Climb Global Solutions Inc

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

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**Note1. ** Description of Business

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Climb Global Solutions, Inc. and Subsidiaries (the “Company”), was incorporated in Delaware in1982. The Company distributes technology products developed by others to resellers who in turn sell to end customers worldwide. The Company also is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide. The Company also operates in Canada, the United Kingdom and Europe. The Company offers an extensive line of products from leading software vendors and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management and other technically sophisticated domains as well as computer hardware.

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The Company is organized intotwo reportable operating segments. The “Distribution” segment distributes technical software to corporate resellers, value added resellers ("VARs"), consultants and systems integrators worldwide under the name “Climb Channel Solutions”. The “Solutions” segment is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide under the name “Grey Matter”.

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**Note2. ** Summary of Significant Accounting Policies

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Principles of Consolidation and Operations

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The consolidated financial statements include the accounts of Climb Global Solutions, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.

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Business Combinations

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We apply the provisions of ASC805, Business Combinations (“ASC805”), in accounting for our acquisitions. ASC805 requires that we evaluate whether a transaction pertains to an acquisition of assets, or to an acquisition of a business. A business is defined as an integrated set of assets and activities that is capable of being conducted and managed for the purpose of providing a return to investors. Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets and liabilities assumed on a relative fair value basis; whereas the acquisition of a business requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at the acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed.

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Our valuation of acquired assets and assumed liabilities requires estimates, especially with respect to intangible assets that was derived using valuation techniques and models such as the income approach. Such models require use of estimates including discount rates, and future expected revenue and earnings before interest, tax, depreciation and amortization. The approach to estimating an initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected cash flows over the term of the contingent earn-out period, discounted for the period over which the initial contingent consideration is measured and expected volatility. Based upon these assumptions, the initial contingent consideration is then valued using a Monte Carlo simulation.

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We have usedthird-party qualified specialists to assist management in determining the fair value of assets acquired and liabilities assumed. This includes assistance with the determination of economic useful lives and valuation of identifiable intangibles.

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We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results* maydiffer from our estimates. Estimates associated with the accounting for acquisitions maychange as additional information becomes available regarding the assets acquired and liabilities assumed. As a result, during the measurement period, which maybe up toone* year from the business acquisition date, we record certain adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

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F-10

All acquisition-related costs are accounted for as expenses in the period in which they are incurred. Contingent consideration is remeasured each reporting period using Level3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in acquisition related costs in the consolidated statement of earnings.

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Use of Estimates

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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 arenot limited to accounting for allowance for expected credit losses, sales returns, allocation of revenue in multiple deliverable arrangements, principal vs. agent considerations, income taxes, depreciation, amortization of intangible assets, contingencies and stock-based compensation. Actual results could differ from those estimates.

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Net Income Per Common Share

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Our basic and diluted earnings per share are computed using thetwo-class method. Thetwo-class method is an earnings allocation method that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities. Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding during each period. Diluted and basic earnings per share are the same because the restricted shares are the only potentially dilutive security.

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

Cash Equivalents

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The Company considers all liquid short-term investments with maturities of90 days or less when purchased to be cash equivalents.

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F-11

Accounts Receivable

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Accounts receivable principally represents amounts collectible from our customers. The Company performs ongoing credit evaluations of its customers but generally doesnot 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 hasno 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.

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Allowances for Expected Credit Losses

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

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Deferred Financing Costs

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Deferred financing costs, such as financial advisory and other professional fees are capitalized and recognized in interest, net over the life of the related debt instrument using the straight-line method. Deferred financing costs associated with the Company’s revolving credit facility are presented as an asset, within other assets on the Consolidated Balance Sheets.

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Foreign Currency Translation

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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 loss, which is a separate component of stockholders’ equity in accordance FASB ASC TopicNo. 220, “Comprehensive Income”. Foreign currency transaction gains and losses are recorded as income or expenses as amounts are settled.

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For foreign currency remeasurement from each local currency into the appropriate functional currency, monetary assets and liabilities are remeasured to functional currencies using current exchange rates in effect at the balance sheet date. Gains or losses from these remeasurements have been included in the Company's Consolidated Statements of Earnings. Non-monetary assets and liabilities are recorded at historical exchange rates.

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Concentration of Credit Risk

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Financial instruments that potentially subject the Company to concentrations in credit risk consist of cash and cash equivalents.

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The Company’s cash and cash equivalents, at times,* mayexceed federally insured limits. The Company’s cash and cash equivalents are deposited primarily in banking institutions with global operations. The Company hasnot* experienced any losses in such accounts. The Company believes it isnot exposed to any significant credit risk on cash and cash equivalents.

