
2,962
5,603
Segment Select Assets
89,555
105,205
Corporate Assets
46,653
21,076
Total Assets
$
136,208
$
126,281
Nine months ended
Three months ended
(Unaudited)
(Unaudited)
Disaggregation of Revenue:
September 30,
September 30,
September 30,
September 30,
2020
2019
2020
2019
Climb Channel Solutions
Hardware, software and other products
$
$
$
$
Software - security & highly interdependent with support
Maintenance, support & other services
Net Sales
$
$
$
$
TechXtend
Hardware, software and other products
$
$
10,515
$
$
3,200
Software - security & highly interdependent with support
255
128
Maintenance, support & other services
938
220
Net Sales
$
$
$
$

Related Party Transactions

Related Party Transactions9 Months Ended
Sep. 30, 2020
Related Party Transactions
Related Party Transactions17. Related Party Transactions:
The Company made sales to a customer where a member of our Board of Directors is an executive. During the three months ended September 30, 2020 and 2019, net sales to this customer totaled approximately $0.1 million, respectively. During the nine months ended September 30, 2020 and 2019, net sales to this customer totaled approximately $0.1 million, respectively. Amounts due from this customer as of September 30, 2020 and December 31, 2019 was less than $0.1 million, respectively, which were settled in cash subsequent to each period end.

Unsolicited Bid and Shareholder

Unsolicited Bid and Shareholder Demand9 Months Ended
Sep. 30, 2020
Unsolicited Bid and Shareholder Demand
Unsolicited Bid and Shareholder Demand18. Unsolicited Bid and Shareholder Demand:
On July 15, 2019 and August 23, 2019, the Company received letters from Shepherd Kaplan Krochuk, LLC (“SKK”) and North & Webster SSG, LLC (“N&W”) announcing an unsolicited bid to acquire the Company. The proposal was subject to a number of contingencies, including the need for SKK and N&W to secure financing to complete a transaction.
On November 27, 2019, SKK, N&W, and Messrs. Shepherd, Kaplan, Krochuk and Kidston (collectively, the “SKK 13D Group”) entered into a Joint Filing Agreement and filed a Schedule 13D with the SEC, disclosing an aggregate 5.8% ownership stake in the Company. Also on November 27, 2019, Mr. Nynens entered into an agreement with SKK and N&W (the “November 27 Agreement”), granting SKK an irrevocable proxy to vote his shares of Common Stock (i) in favor of any acquisition proposal by SKK, (ii) against any third-party acquisition, and (iii) as directed by SKK with respect to the election of directors nominated by persons other than the Company.
On December 20, 2019, Mr. Nynens delivered a nomination notice to the Company regarding his intent to nominate Kim J. McCauley, Delynn Copley, Dennis M. Crowley, III and Nilesh Shah at the Meeting. On February 11, 2020, after considering the proposals with its financial advisers, the Board responded to SKK and N&W that the expired proposal received on December 10, 2019 would not have been in the best interests of the Company’s stockholders because it undervalues the Company, and did not serve as a basis for further diligence or discussion.
On January 22, 2020, the Company received a letter from one of its stockholders demanding that the Board investigate and bring an action against Mr. Nynens for breaches of certain restrictive covenants contained in his Separation and Release Agreement, dated May 11, 2018, including his covenant not to seek future employment with the Company. As a result, the Company filed a lawsuit (the “Lawsuit”) against Mr. Nynens, SKK, and N&W in the Superior Court of New Jersey Monmouth County, on February 14, 2020.
On April 16, 2020 (the “Effective Date”), the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Mr. Nynens, SKK, N&W, and each of Dennis Crowley, David Shepherd, David Kaplan, Timothy Krochuk and Samuel Kidston (collectively with SKK and N&W, the “SKK Parties”). Pursuant to the Settlement Agreement, the Company agreed to voluntarily dismiss the Lawsuit with prejudice, and to purchase all of Mr. Nynens’ 261,631 shares of the Common Stock owned, of record or beneficially, as of the Effective Date, at fair market value, as defined in the agreement. Mr. Nynens and the SKK Parties terminated the November 27 Agreement and the Joint Filing Agreement. Additionally, Mr. Nynens agreed to withdraw the notice of intent to nominate director candidates for election at the 2020 annual meeting of stockholders of the Company, submitted by Mr. Nynens on December 20, 2019, and to cease all solicitation of proxies and other activities in connection with such annual meeting. For further information, see the Current Report on Form 8-K filed by the Company on April 17, 2020.
On April 23, 2020, the Company purchased all of Nynens’ 261,631 shares of Common Stock at $13.19 per share pursuant to the Settlement Agreement, representing approximately 5.8% of the issued and outstanding Common Stock of the Company, for an aggregate purchase price of $3.5 million.
The Company incurred approximately $1.8 million in legal and advisory expenses, net during the nine months ended September 30, 2020 related to the above matter. In connection with this, the Company made certain claims for reimbursement under its insurance policies. During the three months ended September 30, 2020, reimbursement for insurance proceeds realized totaling $0.1 million has been recorded, while any potential additional insurance proceeds reimbursed under these policies as of September 30, 2020 have not been recorded as they have not been realized.

