10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                     

Commission File No. 000-26408

Wayside Technology Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3136104
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

1157 Shrewsbury Avenue, Shrewsbury, New Jersey 07702

(Address of principal executive offices)

(732) 389-8950

Registrant’s Telephone Number

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” and “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Check One:

Large Accelerated Filer ☐	Accelerated Filer ☒
Non-Accelerated Filer ☐	Smaller Reporting Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

There were 4,735,295 outstanding shares of common stock, par value $.01 per share, (“Common Stock”) as of July 29, 2016, not including 549,205 shares classified as treasury stock.

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Wayside Technology Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

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

	June 30,		December 31,
	2016		2015
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	24,576	$	23,823
Accounts receivable, net of allowances of $2,087 and $1,668 in 2016 and 2015, respectively		61,763		58,965
Inventory, net		2,133		1,954
Prepaid expenses and other current assets		1,270		989
Deferred income taxes		243		260
Total current assets		89,985		85,991
Equipment and leasehold improvements, net		466		362
Accounts receivable-long-term		5,908		7,386
Other assets		132		82
Deferred income taxes		244		261
	$	96,735	$	94,082
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	58,114	$	55,423
Total current liabilities		58,114		55,423
Commitments and Contingencies
Stockholders’ equity:
Common Stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued;  4,748,553 and 4,700,812 shares outstanding in 2016 and 2015, respectively		53		53
Additional paid-in capital		32,320		32,540
Treasury stock, at cost, 535,947 and 583,688 shares in 2016 and 2015, respectively		(11,118)		(10,296)
Retained earnings		18,747		17,813
Accumulated other comprehensive loss		(1,381)		(1,451)
Total stockholders’ equity		38,621		38,659
	$	96,735	$	94,082

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Wayside Technology Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(Unaudited)

(Amounts in thousands, except per share data)

	Six months ended				Three months ended
	June 30,				June 30,
	2016		2015		2016		2015
Net sales	$	198,580	$	184,662	$	105,257	$	91,970
Cost of sales		185,628		171,880		98,257		85,545
Gross profit		12,952		12,782		7,000		6,425
Selling, general, and administrative expenses		9,216		8,916		4,756		4,449
Income from operations		3,736		3,866		2,244		1,976
Other income:
Interest, net		125		197		61		99
Foreign currency transaction loss		(3)		(5)		(3)		(4)
Income before provision for income taxes		3,858		4,058		2,302		2,071
Provision for income taxes		1,303		1,394		775		710
Net income	$	2,555	$	2,664	$	1,527	$	1,361
Income per common share-Basic	$	0.56	$	0.57	$	0.34	$	0.29
Income per common share-Diluted	$	0.56	$	0.57	$	0.34	$	0.29
Weighted average common shares outstanding —Basic		4,545		4,665		4,524		4,640
Weighted average common shares outstanding — Diluted		4,557		4,689		4,535		4,663
Dividends paid per common share	$	0.34	$	0.34	$	0.17	$	0.17

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Wayside Technology Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(Amounts in thousands)

	Six months ended				Three months ended
	June 30,				June 30,
	2016		2015		2016		2015
Net income	$	2,555	$	2,664	$	1,527	$	1,361
Other comprehensive  income (loss) , net of tax:
Foreign currency translation adjustment		70		(462)		(53)		146
Other comprehensive  income (loss)		70		(462)		(53)		146
Comprehensive income	$	2,625	$	2,202	$	1,474	$	1,507

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Wayside Technology Group, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

(Amounts in thousands, except share amounts)

											Accumulated
				Additional							Other
	Common Stock			Paid-In		Treasury			Retained		Comprehensive
	Shares	Amount		Capital		Shares	Amount		Earnings		(loss) income		Total
Balance at January 1, 2016	5,284,500	$	53	$	32,540	583,688	$	(10,296)	$	17,813	$	(1,451)	$	38,659
Net income	—		—		—	—		—		2,555		—		2,555
Translation adjustment	—		—		—	—		—		—		70		70
Dividends paid	—		—		—	—		—		(1,621)		—		(1,621)
Share-based compensation expense	—		—		839	—		—		—		—		839
Restricted stock grants (net of forfeitures)	—		—		(1,137)	(161,883)		1,137		—		—		—
Tax benefit from share-based compensation	—		—		78	—		—		—		—		78
Treasury shares repurchased	—		—		—	114,142		(1,959)		—		—		(1,959)
Balance at June 30, 2016	5,284,500	$	53	$	32,320	535,947	$	(11,118)	$	18,747	$	(1,381)	$	38,621

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Wayside Technology Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)

	Six months ended
	June 30,
	2016		2015
Cash flows from operating activities
Net income	$	2,555	$	2,664
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		108		122
Provision for doubtful accounts receivable		—		6
Deferred income tax expense		33		42
Share-based compensation expense		839		534
Changes in operating assets and liabilities:
Accounts receivable		(985)		6,515
Inventory		(165)		(870)
Prepaid expenses and other current assets		(276)		(321)
Accounts payable and accrued expenses		2,610		(8,930)
Other assets		(50)		46
Net cash provided by ( used in) operating activities		4,669		(192)
Cash flows used in investing activities
Purchase of equipment and leasehold improvements		(210)		(105)
Net cash used in investing activities		(210)		(105)
Cash flows used in financing activities
Purchase of treasury stock		(1,959)		(2,776)
Proceeds from stock option exercises		—		574
Tax benefit from share-based compensation		78		135
Dividends paid		(1,621)		(1,637)
Net cash used in financing activities		(3,502)		(3,704)
Effect of foreign exchange rate on cash		(204)		(245)
Net increase in cash and cash equivalents		753		(4,246)
Cash and cash equivalents at beginning of year		23,823		23,124
Cash and cash equivalents at end of year	$	24,576	$	18,878
Supplementary disclosure of cash flow information:
Income taxes paid	$	1,207	$	1,803

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Wayside Technology Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2016

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

1.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 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, 2015.

2.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. In August 2015, the FASB issued Accounting Standards Update ASU 2015-14 (“ASU 2015-14”) which deferred the effective date of the new standard by one year. Along with the deferral of the effective date, ASU No. 2015-14 allows early application as of the original effective date. 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 currently evaluating the newly issued guidance, including 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 do not expect the adoption of this new accounting pronouncement, will have a significant impact on our consolidated financial statements.

In November 2015, the FASB issued Accounting Standards Update 2015-17 (“ASU 2015-17”) to simplify the presentation of deferred taxes. This amendment requires that all deferred tax assets and liabilities, along with any related valuation allowances, be classified as noncurrent on the balance sheet.  Adoption of this standard is required for annual periods beginning after December 15, 2016. We do not expect the adoption of ASU 2015-17 will have a significant impact on our consolidated financial statements and related disclosures.

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

7

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. Early adoption is permitted. The Company is currently assessing the potential impact of adopting ASU 2016-09 on its 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 for both finance and operating leases. 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.

3.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 Canadian operations in the first six months of 2016 were $13.5 million as compared to $11.0 million for the first six months of 2015. The sales from our Canadian operations for the second quarter of 2016 were $6.9 million as compared to $5.4 million for the second quarter of 2015.

4.Cumulative translation adjustments have been classified within accumulated other comprehensive income, which is a separate component of stockholders’ equity in accordance with FASB ASC Topic 220, “Comprehensive Income.”

5.Revenue on product (software and hardware) and maintenance 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) 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 and maintenance agreements are recognized on a gross basis 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 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.  The Company 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.  Maintenance agreements allow customers to 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 agreement is in effect.

Sales are recorded net of discounts, rebates, and returns.  Vendor rebates and price protection are recorded when earned as a reduction to cost of sales or merchandise inventory, as applicable.