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Financial Instruments

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The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of* December 31, 2024and2023*, because of the relative short maturity of these instruments. The Company’s accounts receivable-long-term is discounted to its present value at prevailing market rates at the time of sale which, approximates fair value as of* December 31, 2024and2023*.

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F-12

Inventory

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Inventory, consisting primarily of finished products held for resale, is valued based on thefirst-in-first-out method of accounting and is stated at the lower of cost or net realizable value.

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Equipment and Leasehold Improvements

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Equipment and leasehold improvements are stated at cost or fair value, if purchased as part of a business combination. Equipment depreciation is calculated using the straight-line method over three tofive 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.

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Software Development Costs

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The Company capitalizes certain internal and external costs incurred to acquire or create internal-use software. Capitalized software costs are amortized on a straight-line basis over the estimated useful life of the software. At* December 31, 2024and2023*, the Company had unamortized software development costs of$11.8 million and $6.9 million, respectively, which are included in “Equipment and leasehold improvements” in the Company's Consolidated Balance Sheets. As of* December 31, 2024and2023*, this includes $11.8 million and $6.9 million of capitalized costs for an internal-use software project.

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Goodwill

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We test goodwill for impairment on an annual basis and between annual tests if an event occurs, or circumstances change, that would more likely thannot reduce the fair value of a reporting unit below its carrying amount. The Company performs an evaluation of goodwill, utilizing either a qualitative or quantitative impairment test. The annual test for impairment is conducted as of* October 1.The Company’s reporting units included in the assessment of potential goodwill impairment are the same as its operating segments. Goodwill isnot* amortized but is subject to periodic testing for impairment at the reporting unit level.

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In a qualitative assessment, we assess qualitative factors to determine whether it is more likely thannot (that is, a likelihood of more than50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. If, after assessing the totality of events or circumstances, we determine that it isnot more likely thannot that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary.

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If, after assessing the totality of events or circumstances, we determine that it is more likely thannot that the fair value of a reporting unit is less than its carrying amount, then we perform the quantitative goodwill impairment test. We* may*also elect the unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test.

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In the quantitative impairment test, we compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considerednot impaired. Conversely, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

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Determining the fair value of a reporting unit is judgmental in nature and requires the use of estimates and assumptions, including net sales growth rates, gross profit margins, operating margins, discount rates and future market conditions, among others. Any changes in the judgments, estimates or assumptions used could produce different results.

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F-13

Intangible Assets

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

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Comprehensive Income

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Comprehensive income consists of net income for the year and the impact of unrealized foreign currency translation adjustments. The foreign currency translation adjustments arenot currently adjusted for income taxes as they relate to permanent investments in international subsidiaries.

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Revenue Recognition

The Company’s revenues primarily result from the sale of various technology products and services, includingthird-party products,third-party software andthird-party maintenance, software support and services. The Company recognizes revenue when control of thethird-party products andthird-party software is transferred to customers, which generally happens at the point of shipment or fulfilment and at the point that our customers and vendors accept the terms and conditions of the arrangement forthird-party maintenance, software support and services.

The Company has contracts with certain customers where the Company’s performance obligation is to arrange for the products or services to be provided by another party. In these arrangements, as the Company assumes an agency relationship in the transaction, revenue is recognized in the amount of the net fee associated with serving as an agent. These arrangements primarily relate tothird party maintenance, cloud services and certain security software whose intended functionality is dependent onthird party maintenance.

The Company allows its customers to return product for exchange or credit subject to certain limitations. A liability is recorded at the time of sale for estimated product returns based upon historical experience, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets, and an asset is recognized for the amount expected to be recorded upon product return, which is included in prepaid expenses and other current assets on the Consolidated Balance Sheets. If actual sales returns are greater than estimated by management, an additional returns allowance* may*be required as an offset to net sales. The Company also provides rebates and other discounts to certain customers which are considered variable consideration. A provision for customer rebates and other discounts is recorded as a reduction of revenue at the time of sale based on an evaluation of the contract terms and historical experience.

The Company considers shipping and handling activities as costs to fulfill the sales of products. Shipping revenue is included in net sales when control of the product is transferred to the customer, and the related shipping and handling costs are included in cost of sales. Taxes imposed by governmental authorities on the Company’s revenue producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales.

The Company disaggregates its operating revenue by segment, geography and timing of revenue recognition, which the Company believes provides a meaningful depiction of the nature of its revenue. For additional information, see Note13 (Industry, Segment and Geographic Information).

