What changed in this filing

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Item 1. Financial Statements

2021-05-10 compared with 2020-11-09 · 100 added, 160 removed, 247 unchanged (51% of the section changed)

3 unchanged sentences

(In thousands, except par value)

September 30,

Current assets

25 unchanged sentences

Common stock, $ 0.001 par value, 100,000 shares authorized;

48,112 shares issued and 47,954 outstanding at September 30, 2020 and 48,112 shares issued and 47,478 outstanding at December 31, 2019

49,362 shares issued and 48,607 outstanding at March 31, 2021 and 48,297 shares issued and 48,189 outstanding at December 31, 2020

Additional paid-in capital

6 unchanged sentences

INFORMATION SERVICES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

Operating expenses

2 unchanged sentences

Depreciation and amortization

Operating income

Operating income (loss)

Interest income

1 unchanged sentence

Foreign currency transaction (loss) gain

Income before taxes

Income tax provision

Income (loss) before taxes

Income tax provision (benefit)

Net income (loss)

Weighted average shares outstanding:

Earnings per share:

Comprehensive income:

Foreign currency translation, net of tax (expense) benefit of ($ 398 ), $ 294 , ($ 207 ) and $ 309 , respectively.

Earnings (loss) per share:

Comprehensive income:

Net income (loss)

Foreign currency translation, net of tax expense of $ 343 and $ 479 , respectively

Comprehensive income (loss)

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

4 unchanged sentences

Stockholders’

Balance June 30, 2020

Other comprehensive income

Treasury shares repurchased

Proceeds from issuance of ESPP shares

Issuance of treasury shares

Stock based compensation

Balance September 30, 2020

Comprehensive

Stockholders’

Balance December 31, 2020

Other comprehensive income

Treasury shares repurchased

Proceeds from issuance of ESPP shares

Issuance of treasury shares

Stock based compensation

Balance September 30, 2020

Comprehensive

Stockholders’

Balance June 30, 2019

Other comprehensive loss

1 unchanged sentence

Proceeds from issuance of ESPP shares

Issuance of treasury shares

Issuance of common stock for RSUs vested

Stock based compensation

Balance September 30, 2019

Balance March 31, 2021

Comprehensive

5 unchanged sentences

Issuance of treasury shares

Issuance of common stock for contingent earn-out

Issuance of common stock for RSUs vested

Stock based compensation

Balance September 30, 2019

Balance March 31, 2020

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

INFORMATION SERVICES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities:

1 unchanged sentence

Amortization of intangible assets

Deferred tax expense from stock issuances

Deferred tax (benefit) expense from stock issuances

Write-off of deferred financing costs

1 unchanged sentence

Stock-based compensation

Provisions for accounts receivable

Deferred tax (benefit) provision

Loss on disposal of fixed assets

Change in fair value of contingent consideration

(Benefits) provisions for accounts receivable

Deferred tax provision

Changes in operating assets and liabilities:

7 unchanged sentences

Purchase of furniture, fixtures and equipment

Neuralify acquisition (Note 4)

Net cash used in investing activities

Cash flows from financing activities

Principal payments on borrowings, net

Payment of contingent consideration

Principal payments on borrowings

Proceeds from issuance of employee stock purchase plan shares

15 unchanged sentences

Information Services Group, Inc.

(the “Company” or “ISG”) was founded in 2006 with the strategic vision to become a high-growth, leading provider of information-based advisory services.

The Company specializes in digital transformation services, including automation, cloud and data analytics;

(the “Company”, or “ISG”) is a leading global technology research and advisory firm.

A trusted business partner to over 700 clients, including more than 75 of the top 100 enterprises in our markets, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth.

The firm specializes in digital transformation services, including automation, cloud and data analytics;

sourcing advisory;

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market intelligence and technology research and analysis.

Founded in 2006, and based in Stamford, Conn., ISG employs approximately 1,300 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data.

NOTE 2—BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements as of September 30, 2020 and for the three and nine months ended September 30, 2020 and 2019, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to Form 10-Q and Article 10 of Regulation S-X.

In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are considered necessary for a fair statement of the financial position of the Company as of September 30, 2020 and the results of operations for the three and nine months ended September 30, 2020 and 2019 and the cash flows for the nine months ended September 30, 2020 and 2019.

The accompanying unaudited condensed consolidated financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to Form 10-Q and Article 10 of Regulation S-X.

In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are considered necessary for a fair statement of the financial position of the Company as of March 31, 2021 and the results of operations for the three months ended March 31, 2021 and 2020 and the cash flows for the three months ended March 31, 2021 and 2020.

The condensed consolidated balance sheet as of December 31, 2020 has been derived from the Company’s audited consolidated financial statements.

Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Certain information and disclosures normally included in the notes to annual financial statements prepared in accordance with GAAP have been omitted from these interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

4 unchanged sentences

Actual results may differ from those estimates.

Additionally, ISG has to determine the nature and timing of the satisfaction of performance obligations, the standalone selling price (“SSP”) of certain performance obligations, among other judgments associated with revenue recognition.