Subsequent Events

Subsequent Events9 Months Ended
Sep. 30, 2020
Subsequent Events
Subsequent Events19. Subsequent Events:
On November 6, 2020, Wayside Technology UK Holdings Limited (“Buyer”), a private limited company under the laws of England and Wales and a newly-incorporated, wholly-owned subsidiary of the Company, entered into a Share Purchase Agreement (“SPA”) and purchased the entire share capital of CDF Group Limited, a private limited company under the laws of England and Wales, for an aggregate purchase price of approximately £13.3 million (equivalent to approximately $17.4 million USD), subject to certain working capital and other adjustments.
The SPA contains customary English warranties and covenants, a guaranty by the Company of the performance by Buyer of its obligations under the SPA and customary indemnification obligations of Seller, subject to certain customary limitations and insurance caps.

Risks and Uncertainties Related

Risks and Uncertainties Related to the COVID-19 Pandemic9 Months Ended
Sep. 30, 2020
Risks and Uncertainties Related to the COVID-19 Pandemic
Risks and Uncertainties Related to the COVID-19 Pandemic20. Risks and Uncertainties Related to the COVID-19 Pandemic:
In March 2020, the World Health Organization declared the novel coronavirus, COVID-19, a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. While the Company offers a full suite of solutions and services that address customer priorities across the technology landscape, it is not possible for the Company to predict the duration or magnitude of adverse results of the outbreak and its effects on the Company’s business, liquidity or results of operations at this time. As a result, many of the estimates and assumptions used in preparation of these interim financial statements required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve with respect to the pandemic, the Company’s estimates may materially change in future periods.

Recently Issued Accounting St_2

Recently Issued Accounting Standards (Policies)9 Months Ended
Sep. 30, 2020
Recently Issued Accounting Standards
Recently Issued Accounting StandardsRecently Issued Accounting Standards:
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” ("ASU 2016-13"). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. In November 2019, FASB issued ASU 2019-10, “ Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. 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 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 (Tables)

Revenue Recognition (Tables)9 Months Ended
Sep. 30, 2020
Revenue Recognition
Summary of disaggregation of revenue according to revenue type(Unaudited)
(Unaudited)
Nine months ended
Three months ended
Net sales:
September 30,
September 30,
September 30,
September 30,
2020
2019
2020
2019
Hardware, software and other products
$
$
$
$
47,508
Software - security & highly interdependent with support
1,798
Maintenance, support & other services
3,057
Net sales
$
$
$
$
52,363

Acquisition (Tables)

Acquisition (Tables)9 Months Ended
Sep. 30, 2020
Acquisition
Summary of purchase price allocations(in thousands)
Cash
$
1,009
Trade accounts receivable
9,534
Other current assets
628
Intangible assets
Vendor relationships (14-year weighted average useful life)
3,797
Non-compete (1-year useful life)
8
Goodwill
3,857
Other assets
117
Accounts payable and other current liabilities
(15,051)
Deferred income tax liabilities
(389)
Taxes payable
(600)
Net assets
$
2,910
Summary of supplementary information related to acquisition(in thousands)
Supplementary information:
Cash paid to sellers
$
2,150
Contingent earn-out
760
Total purchase consideration
$
2,910
Cash paid to sellers
2,150
Cash acquired in acquisition
(1,009)
Net cash paid for acquisition
$
1,141