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Hardware and software products sold by the Company are generally delivered via shipment from the Company’s facilities, drop shipment directly from the vendor, or by electronic delivery of keys for software products. The majority of the Company’s business involves shipments directly from its vendors to its customers, in these transactions, the Company is generally responsible for negotiating price both with the vendor and customer, fulfillment of the order, payment to the vendor, establishing payment terms with the customer, product returns, and has risk of loss if the customer doesnot make payment. As the principal with the customer, the Company recognizes revenue upon receiving notification from the vendor that the product was shipped. Control of software products is deemed to have passed to the customer when they acquire the right to use or copy the software under license as substantially all product functionality is available to the customer at the time of sale.

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F-14

The Company performs an analysis of the number of days of sales in-transit to customers at the end of each reporting period based on an analysis of commercial delivery terms that include drop-shipment arrangements. This analysis is the basis upon which the Company estimates the amount of net sales in-transit at the end of the period and adjusts revenue and the related costs to reflect only what has been delivered to the customer. Changes in delivery patterns* may*result in a different number of business days estimated to make this adjustment. The Company also performs a weighted average analysis of the estimated number of days between order fulfillment and beginning of the renewal term for term licenses recorded on a gross basis, and a deferral estimate is recorded for term license renewals fulfilled prior to commencement date.

Generally, software products are sold with accompanyingthird-party delivered software assurance, which is a product that allows customers to upgrade, atno additional cost, to the latest technology if new capabilities are introduced during the period that the software assurance is in effect. The Company evaluates whether the software assurance is a separate performance obligation by assessing if thethird-party delivered software assurance is critical or essential to the core functionality of the software itself. This involves considering if the software provides its original intended functionality to the customer without the updates, if the customer would ascribe a higher value to the upgrades versus the up-front deliverable, if the customer would expect frequent intelligence updates to the software (such as updates that maintain the original functionality), and if the customer chooses tonot delay or always install upgrades. If the Company determines that the accompanyingthird-party delivered software assurance is critical or essential to the core functionality of the software license, the software license and the accompanyingthird-party delivered software assurance are recognized as a single performance obligation. The value of the product is primarily the accompanying support delivered by athird party and therefore the Company is acting as an agent in these transactions and recognizes them on a net basis at the point the associated software license is delivered to the customer. The Company sells cloud computing solutions that utilizethird-party vendors to enable customers to access data center functionality in a cloud-based solution, including storage, computing and networking and access to software in the cloud that enhances office productivity, provides security or assists in collaboration. The Company recognizes revenue for cloud computing solutions for arrangements withone-time invoicing to the customer at the time of invoice on a net basis as the Company is acting as an agent in the transaction. For monthly subscription-based arrangements, the Company is acting as an agent in the transaction and recognizes revenue as it invoices the customer for its monthly usage on a net basis. For software licenses where the accompanyingthird-party delivered software assurance isnot critical or essential to the core functionality, the software assurance is recognized as a separate performance obligation, with the associated revenue recognized on a net basis at the point the related software license is delivered to the customer.

The Company also sells some of its products and services as part of bundled contract arrangements containing multiple deliverables, which* mayinclude a combination of products and services. For each deliverable that represents a distinct performance obligation, total arrangement consideration is allocated based upon the standalone selling prices (“SSP”) of each performance obligation. SSP is determined based on the price at which the performance obligation is sold separately. If the standalone selling price isnot* 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.

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Freight

The Company records freight billed to its customers as net sales and the related freight costs as cost of sales when the underlying product revenue is recognized. For freightnot billed to its customers, the Company records the freight costs as cost of sales. The Company’s typical shipping terms result in shipping being performed before the customer obtains control of the product. The Company considers shipping to be a fulfillment activity andnot a separate performance obligation.

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F-15

Commissions

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The Company pays commissions and related payroll taxes to sales personnel when customers are invoiced. These costs are recorded as selling general and administrative expenses in the period earned as all our performance obligations are complete within a short window of processing the order.

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Stock-Based Compensation

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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.

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Operating Segments

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Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company's operations are classified intotwo reportable business segments: Distribution and Solutions. For additional information, see Note13 (Industry, Segment and Geographic Information).

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Treasury Stock

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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.

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Interest, net

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

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Income Taxes

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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 thannot that some or all the deferred tax assets willnot 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 ASC740 “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.

