tssi_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2025

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

Commission file number: 001-33627

TSS, INC.

(Exact name of registrant as specified in its charter)

Delaware		20-2027651
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1800 Aviation Drive, Building 1, Suite 100 Georgetown, Texas		78628
(Address of principal executive offices)		(Zip Code)

Former address of principal executive offices: 110 E. Old Settlers Blvd., Round Rock, TX 78664

Registrant’s telephone number, including area code

(512)-310-1000

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class		Ticker Symbol		Name of Each Exchange on Which Registered
Common Stock, $.0001 par value		TSSI		Nasdaq Capital Market

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 Exchange Act of 1934 during the past 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 each registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Number of shares of common stock outstanding as of August 7, 2025: 25,364,244

TSS, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended June 30, 2025

“SAFE HARBOR” STATEMENT		ii
PART I–FINANCIAL INFORMATION		1
Item 1. Condensed Consolidated Financial Statements		1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3. Quantitative and Qualitative Disclosures About Market Risk		29
Item 4. Controls and Procedures		29
PART II–OTHER INFORMATION		30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 6. Exhibits		31
SIGNATURES		32

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“SAFE HARBOR” STATEMENT

UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

From time to time, we make oral and written statements that may constitute “forward-looking statements” (rather than historical facts) as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (the “SEC”) in its rules, regulations and releases, including Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We desire to take advantage of the “safe harbor” provisions in the Private Securities Litigation Reform Act of 1995 for forward looking statements made from time to time, including, but not limited to, the forward- looking statements made in this Annual Report on Form 10-K (the “Annual Report”), as well as those made in other filings with the SEC.

Forward looking statements can be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “believe,” “continue,” “forecast,” “foresee” or other similar words. Such forward looking statements are based on management’s current plans and expectations and are subject to risks, uncertainties and changes in plans that could cause actual results to differ materially from those described in the forward-looking statements. Important factors that could cause actual results to differ materially from those anticipated in our forward-looking statements include, but are not limited to, those described under "Risk Factors” set forth in Item 1A of this Annual Report.

We expressly disclaim any obligation to release publicly any updates or any changes in our expectations or any changes in events, conditions or circumstances on which any forward-looking statement is based.

As used herein, except as otherwise indicated by the context, the terms “TSS”, “Company”, “we”, “our” and “us” are used to refer to TSS, Inc. and its subsidiaries.

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PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

TSS, Inc.

Condensed Consolidated Balance Sheets

(in thousands except par values)

	June 30, 2025			December 31,
	(unaudited)			2024

Current Assets:
Cash and cash equivalents	$	36,836		$	23,222
Contract and other receivables, net		13,997			16,203
Costs and estimated earnings in excess of billings on uncompleted contracts		4,418			851
Inventories, net		14,589			17,673
Prepaid expenses and other current assets		1,055			248
Total current assets		70,895			58,197
Property and equipment, net		35,288			8,591
Lease right-of-use asset		22,939			24,213
Goodwill		780			780
Restricted cash		5,000			-
Other assets		4,568			4,787
Total assets	$	139,470		$	96,568

Current Liabilities:
Accounts payable and accrued expenses	$	82,020		$	53,340
Deferred revenues, current		3,333			2,613
Lease liabilities, current		1,891			966
Total current liabilities		87,244			56,919
Non-current Liabilities:
Long-term debt, non-current		19,541			8,200
Lease liabilities, non-current		22,648			23,540
Deferred revenues, non-current		499			771
Total non-current liabilities		42,688			32,511
Total liabilities		129,932			89,430

Commitments and Contingencies (Note 1)

Stockholders’ Equity:
Preferred stock, $0.0001 par value; 1,000 shares authorized; none issued		-			-
Common stock, $0.0001 par value; 49,000 shares authorized; 25,975 and 25,250 issued; 23,740 and 23,107 outstanding at June 30, 2025 and December 31, 2024, respectively		3			3
Additional paid-in capital		76,058			74,200
Treasury stock, at cost; 1,975 and 1,849 shares at June 30, 2025 and December 31, 2024		(10,650	)		(6,730	)
Accumulated deficit		(55,873	)		(60,335	)
Total stockholders’ equity		9,538			7,138
Total liabilities and stockholders’ equity	$	139,470		$	96,568

See accompanying notes to the condensed consolidated financial statements.

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TSS, Inc.