Goodwill and Other Intangible_2

Goodwill and Other Intangible Assets (Tables)9 Months Ended
Sep. 30, 2020
Goodwill and Other Intangible Assets
Summary of goodwillBalance at January 1, 2020
$

Acquisition of Interwork US and Interwork Canada
3,857
Translation adjustments
142
Balance September 30, 2020
$
3,999
Summary of other intangibles, netSeptember 30, 2020
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
Vendor relationships
$
3,888
$
121
$
3,767
Non-compete
8
3
5
Total
$
3,896
$
124
$
3,772
Schedule of estimated future amortization expense of other intangible assets2020 (excluding the nine months ended September 30, 2020)
$
75
2021
294
2022
291
2023
291
2024
291
Thereafter
2,530
Total
$
3,772

Right-of-use Asset and Lease _2

Right-of-use Asset and Lease Liability (Tables)9 Months Ended
Sep. 30, 2020
Right-of-use Asset and Lease Liability
Schedule of information relating to right-of-use assets and related lease liabilities(Unaudited)
Nine months ended
September 30,
2020
2019
Cash paid for operating lease liabilities
$
386
$
371
Right-of-use assets obtained in exchange for new operating lease obligations (1)
$
131
$
2,163
Weighted-average remaining lease term
6.3 years
7.4 years
Weighted-average discount rate
(1)
During the nine months ended September 30, 2019, represents operating leases existing on January 1, 2019 and recognized as part of the Company’s adoption of ASU 2016-02.
Schedule of maturities of lease liabilities2020 (excluding the nine months ended September 30, 2020)
$
103
2021
473
2022
426
2023
462
2024
472
Thereafter
1,100
3,036
Less: imputed interest
(682)
Total lease liabilities
$
2,354
Lease liabilities, current portion
428
Lease liabilities, net of current portion
1,926
Total lease liabilities
$
2,354

Balance Sheet Detail (Tables)

Balance Sheet Detail (Tables)9 Months Ended
Sep. 30, 2020
Balance Sheet Detail
Schedule of equipment and leasehold improvements(Unaudited)
September 30,
December 31,
2020
2019
Equipment
$
2,653
$
2,230
Leasehold improvements
1,307
1,289
3,960
3,519
Less accumulated depreciation and amortization
(2,932)
(2,304)
$
1,028
$
1,215
Schedule of accounts receivable - long term, net(Unaudited)
September 30,
December 31,
2020
2019
Total amount due from customer
$
2,957
$
5,656
Less: unamortized discount
(76)
(194)
Less: current portion included in accounts receivable
(2,493)
(4,104)
$
388
$
1,358
Schedule of accounts payable and accrued expenses(Unaudited)
September 30,
December 31,
2020
2019
Trade accounts payable
$
85,255
$
73,310
Accrued expenses
6,200
5,054
$
91,455
$
78,364

Earnings Per Share (Tables)

Earnings Per Share (Tables)9 Months Ended
Sep. 30, 2020
Earnings Per Share
Schedule of reconciliation of the numerators and denominators for computations of the basic and diluted per share(Unaudited)
(Unaudited)
Nine months ended
Three months ended
September 30,
September 30,
2020
2019
2020
2019
Numerator:
Net income
$
1,947
$
$
530
$
Less distributed and undistributed income allocated to participating securities
59
16
Net income attributable to common shareholders
1,888
4,666
514
1,420
Denominator:
Weighted average common shares (Basic)
4,306
4,415
4,218
4,428
Weighted average common shares including assumed conversions (Diluted)
4,306
4,415
4,218
4,428
Basic net income per share
$
$
$
0.13
$
0.32
Diluted net income per share
$
$
$
0.13
$
0.32

