Revenue Growth - Total revenue for 2023 was $54.4 million, representing a $23.8 million or 78% increase from 2022 revenues of $30.6 million[94] - Revenue from procurement transactions increased by $25.3 million or 191% in 2023, with the aggregate gross value of all procurement transactions rising from $73 million in 2022 to $123.1 million in 2023[93] - Total revenue for 2023 was $54.4 million, a 78% increase from $30.6 million in 2022, primarily driven by a $25.3 million increase in procurement business[124] Profitability - Operating income improved by $0.8 million or 91% from 2022, reaching $1.75 million in 2023[97] - Net income for 2023 was $74,000, compared to a net loss of $73,000 in 2022, marking a turnaround in profitability[137] - Operating income improved by 91% to $1.75 million in 2023, compared to $914,000 in 2022, despite higher selling, general and administrative expenses[134] Cost and Expenses - Selling, general and administrative expenses rose by 16% to $8.9 million in 2023, primarily due to increased labor costs from strategic investments[96] - Interest expense increased by $0.7 million in 2023 due to higher interest rates and increased activity in procurement transactions, with total transactions amounting to approximately $123.1 million[98] - Selling, general and administrative expenses rose by 16% to $8.9 million in 2023, driven by strategic investments in sales and marketing[133] Gross Profit and Margins - Gross profit increased by $2 million or 23% compared to 2022, although gross profit margin decreased to 20% in 2023 from 29% in 2022 due to a higher proportion of lower-margin procurement business[95] - Procurement revenues accounted for 71% of total revenue in 2023, up from 43% in 2022, indicating a shift towards lower-margin services[127] - Gross profit margin decreased to 20% in 2023 from 29% in 2022, attributed to the increased revenue share from procurement services[130] Cash Flow and Liquidity - Cash on hand at the end of 2023 was $11.8 million, a decrease of $8.6 million from the end of 2022, primarily due to timing of cash flows related to procurement activities[99] - Cash used in operating activities was $8.3 million in 2023, a significant decrease from cash provided by operating activities of $14.7 million in 2022, primarily due to timing impacts of procurement services[151] - As of December 31, 2023, the company had cash and cash equivalents of $11.8 million, down from $20.4 million in 2022[150] Future Outlook - The company anticipates continued profitability on a quarterly and annual basis in 2024 and beyond, with no substantial doubt about its ability to continue as a going concern[149] - The company expects fluctuations in MDC deployments to continue, impacting quarterly revenues and profits[90] Other Financial Metrics - The company recorded an accumulated net operating loss carry-forward of $40 million as of December 31, 2023, which may offset future taxable income[136] - Interest expense for 2023 was $1.616 million, up from $931,000 in 2022, due to higher interest rates and increased factoring transactions[135]

Revenue Performance - Total revenue for the nine-month period ended September 30, 2023, was $30.0 million, an increase of $10.3 million or 52% compared to $19.7 million in the same period of 2022[75]. - Systems integration segment revenues increased by 31% during the first nine months of 2023 compared to the same period in 2022, contributing to a $13.7 million increase in total revenue[69]. - Procurement and reseller services revenues for the nine-month period ended September 30, 2023, were approximately $17.7 million, up 216% or $12.1 million from $5.6 million in the comparable period of 2022[77]. - Revenue for the three-month period ended September 30, 2023, was $8.9 million, an increase of $0.8 million or 10% compared to the third quarter of 2022[74]. Profitability and Expenses - Gross profit margin for the three-month period ended September 30, 2023, was 32%, down from 34% in the third quarter of 2022, primarily due to increased costs in the integration business[84]. - Cost of revenue as a percentage of revenue was 68% for the three-month period ended September 30, 2023, compared to 66% for the third quarter of 2022[79]. - Selling, general and administrative expenses increased by $217,000 or 12% for the three-month period ended September 30, 2023, primarily due to higher compensation costs[85]. - Operating income for the three-month period ended September 30, 2023, was $715,000, compared to $871,000 in the third quarter of 2022[86]. - Net income for Q3 2023 was $209,000 ($0.01 per share), down from $605,000 ($0.03 per share) in Q3 2022; for the nine-month period, a net loss of $262,000 was recorded compared to a net income of $1,068,000 in the same period of 2022[88]. Cash Flow and Financial Position - Cash and cash equivalents increased to $28.7 million as of September 30, 2023, from $20.4 million at the end of 2022[93]. - Cash provided by operating activities was $8.6 million for the nine-month period ended September 30, 2023, compared to $3.6 million in the same period of 2022[94]. - Deferred revenue increased by approximately $11 million and accounts payable rose by about $10 million at September 2023 compared to September 2022, reflecting higher procurement activities[94]. - Cash used in investing activities was $240,000 for the nine-month period ended September 30, 2023, primarily for leasehold improvements[95]. - Cash used in financing activities was $33,000 in the nine-month period ended September 30, 2023, significantly lower than $1.7 million in the same period of 2022[96]. - The company has an accumulated deficit of $66.6 million as of September 30, 2023, with a history of annual operating and net losses[90]. Future Outlook - Management believes profitability is achievable in the next quarter and for the year ending December 31, 2023, despite previous delays in customer transactions[91]. - The company plans to implement cost reductions if future results do not meet expectations, which may impact product offerings and financial results[98]. Operational Challenges - The facilities business saw a $3.5 million decrease in revenues from Modular Data Center (MDC) deployments in the first nine months of 2023 compared to the same period in 2022[68]. - Supply chain disruptions continue to impact the timing of systems integration and MDC deployment revenue, with expectations of ongoing issues for several quarters[76]. - Interest expense for Q3 2023 was $661,000, up from $263,000 in Q3 2022, driven by an increase in factored transactions from $27.4 million to $61.4 million[87].