Cooperative reimbursements from vendors, which are earned and available, are recorded in the period the related advertising expenditure is incurred. Cooperative reimbursements are recorded as a reduction of cost of sales in accordance with FASB ASC Topic 605-50 “Accounting by a Customer (including reseller) for Certain Consideration Received from a Vendor.”  Provisions for returns are estimated based on historical sales returns and credit memo analysis which are adjusted to actual on a periodic basis.

Accounts receivable-long-term result from product sales with extended payment terms that are discounted to their present values at the prevailing market rates. 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.

8

6.The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value at June 30, 2016 and December 31, 2015 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.

7.Balance Sheet Detail:

Equipment and leasehold improvements consist of the following as of June 30, 2016 and December 31, 2015:

	June 30,		December 31,
	2016		2015
Equipment	$	3,119	$	2,924
Leasehold improvements		587		572
		3,706		3,496
Less accumulated depreciation and amortization		(3,240)		(3,134)
	$	466	$	362

Accounts payable and accrued expenses consist of the following as of June 30, 2016 and December 31, 2015:

	June 30,		December 31,
	2016		2015
Trade accounts payable	$	55,388	$	52,808
Accrued expenses		2,726		2,615
	$	58,114	$	55,423

Accumulated other comprehensive loss consists of the following as of June 30, 2016 and December 31, 2015:

	June 30,		December 31,
	2016		2015
Foreign currency translation adjustments	$	(1,381)	$	(1,451)
	$	(1,381)	$	(1,451)

8.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, 2016.

At June 30, 2016, the Company had no borrowings outstanding under the Credit Facility.

9.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

9

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,
	2016		2015		2016		2015
Numerator:
Net income	$	2,555	$	2,664	$	1,527	$	1,361
Denominator:
Weighted average shares (Basic)		4,545		4,665		4,524		4,640
Dilutive effect of outstanding options and nonvested shares of restricted stock		12		24		11		23
Weighted average shares including assumed conversions (Diluted)		4,557		4,689		4,535		4,663
Basic net income per share	$	0.56	$	0.57	$	0.34	$	0.29
Diluted net income per share	$	0.56	$	0.57	$	0.34	$	0.29

10.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 three major vendors that accounted for 23.3%, 10.2% and 9.3%, respectively, of total purchases during the six months ended June 30, 2015, and 20.9%, 10.4% and 10.2% of total purchases for the three months ended June 30, 2015. 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. These same customers accounted for 10.6% and 19.0%, respectively, of total net accounts receivable as of June 30, 2016.  The Company had two major customers that accounted for 17.9% and 17.8%, respectively, of its total net sales during the six months ended June 30, 2015, and 17.9%, and 17.0% of total net sales for the three months ended June 30, 2015.

11.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. As of June 30, 2016 the Company’s 2012 through 2015 Federal tax returns remain open for examination, as the Company recently concluded an Internal Revenue Service examination for the 2011 and 2012 tax years. This examination resulted in no change to the previously filed Federal corporate tax returns.  The Company’s New Jersey and Canadian tax returns are open for examination for the years 2012 through 2015. 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 each of  the six and three months ended June 30, 2016 was 33.7% compared to 34.4% and 34.3%, respectively, for the same period last year.

12.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, 2016, the number of shares of Common stock available for future award grants to employees and directors under the 2012 Plan is 307,965.

The 2006 Stock-Based Compensation Plan (the “2006 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 2006 Plan was 800,000. As of June 30, 2016, there are no shares of Common Stock available for future award grants to employees and directors under the 2006 Plan.

10

During 2010, the Company granted a total of 150,500 shares of Restricted Stock to officers and employees. These shares of Restricted Stock vest over 20 equal quarterly installments. In 2010, a total of 5,875 shares of Restricted Stock were forfeited as a result of employees and officers terminating employment with the Company.

During 2011, the Company granted a total of 15,000 shares of Restricted Stock to employees. These shares of Restricted Stock vest over 20 equal quarterly installments. In 2011, a total of 8,375 shares of Restricted Stock were forfeited as a result of employees terminating employment with the Company.

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 168,350 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 6,467 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company.

A summary of nonvested shares of Restricted Stock awards outstanding under the Company’s the 2012 Plan and 2006 Plan as of June 30, 2016, and changes during the six months then ended is as follows:

		Weighted Average
		Grant Date
	Shares	Fair Value
Nonvested shares at January 1, 2016	123,329	$	16.34
Granted in 2016	168,350		17.00
Vested in 2016	(57,893)		14.50
Forfeited in 2016	(6,467)		16.33
Nonvested shares at June 30, 2016	227,319	$	15.34

As of June 30, 2016, there is approximately $3.5 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 3.5 years.

For the six months ended June 30, 2016 and 2015, the Company recognized share-based compensation cost of $0.8 million and $0.5 million respectively, which is included in the Company’s general and administrative expense.

13.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.

11

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,
	2016		2015		2016		2015
Revenue:
Lifeboat Distribution	$	175,999	$	164,206	$	89,659	$	81,260
TechXtend		22,581		20,456		15,598		10,710
		198,580		184,662		105,257		91,970
Gross Profit:
Lifeboat Distribution	$	10,699	$	10,344	$	5,547	$	5,110
TechXtend		2,253		2,438		1,453		1,315
		12,952		12,782		7,000		6,425
Direct Costs:
Lifeboat Distribution	$	3,596	$	3,708	$	1,778	$	1,931
TechXtend		1,062		1,205		558		611
		4,658		4,913		2,336		2,542
Segment Income Before Taxes:
Lifeboat Distribution	$	7,103	$	6,636	$	3,769	$	3,179
TechXtend		1,191		1,233		895		704
Segment Income Before Taxes		8,294		7,869		4,664		3,883
General and administrative		4,558	$	4,003	$	2,420	$	1,907
Interest income		125		197		61		99
Foreign currency translation		(3)		(5)		(3)		(4)
Income before taxes	$	3,858	$	4,058	$	2,302	$	2,071

	As of		As of
	June 30,		December 31,
Selected Assets By Segment:	2016		2015
Lifeboat Distribution	$	40,524	$	45,300
TechXtend		29,280		23,005
Segment Select Assets		69,804		68,305
Corporate Assets		26,931		25,777
Total Assets	$	96,735	$	94,082

12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of risk and uncertainties, including those set forth under the heading “Certain Factors Affecting Results of Operations and Stock Price” and elsewhere in this report and those set forth in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission. The following discussion should be read in conjunction with the accompanying unaudited  condensed consolidated financial statements and related notes included in this report and the consolidated financial statements and related notes included in our 2015 Annual Report on Form 10-K.

Overview

The Company is organized into two reportable operating segments.  The “Lifeboat Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide.  The “TechXtend” segment is a value-added reseller of software, hardware and services for corporations, government organizations and academic institutions in the USA and Canada.

We offer an extensive line of products from leading publishers of software and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management and other technically sophisticated domains as well as computer hardware. We market these products through direct sales, the Internet, our catalogs, direct mail programs, advertisements in trade magazines and e-mail promotions.

The Company’s sales, gross profit, and results of operations have fluctuated and are expected to continue to fluctuate on a quarterly basis as a result of a number of factors, including but not limited to: the condition of the software industry in general, shifts in demand for software products, pricing, level of extended payment terms sales transactions, industry shipments of new software products or upgrades, the timing of new merchandise and catalog offerings, fluctuations in response rates, fluctuations in merchandise returns, adverse weather conditions that affect response, distribution or shipping, shifts in the timing of holidays, and changes in the Company’s product offerings. The Company’s operating expenditures are based on sales forecasts. If sales do not meet expectations in any given quarter, operating results may be materially adversely affected.