Stockholders' Equity and Stoc_2

Stockholders' Equity and Stock Based Compensation (Tables)9 Months Ended
Sep. 30, 2020
Stockholders' Equity and Stock Based Compensation
Summary of nonvested shares of Restricted Stock awards outstanding and the changes during the periodWeighted
Average Grant
Date
Shares
Fair Value
Nonvested shares at January 1, 2020
63,922
$
14.94
Granted in 2020
134,165
14.31
Vested in 2020
(56,737)
16.93
Forfeited in 2020
(4,682)
16.85
Nonvested shares at September 30, 2020
136,668
$
13.43

Segment Information (Tables)

Segment Information (Tables)9 Months Ended
Sep. 30, 2020
Segment Information
Schedule of segment reporting information(Unaudited)
(Unaudited)
Nine months ended September 30,
Three months ended September 30,
2020
2019
2020
2019
Revenue:
Climb Channel Solutions
$
168,537
$
136,189
$
57,059
$
48,815
TechXtend
11,587
11,708
3,860
3,548
180,124
147,897
60,919
52,363
Gross Profit:
Climb Channel Solutions
$
20,390
$
19,708
$
6,585
$
6,386
TechXtend
2,125
2,400
652
669
22,515
22,108
7,237
7,055
Direct Costs:
Climb Channel Solutions
$
8,387
$
7,520
$
2,993
$
2,481
TechXtend
992
1,124
275
316
9,379
8,644
3,268
2,797
Segment Income Before Taxes: (1)
Climb Channel Solutions
$
12,003
$
12,188
$
3,592
$
3,905
TechXtend
1,133
1,276
377
353
Segment Income Before Taxes
13,136
13,464
3,969
4,258
General and administrative
$
7,890
$
7,531
$
2,889
$
2,290
Legal and financial advisory expenses, net - unsolicited bid and related matters
1,752

(81)

Acquisition related costs
982

344

Interest, net
105
416
19
118
Foreign currency transaction gain
211
39
(67)
(52)
Income before taxes
$
2,828
$
6,388
$
769
$
2,034
(1)
Excludes general corporate expenses including interest and foreign currency translation expenses.
(Unaudited)
As of
As of
September 30,
December 31,
Selected Assets by Segment:
2020
2019
Climb Channel Solutions
$
86,593
$
99,602
TechXtend
2,962
5,603
Segment Select Assets
89,555
105,205
Corporate Assets
46,653
21,076
Total Assets
$
136,208
$
126,281
Summary of disaggregation of segment revenueNine months ended
Three months ended
(Unaudited)
(Unaudited)
Disaggregation of Revenue:
September 30,
September 30,
September 30,
September 30,
2020
2019
2020
2019
Climb Channel Solutions
Hardware, software and other products
$
$
$
$
Software - security & highly interdependent with support
Maintenance, support & other services
Net Sales
$
$
$
$
TechXtend
Hardware, software and other products
$
$
10,515
$
$
3,200
Software - security & highly interdependent with support
255
128
Maintenance, support & other services
938
220
Net Sales
$
$
$
$

Foreign Currency Translation (D

Foreign Currency Translation (Details) - USD ($) $ in Thousands3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019
Revenue from external customers
Net sales $ 60,919 $ 52,363 $ 180,124 $ 147,897
Foreign operations
Revenue from external customers
Net sales $ 5,000 $ 4,200 $ 16,600 $ 13,600

Revenue Recognition - Disaggreg

Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Net sales $ 60,919 $ 52,363 $ 180,124 $ 147,897
Minimum
Disaggregation of Revenue [Line Items]
Payment terms on invoiced amount30 days
Maximum
Disaggregation of Revenue [Line Items]
Payment terms on invoiced amount75 days
Payment period3 years
Hardware, software and other products
Disaggregation of Revenue [Line Items]
Net sales56,370 47,508 $ 165,951 133,482
Software - security and highly interdependent with support
Disaggregation of Revenue [Line Items]
Net sales2,059 1,798 5,839 5,417
Maintenance, support and other services revenue
Disaggregation of Revenue [Line Items]
Net sales $ 2,490 $ 3,057 $ 8,334 $ 8,998

