Climb Global Solutions (CLMB) 10-Q 7 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 03, 2017
Document and Entity Information
Entity Registrant Name	Wayside Technology Group, Inc.
Entity Central Index Key	945,983
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		4,503,788
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 9,729	$ 13,524
Accounts receivable, net of allowances of $2,751 and $2,293, respectively	63,010	83,317
Inventory, net	2,349	2,324
Prepaid expenses and other current assets	1,212	948
Total current assets	76,300	100,113
Equipment and leasehold improvements, net	1,993	1,937
Accounts receivable-long-term	11,969	11,119
Other assets	214	113
Deferred income taxes	444	416
Total assets	90,920	113,698
Current liabilities
Accounts payable and accrued expenses	53,543	76,087
Total current liabilities	53,543	76,087
Commitments and contingencies
Stockholders' equity:
Common Stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued; 4,513,205 and 4,555,434 shares outstanding, respectively	53	53
Additional paid-in capital	29,944	30,683
Treasury stock, at cost, 771,295 and 729,066 shares, respectively	(12,963)	(12,029)
Retained earnings	21,568	20,515
Accumulated other comprehensive loss	(1,225)	(1,611)
Total stockholders' equity	37,377	37,611
Total liabilities and stockholders' equity	$ 90,920	$ 113,698

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Condensed Consolidated Balance Sheets
Accounts receivable, allowances (in dollars)	$ 2,751	$ 2,293
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized	10,000,000	10,000,000
Common Stock, shares issued	5,284,500	5,284,500
Common Stock, shares outstanding	4,513,205	4,555,434
Treasury stock, shares	771,295	729,066

Consolidated Statements of Earn

Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Condensed Consolidated Statements of Earnings
Net sales	$ 102,982	$ 105,257	$ 215,778	$ 198,580
Cost of sales	96,410	98,257	202,447	185,628
Gross profit	6,572	7,000	13,331	12,952
Selling, general and administrative expenses	4,842	4,756	9,810	9,216
Income from operations	1,730	2,244	3,521	3,736
Other income:
Interest, net	173	61	321	125
Foreign currency transaction (loss)	(50)	(3)	(50)	(3)
Income before provision for income taxes	1,853	2,302	3,792	3,858
Provision for income taxes	578	775	1,200	1,303
Net income	$ 1,275	$ 1,527	$ 2,592	$ 2,555
Income per common share-Basic (in dollars per share)	$ 0.30	$ 0.34	$ 0.60	$ 0.56
Income per common share-Diluted (in dollars per share)	$ 0.30	$ 0.34	$ 0.60	$ 0.56
Weighted average common shares outstanding-Basic (in shares)	4,285	4,524	4,314	4,545
Weighted average common shares outstanding-Diluted (in shares)	4,315	4,535	4,337	4,557
Dividends paid per common share (in dollars per share)	$ 0.17	$ 0.17	$ 0.34	$ 0.34

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Condensed Consolidated Statements of Comprehensive Income
Net income	$ 1,275	$ 1,527	$ 2,592	$ 2,555
Other comprehensive income , net of tax:
Foreign currency translation adjustment	254	(53)	386	70
Other comprehensive income (loss)	254	(53)	386	70
Comprehensive income	$ 1,529	$ 1,474	$ 2,978	$ 2,625

Consolidated Statement of Stock

Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2017 - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Treasury	Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Total
Balance at Dec. 31, 2016	$ 53	$ 30,683	$ (12,029)	$ 20,515	$ (1,611)	$ 37,611
Balance (in shares) at Dec. 31, 2016	5,284,500					5,284,500
Balance (in shares) at Dec. 31, 2016			729,066			729,066
Increase (Decrease) in Stockholders' Equity
Net income				2,592		$ 2,592
Translation adjustment					386	386
Dividends paid				(1,539)		(1,539)
Share-based compensation expense		703				703
Restricted stock grants (net of forfeitures)		(1,442)	$ 1,442
Restricted stock grants (in shares)			(87,040)
Treasury stock repurchased			$ (2,376)			(2,376)
Treasury stock repurchased (in shares)			129,269
Balance at Jun. 30, 2017	$ 53	$ 29,944	$ (12,963)	$ 21,568	$ (1,225)	$ 37,377
Balance (in shares) at Jun. 30, 2017	5,284,500					5,284,500
Balance (in shares) at Jun. 30, 2017			771,295			771,295

