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 ...