Acquisition (Details)

Acquisition (Details) $ in Thousands, $ in MillionsApr. 30, 2020CAD ($)Apr. 30, 2020USD ($)Sep. 30, 2020USD ($)Sep. 30, 2020USD ($)
Acquisition of CDF Group Limited
Acquisition related costs $ 344 $ 982
Interwork Group, Inc.
Acquisition of CDF Group Limited
Aggregate purchase price $ 5 $ 3,600
Potential earn-out $ 1.1 $ 800
Acquisition related costs300 1,000
Revenue $ 2,600 $ 6,300

Acquisition - Cash Consideratio

Acquisition - Cash Consideration (Details) - USD ($) $ in ThousandsApr. 30, 2020Sep. 30, 2020
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Goodwill $ 3,999
Interwork Group, Inc.
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Cash $ 1,009
Trade accounts receivable9,534
Other current assets628
Goodwill3,857
Other assets117
Accounts payable and other current liabilities(15,051)
Deferred income tax liabilities(389)
Taxes payable(600)
Net assets2,910
Interwork Group, Inc. | Vendor Relationships
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets $ 3,797
Useful life13 years 8 months 12 days
Amount deductible for Canadian income tax purposes $ 2,300
Interwork Group, Inc. | Non-compete
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
Intangible assets $ 8
Useful life1 year

Acquisition - Supplementary inf

Acquisition - Supplementary information (Details) - USD ($) $ in ThousandsApr. 30, 2020Sep. 30, 2020
Business Acquisition [Line Items]
Change in fair value of contingent earn-out consideration $ 24
Interwork Group, Inc.
Business Acquisition [Line Items]
Cash paid to sellers $ 2,150
Contingent earn-out760
Total purchase consideration2,910
Cash acquired in acquisition(1,009)
Net cash paid for acquisition $ 1,141

Goodwill and Other Intangible_3

Goodwill and Other Intangible Assets - Summary of goodwill (Details) $ in Thousands9 Months Ended
Sep. 30, 2020USD ($)
Goodwill [Roll Forward]
Acquisition of Interwork US and Interwork Canada $ 3,857
Translation adjustments142
Ending Balance $ 3,999

Goodwill and Other Intangible_4

Goodwill and Other Intangible Assets - Other intangibles, net (Details) - USD ($) $ in Thousands3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount $ 3,896 $ 3,896
Accumulated Amortization124 124
Total3,772 3,772 $ 0
Amortization expense100 $ 0 100 $ 0
Vendor Relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount3,888 3,888
Accumulated Amortization121 121
Total3,767 $ 3,767
Vendor Relationships | Minimum
Finite-Lived Intangible Assets [Line Items]
Amortization period11 years
Vendor Relationships | Maximum
Finite-Lived Intangible Assets [Line Items]
Amortization period15 years
Non-compete
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount8 $ 8
Accumulated Amortization3 3
Total $ 5 $ 5
Amortization period1 year

Goodwill and Other Intangible_5

Goodwill and Other Intangible Assets - Future amortization expense (Details) - USD ($) $ in ThousandsSep. 30, 2020Dec. 31, 2019
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2020 (excluding the nine months ended September 30, 2020) $ 75
2021294
2022291
2023291
2024291
Thereafter2,530
Total $ 3,772 $ 0

Right-of-use Asset and Lease _3

Right-of-use Asset and Lease Liability (Details)Sep. 30, 2020
Minimum
Right-of-use Asset and Lease Liability
Lease term2 years
Maximum
Right-of-use Asset and Lease Liability
Lease term11 years

Right-of-use Asset and Lease _4

Right-of-use Asset and Lease Liability - Operating lease information (Details) - USD ($) $ in Thousands9 Months Ended
Sep. 30, 2020Sep. 30, 2019
Right-of-use Asset and Lease Liability
Cash paid for operating lease liabilities $ 386 $ 371
Right-of-use assets obtained in exchange for new operating lease obligations $ 131 $ 2,163
Weighted-average remaining lease term6 years 3 months 18 days7 years 4 months 24 days
Weighted-average discount rate3.40%3.40%