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities
Net income	$ 2,592	$ 2,555
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	233	108
Deferred income tax (benefit) expense	(28)	33
Share-based compensation expense	703	839
(Benefit) provision for doubtful accounts receivable	(54)
Changes in operating assets and liabilities:
Accounts receivable	19,769	(985)
Inventory	(20)	(165)
Prepaid expenses and other current assets	(259)	(276)
Accounts payable and accrued expenses	(22,660)	2,610
Other assets	(104)	(50)
Net cash provided by operating activities	172	4,669
Cash flows used in investing activities
Purchase of equipment and leasehold improvements	(285)	(210)
Net cash used in investing activities	(285)	(210)
Cash flows used in financing activities
Purchase of treasury stock	(2,376)	(1,959)
Tax benefit from share-based compensation		78
Dividends paid	(1,539)	(1,621)
Net cash used in financing activities	(3,915)	(3,502)
Effect of foreign exchange rate on cash	233	(204)
Net (decrease) increase in cash and cash equivalents	(3,795)	753
Cash and cash equivalents at beginning of period	13,524	23,823
Cash and cash equivalents at end of period	9,729	24,576
Supplementary disclosure of cash flow information:
Income taxes paid	$ 1,359	$ 1,207

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2017
Basis of Presentation
Basis of Presentation	1. Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of Wayside Technology Group, Inc. and its subsidiaries (collectively, the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete audited financial statements. The preparation of these condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, 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, and contingencies and litigation. The Company bases its estimates on its historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In the opinion of the Company’s management, all adjustments that are of a normal recurring nature, considered necessary for fair presentation, have been included in the accompanying condensed consolidated financial statements. The Company’s actual results may differ from these estimates under different assumptions or conditions. The unaudited condensed consolidated statements of earnings for the interim periods are not necessarily indicative of results for the full year. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K filed with the Securities Exchange Commission for the year ended December 31, 2016.

Significant Accounting Policies

Significant Accounting Policies	6 Months Ended
	Jun. 30, 2017
Significant Accounting Policies
Significant Accounting Policies	2. Significant Accounting Policies: In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance for revenue recognition for contracts, superseding the previous revenue recognition requirements, along with most existing industry-specific guidance. The guidance requires an entity to review contracts in five steps: 1) identify the contract, 2) identify performance obligations, 3) determine the transaction price, 4) allocate the transaction price, and 5) recognize revenue. The new standard will result in enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers. Entities are allowed to transition to the new standard by either recasting prior periods or recognizing the cumulative effect as of the beginning of the period of adoption. The standard and related amendments will be effective for the Company for its annual reporting period beginning January 1, 2018, including interim periods within that reporting period. The Company is in the process of developing its conclusions on several aspects of the standard including principal versus agent considerations, identification of performance obligations, the determination of when control of goods and services transfers to the Company’s customer, which transition approach will be applied and the estimated impact it will have on our consolidated financial statements. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, "Simplifying the Measurement of Inventory (Topic 330)", ("ASU 2015-11"). Topic 330, Inventory, currently requires an entity to measure inventory at the lower of cost or market, with market value represented by replacement cost, net realizable value or net realizable value less a normal profit margin. The amendments in ASU 2015-11 require an entity to measure inventory at the lower of cost or net realizable value. ASU 2015-11 is effective for reporting periods beginning after December 15, 2016. We adopted ASU 2015-11 during the quarter ended March 31, 2017 and it did not have a material impact on our consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted the provisions of ASU 2016-09 related to the recognition of excess tax benefits in the income statement and classification in the statement of cash flows were adopted prospectively and the prior periods were not retrospectively adjusted. The Company has elected to account for forfeitures of share-based awards when they occur in determining compensation cost to be recognized each period. The adoption of ASU 2016-09 did not have a material impact on our consolidated financial statements In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 supersedes the lease guidance under FASB Accounting Standards Codification ("ASC") Topic 840, Leases, resulting in the creation of FASB ASC Topic 842, Leases. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. Leases will be classified as either finance or operating leases with classification affecting the pattern of expenses recognition in the statement of earnings. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the potential impact of adopting ASU 2016-02 on its consolidated financial statements. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASU No. 2016-13"). ASU No. 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU No. 2016-13 is effective for the Company in the first quarter of 2020, with early adoption permitted, and is to be applied using a modified retrospective approach. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2016-13 on it consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (“ASU 2016-15”) ASU 2016-15 which reduces diversity in practice in how certain transactions are classified in the statement of cash flows. The new standard will become effective for the Company beginning with the first quarter of 2018, with early adoption permitted. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” This amendment is intended to improve accounting for the income tax consequences of intra-entity transfers of assets other than inventory. In accordance with this guidance, an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The ASU is effective for the Company beginning in fiscal 2019. Early adoption is permitted in fiscal 2018 with modified retrospective application. The Company is continuing to evaluate the impact of the adoption of this guidance on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Scope of Modification Accounting”, to reduce diversity in practice and provide clarity regarding existing guidance in ASC 718, “Stock Compensation”. The amendments in this updated guidance clarify that an entity should apply modification accounting in response to a change in the terms and conditions of an entity’s share-based payment awards unless three newly specified criteria are met. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Company has evaluated the potential impacts of this updated guidance, and it does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.