Results of Operations

The following table sets forth for the periods indicated certain financial information derived from the Company’s unaudited condensed consolidated statements of earnings expressed as a percentage of net sales. This comparison of financial results is not necessarily indicative of future results:

	Six months ended				Three months ended
	June 30,				June 30,
	2016		2015		2016		2015
Net sales	100.0	%	100	%	100.0	%	100	%
Cost of sales	93.5		93.1		93.4		93.0
Gross profit	6.5		6.9		6.6		7.0
Selling, general and administrative expenses	4.6		4.8		4.5		4.8
Income from operations	1.9		2.1		2.1		2.2
Other income	0.1		0.1		0.1		0.1
Income before income taxes	2.0		2.2		2.2		2.3
Income tax provision	0.7		0.8		0.7		0.8
Net income	1.3	%	1.4	%	1.5	%	1.5	%

Net Sales

Net sales for the second quarter ended June 30, 2016 increased 14% or $13.3 million to $105.3 million compared to $92.0 million for the same period in 2015. Total sales for the second quarter of 2016 for our Lifeboat Distribution

13

segment were $89.7 million compared to $81.3 million in the second quarter of 2015, representing an increase of $8.4 million or 10%. Total sales for the second quarter of 2016 for our TechXtend segment were $15.6 million compared to $10.7 million in the second quarter of 2015, representing an increase of $4.9 million or 46%.

The 10% increase in net sales for the Lifeboat Distribution segment was mainly a result of the addition of several key product lines and our ongoing strategy of strengthening of our account penetration. This was offset in part by lower sales to one of our key accounts. The 46% increase in net sales in the TechXtend segment was primarily due to an increase of $5.6 million in extended payment terms sales transactions as compared to the second quarter ended June 30, 2015.

For the six months ended June 30, 2016, net sales increased 8% or $13.9 million to $198.6 million compared to $184.7 million for the same period in 2015. Net sales for the six months ended June 30, 2016 for our Lifeboat Distribution segment increased 7% or $11.8 million to $176.0 million compared to $164.2 million for the same period in 2015.   Net sales for the six months ended June 30, 2016 for our TechXtend segment increased 10% or $2.1 million to $22.6 million compared to $20.5 million for the same period in 2015.

The 7% increase in net sales from our Lifeboat Distribution segment in the first six months of 2016 compared to the same period in 2015 was mainly a result of the addition of several key product lines and our ongoing strategy of strengthening of our account penetration. The 10% increase in net sales in the TechXtend segment was primarily due to an increase in extended payment terms sales transactions compared to the six months ended June 30, 2015.

Gross Profit

Gross Profit for the second quarter ended June 30, 2016 was $7.0 million, a 9% increase as compared to $6.4 million for the second quarter of 2015. Gross profit for our Lifeboat segment in the second quarter of 2016 was $5.5 million compared to $5.1 million for the second quarter of 2015, representing a 9% increase.  Gross profit for our TechXtend segment in the second quarter of 2016 was $1.5 million compared to $1.3 million for the second quarter of 2015, representing a 10% increase.

Gross profit margin (gross profit as a percentage of net sales) for the second quarter ended June 30, 2016 was 6.7% compared to 7.0% for the second quarter of 2015.  Gross profit margin for our Lifeboat Distribution segment for the second quarter of 2016 was 6.2% compared to 6.3% for the second quarter of 2015. The decrease in gross profit margin for the Lifeboat Distribution segment was primarily caused by a program change by one of our main vendors, causing gross margins to decline by 1.8% for that line. Gross profit margin for our TechXtend segment for the second quarter of 2016 was  9.3% compared to 12.3% for the second quarter of 2015. The decrease in gross profit margin for the TechXtend segment was primarily caused by the increase in extended payment sales transaction which carry lower margins.

For the six months ended June 30, 2016 gross profit increased 1% or $0.2 million to $13.0 million compared to $12.8 million for the same period in 2015. Lifeboat Distribution’s gross profit for the six months ended June 30, 2016 increased 3% to $10.7 million as compared to $10.3 million for the first six months of 2015. The increase in gross profit for the Lifeboat Distribution segment was primarily due to higher sales volume. TechXtend gross profit for the six months ended June 30, 2016 decreased by 8% to $2.3 million as compared to $2.4 million for the first six months of 2015. The decrease in gross profit margin for the TechXtend segment was primarily caused by the increase in extended payment sales transaction which carry lower margins.

Vendor rebates and discounts for each of  the six month period ended June 30, 2016 and 2015 amounted to $1.0 million.Vendor rebates are dependent on reaching certain targets set by our vendors. Vendors have been periodically substantially increasing their target revenues for rebate eligibility.  The Company monitors gross profits and gross profit margins carefully. Price competition in our market continued in 2016. We anticipate that margins, as well as discounts and rebates, for the remainder of the year will continue to be affected by this current trend.  To the extent that the Company finances larger transactions with extended payment terms, as anticipated, gross margins also will be negatively impacted.

14

Selling, General and Administrative Expenses

Total selling, general, and administrative (“SG&A”) expenses for the second quarter of 2016 were $4.8 million compared to $4.4 million for the second quarter of 2015, representing an increase of $0.3 million or 7%.  This increase is primarily the result of an increase in stock compensation and amounts accrued for bonus expense in 2016 compared to 2015. As a percentage of net sales, SG&A expenses for the second quarter of 2016 were 4.5% compared to 4.8% for the second quarter of 2015.

For the six months ended June 30, 2016, SG&A expenses were $9.2 million compared to $8.9 million in the same period in 2015, representing an increase of $0.3 million or 3%. This increase is primarily the result of an increase in stock compensation and amounts accrued for bonus expense in 2016 compared to 2015. As a percentage of net sales, SG&A expenses for the six months ended June 30, 2016 were 4.6% compared to 4.8% for the six months ended June 2015.

Direct selling costs (a component of SG&A) for the second quarter of 2016 were $2.3 million compared to $2.5 million for the second quarter of 2015. Total direct selling costs for our Lifeboat Distribution segment for the second quarter of 2016 were $1.8 million compared to $1.9 million for the same period in 2015. Total direct selling costs for our TechXtend segment for the second quarter of 2016 were approximately $0.6 million compared to approximately $0.6 million for the same period in 2015.

The Company expects that its SG&A expenses, as a percentage of net sales, may vary by quarter depending on changes in sales volume, and levels of continuing investments in employee headcount and marketing. We plan to continue our investments in our Lifeboat Distribution segment and to monitor our SG&A expenses closely.

Income Taxes

For the three months ended June 30, 2016, the Company recorded a provision for income taxes of $0.8 million or 33.7% of income, compared to $0.7 million or 34.3% of income for the same period in 2015.

For the six months ended June 30, 2016, the Company recorded a provision for income taxes of $1.3 million or 33.7% of income, compared to $1.4 million or 34.4% of income for the same period in 2015.

Liquidity and Capital Resources

During the first six months of 2016 our cash and cash equivalents increased by $0.8 million to $24.6 million at June 30, 2016, from $23.8 million at December 31, 2015. During the first six months of 2016, net cash provided by operating activities amounted to $4.7 million, net cash used in investing activities amounted to $0.2 million and net cash used in financing activities amounted to $3.5 million.

Net cash provided by operating activities in the first six months of 2016 was $4.7 million and primarily resulted from $2.5 million in net income excluding non-cash charges, a $2.6 million increase in accounts payable and accrued expenses offset in part by an increase of $1.0 million in accounts receivable, an increase of $0.2 million in inventory and an increase of $0.3 million in prepaid and other current assets. The increases in accounts receivable, accounts payable and accrued expenses were mainly due to higher sales volume, in the second quarter of 2016 compared to the fourth quarter of 2015.