Revenue Performance - Revenue for the three-month period ended June 30, 2023, was $14.5 million, an increase of $8.1 million or 126% compared to the second quarter of 2022[78]. - Year-to-date revenue for the six-month period ended June 30, 2023, was $21.1 million, an increase of $9.5 million or 82% compared to the first six months of 2022[79]. - Systems integration revenues grew by 46% in the first half of 2023 compared to the first half of 2022, driven by an $11.3 million increase in this segment[79]. - Revenues from procurement and reseller services were approximately $10.6 million in the second quarter of 2023, compared to $0.8 million in the second quarter of 2022[81]. Profitability and Income - Gross profit margin for the three-month period ended June 30, 2023, was 22%, down from 41% in the second quarter of 2022, primarily due to increased costs in the integration business[88]. - Operating income for the three-month period ended June 30, 2023, was $975,000, compared to $939,000 in the second quarter of 2022[90]. - For the three-month period ended June 30, 2023, the company recorded a net income of $315,000 or $0.01 per share, compared to a net income of $771,000 or $0.04 per share for the same period in 2022[93]. - For the six-month period ended June 30, 2023, the company reported a net loss of $471,000 or $(0.02) per share, contrasting with a net income of $463,000 or $0.02 per share in the first half of 2022[93]. - The company anticipates being profitable in the next quarter and for the year ended December 31, 2023, based on improved revenue growth and order backlog[96]. Expenses and Costs - Cost of revenue as a percentage of revenue was 78% for the three-month period ended June 30, 2023, compared to 59% for the second quarter of 2022[83]. - Selling, general and administrative expenses increased by $556,000 or 35% for the three-month period ended June 30, 2023, compared to the second quarter of 2022[89]. - The company plans to implement reductions in selling, general, and administrative expenses if future results do not meet expectations to improve profitability and cash flows[95]. Cash Flow and Financial Position - As of June 30, 2023, the company had cash and cash equivalents of $24.2 million, an increase from $20.4 million at December 31, 2022[98]. - Cash provided by operating activities was $4 million for the six-month period ended June 30, 2023, significantly up from $0.5 million for the same period in 2022[99]. - Cash used in investing activities was $205,000 for the six-month period ended June 30, 2023, primarily for leasehold improvements, compared to $122,000 in the same period of 2022[101]. - Cash used in financing activities was $10,000 for the six-month period ended June 30, 2023, compared to cash provided of $27,000 in the same period of 2022[102]. - The company had an accumulated deficit of $66.9 million as of June 30, 2023, with a history of annual operating and net losses attributed to COVID-19 and supply chain constraints[95]. Supply Chain and Future Outlook - The company expects ongoing supply chain issues to persist for at least the next several quarters, affecting the timing of revenue recognition[80]. - Interest expense for the three-month period ended June 30, 2023, was $672,000, an increase from $162,000 in the same period of 2022, due to more agent-type transactions[92]. - The company has no off-balance sheet arrangements as of June 30, 2023[105].

Revenue Performance - Revenue for the three-month period ended March 31, 2023, was $6.6 million, an increase of $1.4 million or 27% compared to the first quarter of 2022[83]. - Systems integration segment revenues increased by $1.2 million, or 39%, to $4.3 million in the first quarter of 2023, driven by improved supply chain conditions[83]. - The facilities business saw a $3.9 million increase in revenues from MDC deployments in 2022, contributing to the overall revenue growth[76]. - The company expects fluctuations in the number of MDC deployments on a quarterly basis, impacting revenues and profits[76]. Cost and Profitability - Cost of revenue as a percentage of revenue was 74% for the three-month period ended March 31, 2023, compared to 68% for the first quarter of 2022[87]. - Gross profit margin for the three-month period ended March 31, 2023, was 26%, down from 32% in the first quarter of 2022, primarily due to increased labor costs[91]. - Selling, general and administrative expenses increased by $533,000 or 31% compared to the first quarter of 2022, mainly due to higher compensation and professional fees[92]. - The company recorded an operating loss of $665,000 for the three-month period ended March 31, 2023, compared to an operating loss of $173,000 in the first quarter of 2022[93]. - Net loss for the three-month period ended March 31, 2023, was $786,000 or $0.04 per share, compared to a net loss of $308,000 or $0.02 per share for the same period in 2022[95]. Cash Flow and Financial Position - Cash used in operating activities was $13.5 million for the three-month period ended March 31, 2023, compared to cash provided by operating activities of $4.9 million for the same period in 2022[101]. - The Company had cash and cash equivalents of $6.7 million as of March 31, 2023, down from $20.4 million at the end of 2022[100]. - Cash used in investing activities was $185,000 for the three-month period ended March 31, 2023, primarily for leasehold improvements[102]. - Cash used in financing activities was $1,000 for the three-month period ended March 31, 2023, compared to $23,000 for the same period in 2022[103]. - As of March 31, 2023, the Company had an accumulated deficit of $67.2 million and negative working capital of $499,000[97]. Future Outlook and Risks - Management anticipates profitability in the next quarter and for the year ended December 31, 2023, based on a significant backlog of delayed projects[98]. - The Company may require additional capital for business acquisitions or if there is a sudden increase in reseller and procurement services[97]. - Management believes that adequate trade credit will be available to finance reseller activities as the business grows in 2023 and beyond[101]. - There are potential risks that revenues may not meet projections or costs may exceed estimates, affecting liquidity and growth opportunities[99]. - Supply chain disruptions continue to affect the timing of systems integration revenue, with expectations of ongoing issues for several quarters[84]. - The Company has a history of annual operating losses, attributed to COVID-19 and supply chain constraints[97].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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 number: 001-33627 TSS, INC. (Exact name of registrant as specified in its charter) Delaware 20-2027651 (State or other jur ...