The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the revenue recognition guidance for contracts in which control is transferred to the customer over time affect the amounts of revenues, expenses, contract assets and contract liabilities.

Numerous internal and external factors can affect estimates.

Estimates are also used for but not limited to:

allowance for doubtful accounts;

useful lives of furniture, fixtures and equipment and definite-lived intangible assets;

depreciation expense;

fair value assumptions in analyzing goodwill and other long-lived assets for impairment;

income taxes and deferred tax asset valuation;

and the valuation of stock-based compensation.

allowance for doubtful accounts, useful lives of furniture, fixtures and equipment and definite lived intangible assets, depreciation expense, fair value assumptions in evaluating goodwill for impairment, income taxes and deferred tax asset valuation, and the valuation of stock-based compensation.

Restricted Cash

Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits.

The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities, and accrued interest approximated their fair values at September 30, 2020 and December 31, 2019 due to the short-term nature of these accounts.

Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits and are not available for general corporate purposes.

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities, and accrued interest approximated their fair values at March 31, 2021 and December 31, 2020 due to the short-term nature of these accounts.

Fair value measurements were applied with respect to our nonfinancial assets and liabilities measured on a nonrecurring basis, which would consist of measurements primarily to contingent consideration in a business combination.

7 unchanged sentences

● Level 3 measurements include those that are unobservable and of a highly subjective measure.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

The following tables summarize the assets measured at fair value on a recurring basis at the dates indicated:

Basis of Fair Value Measurements

September 30, 2020

March 31, 2021

Cash equivalents

4 unchanged sentences

Contingent consideration (2)

(1) Contingent consideration is included in “Other liabilities.”

The fair value measurement of this contingent consideration is classified within Level 3 of the fair value hierarchy and reflects the Company’s own assumptions in measuring fair values using the income approach .

In developing these

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

estimates, the Company considered certain performance projections, historical results, and industry trends.

(1) Contingent consideration is included in “Other current liabilities” for the first quarter 2021.

(2) The current and noncurrent Contingent consideration is included in “Accrued expenses” and “Other current liabilities,” respectively, as of December 31, 2020.

The fair value measurement of the contingent consideration is classified within Level 3 of the fair value hierarchy and reflects the Company’s own assumptions in measuring fair values using the income approach .

In developing these estimates, the Company considered certain performance projections, historical results, and industry trends.

This amount was estimated through a valuation model that incorporated probability-weighted assumptions related to the achievement of these milestones and the likelihood of the Company making payments.

These cash outflow projections have then been discounted using a rate of 2.50 %.

The following table represents the change in the contingent consideration liability during the nine months ended September 30, 2020 and 2019:

Nine Months Ended

September 30,

The following table represents the change in the contingent consideration liability during the three months ended March 31, 2021:

Three Months Ended

Beginning Balance

4 unchanged sentences

Ending Balance

The Company’s financial instruments include outstanding borrowings of $ 79.9 million at September 30, 2020 and $ 86.9 million at December 31, 2019, which are carried at amortized cost.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

The Company’s financial instruments include outstanding borrowings of $ 77.7 million at March 31, 2021 and $ 78.8 million at December 31, 2020, which are carried at amortized cost.

The fair value of debt is classified within Level 3 of the fair value hierarchy.

The fair value of the Company's outstanding borrowings is approximately $ 78.8 million and $ 86.7 million at September 30, 2020 and December 31, 2019, respectively.

The fair value of the Company's outstanding borrowings is approximately $ 76.7 million and $ 77.7 million at March 31, 2021 and December 31, 2020, respectively.

The fair values of debt have been estimated using a discounted cash flow analysis based on the Company's incremental borrowing rate for similar borrowing arrangements.

The incremental borrowing rate used to discount future cash flows is 2.48 %.

The incremental borrowing rate used to discount future cash flows is 2.44 % and 2.49 % at March 31, 2021 and December 31, 2020, respectively.

The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions.

6 unchanged sentences

Neuralify Acquisition

On July 8, 2020, a subsidiary of the Company executed an Asset Purchase Agreement with Neuralify, LLC (“the Agreement”), a market leader in intelligent automation enablement solutions and services, and consummated the acquisition of substantially all of the assets and assumed certain liabilities of Neuralify, LLC.

On July 8, 2020, a subsidiary of the Company executed an Asset Purchase Agreement with Neuralify, LLC (“the Agreement”), a firm focused on intelligent automation enablement solutions and services, and consummated the acquisition of substantially all of the assets and assumed certain liabilities of Neuralify, LLC.

The primary reason for the acquisition was to expand the capabilities of ISG’s pure-play automation service line, ISG Automation.

The purchase price was comprised of $ 2.3 million of cash consideration paid at closing and Neuralify, LLC will also have the right to receive additional consideration paid via earn-out payments during the next 18 months , if certain financial targets are met.

The Company estimates such earn-out payments will be up to $ 4.9 million.

The purchase price was comprised of $ 2.3 million of cash consideration paid at closing and certain former employees of Neuralify, LLC will also have the right to receive additional consideration paid via earn-out payments during the next 18 months , if certain financial targets are met.

At the Agreement date, the Company estimated such earn-out payments would be up to $ 4.9 million.