Net cash used in investing activities in the first six months of 2016 amounted to $0.2 million. This was the result of capital expenditures of  $0.2 million.

Net cash used in financing activities in the first six months of 2016 amounted to $3.5 million. This consisted primarily of dividends paid of $1.6 million and treasury stock repurchases of $2.0 million.

The Company’s current and anticipated use of its cash and cash equivalents is, and will continue to be, to fund working capital, operational expenditures, the Common Stock repurchase program and dividends if declared by the board of directors.

15

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, Promissory Note (the “Note”), Commercial Security Agreements and Commercial Pledge Agreement (the “Pledge Agreement”). The Credit Facility, which is intended to be used  for business and working capital purposes, including financing of larger extended payment terms sales transactions which may become a moresignificant portion of the Company’s net sales. On December 18, 2015, the Company signed an extension to this agreement which extended the maturity date to January 31, 2019 with all other terms remaining the same (See Note 8 in the Notes to our Condensed Consolidated Financial Statements). As of June 30, 2016, there were no borrowings outstanding on the Credit Facility.

We believe that the funds held in cash and cash equivalents and our unused borrowings on our credit facility will be sufficient to fund our working capital and cash requirements for at least the next 12 months.

Contractual Obligations as of June 30, 2016 are summarized as follows: (000’s)

Payment due by Period	Total		Less than 1 year		1-3 years		4-5 years	After 5 years
Operating Leases obligations (1)	$	4,761	$	550	$	1,242	816	2,153
Total Contractual Obligations	$	4,761	$	550	$	1,242	816	2,153

(1) Operating leases relate primarily to the leases of the space used for our operations in Eatontown, New Jersey, Mesa Arizona Mississauga, Canada and Amsterdam, Netherlands. The commitments for operating leases include the minimum rent payments.

As of June 30, 2016, the Company has no borrowings outstanding under lines of credit and no commitments relating to standby letters of credit, and has no standby repurchase obligations or other commercial commitments (see Note 8 in the Notes to our Consolidated Financial Statements).

Foreign Exchange

The Company’s Canadian business is subject to changes in demand or pricing resulting from fluctuations in currency exchange rates or other factors. We are subject to fluctuations primarily in the Canadian Dollar-to-U.S. Dollar exchange rate.

Off-Balance Sheet Arrangements

As of June 30, 2016, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these 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. The Company recognizes revenue from the sale of software and hardware for microcomputers, servers and networks upon shipment or upon electronic delivery of the product. The Company expenses the advertising costs associated with producing its catalogs. The costs of these catalogs are expensed in the same month the catalogs are mailed.

On an on-going basis, the Company evaluates its estimates, including those related to product returns, bad debts, inventories, investments, intangible assets, income taxes, stock-based compensation, contingencies and litigation.

The Company bases its estimates on 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.  Actual results may differ from these estimates.

The Company believes the following critical accounting policies, used in the preparation of its unaudited condensed consolidated financial statements, affect its more significant judgments and estimates.

16

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-offs may be required.

The Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance related to deferred tax assets. In the event the Company was to determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made.

Under the fair value recognition provision stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense as it is amortized on a straight-line basis over the requisite service period, which is the vesting period. We make certain assumptions in order to value and expense our various share-based compensation awards. In connection with valuing stock options, we use the Black-Scholes model, which requires us to consider certain facts and to estimate certain subjective assumptions. The key facts and assumptions we consider are: (i) the expected volatility of our Common Stock; (ii) the expected term of the award; and (iii) the expected forfeiture rate. In connection with our restricted stock program we make assumptions principally related to the forfeiture rate. We review our valuation assumptions periodically and, as a result, we may change our valuation assumptions used to value stock based awards granted in future periods. Such changes may lead to a significant change in the expense we recognize in connection with share-based payments.

Certain Factors Affecting Results of Operations and Stock Price

This report includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements in this report regarding future events or conditions, including but not limited to statements regarding industry prospects and the Company’s expected financial position, results of operations, business and financing plans, are forward-looking statements. These statements can be identified by forward-looking words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” and “continue” or similar words.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Substantial risks and uncertainties unknown at this time could cause actual results to differ materially from those indicated by such forward-looking statements, including, but not limited to, the continued acceptance of the Company’s distribution channel by vendors and customers, the timely availability and acceptance of new products, product mix, market conditions, competitive pricing pressures, contribution of key vendor relationships and support programs, including vendor rebates and discounts, as well as factors that affect the software industry in general and other factors generally. We strongly urge current and prospective investors to carefully consider the cautionary statements and risk factors contained in this report and our annual report on Form 10-K for the year ended December 31, 2015.

The Company operates in a rapidly changing business, and new risk factors emerge from time to time. Management cannot predict every risk factor, nor can it assess the impact, if any, of all such risk factors on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements.

Accordingly, forward-looking statements should not be relied upon as a prediction of actual results and readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The statements concerning future sales, future gross profit margin and future selling and administrative expenses are forward looking statements involving certain risks and uncertainties such as availability of products, product mix,

17

pricing pressures, market conditions and other factors, which could result in a fluctuation of sales below recent experience.

Stock Volatility. The technology sector of the United States stock markets has experienced substantial volatility in recent periods. Numerous conditions which impact the technology sector or the stock market in general or the Company in particular, whether or not such events relate to or reflect upon the Company’s operating performance, could adversely affect the market price of the Company’s Common Stock. Furthermore, fluctuations in the Company’s operating results, announcements regarding litigation, the loss of a significant vendor, increased competition, reduced vendor incentives and trade credit, higher postage and operating expenses, and other developments, could have a significant impact on the market price of the Company’s Common Stock.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In addition to its activities in the United States, 6.8% of the Company sales during the six months ended June 30, 2016 were generated in Canada. We are subject to general risks attendant to the conduct of business in Canada, including economic uncertainties and foreign government regulations. In addition, the Company’s Canadian business is subject to changes in demand or pricing resulting from fluctuations in currency exchange rates or other factors. See “Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Foreign Currency Transactions Gain (Loss).”

The Company’s cash balance is invested in short-term savings accounts with our primary banks, Citibank, and JPMorgan Chase Bank. As such, we believe that the risk of significant changes in the value of our cash invested is minimal.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15(b) under the Exchange Act, our management carried out an evaluation of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures”, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report.  This evaluation was carried out under the supervision and with the participation of various members of our management, including our Company’s President, Chairman of the Board and Chief Executive Officer (principal executive officer) and Vice President and Chief  Accounting Officer (principal financial officer). Based upon that evaluation, the Company’s Chief Executive Officer and  Chief Accounting Officer concluded that the Company’s disclosure controls and procedures were effective, as of the end of the period covered by this report, to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act, that occurred during the quarter ended June 30, 2016, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

18

PART II - OTHER INFORMATION

Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds

The table below sets forth the repurchase of Common Stock by the Company and its affiliated purchasers during the second quarter of 2016.

ISSUER PURCHASE OF EQUITY SECURITIES

								Maximum
								Number of
					Total Number			Shares That
					of Shares			May Yet Be
					Purchased as			Purchased
	Total		Average		Part of Publicly	Average		Under the
	Number		Price Paid		Announced	Price Paid		Plans or
	of Shares		Per Share		Plans or	Per Share		Programs
Period	Purchased		(2)		Programs	(3)		(4)(5)
April 1, 2016- April 30, 2016	26,860		$	17.05	26,860	$	17.05	388,614
May 1, 2016- May 31, 2016	26,660	(1)	$	16.80	16,405	$	16.78	372,209
June 1, 2016- June 30, 2016	8,045		$	17.84	8,045	$	17.84	364,164
Total	61,565		$	17.04	51,310	$	17.09	364,164

(1) Includes 10,255 shares surrendered to the Company by employees to satisfy individual tax withholding obligations upon vesting of previously issued shares of Restricted Stock. These shares are not included in the Common Stock repurchase program referred to in footnote (4) below.