Foreign Currency Translation

Foreign Currency Translation	6 Months Ended
	Jun. 30, 2017
Foreign Currency Translation
Foreign Currency Translation	3. Foreign Currency Translation: Assets and liabilities of the Company’s foreign subsidiaries have been translated at current exchange rates, and related sales and expenses have been translated at average rates of exchange in effect during the period. The sales from our foreign operations for the first six months of 2017 were $23.6 million as compared to $20.9 million in the first six months of 2016. The sales from our foreign operations for the second quarter of 2017 were $10.9 million as compared to $11.4 million in the second quarter of 2016 .

Comprehensive Income

Comprehensive Income	6 Months Ended
	Jun. 30, 2017
Comprehensive Income
Comprehensive Income	4. Comprehensive Income: Cumulative translation adjustments have been classified within accumulated other comprehensive loss, which is a separate component of stockholders’ equity in accordance with FASB ASC Topic 220, “Comprehensive Income.”

Revenue Recognition

Revenue Recognition	6 Months Ended
	Jun. 30, 2017
Revenue Recognition
Revenue Recognition	5. Revenue Recognition: Revenue on product (software and hardware) and maintenance and subscription agreement sales are recognized once four criteria are met: (1) persuasive evidence of an arrangement exists, (2) the price is fixed and determinable, (3) delivery (software and hardware) or fulfillment (maintenance and subscription) has occurred, and (4) there is reasonable assurance of collection of the sales proceeds. Revenues from the sales of hardware products, software products and licenses, maintenance and subscription agreements are generally recognized on a gross basis upon delivery or fulfillment with the selling price to the customer recorded as sales and the acquisition cost of the product recorded as cost of sales. Product delivery to customers occur in a variety of ways, including (i) as physical product shipped from the Company’s warehouse, (ii) via drop-shipment by the vendor, or (iii) via electronic delivery for software licenses. The Company leverages drop-ship arrangements with many of its vendors and suppliers to deliver products to customers without having to physically hold the inventory at its warehouse, thereby increasing efficiency and reducing costs. The Company generally recognizes revenue for drop-ship arrangements on a gross basis. Furthermore, in such drop-ship arrangements, the Company negotiates price with the customer, pays the supplier directly for the product shipped and bears credit risk of collecting payment from its customers. Maintenance and subscription agreements allow customers to access software and obtain technical support directly from the software publisher and to upgrade, at no additional cost, to the latest technology if new applications are introduced by the software publisher during the period that the maintenance and subscription agreement is in effect. The Company generally serves as the principal with the customer and, therefore, recognizes the sale and cost of sale of the product upon receiving notification from the supplier that the product has shipped or the contract with respect to maintenance and subscription agreements has been fulfilled as the Company has no future performance obligation. counting by a Customer (including reseller) for Certain Consideration Received from a Vendor .” Accounts receivable-long-term result from product sales with extended payment terms that are discounted to their present values at the prevailing market rates at the time of the sale. In subsequent periods, the accounts receivable are increased to the amounts due and payable by the customers through the accretion of interest income on the unpaid accounts receivable due in future years. The amounts due under these long-term accounts receivable due within one year are reclassified to the current portion of accounts receivable and are shown net of reserves.

Fair Value

Fair Value	6 Months Ended
	Jun. 30, 2017
Fair Value
Fair Value	6. Fair Value: The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value at June 30, 2017 and December 31, 2016 because of the relative short maturity of these instruments. The Company’s accounts receivable long-term is discounted to their present value at prevailing market rates so the balances approximate fair value.

Balance Sheet Detail

Balance Sheet Detail	6 Months Ended
	Jun. 30, 2017
Balance Sheet Detail
Balance Sheet Detail	7. Balance Sheet Detail: Equipment and leasehold improvements consist of the following: June 30, December 31, 2017 2016 Equipment $ 1,921 $ 1,638 Leasehold improvements 1,326 1,317 3,247 2,955 Less accumulated depreciation and amortization (1,254) (1,018) $ 1,993 $ 1,937 For the six months ended June 30, 2017 and 2016, the Company recorded depreciation and amortization expense of $0.2 million and $0.1 million respectively, which is included in the Company’s general and administrative expense. Accounts payable and accrued expenses consist of the following June 30, December 31, 2017 2016 Trade accounts payable $ 49,820 $ 72,093 Accrued expenses 3,723 3,994 $ 53,543 $ 76,087