Right-of-use Asset and Lease _5

Right-of-use Asset and Lease Liability - Maturities of lease liabilities (Details) - USD ($) $ in ThousandsSep. 30, 2020Dec. 31, 2019
Maturities of lease liabilities
2020 (excluding the nine months ended September 30, 2020) $ 103
2021473
2022426
2023462
2024472
Thereafter1,100
Total3,036
Less: imputed interest(682)
Total lease liabilities2,354
Lease liability, current portion428 $ 383
Lease liability, net of current portion $ 1,926 $ 2,189

Balance Sheet Detail (Details)

Balance Sheet Detail (Details) - USD ($) $ in Thousands3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019Dec. 31, 2019
Equipment and leasehold improvements
Equipment and leasehold improvements, gross $ 3,960 $ 3,960 $ 3,519
Less accumulated depreciation and amortization(2,932)(2,932)(2,304)
Equipment and leasehold improvements, net1,028 1,028 1,215
Depreciation and amortization expense $ 403 $ 380
Minimum
Equipment and leasehold improvements
Payment extension term to customers12 months
Maximum
Equipment and leasehold improvements
Payment extension term to customers48 months
Equipment
Equipment and leasehold improvements
Equipment and leasehold improvements, gross2,653 $ 2,653 2,230
Leasehold improvements
Equipment and leasehold improvements
Equipment and leasehold improvements, gross1,307 1,307 $ 1,289
General and Administrative Expense
Equipment and leasehold improvements
Depreciation and amortization expense $ 100 $ 100 $ 300 $ 400

Balance Sheet Detail - Accounts

Balance Sheet Detail - Accounts receivable - long term, net (Details) - USD ($) $ in ThousandsSep. 30, 2020Dec. 31, 2019
Balance Sheet Detail
Undiscounted cash flows September 30, 2021 $ 2,600
Undiscounted cash flows September 30, 2022400
Accounts receivable - long term
Total amount due from customer2,957 $ 5,656
Less unamortized discount(76)(194)
Less current portion included in accounts receivable(2,493)(4,104)
Total of accounts receivable, long term, net $ 388 $ 1,358

Balance Sheet Detail - Accoun_2

Balance Sheet Detail - Accounts payable and accrued expenses (Details) - USD ($) $ in ThousandsSep. 30, 2020Dec. 31, 2019
Accounts payable and accrued expenses
Trade accounts payable $ 85,255 $ 73,310
Accrued expenses6,200 5,054
Accounts payable and accrued expenses $ 91,455 $ 78,364

Credit Facility (Details)

Credit Facility (Details) - Credit FacilityNov. 15, 2017USD ($)Sep. 30, 2020USD ($)Dec. 31, 2019USD ($)
Credit Facility
Maximum borrowing capacity $ 20,000,000
Debt Service Coverage Ratio2
Leverage Ratio2.5
Collateral Coverage Ratio1.5
Borrowings outstanding $ 0 $ 0
Index
Credit Facility
Interest rate2.50%
Interest rate margin (as a percent)1.75%

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands3 Months Ended9 Months Ended
Sep. 30, 2020Jun. 30, 2020Mar. 31, 2020Sep. 30, 2019Jun. 30, 2019Mar. 31, 2019Sep. 30, 2020Sep. 30, 2019
Numerator:
Net income $ 530 $ 581 $ 836 $ 1,445 $ 1,857 $ 1,463 $ 1,947 $ 4,764
Less distributed and undistributed income allocated to participating securities16 25 59 98
Net income attributable to common shareholders $ 514 $ 1,420 $ 1,888 $ 4,666
Denominator:
Weighted average common shares (Basic)4,218 4,428 4,306 4,415
Weighted average common shares including assumed conversions (Diluted)4,218 4,428 4,306 4,415
Basic net income per share $ 0.13 $ 0.32 $ 0.44 $ 1.06
Diluted net income per share $ 0.13 $ 0.32 $ 0.44 $ 1.06