(2) Average price paid per share reflects the closing price the Company’s Common Stock on the business date the shares were surrendered by the employee stockholder to satisfy individual tax withholding obligations upon vesting of Restricted Stock or the price of the Common Stock paid on the open market purchase, as applicable.

(3) Average price paid per share reflects the price of the Company’s Common Stock purchased on the open market.

(4) On July 31, 2008, the Company approved the increase of its Common Stock repurchase program by an additional 500,000 shares. The Company expects to purchase shares of its Common Stock from time to time in the market or otherwise subject to market conditions. The Common Stock repurchase program does not have an expiration date.

(5) On February 2, 2016, the Board of Directors approved, and on March 4, 2016, the Company entered into a written purchase plan intended to comply with the requirements of Rule 10b5-1 under the Exchange Act, as amended (the “Plan”).  Purchases involving shares of the Company’s Common Stock under the Plan commenced March 7, 2016, and the Plan is intended to be in effect until August 31, 2016.  Pursuant to the Plan, the Company’s broker shall effect purchases of up to an aggregate of 400,000 shares of Common Stock.

19

Item 6. Exhibits

(a)	Exhibits
31.1	Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Simon F. Nynens, the Chairman of the Board, President and Chief Executive Officer (principal executive officer) of the Company.
31.2	Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Kevin T. Scull, the Vice President and Chief Accounting Officer (principal financial officer) of the Company.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Simon F. Nynens, the Chairman of the Board, President and Chief Executive Officer (principal executive officer) of the Company.
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Kevin T. Scull, the Vice President and Chief Accounting Officer (principal financial officer) of the Company.
101	The following financial information from Wayside Technology Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the SEC on August 8, 2016, formatted in XBRL (Extensible Business Reporting Language) includes: (1) Condensed Consolidated Balance Sheets, (2) Condensed Consolidated Statements of Earnings, (3) Condensed Consolidated Statements of Stockholders’ Equity, (4) Condensed Consolidated Statements of Comprehensive Income, (5) Condensed Consolidated Statements of Cash Flows, and (6) the Notes to the Unaudited Condensed Consolidated Financial Statements.

20

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		WAYSIDE TECHNOLOGY GROUP, INC
8/08/2016	By:	/s/ Simon F. Nynens
Date		Simon F. Nynens, Chairman of the Board, President and Chief Executive Officer
8/08/2016	By:	/s/ Kevin T. Scull
Date		Kevin T. Scull, Vice President and Chief Accounting Officer

21

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Simon F. Nynens, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Wayside Technology Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))  and  internal control over financial reporting ( as defined in Exchange Act Rules 13a-15(f) and 15(d) -15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed  such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 8, 2016

/s/ Simon F. Nynens

Simon F. Nynens

Chairman of the Board

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kevin T. Scull, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Wayside Technology Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))  and  internal control over financial reporting ( as defined in Exchange Act Rules 13a-15(f) and 15(d) -15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed  such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2016

/s/ Kevin T. Scull

Kevin T. Scull

Vice President and Chief Accounting Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Wayside Technology Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Simon F. Nynens,  certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Simon F. Nynens

Simon F. Nynens

Chairman of the Board

President and Chief Executive Officer (Principal Executive Officer)

August 8, 2016

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Wayside Technology Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin  T. Scull, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Kevin T. Scull

Kevin T. Scull

Vice President and Chief Accounting Officer

(Principal Financial Officer)

August 8, 2016

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 29, 2016
Document and Entity Information
Entity Registrant Name	Wayside Technology Group, Inc.
Entity Central Index Key	0000945983
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
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		4,735,295
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 24,576	$ 23,823
Accounts receivable, net of allowances of $2,087 and $1,668 in 2016 and 2015, respectively	61,763	58,965
Inventory, net	2,133	1,954
Prepaid expenses and other current assets	1,270	989
Deferred income taxes	243	260
Total current assets	89,985	85,991
Equipment and leasehold improvements, net	466	362
Accounts receivable-long-term	5,908	7,386
Other assets	132	82
Deferred income taxes	244	261
Total assets	96,735	94,082
Current liabilities
Accounts payable and accrued expenses	58,114	55,423
Total current liabilities	58,114	55,423
Commitments and contingencies
Stockholders' equity:
Common Stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued; 4,748,553 and 4,700,812 shares outstanding in 2016 and 2015, respectively	53	53
Additional paid-in capital	32,320	32,540
Treasury stock, at cost, 535,947 and 583,688 shares in 2016 and 2015, respectively	(11,118)	(10,296)
Retained earnings	18,747	17,813
Accumulated other comprehensive loss	(1,381)	(1,451)
Total stockholders' equity	38,621	38,659
Total liabilities and stockholders' equity	$ 96,735	$ 94,082

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Condensed Consolidated Balance Sheets
Accounts receivable, allowances (in dollars)	$ 2,087	$ 1,668
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	4,748,553	4,700,812
Treasury stock, shares	535,947	583,688

XML

Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Condensed Consolidated Statements of Earnings
Net sales	$ 105,257	$ 91,970	$ 198,580	$ 184,662
Cost of sales	98,257	85,545	185,628	171,880
Gross profit	7,000	6,425	12,952	12,782
Selling, general and administrative expenses	4,756	4,449	9,216	8,916
Income from operations	2,244	1,976	3,736	3,866
Other income:
Interest, net	61	99	125	197
Foreign currency transaction loss	(3)	(4)	(3)	(5)
Income before provision for income taxes	2,302	2,071	3,858	4,058
Provision for income taxes	775	710	1,303	1,394
Net income	$ 1,527	$ 1,361	$ 2,555	$ 2,664
Income per common share-Basic (in dollars per share)	$ 0.34	$ 0.29	$ 0.56	$ 0.57
Income per common share-Diluted (in dollars per share)	$ 0.34	$ 0.29	$ 0.56	$ 0.57
Weighted average common shares outstanding-Basic (in shares)	4,524	4,640	4,545	4,665
Weighted average common shares outstanding-Diluted (in shares)	4,535	4,663	4,557	4,689
Dividends paid per common share (in dollars per share)	$ 0.17	$ 0.17	$ 0.34	$ 0.34

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Condensed Consolidated Statements of Comprehensive Income
Net income	$ 1,527	$ 1,361	$ 2,555	$ 2,664
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(53)	146	70	(462)
Other comprehensive income (loss)	(53)	146	70	(462)
Comprehensive income	$ 1,474	$ 1,507	$ 2,625	$ 2,202

XML

Condensed Consolidated Statement of Stockholders' Equity - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Treasury	Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Total
Balance at Dec. 31, 2015	$ 53	$ 32,540	$ (10,296)	$ 17,813	$ (1,451)	$ 38,659
Balance (in shares) at Dec. 31, 2015	5,284,500					5,284,500
Balance (in shares) at Dec. 31, 2015			583,688			583,688
Increase (Decrease) in Stockholders' Equity
Net income				2,555		$ 2,555
Translation adjustment					70	70
Dividends paid				(1,621)		(1,621)
Share-based compensation expense		839				839
Restricted stock grants (net of forfeitures)		(1,137)	$ 1,137
Restricted stock grants (in shares)			(161,883)
Tax benefit from share-based compensation		78				78
Treasury stock repurchased			$ (1,959)			(1,959)
Treasury stock repurchased (in shares)			114,142
Balance at Jun. 30, 2016	$ 53	$ 32,320	$ (11,118)	$ 18,747	$ (1,381)	$ 38,621
Balance (in shares) at Jun. 30, 2016	5,284,500					5,284,500
Balance (in shares) at Jun. 30, 2016			535,947			535,947