Credit Facility

Credit Facility	6 Months Ended
	Jun. 30, 2017
Credit Facility.
Credit Facility	8. Credit Facility: On January 4, 2013, the Company entered into a $10,000,000 revolving credit facility (the “Credit Facility”) with Citibank, N.A. (“Citibank”) pursuant to a Business Loan Agreement (the “Loan Agreement”), Promissory Note (the “Note”), Commercial Security Agreements (the “Security Agreements”) and Commercial Pledge Agreement (the “Pledge Agreement”). The Credit Facility matures on January 31, 2019, at which time the Company must pay this loan in one payment of any outstanding principal plus all accrued unpaid interest. The interest rate for any borrowings under the Credit Facility is subject to change from time to time based on the changes in an independent index which is the LIBOR Rate (the “Index”). If the Index becomes unavailable during the term of this loan, Citibank may designate a substitute index after notifying the Company. Interest on the unpaid principal balance of the Note will be calculated using a rate of 1.500 percentage points over the Index. The Credit Facility is secured by the assets of the Company. Among other affirmative covenants set forth in the Loan Agreement, the Company must maintain (i) a ratio of Total Liabilities to Tangible Net Worth (each as defined in the Loan Agreement) of not greater than 2.50 to 1.00, to be tested quarterly and (ii) a minimum Debt Service Coverage Ratio (as defined in the Loan Agreement) of 2.00 to 1.00. Additionally, the Loan Agreement contains negative covenants related to, among other items, prohibitions against the creation of certain liens, engaging in any business activities substantially different than those currently engaged in by the Company, and paying dividends on the Company’s stock other than (i) dividends payable in its stock and (ii) cash dividends in amounts and frequency consistent with past practice, without first securing the written consent of Citibank. The Company is in compliance with all covenants at June 30, 2017. At June 30, 2017, the Company had no borrowings outstanding under the Credit Facility.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jun. 30, 2017
Earnings Per Share
Earnings Per Share	9. Earnings Per Share: Basic Earnings Per Share (“EPS”) is calculated by dividing net income attributable to common stockholders by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS is calculated by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding, adjusted for potentially dilutive securities including unexercised stock option grants and nonvested shares of restricted stock. A reconciliation of the numerators and denominators of the basic and diluted per share computations follows: Six months ended Three months ended June 30, June 30, 2017 2016 2017 2016 Numerator: Net income $ 2,592 $ $ 1,275 $ Denominator: Weighted average shares (Basic) 4,314 4,285 Dilutive effect of outstanding options and nonvested shares of restricted stock 23 30 Weighted average shares including assumed conversions (Diluted) 4,337 4,557 4,315 4,535 Basic net income per share $ $ $ $ Diluted net income per share $ $ $ $

Major Customers and Vendors

Major Customers and Vendors	6 Months Ended
	Jun. 30, 2017
Major Customers and Vendors
Major Customers and Vendors	10. Major Customers and Vendors: The Company had two major vendors that accounted for 26.6% and 14.1%, respectively, of total purchases during the six months ended June 30, 2017, and 22.0% and 14.9% of total purchases for the three months ended June 30, 2017. The Company had two major vendors that accounted for 23.9% and 10.0%, respectively, of total purchases during the six months ended June 30, 2016, and 17.4% and 10.2% of total purchases for the three months ended June 30, 2016. The Company had two major customers that accounted for 21.6% and 19.7%, respectively, of its total net sales during the six months ended June 30, 2017, and 21.5%, and 17.4% of total net sales for the three months ended June 30, 2017. These same customers accounted for 9.2% and 22.8%, respectively, of total net accounts receivable as of June 30, 2017. The Company had two major customers that accounted for 18.9% and 17.9%, respectively, of its total net sales during the six months ended June 30, 2016, and 17.5%, and 14.7% of total net sales for the three months ended June 30, 2016.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2017
Income Taxes
Income Taxes	11. Income Tax: The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. The Company has identified its federal consolidated tax return and its state tax return in New Jersey and its Canadian tax return as major tax jurisdictions. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. The effective tax rate for the six and three months ended June 30, 2017 was 31.7% and 31.2%, respectively, compared to 33.7% for the same periods last year.