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F-16

Foreign Exchange

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The Company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase the product. In cases where the Company isnot able to create a natural hedge by maintaining offsetting asset and liability amounts in the same currency, it* mayenter into foreign exchange contracts, typically in the form of forward purchase agreements, to facilitate the hedging of foreign currency exposures to mitigate the impact of changes in foreign currency exchange rates. These contracts generally have terms ofno* more thantwo months. The Company doesnot apply hedge accounting to these contracts and therefore the changes in fair value are recorded in earnings. The Company doesnot enter into foreign exchange contracts for trading purposes and the risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the Company minimizes by limiting its counterparties to major financial institutions. The Company recognized an unrealized gain of less than $0.1 million on contracts outstanding as of* December 31, 2024*

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Recently Issued Accounting Pronouncements

In* November 2024,the FASB issued ASUNo.* 2024-03, “ Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic220*-40): Disaggregation of Income Statement Expenses* ”. This ASU requires entities to disaggregate expense items in the notes to the financial statements and requires disclosure of specified information related to purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The amendments in this ASU are effective for annual periods beginning after* December 15, 2026,and interim periods beginning after December 15, 2027.Companies have the option to apply the guidance either on a retrospective or prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of the ASU on its condensed consolidated financial statements and related disclosures. In January 2025,the FASB issued ASUNo.* 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic220-40): Clarifying the Effective Date. This ASU amends the effective date of ASUNo. 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after* December 15, 2026,and interim periods within annual reporting periods beginning after December 15, 2027.Early adoption of ASUNo.* 2024-03 is permitted.

In* December 2023,the FASB issued ASUNo.* 2023-09, “ Income Taxes (Topic740*): Improvements to Income Tax Disclosures* ” . Upon adoption of this ASU, the company will disclose specific new categories in its income tax rate reconciliation and provide additional information for reconciling items above a quantitative threshold. The Company will also disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes, and also disaggregated by individual jurisdictions in which income taxes paid were above a threshold. The Company expects these amendments willfirst be applied in the company’s annual report on Form10-K for the fiscal year ending* December 31, 2025,*on a prospective basis.

In* November 2023,the FASB issued Accounting Standards Update2023*-07 “ Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures* ” . The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The Company adopted this ASU in thefirst quarter of2024 and upon adoption, the Company has disclosed significant segment expenses, the title and position of the CODM, and an explanation of how the reported measure of segment profit or loss is used by the CODM to assess segment performance and make resource allocation decisions.

**3. ** Acquisition

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Acquisition of Douglas Stewart Software & Services, LLC

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On* July 31, 2024,*Climb Global Solutions DSS, LLC, a wholly-owned subsidiary of the Company, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) and purchased the entire share capital of Douglas Stewart Software & Services, LLC (“DSS”), a Florida limited liability company, for an aggregate purchase price of approximately $20.3 million (subject to certain adjustments) plus a potential post-closing earnout payment. DSS distributes software to VARs and campus stores across North America in both the K-12 and higher education markets, furthering the Company's reach into these markets. The Purchase Agreement contains customary representations, warranties, covenants and indemnities. The acquisition was funded utilizing cash from the Company’s balance sheet.

The financial position and operating results of DSS is included in the Company’s consolidated financial statements from the date of the acquisition. The Company recorded net revenue for DSS of approximately $11.8 million and net income of approximately $0.8 million during the year ended* December 31, 2024*.

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F-17

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 is depicted in the table below. Due to the timing of the closing of the transaction in thethird quarter of2024, the Company hasnot yet completed its evaluation and determination of certain assets acquired and liabilities assumed, primarily the final valuation of goodwill and intangible assets; therefore, the final fair value of the assets acquired and liabilities assumed, which will be completed within the measurement period of up toone year from the acquisition date,* may*vary from the Company’s preliminary estimates.

Intangible assets are comprised of approximately $13.6 million of vendor relationships with a weighted average amortization period of 11 years, representing the expected period of benefits. Goodwill, which was allocated to the Distribution 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. The DSS transaction was structured as an asset acquisition and as such the goodwill resulting from the transaction will be deductible for income tax purposes.

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F-18

The Company used the income approach to value the intangible assets, representing acquired vendor relationships. The fair value measurements were primarily based on significant inputs that arenot observable, which are categorized as a Level3 measurement in the fair value hierarchy (See Note14 – Fair Value Measurements). Inputs used to value these intangible assets include the discount rate, projection of all future cash flows, long-term growth rates in revenue and earnings before interest, tax, depreciation and amortization, vendor attrition rates and applicable income tax rates. The excess purchase price recorded to goodwill primarily represents the future economic benefits the Company expects to achieve as a result of combining operations and expanding vendor relationships.

