Climb Global Solutions, Inc.

Notes to Condensed Consolidated Financial Statements

June 30, 2025

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

1.** Basis of Presentation:**

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The accompanying unaudited condensed consolidated financial statements of Climb Global Solutions, Inc. and its subsidiaries (collectively, the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form10-Q and Rule10-01 of Regulation S-X. Accordingly, as permitted by the rules and regulation of the Securities and Exchange Commission, the financial statements donot include all of the information and footnotes required by U.S. GAAP for complete audited financial statements.

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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 arenot 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* maydiffer from these estimates under different assumptions or conditions. The unaudited condensed consolidated statements of earnings for the interim periods arenot* 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 Form10-K filed with the Securities Exchange Commission for the fiscal year ended* December 31, 2024*.

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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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Reclassifications

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Certain reclassifications and immaterial revisions have been made to the prior period financial statements to conform to the current-year presentation.

2. Recently Issued Accounting Standards:

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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.

3.** 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. Transactions denominated in currencies other than the applicable functional currency are converted to the functional currency at the exchange rate on the transaction date. Foreign currency transaction gains and losses are recorded as income or expenses as amounts are settled. The net sales from our foreign operations for thethree months ended* June 30, 2025and2024* were $42.7 million and $22.9 million, respectively. The net sales from our foreign operations for thesix months ended* June 30, 2025and2024* were $73.7 million and $51.1 million, respectively.

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 thanthree 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 loss of less than $0.1 million on contracts outstanding as of* June 30, 2025*, which is included in foreign currency transaction loss in the Consolidated Statements of Earnings.

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4.** Comprehensive Income:**

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Cumulative translation adjustments have been classified within accumulated other comprehensive loss, which is a separate component of stockholders’ equity in accordance with FASB ASC Topic220, “Comprehensive Income.”

5.** 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 Note17 – Segment Information.

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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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.

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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.

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

6. Acquisition:

On* 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 value added resellers (“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 purchase consideration included approximately $1.7 million fair value for potential earn-out consideration if certain targets are achieved by* September 30, 2025,payable in cash. As of June 30, 2025*, the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximately $2.4 million, with $0.4 million and $0.5 million adjustment recognized within change in fair value of acquisition contingent consideration during thethree andsix months ended* June 30, 2025*, respectively. 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 Note18 – 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.

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7. Goodwill and Other Intangible Assets:

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The following table summarizes the changes in the carrying amount of goodwill for thesix months ended* June 30, 2025*:

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

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

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During thethree months ended* June 30, 2025and2024*, the Company recognized total amortization expense for other intangibles, net of $1.6 million and $0.7 million, respectively. During thesix months ended* June 30, 2025and2024*, the Company recognized total amortization expense for other intangibles, net of $2.9 million and $1.4 million, respectively.

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Estimated future amortization expense of the Company’s other intangibles, net as of* June 30, 2025* is as follows:

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8. 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 2 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 (“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 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 ROU assets and related lease liabilities were as follows:

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Maturities of lease liabilities as of* June 30, 2025* were as follows:

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9. Fair Value:

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The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable, accounts payable and term loan approximated fair value at* June 30, 2025* and* December 31, 2024* because of the relative short maturity of these instruments. The Company’s accounts receivable long-term are discounted to their present value at prevailing market rates at the time of sale.

10. Balance Sheet Detail:

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Equipment and leasehold improvements consist of the following:

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During thethree months ended* June 30, 2025and2024*, the Company recorded depreciation and amortization expense of $0.4 millionand $0.1 million, respectively. During thesix months ended* June 30, 2025and2024*, the Company recorded depreciation and amortization expense of $0.8 million and $0.3 million, respectively.

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In limited circumstances, the Company offers extended payment terms to customers for periods of 12 to 36 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 withinone year are reclassified to the current portion of accounts receivable. Accounts receivable long term, net consists of the following:

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The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $0.4 million, $0.9 million and $0.4 million, respectively, during each of the12-month periods ending* June 30,* 2025, 2026, and2027.

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Accounts payable and accrued expenses consist of the following:

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11.** Credit Facility:**

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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, 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* June 30, 2025* and* December 31, 2024*.

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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%. Capitalized terms used in this paragraph are defined in the Credit Agreement.

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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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On* April 8, 2022,the Company entered into a $2.1 million term loan (the “Term Loan”) with First American Commercial Bancorp, Inc. (“First American”) pursuant to a Master Loan and Security Agreement. The proceeds from the Term Loan were 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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At* June 30, 2025* and* December 31, 2024*, the Company had $0.5 million and $0.8 million outstanding under the Term Loan, respectively. At* June 30, 2025*, future principal payments under the Term Loan are as follows:

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In connection with the acquisition of Data Solutions, which was completed* October 6, 2023,the Company acquired an invoice discounting facility ("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 varied based on the currency of the accounts receivable.