Stockholders' Equity and Stock

Stockholders' Equity and Stock Based Compensation	6 Months Ended
	Jun. 30, 2017
Stockholders' Equity and Stock Based Compensation
Stockholders' Equity and Stock Based Compensation	12. Stockholders’ Equity and Stock Based Compensation: The 2012 Stock-Based Compensation Plan (the “2012 Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards. The total number of shares of Common Stock initially available for award under the 2012 Plan was 600,000. As of June 30, 2017, the number of shares of Common stock available for future award grants to employees and directors under the 2012 Plan is 223,188. During 2012, the Company granted a total of 92,000 shares of Restricted Stock to officers, directors, and employees. These shares of Restricted Stock vest over 20 equal quarterly installments. A total of 3,525 shares of Restricted Stock were forfeited as a result of employees terminating employment with the Company. During 2013, the Company granted a total of 56,500 shares of Restricted Stock to officers and employees. Included in these grants were 40,000 Restricted Shares granted to the Company’s CEO in accordance with the satisfaction of certain performance criteria included in his compensation plan. These 40,000 Restricted Shares vest over 16 equal quarterly installments. The remaining grants of Restricted Stock vest over 20 equal quarterly installments. A total of 775 shares of Restricted Stock were forfeited as a result of employees terminating employment with the Company. During 2014, the Company granted a total of 98,689 shares of Restricted Stock to officers, directors and employees. These shares of Restricted Stock vest between one and twenty equal quarterly installments. A total of 34,487 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company. During 2015, the Company granted a total of 44,000 shares of Restricted Stock to officers. These shares of Restricted Stock vest over sixteen equal quarterly installments. In 2015, a total of 4,465 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company. During 2016, the Company granted a total of 171,252 shares of Restricted Stock to officers, directors, and employees. These shares of Restricted Stock vest between one and twenty equal quarterly installments. A total of 7,167 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company. During 2017, the Company granted a total of 87,076 shares of Restricted Stock to officers and employees. These shares of Restricted Stock vest between eight and twenty equal quarterly installments. A total of 36 shares of Restricted Stock were forfeited as a result of employees terminating employment with the Company. A summary of nonvested shares of Restricted Stock awards outstanding under the Company’s the 2012 Plan as of June 30, 2017, and changes during the three months then ended is as follows: Weighted Average Grant Date Shares Fair Value Nonvested shares at January 1, 2017 186,081 $ 15.58 Granted in 2017 87,076 18.25 Vested in 2017 (46,623) 15.08 Forfeited in 2017 (36) 15.40 Nonvested shares at June 30, 2017 226,498 $ 15.86 As of June 30, 2017, there is approximately $3.6 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 3.2 years. For the six months ended June 30, 2017 and 2016, the Company recognized share-based compensation cost of $0.7million and $0.8 million respectively, which is included in the Company’s general and administrative expense.

Segment Information

Segment Information	6 Months Ended
	Jun. 30, 2017
Segment Information
Segment Information	13. Segment Information: FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the public company’s Chief Operating Decision Maker (CODM) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s CODM is the Chief Executive Officer. The Company is organized into two reportable operating segments. The “Lifeboat Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “TechXtend” segment is a value-added reseller of software, hardware and services for corporations, government organizations and academic institutions in the United States and Canada. As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada with the domestic segments as the Canadian operations provide the same products and services to similar clients and are considered together when the Company’s CODM decides how to allocate resources. Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit. The Company only identifies accounts receivable and inventory by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided: Six months ended Three months ended June 30, June 30, 2017 2016 2017 2016 Revenue: Lifeboat Distribution $ 200,157 $ 175,999 $ 95,674 $ 89,659 TechXtend 15,621 22,581 7,308 15,598 215,778 198,580 102,982 105,257 Gross Profit: Lifeboat Distribution $ 11,455 $ 10,699 $ 5,612 $ 5,547 TechXtend 1,876 2,253 960 1,453 13,331 12,952 6,572 7,000 Direct Costs: Lifeboat Distribution $ 4,276 $ 3,596 $ 2,171 $ 1,778 TechXtend 889 1,062 417 558 5,165 4,658 2,588 2,336 Segment Income Before Taxes: Lifeboat Distribution $ 7,179 $ 7,103 $ 3,441 $ 3,769 TechXtend 987 1,191 543 895 Segment Income Before Taxes 8,166 8,294 3,984 4,664 General and administrative $ 4,645 $ 4,558 $ 2,254 $ 2,420 Interest income 321 125 173 61 Foreign currency translation (50) (3) (50) (3) Income before taxes $ 3,792 $ 3,858 $ 1,853 $ 2,302 As of As of June 30, December 31, Selected Assets By Segment: 2017 2016 Lifeboat Distribution $ 52,396 $ 64,558 TechXtend 24,932 32,202 Segment Select Assets 77,328 96,760 Corporate Assets 13,592 16,938 Total Assets $ 90,920 $ 113,698