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The purchase consideration includes approxim ately $1.7 million fair value for potential earn-out consideration if certain targets are achieved by* September 30, 2025,payable in cash. As of December 31, 2024*, the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximately $1.9 million, with$0.1 million adjustment recognized within change in fair value of acquisition contingent consideration during the year ended* December 31, 2024*. The fair value earn-out measurement was primarily based on inputs that arenot observable, which are categorized as a Level3 measurement in the fair value hierarchy (See Note14 – Fair Value Measurements), reflecting its assessment of the assumptions market participants would use to value these liabilities. The undiscounted payment of the earn-out can range from zero up to approximately $4.2 million and achievement is based on the post-acquisition results of DSS.

Acquisition of Data Solutions Holdings Limited

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On* October 6, 2023,*the Company entered into a Share Purchase Agreement and purchased the entire share capital of Data Solutions Holdings Limited (“Data Solutions”) for an aggregate purchase price of approximately€15.0 million (equivalent to $15.9 million USD), subject to certain working capital and other adjustments, paid at closing plus a potential post-closing earn-out. The allocation of the purchase price was based on the estimated fair value of Data Solutions’ net tangible and identifiable intangible assets as of the date of the acquisition. The transaction was accounted for under the purchase method of accounting.

The purchase consideration included approximately $2.2 million fair value for potential earn-out consideration if certain targets are achieved, payable in cash. During the year* December 31, 2024*, the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximately $3.4 million, with$1.2 million adjustment recognized within change in fair value of acquisition contingent consideration during the year ended* December 31, 2024*. The earn-out was paid in cash during the year ended* December 31, 2024* andno liability remains as of* December 31, 2024*. The earn-out liability was included in current liabilities as of* December 31, 2023.The Company also paid approximately $0.5 million for amounts that had been held back at the closing date of the transaction, which were included in payments for acquisitions, net of cash acquired within the cash flow statement for the year ended December 31, 2024*.

In connection with the acquisition of Data Solutions on* October 6, 2023,the Company acquired an invoice discounting facility (“IDF”) that was with recourse to the Company (See Note11* – Credit Facilities). The balance outstanding under the IDF at* December 31, 2024* waszero, as the Company terminated the IDF during the period, compared to $4.3 million at* December 31, 2023,*which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

During the years ended* December 31, 2024and2023*, the Company recognized acquisition related costs of $2.3 million and $0.6 million, respectively. These acquisition related costs are reflected in the accompanying consolidated statements of earnings. The costs incurred during the year ended* December 31, 2024related to our continued acquisition initiatives including the aforementioned DSS acquisition, while the costs incurred during the prior period ended December 31, 2023*related to the Data Solutions acquisition.

Pro Forma Results (unaudited)

The following unaudited pro forma financial information summarizes the results of operations for the years ended* December 31, 2024and2023** as if the acquisition of DSS and Data Solutions has been completed as of the beginning of the years ended December 31, 2024and2023*, respectively. The pro forma results are based upon certain assumptions and estimates, and they give effect to actual operating results prior to the acquisitions and adjustments to reflect income taxes at a rate consistent with the tax rates of the local jurisdictions. As a result, these pro forma results donot necessarily represent results that would have occurred if the acquisitions had taken place on the basis assumed above, nor are they indicative of the results of future combined periods.

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F-19

**4. ** Goodwill and Other Intangible Assets

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 following table summarizes the changes in the carrying amount of goodwill by reportable segment for the years ended* December 31, 2024and2023*.

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

Customer relationships are amortized over thirteen years. Vendor relationships are amortized between eight andfifteen years. Trade name is amortized over fifteen years.

The Company recognized total amortization expense for other intangibles, net of$3*.4* million and $2.2 million during the years ended* December 31, 2024and2023*, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of* December 31, 2024* is as follows:

F-20

**5. ** Right-of-use Asset and Lease Liability

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The Company has entered into operating leases for office and warehouse facilities, which have terms at lease commencement that range from 1 years to 11 years. The Company determines if an arrangement is a lease at inception. Leases with an initial term of12 months or less arenot recorded on the Consolidated Balance Sheets and lease expense for these leases is recognized on a straight-line basis over the lease term.

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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 donot provide a readily determinable implicit rate, we use an incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Operating lease expense is recognized on a straight-line basis over the lease term and included in selling, general and administrative expenses.

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Information related to the Company’s right-of-use assets and related lease liabilities were as follows:

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Maturities of lease liabilities as of* December 31, 2024* were as follows:

F-21

**6. ** Balance Sheet Detail

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Equipment and leasehold improvements, net consist of the following:

Depreciation expense relating to equipment, leasehold improvements and buildings, net was$0.9 million and $0.6 million during the years ended* December 31, 2024and2023*, respectively.