Unaudited Consolidated Statements of Operations

(in thousands, except per-share amounts)

	Three Months Ended June 30						Six Months Ended June 30
	2025			2024			2025			2024
Revenues:
Procurement	$	33,002		$	4,914		$	123,179		$	16,538
Facilities management		1,482			2,285			2,780			4,431
System integration		9,486			4,960			16,970			7,083
Total revenues		43,970			12,159			142,929			28,052
Cost of revenue		36,155			7,623			125,904			20,802
Gross profit		7,815			4,536			17,025			7,250

Operating expenses:
Selling, general and administrative		4,735			2,719			9,622			5,108
Depreciation and amortization		844			117			1,054			188
Total operating expenses		5,579			2,836			10,676			5,296
Income from operations		2,236			1,700			6,349			1,954

Interest expense		859			378			2,327			706
Interest income		(175	)		(106	)		(558	)		(205	)
Pre-tax income		1,552			1,428			4,580			1,453
Income taxes		69			26			118			36
Net income	$	1,483		$	1,402		$	4,462		$	1,417

Earnings per common share - Basic	$	0.06		$	0.06		$	0.19		$	0.06
Earnings per common share - Diluted	$	0.06		$	0.06		$	0.17		$	0.06

See accompanying notes to the condensed consolidated financial statements.

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TSS, Inc.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in thousands)

					Additional											Total
	Common Stock				Paid-in		Treasury Stock						Accumulated			Stockholders’
	Shares		Amount		Capital		Shares			Amount			Deficit			Equity
Balance January 1, 2024		23,533	$	2	$	72,103		(1,762	)	$	(2,245	)	$	(66,311	)	$	3,549
Restricted stock vested		376		-		-		-			-			-			-
Treasury shares repurchased		-		-		-		(120	)		(55	)		-			(55	)
Stock-based compensation		-		-		150		-			-			-			150
Net income		-		-		-		-			-			15			15
Balance at March 31, 2024		23,909	$	2	$	72,253		(1,882	)	$	(2,300	)	$	(66,296	)	$	3,659
Restricted stock vested		135		-		-		-			-			-			-
Stock options exercised		200		-		20		(15	)		(20	)		-			-
Treasury shares repurchased		-		-		-		(45	)		(62	)		-			(62	)
Stock-based compensation		-		-		155		-			-			-			155
Net income		-		-		-		-			-			1,402			1,402
Balance at June 30, 2024		24,244	$	2	$	72,428		(1,942	)	$	(2,382	)	$	(64,894	)	$	5,154

						Additional											Total
	Common Stock					Paid-in		Treasury Stock						Accumulated			Stockholders’
	Shares			Amount		Capital		Shares			Amount			Deficit			Equity
Balance January 1, 2025		25,250		$	3	$	74,200		(1,849	)	$	(6,730	)	$	(60,335	)	$	7,138
Restricted stock vested		473			-		-		-			-			-			-
Stock options exercised		70			-		7		-			-			-			7
Treasury shares repurchased		-			-		-		(124	)		(1,654	)		-			(1,654	)
Stock-based compensation		-			-		921		-			-			-			921
Net income		-			-		-		-			-			2,979			2,979
Balance at March 31, 2025		25,793		$	3	$	75,128		(1,973	)	$	(8,384	)	$	(57,356	)	$	9,391
Restricted stock vested		279			-		-		-			-			-			-
Treasury shares repurchased		-			-		-		(99	)		(2,266	)		-			(2,266	)
Treasury shares retired		(97	)		-		-		97			-			-			-
Stock-based compensation		-			-		930		-			-			-			930
Net income		-			-		-		-			-			1,483			1,483
Balance at June 30, 2025		25,975		$	3	$	76,058		(1,975	)	$	(10,650	)	$	(55,873	)	$	9,538

See accompanying notes to the condensed consolidated financial statements.

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TSS, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended June 30,
	2025			2024
Cash Flows from Operating Activities:
Net income	$	4,462		$	1,417
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,054			188
Stock-based compensation		1,851			305
Provision for inventory reserve		-			-
Amortization of debt issuance costs		8			-
Changes in operating assets and liabilities:
Contract and other receivables		2,206			(3,468	)
Costs and estimated earnings in excess of billings on uncompleted contracts		(3,567	)		786
Inventories		3,084			(2,596	)
Prepaid expenses and other assets		(679	)		(286	)
Right-of-use assets		1,274			272
Accounts payable and accrued expenses		26,799			(669	)
Deferred revenues		448			2,634
Operating lease liabilities		33			(265	)
Net cash provided by (used in) operating activities		36,973			(1,682	)
Cash Flows from Investing Activities:
Capital expenditures		(25,779	)		(1,721	)
Net cash used in investing activities		(25,779	)		(1,721	)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt		11,333			-
Proceeds from exercise of stock options		7			-
Repurchase of treasury stock		(3,920	)		(117	)
Net cash provided by (used in) financing activities		7,420			(117	)
Net increase (decrease) in cash, cash equivalents and restricted cash		18,614			(3,520	)
Cash, cash equivalents and restricted cash, beginning of period		23,222			11,831
Cash, cash equivalents and restricted cash, end of period	$	41,836		$	8,311

Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized	$	2,327		$	537
Cash paid for taxes	$	201		$	79

Cash and cash equivalents, beginning of period	$	23,222		$	11,831
Restricted cash, beginning of period	$	-		$	-
Cash, cash equivalents and restricted cash, beginning of period	$	23,222		$	11,831

SEC Form 10-Q filed by TSS Inc.