Significant Accounting Polici21

Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2017
Significant Accounting Policies
Recently Issued Accounting Pronouncements	In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance for revenue recognition for contracts, superseding the previous revenue recognition requirements, along with most existing industry-specific guidance. The guidance requires an entity to review contracts in five steps: 1) identify the contract, 2) identify performance obligations, 3) determine the transaction price, 4) allocate the transaction price, and 5) recognize revenue. The new standard will result in enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers. Entities are allowed to transition to the new standard by either recasting prior periods or recognizing the cumulative effect as of the beginning of the period of adoption. The standard and related amendments will be effective for the Company for its annual reporting period beginning January 1, 2018, including interim periods within that reporting period. The Company is in the process of developing its conclusions on several aspects of the standard including principal versus agent considerations, identification of performance obligations, the determination of when control of goods and services transfers to the Company’s customer, which transition approach will be applied and the estimated impact it will have on our consolidated financial statements. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, "Simplifying the Measurement of Inventory (Topic 330)", ("ASU 2015-11"). Topic 330, Inventory, currently requires an entity to measure inventory at the lower of cost or market, with market value represented by replacement cost, net realizable value or net realizable value less a normal profit margin. The amendments in ASU 2015-11 require an entity to measure inventory at the lower of cost or net realizable value. ASU 2015-11 is effective for reporting periods beginning after December 15, 2016. We adopted ASU 2015-11 during the quarter ended March 31, 2017 and it did not have a material impact on our consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted the provisions of ASU 2016-09 related to the recognition of excess tax benefits in the income statement and classification in the statement of cash flows were adopted prospectively and the prior periods were not retrospectively adjusted. The Company has elected to account for forfeitures of share-based awards when they occur in determining compensation cost to be recognized each period. The adoption of ASU 2016-09 did not have a material impact on our consolidated financial statements In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 supersedes the lease guidance under FASB Accounting Standards Codification ("ASC") Topic 840, Leases, resulting in the creation of FASB ASC Topic 842, Leases. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. Leases will be classified as either finance or operating leases with classification affecting the pattern of expenses recognition in the statement of earnings. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the potential impact of adopting ASU 2016-02 on its consolidated financial statements. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASU No. 2016-13"). ASU No. 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU No. 2016-13 is effective for the Company in the first quarter of 2020, with early adoption permitted, and is to be applied using a modified retrospective approach. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2016-13 on it consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (“ASU 2016-15”) ASU 2016-15 which reduces diversity in practice in how certain transactions are classified in the statement of cash flows. The new standard will become effective for the Company beginning with the first quarter of 2018, with early adoption permitted. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” This amendment is intended to improve accounting for the income tax consequences of intra-entity transfers of assets other than inventory. In accordance with this guidance, an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The ASU is effective for the Company beginning in fiscal 2019. Early adoption is permitted in fiscal 2018 with modified retrospective application. The Company is continuing to evaluate the impact of the adoption of this guidance on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Scope of Modification Accounting”, to reduce diversity in practice and provide clarity regarding existing guidance in ASC 718, “Stock Compensation”. The amendments in this updated guidance clarify that an entity should apply modification accounting in response to a change in the terms and conditions of an entity’s share-based payment awards unless three newly specified criteria are met. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Company has evaluated the potential impacts of this updated guidance, and it does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.

Balance Sheet Detail (Tables)

Balance Sheet Detail (Tables)	6 Months Ended
	Jun. 30, 2017
Balance Sheet Detail
Schedule of equipment and leasehold improvements, net	June 30, December 31, 2017 2016 Equipment $ 1,921 $ 1,638 Leasehold improvements 1,326 1,317 3,247 2,955 Less accumulated depreciation and amortization (1,254) (1,018) $ 1,993 $ 1,937
Schedule of accounts payable and accrued expenses	June 30, December 31, 2017 2016 Trade accounts payable $ 49,820 $ 72,093 Accrued expenses 3,723 3,994 $ 53,543 $ 76,087

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2017
Earnings Per Share
Schedule of reconciliation of the numerators and denominators for computations of the basic and diluted per share	Six months ended Three months ended June 30, June 30, 2017 2016 2017 2016 Numerator: Net income $ 2,592 $ $ 1,275 $ Denominator: Weighted average shares (Basic) 4,314 4,285 Dilutive effect of outstanding options and nonvested shares of restricted stock 23 30 Weighted average shares including assumed conversions (Diluted) 4,337 4,557 4,315 4,535 Basic net income per share $ $ $ $ Diluted net income per share $ $ $ $