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Accounts receivable – long term, net consist of the following:

Accounts payable and accrued expenses consist of the following:

Accumulated other comprehensive loss consists of the following:

F-22

**7. ** Income Taxes

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Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the Consolidated Balance Sheets are as follows:

The provision for income taxes is as follows:

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:

F-23

The Company has analyzed filing positions in all the federal, state and foreign 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 returns, its Canadian tax return and its tax return in the United Kingdom as major tax jurisdictions. As of* December 31, 2024*, the Company’s 2021 through2023 Federal tax returns remain open for examination. The Company’s various states and Canadian tax returns are open for examination for the years 2020 through2023. The Company’s tax return in the United Kingdom is open for examination for the years 2022 and2023. 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:

The Company has approximately $10.2 million of undistributed earnings in Canada and $4.9 million of undistributed earnings in the United Kingdom and $0.6 million of undistributed earnings in Ireland, which it continues to reinvest indefinitely, and thereforeno withholding taxes related to its repatriation has been recorded.

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There wasno activity related to the Company’s unrecognized tax benefits during the year ended* December 31, 2024and December 31, 2023*.

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During the years ended* December 31, 2024and2023*, the Company incurred interest and penalties of zero, respectively, related to these uncertain tax benefits.

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**8. ** Credit Facilities

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On* May 18, 2023,the Company entered into a revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JPM”), providing for a revolving credit facility of up to $50.0 million subject to a borrowing base, including the issuance of letters of credit and swingline loansnot* to exceed $2.5 million and $5.0 million, respectively, at any time outstanding. In addition, subject to certain conditions enumerated in the Credit Agreement, the Company has the right to increase the revolving credit facility by a total amountnot to exceed $20.0 million. The proceeds of the revolving loans, letters of credit and swingline loans under the Credit Agreement* may*be used for working capital needs, general corporate purposes and for acquisitions permitted by the terms of the Credit Agreement.

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All outstanding loans issued pursuant to the Credit Agreement become due and payable on* May 18, 2028.There wereno* amounts outstanding under the Credit Agreement as of* December 31, 2024and2023*, respectively.

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Outstanding Loans comprising (i) ABR Borrowings bear interest at the ABR plus the Applicable Rate, (ii) Term Benchmark Borrowings bear interest at the Adjusted Term SOFR Rate or the Adjusted EURIBOR Rate, as applicable, plus the Applicable Rate and (iii) RFR Loans bear interest at a rate per annum equal to the applicable Adjusted Daily Simple RFR plus the Applicable Rate. The Applicable Rate for borrowings varies (i) in the case of ABR Borrowings, from 0.50% to 0.75% and (ii) in the case of Term Benchmark Borrowings and RFR Loans, from 1.50% to 1.75%.

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The Credit Agreement contains customary affirmative covenants, such as financial statement and collateral reporting requirements. The Credit Agreement also contains customary negative covenants that limit the ability of the Company to, among other things, incur indebtedness, create liens or permit encumbrances, or undergo certain fundamental changes. Additionally, under certain circumstances, the Company is required to maintain a minimum fixed charge coverage ratio.

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F-24

In connection with entering into the Credit Agreement, the Company voluntarily terminated its existing revolving credit agreement, dated* November 15, 2017*with Citibank N.A. (“Previous Credit Facility”).

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On* April 8, 2022,the Company entered into a $2.1 million term loan (the “Term Loan”) with First American Commercial Bancorp, Inc. pursuant to a Master Loan and Security Agreement. The proceeds from the Term Loan will be used to fund certain capital expenditures. The borrowing under the Term Loan bears interest at a rate of 3.73% per annum and is being repaid overforty-eight* monthly installments of principal and interest through* April 2026.*

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As of* December 31, 2024and2023*, the Company had $0.8 million and $1.3 million outstanding under the Term Loan, respectively.

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As of* December 31, 2024*, future principal payments under the Term Loan are as follows:

In connection with the acquisition of Data Solutions (See Note3 – Acquisition), the Company acquired an IDF that was with recourse to the Company. Data Solutions had previously entered into the IDF with AIB Commercial Finance Limited (“AIB”) pursuant to a Debt Purchase Agreement. The Company subsequently terminated the IDF during the year ended* December 31, 2024.The proceeds from the IDF were used for working capital needs of Data Solutions. Borrowings under the IDF were based on accounts receivable up to 80% of the outstanding accounts receivable balance. The discount rate under the IDF was equal to 2.5% above AIB’s applicable lending rates that vary based on the currency of the accounts receivable. The outstanding balance under the IDF at December 31, 2024* was zero, as the Company terminated the IDF during the period, compared to $4.3 million at* December 31, 2023,*which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

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9. ** Stockholders’ Equity and Stock-Based Compensation**

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The2021 Omnibus Incentive Plan (the*“2021* Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards. The2021 Plan was approved by the Company’s stockholders at the2021 Annual Meeting in* June 2021.The total number of shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) initially available for award under the2021* Plan was 500,000 shares. As of* December 31, 2024*, the number of shares of Common Stock available for future award grants to employees, officers and directors under the2021 Plan is 241,068.