Major Customers and Vendors (De

Major Customers and Vendors (Details)3 Months Ended9 Months Ended12 Months Ended
Sep. 30, 2020customeritemSep. 30, 2019customeritemSep. 30, 2020customeritemSep. 30, 2019customeritemDec. 31, 2019
Purchases | Vendor concentration risk
Significant Customers and Vendors
Number of vendors | item2 2 2 2
Purchases | Vendor concentration risk | Major vendor one
Significant Customers and Vendors
Percentage of concentration risk21.00%22.00%20.00%24.00%
Purchases | Vendor concentration risk | Major vendor two
Significant Customers and Vendors
Percentage of concentration risk12.00%18.00%9.00%16.00%
Net sales | Customer concentration risk
Significant Customers and Vendors
Number of customers | customer2 2 2 2
Net sales | Customer one | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk22.00%19.00%26.00%24.00%
Net sales | Customer two | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk12.00%17.00%14.00%20.00%
Net accounts receivable | Customer one | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk19.00%43.00%
Net accounts receivable | Customer two | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk11.00%12.00%

Income Taxes (Details)

Income Taxes (Details)3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019
Income Taxes
Effective tax rate (as a percent)31.10%29.00%31.10%25.40%

Stockholders' Equity and Stoc_3

Stockholders' Equity and Stock Based Compensation - Plans and options (Details) - $ / sharesSep. 30, 2020Dec. 31, 2019Jun. 30, 2018May 31, 2018
Stock-based compensation
Common Stock, par value (in dollars per share) $ 0.01 $ 0.01
2012 Plan
Stock-based compensation
Number of shares of common stock initially available for award1,000,000 600,000
Options reserved for future issuance (in shares)384,164

Stockholders' Equity and Stoc_4

Stockholders' Equity and Stock Based Compensation - Nonvested (Details) $ / shares in Units, $ in Millions3 Months Ended9 Months Ended
Sep. 30, 2020USD ($)$ / sharessharesSep. 30, 2019USD ($)Sep. 30, 2020USD ($)item$ / sharessharesSep. 30, 2019USD ($)itemshares
Weighted Average Grant Date Fair Value
Share-based compensation expense | $ $ 0.6 $ 0.3 $ 1 $ 0.6
Restricted stock
Shares
Nonvested shares at the beginning of the period | shares63,922
Granted (in shares) | shares134,165 32,905
Vested (in shares) | shares(56,737)
Forfeited (in shares) | shares(4,682)(16,530)
Nonvested shares at the end of the period | shares136,668 136,668
Number of equal quarterly installments for vesting of awards | item16 16
Weighted Average Grant Date Fair Value
Nonvested shares at the beginning of period (in dollars per share) | $ / shares $ 14.94
Granted (in dollars per share) | $ / shares14.31
Vested (in dollars per share) | $ / shares16.93
Forfeited (in dollars per share) | $ / shares16.85
Nonvested shares at the end of period (in dollars per share) | $ / shares $ 13.43 $ 13.43
Unrecognized compensation cost (in dollars) | $ $ 1.7 $ 1.7
Weighted average period for recognition of unrecognized compensation cost2 years 9 months 18 days

Segment Information (Details)

Segment Information (Details) $ in Thousands3 Months Ended9 Months Ended
Sep. 30, 2020USD ($)Sep. 30, 2019USD ($)Sep. 30, 2020USD ($)itemSep. 30, 2019USD ($)
Segment reporting information
Number of reportable operating segments | item2
Revenue $ 60,919 $ 52,363 $ 180,124 $ 147,897
Gross profit7,237 7,055 22,515 22,108
Direct Costs3,268 2,797 9,379 8,644
Segment Income Before Taxes3,969 4,258 13,136 13,464
General and administrative2,889 2,290 7,890 7,531
Legal and financial advisory expenses - unsolicited bid and related matters(81)1,752
Acquisition related costs344 982
Interest, net19 118 105 416
Foreign currency transaction gain (loss)(67)(52)211 39
Income before provision for income taxes769 2,034 2,828 6,388
Climb Channel Solutions
Segment reporting information
Revenue57,059 48,815 168,537 136,189
Gross profit6,585 6,386 20,390 19,708
Direct Costs2,993 2,481 8,387 7,520
Segment Income Before Taxes3,592 3,905 12,003 12,188
TechXtend
Segment reporting information
Revenue3,860 3,548 11,587 11,708
Gross profit652 669 2,125 2,400
Direct Costs275 316 992 1,124
Segment Income Before Taxes $ 377 $ 353 $ 1,133 $ 1,276