Stockholders' Equity and Stoc24

Stockholders' Equity and Stock Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2017
Stockholders' Equity and Stock Based Compensation
Summary of nonvested shares of Restricted Stock awards outstanding and the changes during the period	Weighted Average Grant Date Shares Fair Value Nonvested shares at January 1, 2017 186,081 $ 15.58 Granted in 2017 87,076 18.25 Vested in 2017 (46,623) 15.08 Forfeited in 2017 (36) 15.40 Nonvested shares at June 30, 2017 226,498 $ 15.86

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Jun. 30, 2017
Segment Information
Schedule of segment reporting information	Six months ended Three months ended June 30, June 30, 2017 2016 2017 2016 Revenue: Lifeboat Distribution $ 200,157 $ 175,999 $ 95,674 $ 89,659 TechXtend 15,621 22,581 7,308 15,598 215,778 198,580 102,982 105,257 Gross Profit: Lifeboat Distribution $ 11,455 $ 10,699 $ 5,612 $ 5,547 TechXtend 1,876 2,253 960 1,453 13,331 12,952 6,572 7,000 Direct Costs: Lifeboat Distribution $ 4,276 $ 3,596 $ 2,171 $ 1,778 TechXtend 889 1,062 417 558 5,165 4,658 2,588 2,336 Segment Income Before Taxes: Lifeboat Distribution $ 7,179 $ 7,103 $ 3,441 $ 3,769 TechXtend 987 1,191 543 895 Segment Income Before Taxes 8,166 8,294 3,984 4,664 General and administrative $ 4,645 $ 4,558 $ 2,254 $ 2,420 Interest income 321 125 173 61 Foreign currency translation (50) (3) (50) (3) Income before taxes $ 3,792 $ 3,858 $ 1,853 $ 2,302 As of As of June 30, December 31, Selected Assets By Segment: 2017 2016 Lifeboat Distribution $ 52,396 $ 64,558 TechXtend 24,932 32,202 Segment Select Assets 77,328 96,760 Corporate Assets 13,592 16,938 Total Assets $ 90,920 $ 113,698

Foreign Currency Translation (D

Foreign Currency Translation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenue from external customers
Net sales	$ 102,982	$ 105,257	$ 215,778	$ 198,580
Foreign operations
Revenue from external customers
Net sales	$ 10,900	$ 11,400	$ 23,600	$ 20,900

Revenue Recognition (Details)

Revenue Recognition (Details) $ in Millions	6 Months Ended
	Jun. 30, 2017USD ($)item
Revenue Recognition
Number of criteria | item	4
Additional cost to obtain technical support directly from the software publisher and upgrade to latest technology | $	$ 0

Balance Sheet Detail (Details)

Balance Sheet Detail (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Equipment and leasehold improvements
Gross	$ 3,247		$ 2,955
Less accumulated depreciation and amortization	(1,254)		(1,018)
Net	1,993		1,937
Depreciation and amortization expense	233	$ 108
Accumulated Other Comprehensive Income
Accumulated other comprehensive loss	(1,225)		(1,611)
Accounts payable and accrued expenses
Trade accounts payable	49,820		72,093
Accrued expenses	3,723		3,994
Accounts payable and accrued expenses	53,543		76,087
Equipment
Equipment and leasehold improvements
Gross	1,921		1,638
Leasehold improvements
Equipment and leasehold improvements
Gross	1,326		$ 1,317
General and Administrative Expense
Equipment and leasehold improvements
Depreciation and amortization expense	$ 200	$ 100

Credit Facility (Details)

Credit Facility (Details) - Credit Facility	6 Months Ended
	Jun. 30, 2017USD ($)item	Jan. 04, 2013USD ($)
Credit Facility
Maximum borrowing capacity		$ 10,000,000
Number of payments | item	1
Total liabilities to tangible net worth ratio, maximum	2.50
Interest coverage ratio, minimum	2
Borrowings outstanding	$ 0
Index
Credit Facility
Interest rate margin (as a percent)	1.50%

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Numerator:
Net income	$ 1,275	$ 1,527	$ 2,592	$ 2,555
Denominator:
Weighted average shares (Basic)	4,285	4,524	4,314	4,545
Dilutive effect of outstanding options and non-vested shares of restricted stock (in shares)	30	11	23	12
Weighted average shares including assumed conversions (Diluted)	4,315	4,535	4,337	4,557
Basic income per share (in dollars per share)	$ 0.30	$ 0.34	$ 0.60	$ 0.56
Diluted income per share (in dollars per share)	$ 0.30	$ 0.34	$ 0.60	$ 0.56