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The2012 Stock-Based Compensation Plan (the*“2012* Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards. The total number of shares of the Company’s Common Stock initially available for award under the2012 Plan was 600,000, which was increased to 1,000,000 shares by stockholder approval at the Company’s2018 Annual Meeting in* June 2018.Immediately prior to the replacement of the2012* Plan by the2021 Plan, there were 352,158 shares of Common Stock available under the2012 Plan. The2012 Plan has been replaced by the2021 Plan andnone of the remaining shares of Common Stock authorized under the2012 Plan will be transferred to or used under the2021 Plan nor will any awards under the2012 Plan that are forfeited increase the shares available for awards under the2021 Plan. As of* December 31, 2024*, the number of shares of Common Stock available under the2012 Plan is zero.

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During the year ended* December 31, 2024*, the Company granted a total of 51,812 shares of Restricted Stock to officers, directors and employees. These shares of Restricted Stock vest immediately, over time inthree equal installments or over time in up tosixteen equal quarterly installments. During the year ended* December 31, 2024*,1,999 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company.

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During the year ended* December 31, 2023*, the Company granted a total of 132,526 shares of Restricted Stock to officers, directors and employees. These shares of Restricted Stock vest immediately, over time inthree equal installments or over time in up tosixteen equal quarterly installments.

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F-25

There wasno options activity during the year ended* December 31, 2024and2023* and there wereno options outstanding or exercisable at* December 31, 2024and2023*, respectively, under both the Company’s2012 Plan and2021 Plan.

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Under the various plans, options that are cancelled can be reissued. At* December 31, 2024*,no cancelled options were reserved for future reissuance.

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A summary of nonvested shares of Restricted Stock awards outstanding under the Company’s2012 Plan as of* December 31, 2024*, and2023 and changes during the years ended* December 31, 2024and2023* is as follows:

As of* December 31, 2024*, there was approximately $2.9 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 1.5 years.

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For the years ended* December 31, 2024and2023*, the Company consistently recognized share-based compensation cost of approximately $4.1 million, respectively, which is included in selling, general and administrative expenses.

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**10. ** Defined Contribution Plan

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The Company maintains a defined contribution plan covering substantially all employees. Participating employees* maymake 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 didnot* exceed 8% of their compensation. During the years ended* December 31, 2024and2023*, the Company expensed approximately $0.9 million and $0.5 million, respectively, related to this plan.

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F-26

**11. ** Commitments and Contingencies

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Severance Plan

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The Board of Directors of the Company previously approved the Climb Global Solutions, Inc. Executive Severance and Change in Control Plan (the “Severance Plan”), which supersedes and replaces all other severance arrangements between the Company and its executive officers, which previously had been governed by separate legacy employment agreements and offer letters. The Severance Plan provides severance benefits upon a qualifying termination of employment (“Covered Termination”) of an executive officer. The Severance Plan provides forthree tiers of severance benefits in the event of a Covered Termination based on the executive’s seniority and position, including payment of6-18 months of base salary, a pro rata payment of such executive’s bonus for the year in which the Covered Termination occurred, and a COBRA subsidy during the severance period. In the event the Covered Termination in connection with a change of control, the Severance Plan provides for increased severance benefits, including payment of18-24 months of base salary, payment of such executive’s target bonus for the year in which the Covered Termination occurred, double trigger vesting acceleration of equity awards, and a COBRA subsidy during the severance period.

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Other

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As of* December 31, 2024*, the Company hasno standby letters of credit, hasno standby repurchase obligations or other commercial commitments. The Company has a line of credit see Note8 (Credit Facility). Other than employment agreements, other management compensation arrangements and related party transactions as disclosed in Note12, the Company isnot engaged in any other transactions with related parties.