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Net income	$ 2,555	$ 2,664
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	108	122
Deferred income tax expense	33	42
Provision for doubtful accounts receivable		6
Share-based compensation expense	839	534
Changes in operating assets and liabilities:
Accounts receivable	(985)	6,515
Inventory	(165)	(870)
Prepaid expenses and other current assets	(276)	(321)
Accounts payable and accrued expenses	2,610	(8,930)
Other assets	(50)	46
Net cash provided by (used in) operating activities	4,669	(192)
Cash flows used in investing activities
Purchase of equipment and leasehold improvements	(210)	(105)
Net cash used in investing activities	(210)	(105)
Cash flows used in financing activities
Purchase of treasury stock	(1,959)	(2,776)
Proceeds from stock option exercises		574
Tax benefit from share-based compensation	78	135
Dividends paid	(1,621)	(1,637)
Net cash used in financing activities	(3,502)	(3,704)
Effect of foreign exchange rate on cash	(204)	(245)
Net increase in cash and cash equivalents	753	(4,246)
Cash and cash equivalents at beginning of period	23,823	23,124
Cash and cash equivalents at end of period	24,576	18,878
Supplementary disclosure of cash flow information:
Income taxes paid	$ 1,207	$ 1,803

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2016

Basis of Presentation

Basis of Presentation

1.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 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, 2015.

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2.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. In August 2015, the FASB issued Accounting Standards Update ASU 2015-14 (“ASU 2015-14”) which deferred the effective date of the new standard by one year. Along with the deferral of the effective date, ASU No. 2015-14 allows early application as of the original effective date. 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 currently evaluating the newly issued guidance, including 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 do not expect the adoption of this new accounting pronouncement, will have a significant impact on our consolidated financial statements.

In November 2015, the FASB issued Accounting Standards Update 2015-17 (“ASU 2015-17”) to simplify the presentation of deferred taxes. This amendment requires that all deferred tax assets and liabilities, along with any related valuation allowances, be classified as noncurrent on the balance sheet.  Adoption of this standard is required for annual periods beginning after December 15, 2016. We do not expect the adoption of ASU 2015-17 will have a significant impact on our consolidated financial statements and related disclosures.

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. Early adoption is permitted. The Company is currently assessing the potential impact of adopting ASU 2016-09 on its 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 for both finance and operating leases. 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.

XML

Foreign Currency Translation

6 Months Ended

Jun. 30, 2016

Foreign Currency Translation

Foreign Currency Translation

3.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 Canadian operations in the first six months of 2016 were $13.5 million as compared to $11.0 million for the first six months of 2015. The sales from our Canadian operations for the second quarter of 2016 were $6.9 million as compared to $5.4 million for the second quarter of 2015.

XML

Comprehensive Income

6 Months Ended

Jun. 30, 2016

Comprehensive Income

Comprehensive Income

4.Cumulative translation adjustments have been classified within accumulated other comprehensive income, which is a separate component of stockholders’ equity in accordance with FASB ASC Topic 220, “Comprehensive Income.”

XML

Revenue Recognition

6 Months Ended

Jun. 30, 2016

Revenue Recognition

Revenue Recognition

5.Revenue on product (software and hardware) and maintenance agreement sales are recognized once fourcriteria are met: (1) persuasive evidence of an arrangement exists, (2) the price is fixed and determinable, (3) delivery (software and hardware) or fulfillment (maintenance) 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 and maintenance agreements are recognized on a gross basis 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 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.  The Company 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.  Maintenance agreements allow customers to 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 agreement is in effect.

Sales are recorded net of discounts, rebates, and returns.  Vendor rebates and price protection are recorded when earned as a reduction to cost of sales or merchandise inventory, as applicable.

Cooperative reimbursements from vendors, which are earned and available, are recorded in the period the related advertising expenditure is incurred. Cooperative reimbursements are recorded as a reduction of cost of sales in accordance with FASB ASC Topic 605-50 “Accounting by a Customer (including reseller) for Certain Consideration Received from a Vendor.”  Provisions for returns are estimated based on historical sales returns and credit memo analysis which are adjusted to actual on a periodic basis.

Accounts receivable-long-term result from product sales with extended payment terms that are discounted to their present values at the prevailing market rates. 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.

XML

Fair Value

6 Months Ended

Jun. 30, 2016

Fair Value

Fair Value

6.The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value at June 30, 2016 and December 31, 2015 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.

XML

Balance Sheet Detail

6 Months Ended

Jun. 30, 2016

Balance Sheet Detail

Balance Sheet Detail

7.Balance Sheet Detail:

Equipment and leasehold improvements consist of the following as of June 30, 2016 and December 31, 2015:

	June 30,		December 31,
	2016		2015
Equipment	$	3,119	$	2,924
Leasehold improvements		587		572
		3,706		3,496
Less accumulated depreciation and amortization		(3,240)		(3,134)
	$	466	$	362

Accounts payable and accrued expenses consist of the following as of June 30, 2016 and December 31, 2015:

	June 30,		December 31,
	2016		2015
Trade accounts payable	$	55,388	$	52,808
Accrued expenses		2,726		2,615
	$	58,114	$	55,423

Accumulated other comprehensive loss consists of the following as of June 30, 2016 and December 31, 2015:

	June 30,		December 31,
	2016		2015
Foreign currency translation adjustments	$	(1,381)	$	(1,451)
	$	(1,381)	$	(1,451)

XML

Credit Facility

6 Months Ended

Jun. 30, 2016

Credit Facility.

Credit Facility

8.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, 2016.

At June 30, 2016, the Company had no borrowings outstanding under the Credit Facility.

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share

Earnings Per Share

9.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,
	2016		2015		2016		2015
Numerator:
Net income	$	2,555	$	2,664	$	1,527	$	1,361
Denominator:
Weighted average shares (Basic)		4,545		4,665		4,524		4,640
Dilutive effect of outstanding options and nonvested shares of restricted stock		12		24		11		23
Weighted average shares including assumed conversions (Diluted)		4,557		4,689		4,535		4,663
Basic net income per share	$	0.56	$	0.57	$	0.34	$	0.29
Diluted net income per share	$	0.56	$	0.57	$	0.34	$	0.29

XML

Major Customers and Vendors

6 Months Ended

Jun. 30, 2016

Major Customers and Vendors

Major Customers and Vendors

10.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 three major vendors that accounted for 23.3%,  10.2% and 9.3%, respectively, of total purchases during the six months ended June 30, 2015, and 20.9%,  10.4% and 10.2% of total purchases for the three months ended June 30, 2015. 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. These same customers accounted for 10.6% and 19.0%, respectively, of total net accounts receivable as of June 30, 2016.  The Company had two major customers that accounted for 17.9% and 17.8%, respectively, of its total net sales during the six months ended June 30, 2015, and 17.9%, and 17.0% of total net sales for the three months ended June 30, 2015.

XML

Income Taxes

6 Months Ended

Jun. 30, 2016

Income Taxes

Income Taxes

11.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. As of June 30, 2016 the Company’s 2012 through 2015 Federal tax returns remain open for examination, as the Company recently concluded an Internal Revenue Service examination for the 2011 and 2012 tax years. This examination resulted in no change to the previously filed Federal corporate tax returns.  The Company’s New Jersey and Canadian tax returns are open for examination for the years 2012 through 2015. 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 each of  the six and three months ended June 30, 2016 was 33.7% compared to 34.4% and34.3%, respectively, for the same period last year.