12. Earnings Per Share:

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Our basic and diluted earnings per share are computed using thetwo-class method in accordance with ASC260. Thetwo-class method is an earnings allocation that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities. Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding during each period. Diluted and basic earnings per share are the same because the restricted shares are the only potentially dilutive security.

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

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13.** Major Customers and Vendors:**

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During thethree months ended* June 30, 2025*, the Company hadno major vendors, compared toone major vendor that accounted for 10% of total purchases during thethree months ended* June 30, 2024.During thesix* months ended* June 30, 2025*, the Company hadno major vendors, compared toone major vendor that accounted for 13% of total purchases during thesix months ended* June 30, 2024*.

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The Company hadthree major customers that accounted for 24%,20% and 13%, respectively, of its net sales during thethree months ended* June 30, 2025*, and 18%,1% and 18%, respectively, of its net sales during thethree months ended* June 30, 2024.The Company hadthree major customers that accounted for 25%,13% and 13% of net sales during thesix* months ended* June 30, 2025*, and 19%,2% and 16%, of net sales during thesix months ended* June 30, 2024*. These same customers accountedfor 18%,25% and 8% oftotal net accounts receivable as of* June 30, 2025*, and 12%,19% and 6% of total net accounts receivable as of* December 31, 2024*.

14.** Income Taxes:**

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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.

During thethree months ended* June 30, 2025and2024*, the Company recorded a provision for income taxes of $1.8 million and $1.0 million, respectively. The effective tax rate for thethree months ended* June 30, 2025and2024* was 22.9% and 22.8%, respectively. During thesix months ended* June 30, 2025and2024*, the Company recorded a provision for income taxes of $2.3 million and $1.9 million, respectively. The effective tax rate for thesix months ended* June 30, 2025and2024* was 19.5% and 23.6%, respectively. The change in effective tax rate for the three andsix months ended* June 30, 2025* compared to the same period in the prior year was primarily impacted by a discrete item for the recognition of excess tax benefits related to share-based compensation in income tax expense. The recognition of excess tax benefit related to share-based compensation in income tax expense resulted in a net tax benefit of $0.2 million and $0.7 million, respectively, which reduced our effective tax rate by 2.6% and 5.9% during thethree andsix months ended* June 30, 2025*.

15. Stockholders’** Equity and Stock Based Compensation:**

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The2021 Omnibus Incentive Plan (the*“2021* Plan”) authorizes the grant of Stock Options, Restricted 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* June 30, 2025*, the number of shares of Common Stock available for future award grants to employees, officers and directors under the2021 Plan is 155,991.

During thesix months ended* June 30, 2025*, the Company granted a totalof 43,736 shares of Restricted Stock Units to directors, officers and employees. These shares of Restricted Stock Units vest immediately, over time inthree equal installments or over time insixteen equal quarterly installments. During thesix months ended* June 30, 2025*, a total of 15,471 shares of Restricted Stock Units were forfeited.

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During thesix months ended* June 30, 2024*, the Company granted a total of 51,812 shares of Restricted Stock Units to directors, officers and employees. These shares of Restricted Stock Units vest immediately, over time inthree equal installments or over time insixteen equal quarterly installments. During thesix months ended* June 30, 2024*, a total of 1,661 shares of Restricted Stock Units were forfeited.

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A summary of nonvested shares of Restricted Stock Units awards outstanding under the2021 Plan as of* June 30, 2025*, and changes during thethree months then ended is as follows:

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As of* June 30, 2025*, there is approximately $5.5 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 2.1 years.

During the three months ended* June 30, 2025and2024*, the Company recognized share-based compensation expense of $1.2 millionand $1.1 million, respectively. During thesix months ended* June 30, 2025and2024*, the Company recognized share-based compensation expense of $2.5 million and $1.9 million, respectively.

16. Commitments and Contingencies

Severance Plan

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.

Other

As of* June 30, 2025*, the Company hasno standby letters of credit, hasno standby repurchase obligations or other commercial commitments. The Company has a line of credit see Note11 (Credit Facility). Other than employment agreements and management compensation arrangements, the Company isnot engaged in any other transactions with related parties.

17. Segment 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, 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.

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Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative 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:

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Geographic areas and net sales mix related to operations for thethree andsix months ended* June 30, 2025and2024* were as follows. Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.

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Geographic identifiable assets related to operations as of* June 30, 2025* and* December 31, 2024* were as follows.

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18.** Fair Value Measurements**

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Fair value is defined under U.S. 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* June 30, 2025* and* December 31, 2024*, respectively, are as follows:

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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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During thesix months ended* June 30, 2025*, the Company made a contingent consideration payment of $3.6 million in cash related to the acquisition of Spinnakar Limited, which was completed on* August 18, 2022.*The payment was made based on Spinnakar's achievement of targets outlined in the acquisition agreement.

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19.** Subsequent Events**

The One, Big, Beautiful Bill Act ("OBBBA”) was enacted on* July 4, 2025and the Company continues to evaluate the impact on its financial position. The OBBBA isnot* currently expected to materially impact the Company’s effective tax rate or cash flows in the current fiscal year.