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**12. ** Related Party Transactions

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The Company made sales to a customer where a family member ofone of our executive’s has a minority ownership position. The minority ownership position terminated during the year ended* December 31, 2024*. During the year ended* December 31, 2024and2023*, net sales to this customer totaled approximately $0.7 million and $1.4 million, respectively, and amounts due from this customer as of* December 31, 2024and2023* were zero and less than $0.1 million, respectively, which was settled in cash subsequent to the period end.

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13. Industry, Segment and Geographic Financial Information

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The Company distributes software developed by others through resellers indirectly to customers worldwide. We also resell computer software and hardware developed by others and provide technical services directly to customers worldwide.

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FASB ASC Topic280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the public company’s Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s Chief Executive Officer, who has been identified as the Company’s CODM, evaluates the performance of both reportable segments based on operating income. Net sales, gross profit, and operating expenses are also monitored closely. This information is used to measure segment profitability, allocate resources, and make budgeting and forecasting decisions about the reportable segments. The CODM also uses these measures to monitor trends in year over year performance comparisons, sequential quarter performance comparisons, and to compare actual results to forecasts. More disaggregated information about operating expense is generally only reviewed by the CODM on a consolidated basis. Operating income represents net sales less costs of sales, excluding depreciation and amortization expense and operating expenses. Net sales and cost of sales, excluding depreciation and amortization expense are directly attributed to each segment. The majority of operating expenses are also directly attributed to each segment, while certain other operating expenses are allocated to the segments in a reasonable manner considering the specific facts and circumstances of the expenses being allocated.

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The Company is organized intotwo reportable operating segments. The “Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “Solutions” segment is a provider of cloud solutions and value-added reseller of software, hardware and services to customers worldwide. The Company's reportable segments are based on products and services delivered, and the Company's CODM decides how to assess performance and allocate resources based on segment.

F-27

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 expensesnot attributed to an individual segment business unit. The Company only identifies accounts receivable, vendor prepayments, inventory, goodwill and intangible assets by segment as shown below as “Selected Assets” by segment; it doesnot allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided:

F-28

Geographic areas and net sales mix related to operations for the year ended* December 31, 2024and2023* were as follows. Net sales is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.

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Geographic identifiable assets related to operations as of* December 31, 2024and2023* were as follows.

F-29

For the year ended* December 31, 2024*, the Company hadthree customers that accounted for 18%,14% and 11%, respectively, of consolidated net sales and as of* December 31, 2024*,12%,6% and 19%, respectively, of total net accounts receivable. For the year ended* December 31, 2024*, the Company hadone vendor that accounted for 10% of our consolidated purchases. These customers and vendors are all in the Company's Distribution segment.

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For the year ended* December 31, 2023*, the Company hadtwo customers that accounted for 20%, and 15%, respectively, of consolidated net sales and as of* December 31, 2023*,15% and 6%, respectively, of total net accounts receivable. For the year ended* December 31, 2023*, the Company hadone vendor that accounted for 14% of our consolidated purchases. These customers and vendors are all in the Company's Distribution segment.

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Our topfive customers accounted for 54% and 51% of consolidated net sales for the years ended* December 31, 2024and2023*, respectively.

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**14. ** Fair Value Measurements

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Fair value is defined under US GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established for valuation inputs to prioritize the inputs intothree levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported inone of thethree levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

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Level1 – observable inputs such as quoted prices for identical instruments traded in active markets.

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Level2 – inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that arenot active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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Level3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

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The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of* December 31, 2024and2023*, respectively, are as follows:

F-30

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions based on the best information available. The approach to estimating the contingent earn-out associated with the Company’s business combinations uses unobservable factors such as projected cash flows over the term of the contingent earn-out periods.

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The Company’s investment in treasury bills are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level1 within the fair value hierarchy. The Company’s contingent earn-out liability is measured at fair value on a recurring basis and is classified as level3 within the fair value hierarchy. During thefourth quarter of each year, the Company evaluates goodwill for impairment at the reporting unit level. The Company uses qualitative factors to determine whether it is “more likely thannot” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a goodwill impairment test. This measurement is classified based on level3 input.

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The following table presents the changes in the Company’s level3 financial instruments measured at fair value on a recurring basis:

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F-31

**15. ** Subsequent Events

On* January 30, 2025,the Company received notice of termination of a distribution agreement fromone of its vendors. This vendor relationship was acquired through a prior year acquisition and as such, the Company had previously recognized an intangible asset at the prior year acquisition date for this vendor relationship that was being amortized over a period of 11 years, which represented the expected period of benefits as of the acquisition date. As of December 31, 2024*, the unamortized value of this vendor relationship intangible asset was approximately $4.9 million, which will be assessed for potential impairment or change in the amortization life of the intangible asset during thefirst quarter of2025.