XML

Stockholders' Equity and Stock Based Compensation

6 Months Ended

Jun. 30, 2016

Stockholders' Equity and Stock Based Compensation

Stockholders' Equity and Stock Based Compensation

12.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, 2016, the number of shares of Common stock available for future award grants to employees and directors under the 2012 Plan is 307,965.

The 2006 Stock-Based Compensation Plan (the “2006 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 2006 Plan was 800,000. As of June 30, 2016, there are no shares of Common Stock available for future award grants to employees and directors under the 2006 Plan.

During 2010, the Company granted a total of 150,500 shares of Restricted Stock to officers and employees. These shares of Restricted Stock vest over 20 equal quarterly installments. In 2010, a total of 5,875 shares of Restricted Stock were forfeited as a result of employees and officers terminating employment with the Company.

During 2011, the Company granted a total of 15,000 shares of Restricted Stock to employees. These shares of Restricted Stock vest over 20 equal quarterly installments. In 2011, a total of 8,375 shares of Restricted Stock were forfeited as a result of employees terminating employment with the Company.

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 168,350 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 6,467 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company.

A summary of nonvested shares of Restricted Stock awards outstanding under the Company’s the 2012 Plan and 2006 Plan as of June 30, 2016, and changes during the six months then ended is as follows:

		Weighted Average
		Grant Date
	Shares	Fair Value
Nonvested shares at January 1, 2016	123,329	$	16.34
Granted in 2016	168,350		17.00
Vested in 2016	(57,893)		14.50
Forfeited in 2016	(6,467)		16.33
Nonvested shares at June 30, 2016	227,319	$	15.34

As of June 30, 2016, there is approximately $3.5 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 3.5 years.

For the six months ended June 30, 2016 and 2015, the Company recognized share-based compensation cost of $0.8 million and $0.5 million respectively, which is included in the Company’s general and administrative expense.

XML

Industry, Segment and Geographic Information

6 Months Ended

Jun. 30, 2016

Industry, Segment and Geographic Information

Industry, Segment and Geographic Information

13.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,
	2016		2015		2016		2015
Revenue:
Lifeboat Distribution	$	175,999	$	164,206	$	89,659	$	81,260
TechXtend		22,581		20,456		15,598		10,710
		198,580		184,662		105,257		91,970
Gross Profit:
Lifeboat Distribution	$	10,699	$	10,344	$	5,547	$	5,110
TechXtend		2,253		2,438		1,453		1,315
		12,952		12,782		7,000		6,425
Direct Costs:
Lifeboat Distribution	$	3,596	$	3,708	$	1,778	$	1,931
TechXtend		1,062		1,205		558		611
		4,658		4,913		2,336		2,542
Segment Income Before Taxes:
Lifeboat Distribution	$	7,103	$	6,636	$	3,769	$	3,179
TechXtend		1,191		1,233		895		704
Segment Income Before Taxes		8,294		7,869		4,664		3,883
General and administrative		4,558	$	4,003	$	2,420	$	1,907
Interest income		125		197		61		99
Foreign currency translation		(3)		(5)		(3)		(4)
Income before taxes	$	3,858	$	4,058	$	2,302	$	2,071

	As of		As of
	June 30,		December 31,
Selected Assets By Segment:	2016		2015
Lifeboat Distribution	$	40,524	$	45,300
TechXtend		29,280		23,005
Segment Select Assets		69,804		68,305
Corporate Assets		26,931		25,777
Total Assets	$	96,735	$	94,082

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

New Accounting Pronouncements

New 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. In August 2015, the FASB issued Accounting Standards Update ASU 2015-14 (“ASU 2015-14”) which deferred the effective date of the new standard by one year. Along with the deferral of the effective date, ASU No. 2015-14 allows early application as of the original effective date. 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 currently evaluating the newly issued guidance, including 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 do not expect the adoption of this new accounting pronouncement, will have a significant impact on our consolidated financial statements.

In November 2015, the FASB issued Accounting Standards Update 2015-17 (“ASU 2015-17”) to simplify the presentation of deferred taxes. This amendment requires that all deferred tax assets and liabilities, along with any related valuation allowances, be classified as noncurrent on the balance sheet.  Adoption of this standard is required for annual periods beginning after December 15, 2016. We do not expect the adoption of ASU 2015-17 will have a significant impact on our consolidated financial statements and related disclosures.

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. Early adoption is permitted. The Company is currently assessing the potential impact of adopting ASU 2016-09 on its 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 for both finance and operating leases. 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.

XML

Balance Sheet Detail (Tables)

6 Months Ended

Jun. 30, 2016

Balance Sheet Detail

Schedule of equipment and leasehold improvements, net

	June 30,		December 31,
	2016		2015
Equipment	$	3,119	$	2,924
Leasehold improvements		587		572
		3,706		3,496
Less accumulated depreciation and amortization		(3,240)		(3,134)
	$	466	$	362

Schedule of accounts payable and accrued expenses

	June 30,		December 31,
	2016		2015
Trade accounts payable	$	55,388	$	52,808
Accrued expenses		2,726		2,615
	$	58,114	$	55,423

Schedule of accumulated other comprehensive loss

	June 30,		December 31,
	2016		2015
Foreign currency translation adjustments	$	(1,381)	$	(1,451)
	$	(1,381)	$	(1,451)

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2016

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,
	2016		2015		2016		2015
Numerator:
Net income	$	2,555	$	2,664	$	1,527	$	1,361
Denominator:
Weighted average shares (Basic)		4,545		4,665		4,524		4,640
Dilutive effect of outstanding options and nonvested shares of restricted stock		12		24		11		23
Weighted average shares including assumed conversions (Diluted)		4,557		4,689		4,535		4,663
Basic net income per share	$	0.56	$	0.57	$	0.34	$	0.29
Diluted net income per share	$	0.56	$	0.57	$	0.34	$	0.29

XML

Stockholders' Equity and Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2016

Stockholders' Equity and Stock Based Compensation

Schedule of changes in options outstanding under the combined plans

		Weighted Average
		Grant Date
	Shares	Fair Value
Nonvested shares at January 1, 2016	123,329	$	16.34
Granted in 2016	168,350		17.00
Vested in 2016	(57,893)		14.50
Forfeited in 2016	(6,467)		16.33
Nonvested shares at June 30, 2016	227,319	$	15.34

XML

Industry, Segment and Geographic Information (Tables)

6 Months Ended

Jun. 30, 2016

Industry, Segment and Geographic Information

Schedule of segment reporting information

	Six months ended				Three months ended
	June 30,				June 30,
	2016		2015		2016		2015
Revenue:
Lifeboat Distribution	$	175,999	$	164,206	$	89,659	$	81,260
TechXtend		22,581		20,456		15,598		10,710
		198,580		184,662		105,257		91,970
Gross Profit:
Lifeboat Distribution	$	10,699	$	10,344	$	5,547	$	5,110
TechXtend		2,253		2,438		1,453		1,315
		12,952		12,782		7,000		6,425
Direct Costs:
Lifeboat Distribution	$	3,596	$	3,708	$	1,778	$	1,931
TechXtend		1,062		1,205		558		611
		4,658		4,913		2,336		2,542
Segment Income Before Taxes:
Lifeboat Distribution	$	7,103	$	6,636	$	3,769	$	3,179
TechXtend		1,191		1,233		895		704
Segment Income Before Taxes		8,294		7,869		4,664		3,883
General and administrative		4,558	$	4,003	$	2,420	$	1,907
Interest income		125		197		61		99
Foreign currency translation		(3)		(5)		(3)		(4)
Income before taxes	$	3,858	$	4,058	$	2,302	$	2,071