Major Customers and Vendors (De

Major Customers and Vendors (Details) - customer	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Purchases | Vendor concentration risk
Significant Customers and Vendors
Number of vendors	2	2	2	2
Purchases | Vendor concentration risk | Major vendor one
Significant Customers and Vendors
Percentage of concentration risk	22.00%	17.40%	26.60%	23.90%
Purchases | Vendor concentration risk | Major vendor two
Significant Customers and Vendors
Percentage of concentration risk	14.90%	10.20%	14.10%	10.00%
Net sales | Customer concentration risk
Significant Customers and Vendors
Number of customers	2	2	2	2
Net sales | Customer one | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	21.50%	17.50%	21.60%	18.90%
Net sales | Customer two | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	17.40%	14.70%	19.70%	17.90%
Net accounts receivable | Customer concentration risk
Significant Customers and Vendors
Number of customers	2
Net accounts receivable | Customer one | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	9.20%
Net accounts receivable | Customer two | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	22.80%

Income Taxes (Details)

Income Taxes (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Taxes
Effective tax rate (as a percent)	31.20%	33.70%	31.70%	33.70%

Stockholders' Equity and Stoc33

Stockholders' Equity and Stock Based Compensation - Vesting (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2017installmentshares	Dec. 31, 2016installmentshares	Dec. 31, 2015installmentshares	Dec. 31, 2014installmentshares	Dec. 31, 2013installmentshares	Dec. 31, 2012installmentshares
Stock-based compensation
Number of shares of common stock initially available for award	600,000
Options reserved for future issuance (in shares)	223,188
Restricted stock
Stock-based compensation
Granted (in shares)	87,076	171,252	44,000	98,689	56,500	92,000
Number of equal quarterly installments for vesting of awards | installment			16		20	20
Forfeited (in shares)	36	7,167	4,465	34,487	775	3,525
Restricted stock | Minimum
Stock-based compensation
Number of equal quarterly installments for vesting of awards | installment	8	1		1
Restricted stock | Maximum
Stock-based compensation
Number of equal quarterly installments for vesting of awards | installment	20	20		20
Restricted stock | CEO
Stock-based compensation
Granted (in shares)					40,000
Number of equal quarterly installments for vesting of awards | installment					16

Stockholders' Equity and Stoc34

Stockholders' Equity and Stock Based Compensation - Nonvested (Details) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
General and Administrative Expense
Weighted Average Grant Date Fair Value
Share-based compensation cost	$ 0.7	$ 0.8
Restricted stock
Shares
Nonvested shares at the beginning of the period	186,081
Granted (in shares)	87,076		171,252	44,000	98,689	56,500	92,000
Vested (in shares)	(46,623)
Forfeited (in shares)	(36)		(7,167)	(4,465)	(34,487)	(775)	(3,525)
Nonvested shares at the end of the period	226,498		186,081
Weighted Average Grant Date Fair Value
Nonvested shares at the beginning of period (in dollars per share)	$ 15.58
Granted (in dollars per share)	18.25
Vested (in dollars per share)	15.08
Forfeited (in dollars per share)	15.40
Nonvested shares at the end of period (in dollars per share)	$ 15.86		$ 15.58
Unrecognized compensation cost (in dollars)	$ 3.6
Weighted average period for recognition of unrecognized compensation cost	3 years 2 months 12 days

Segment Information (Details)

Segment Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017USD ($)	Jun. 30, 2016USD ($)	Jun. 30, 2017USD ($)item	Jun. 30, 2016USD ($)	Dec. 31, 2016USD ($)
Segment reporting information
Number of reportable operating segments | item			2
Revenue	$ 102,982	$ 105,257	$ 215,778	$ 198,580
Gross Profit	6,572	7,000	13,331	12,952
Direct Costs	2,588	2,336	5,165	4,658
Segment Income Before Taxes	3,984	4,664	8,166	8,294
General and administrative	2,254	2,420	4,645	4,558
Interest income	173	61	321	125
Foreign currency translation	(50)	(3)	(50)	(3)
Income before provision for income taxes	1,853	2,302	3,792	3,858
Total Assets	90,920		90,920		$ 113,698
Segment Total
Segment reporting information
Total Assets	77,328		77,328		96,760
Corporate Assets
Segment reporting information
Total Assets	13,592		13,592		16,938
Lifeboat Distribution
Segment reporting information
Revenue	95,674	89,659	200,157	175,999
Gross Profit	5,612	5,547	11,455	10,699
Direct Costs	2,171	1,778	4,276	3,596
Segment Income Before Taxes	3,441	3,769	7,179	7,103
Total Assets	52,396		52,396		64,558
TechXtend
Segment reporting information
Revenue	7,308	15,598	15,621	22,581
Gross Profit	960	1,453	1,876	2,253
Direct Costs	417	558	889	1,062
Segment Income Before Taxes	543	$ 895	987	$ 1,191
Total Assets	$ 24,932		$ 24,932		$ 32,202