Segment Information - Selected

Segment Information - Selected Assets by Segment (Details) - USD ($) $ in ThousandsSep. 30, 2020Dec. 31, 2019
Segment Reporting Information [Line Items]
Total Assets $ 136,208 $ 126,281
Segment Select Assets
Segment Reporting Information [Line Items]
Total Assets89,555 105,205
Corporate Assets
Segment Reporting Information [Line Items]
Total Assets46,653 21,076
Climb Channel Solutions | Segment Select Assets
Segment Reporting Information [Line Items]
Total Assets86,593 99,602
TechXtend | Segment Select Assets
Segment Reporting Information [Line Items]
Total Assets $ 2,962 $ 5,603

Segment Information - Disaggreg

Segment Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Net sales $ 60,919 $ 52,363 $ 180,124 $ 147,897
Climb Channel Solutions
Disaggregation of Revenue [Line Items]
Net sales57,059 48,815 168,537 136,189
TechXtend
Disaggregation of Revenue [Line Items]
Net sales3,860 3,548 11,587 11,708
Hardware, software and other products
Disaggregation of Revenue [Line Items]
Net sales56,370 47,508 165,951 133,482
Hardware, software and other products | Climb Channel Solutions
Disaggregation of Revenue [Line Items]
Net sales52,706 44,308 155,039 122,967
Hardware, software and other products | TechXtend
Disaggregation of Revenue [Line Items]
Net sales3,664 3,200 10,912 10,515
Software - security and highly interdependent with support
Disaggregation of Revenue [Line Items]
Net sales2,059 1,798 5,839 5,417
Software - security and highly interdependent with support | Climb Channel Solutions
Disaggregation of Revenue [Line Items]
Net sales2,042 1,670 5,775 5,162
Software - security and highly interdependent with support | TechXtend
Disaggregation of Revenue [Line Items]
Net sales17 128 64 255
Maintenance, support and other services revenue
Disaggregation of Revenue [Line Items]
Net sales2,490 3,057 8,334 8,998
Maintenance, support and other services revenue | Climb Channel Solutions
Disaggregation of Revenue [Line Items]
Net sales2,311 2,837 7,723 8,060
Maintenance, support and other services revenue | TechXtend
Disaggregation of Revenue [Line Items]
Net sales $ 179 $ 220 $ 611 $ 938

Related Party Transactions (Det

Related Party Transactions (Detail) - USD ($) $ in Millions3 Months Ended9 Months Ended
Sep. 30, 2020Sep. 30, 2019Sep. 30, 2020Sep. 30, 2019Dec. 31, 2019
Sales to related party $ 0.1 $ 0.1 $ 0.1 $ 0.1
Maximum
Due from related party $ 0.1 $ 0.1 $ 0.1

Unsolicited Bid and Sharehold_2

Unsolicited Bid and Shareholder Demand (Details) - USD ($) $ / shares in Units, $ in ThousandsApr. 23, 2020Apr. 16, 2020Sep. 30, 2020Sep. 30, 2020Nov. 27, 2019
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Legal and financial advisory expenses $ (81) $ 1,752
Insurance proceeds realized $ 100
SKK 13D Group
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares held (Percentage)5.80%
Settlement Agreement with Mr. Nynens and the N&W Group
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Shares repurchased261,631 261,631
Market value (in dollars per share) $ 13.19
Shares repurchased (Percentage)5.80%
Shares repurchased amount $ 3,500

Subsequent Events (Details)

Subsequent Events (Details) - Nov. 06, 2020 £ in Thousands, $ in MillionsGBP (£)USD ($)
Subsequent Event | CDF Group Limited
Subsequent Event [Line Items]
Aggregate purchase price £ 13,300 $ 17.4