	As of		As of
	June 30,		December 31,
Selected Assets By Segment:	2016		2015
Lifeboat Distribution	$	40,524	$	45,300
TechXtend		29,280		23,005
Segment Select Assets		69,804		68,305
Corporate Assets		26,931		25,777
Total Assets	$	96,735	$	94,082

XML

Foreign Currency Translation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue from external customers
Net sales	$ 105,257	$ 91,970	$ 198,580	$ 184,662
Canadian operations
Revenue from external customers
Net sales	$ 6,900	$ 5,400	$ 13,500	$ 11,000

XML

Revenue Recognition (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) 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

XML

Balance Sheet Detail: (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Equipment and leasehold improvements
Gross	$ 3,706	$ 3,496
Less accumulated depreciation and amortization	(3,240)	(3,134)
Net	466	362
Accumulated Other Comprehensive Income
Accumulated other comprehensive loss	(1,381)	(1,451)
Accounts payable and accrued expenses
Trade accounts payable	55,388	52,808
Accrued expenses	2,726	2,615
Accounts payable and accrued expenses	58,114	55,423
Accumulated Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income
Accumulated other comprehensive loss	(1,381)	(1,451)
Equipment
Equipment and leasehold improvements
Gross	3,119	2,924
Leasehold improvements
Equipment and leasehold improvements
Gross	$ 587	$ 572

XML

Credit Facility (Details) - Credit Facility	Jan. 04, 2013 USD ($) item	Jun. 30, 2016 USD ($)
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	2.00
Borrowings outstanding		$ 0
Index
Credit Facility
Interest rate margin (as a percent)	1.50%

XML

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Numerator:
Net income	$ 1,527	$ 1,361	$ 2,555	$ 2,664
Denominator:
Weighted average shares (Basic)	4,524	4,640	4,545	4,665
Dilutive effect of outstanding options and non-vested shares of restricted stock (in shares)	11	23	12	24
Weighted average shares including assumed conversions (Diluted)	4,535	4,663	4,557	4,689
Basic income per share (in dollars per share)	$ 0.34	$ 0.29	$ 0.56	$ 0.57
Diluted income per share (in dollars per share)	$ 0.34	$ 0.29	$ 0.56	$ 0.57

XML

Major Customers and Vendors (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 entity customer	Jun. 30, 2015 entity customer	Jun. 30, 2016 entity customer	Jun. 30, 2015 entity customer
Purchases | Vendor concentration risk
Significant Customers and Vendors
Number of vendors | entity	2	3	2	3
Purchases | Vendor concentration risk | Major vendor one
Significant Customers and Vendors
Percentage of concentration risk	17.40%	20.90%	23.90%	23.30%
Purchases | Vendor concentration risk | Major vendor two
Significant Customers and Vendors
Percentage of concentration risk	10.20%	10.40%	10.00%	10.20%
Purchases | Vendor concentration risk | Major vendor three
Significant Customers and Vendors
Percentage of concentration risk		10.20%		9.30%
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	17.50%	17.90%	18.90%	17.90%
Net sales | Customer two | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	14.70%	17.00%	17.90%	17.80%
Net accounts receivable | Vendor 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	10.60%
Net accounts receivable | Customer two | Customer concentration risk
Significant Customers and Vendors
Percentage of concentration risk	19.00%

XML

Income Taxes (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Taxes
Effective tax rate (as a percent)	33.70%	34.30%	33.70%	34.40%

XML

Stockholders' Equity and Stock Based Compensation - Vesting (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2016 installment shares	Dec. 31, 2015 installment shares	Dec. 31, 2014 installment shares	Dec. 31, 2013 installment shares	Dec. 31, 2012 installment shares	Dec. 31, 2011 installment shares	Dec. 31, 2010 installment shares
Restricted stock | Minimum
Stock-based compensation
Number of equal quarterly installments for vesting of awards | installment	1
Restricted stock | Maximum
Stock-based compensation
Number of equal quarterly installments for vesting of awards | installment	20
2006 Plan
Stock-based compensation
Number of shares of common stock initially available for award	800,000
Options reserved for future issuance (in shares)	0
2006 Plan | Restricted stock
Stock-based compensation
Granted (in shares)					92,000	15,000	150,500
Number of equal quarterly installments for vesting of awards | installment					20	20	20
Forfeited (in shares)					3,525	8,375	5,875
2012 Plan
Stock-based compensation
Number of shares of common stock initially available for award	600,000
Options reserved for future issuance (in shares)	307,965
2006 Plan and 2012 Plan | Restricted stock
Stock-based compensation
Granted (in shares)	168,350	44,000	98,689	56,500
Number of equal quarterly installments for vesting of awards | installment		16		20
Forfeited (in shares)	6,467	4,465	34,487	775
2006 Plan and 2012 Plan | Restricted stock | Minimum
Stock-based compensation
Number of equal quarterly installments for vesting of awards | installment			1
2006 Plan and 2012 Plan | Restricted stock | Maximum
Stock-based compensation
Number of equal quarterly installments for vesting of awards | installment			20
2006 Plan and 2012 Plan | Restricted stock | CEO
Stock-based compensation
Granted (in shares)				40,000
Number of equal quarterly installments for vesting of awards | installment				16

XML

Stockholders' Equity and Stock Based Compensation - Nonvested (Details) - 2006 Plan and 2012 Plan - Restricted stock - USD ($) $ / shares in Units, $ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Shares
Nonvested shares at the beginning of the period	123,329
Granted (in shares)	168,350		44,000	98,689	56,500
Vested (in shares)	(57,893)
Forfeited (in shares)	(6,467)		(4,465)	(34,487)	(775)
Nonvested shares at the end of the period	227,319		123,329
Weighted Average Grant Date Fair Value
Nonvested shares at the beginning of period (in dollars per share)	$ 16.34
Granted (in dollars per share)	17.00
Vested (in dollars per share)	14.50
Forfeited (in dollars per share)	16.33
Nonvested shares at the end of period (in dollars per share)	$ 15.34		$ 16.34
Unrecognized compensation cost (in dollars)	$ 3.5
Weighted average period for recognition of unrecognized compensation cost	3 years 6 months
Share-based compensation cost (in dollars)	$ 0.8	$ 0.5

XML

Industry, Segment and Geographic Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Segment reporting information
Number of reportable operating segments | item			2
Revenue	$ 105,257	$ 91,970	$ 198,580	$ 184,662
Gross Profit	7,000	6,425	12,952	12,782
Direct Costs	2,336	2,542	4,658	4,913
Segment Income	4,664	3,883	8,294	7,869
General and administrative	2,420	1,907	4,558	4,003
Interest, net	61	99	125	197
Foreign currency translation (loss)	(3)	(4)	(3)	(5)
Income before provision for income taxes	2,302	2,071	3,858	4,058
Total Assets	96,735		96,735		$ 94,082
Segment Total
Segment reporting information
Total Assets	69,804		69,804		68,305
Corporate Assets
Segment reporting information
Total Assets	26,931		26,931		25,777
Lifeboat Distribution
Segment reporting information
Revenue	89,659	81,260	175,999	164,206
Gross Profit	5,547	5,110	10,699	10,344
Direct Costs	1,778	1,931	3,596	3,708
Segment Income	3,769	3,179	7,103	6,636
Total Assets	40,524		40,524		45,300
TechXtend
Segment reporting information
Revenue	15,598	10,710	22,581	20,456
Gross Profit	1,453	1,315	2,253	2,438
Direct Costs	558	611	1,062	1,205
Segment Income	895	$ 704	1,191	$ 1,233
Total Assets	$ 29,280		$ 29,280		$ 23,005