The following table summarizes the consideration transferred to acquire Neuralify, LLC and the amounts of identified assets acquired, and liabilities assumed as of the Agreement date:

Contingent consideration

Total allocable purchase price

The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, are the inclusion of legacy Neuralify workforce and know-how which expands the Company’s pure-play automation service line, ISG Automation.

Costs associated with this acquisition are included in the selling, general and administrative expenses in the Consolidated Statement of Income and Comprehensive Income and totaled $ 0.1 million during the year ended December 31, 2020.

This business combination was accounted for under the acquisition method of accounting, and as such, the aggregate purchase price was allocated on a preliminary basis to the assets acquired and liabilities assumed based on estimated fair values as of the closing date.

Based on the valuation and other factors as described above, the purchase price assigned to intangible assets and the amortization period were as follows:

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

Contingent consideration

Total allocable purchase price

Recognized amounts of identifiable assets acquired and liabilities assumed as of the Agreement date:

Accounts receivable

4 unchanged sentences

Net assets acquired

The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, are the inclusion of legacy Neuralify software and workforce which expands the Company’s pure-play automation service line, ISG Automation.

Costs associated with this acquisition are included in the selling, general and administrative expenses in the condensed consolidated statement of comprehensive income and totaled $ 0.1 million during the nine months ended September 30, 2020.

The purchase price allocations will be finalized after the completion of the valuation of certain intangible assets and any adjustments to the preliminary purchase price allocations are not expected to have a material impact on the Company’s results of operations.

Based on the valuation and other factors as described above, the purchase price assigned to intangible assets and the amortization period were as follows:

Purchase Price

Amortizable intangible assets:

Trademark and trade names

Customer relationships

Noncompete agreements

Total intangible assets

The Condensed Consolidated Statements of Comprehensive Income includes the results of the Neuralify acquisition subsequent to the closing.

The Consolidated Statement of Income and Comprehensive Income includes the results of the Neuralify acquisition subsequent to the closing.

Had the acquisition occurred as of January 1, 2020, the impact on the Company’s results of operations would not have been material.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

NOTE 5—GOODWILL

The changes in the carrying amount of goodwill for the period ended September 30, 2020 are as follows:

Balance as of December 31, 2019

Neuralify Acquisition

Foreign currency impact

Balance as of September 30, 2020

NOTE 5—REVENUE

5 unchanged sentences

The majority of our contracts have a single performance obligation as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, not distinct.

For contracts with multiple performance obligations, including our managed service implementation and software and implementation contract types, the Company allocates the transaction price to each performance obligation using our best estimate of the standalone selling price, or SSP, of each distinct good or service in the contract.

For contracts with multiple performance obligations, including our managed service (GovernX) implementation, software and implementation, and research and subscription contracts, the Company allocates the transaction price to each performance obligation using our best estimate of the standalone selling price, or SSP, of each distinct good or service in the contract.

Our contracts may include promises to transfer multiple services and products to a client.

Determining whether services and products are considered distinct performance obligations that should be accounted for separately versus together may require judgment.

Estimates were required to determine the SSP for each distinct performance obligation identified within our managed service implementation contracts, software and implementation contracts, and research and subscription contracts.

Estimates were required to determine the SSP for each distinct performance obligation identified within our managed service (including GovernX) implementation contracts, software and implementation contracts, and research and subscription contracts.

Contract Balances

6 unchanged sentences

However, we sometimes receive advances or deposits before revenue is recognized, resulting in contract liabilities.

Contract assets and liabilities are reported in the current assets and current liabilities sections of the consolidated balance sheet, at the end of each reporting period, based on the timing of the satisfaction of the related performance obligation(s).

See the table below for a breakdown of contract assets and contract liabilities.

September 30,

Contract assets

Contract liabilities

Revenue recognized for the three months ended September 30, 2020 that was included in the contract liability balance at July 1, 2020 was $ 2.4 million and represented primarily revenue from our fixed fee and subscription contracts.

Contract assets and liabilities are generally reported in the current assets and current liabilities sections of the consolidated balance sheet, at the end of each reporting period, based on the timing of the satisfaction of the related performance obligation(s).

For multi-year software sales with annual invoicing, we perform a significant financing component calculation and recognize the associated interest income throughout the duration of the financing period.

In addition, we reclassify the resulting contract asset balances as current and noncurrent receivables as

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

Revenue recognized for the nine months ended September 30, 2020 that was included in the contract liability balance at January 1, 2020 was $ 4.6 million and represented primarily revenue from our fixed fee and subscription contracts.

Disaggregation of Revenue

The following table presents our revenue disaggregated by geographic area for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended

Nine Months Ended

September 30,

Geographic area

receipt of the consideration is conditional only on the passage of time and there are no performance risk factors present.

See the table below for a breakdown of contract assets and contract liabilities.

Contract assets

Contract liabilities

Revenue recognized for the three months ended March 31, 2021 that was included in the contract liability balance at January 1, 2021 was $ 1.9 million and represented primarily revenue from our fixed fee and subscription contracts.

Remaining Performance Obligations

As of September 30, 2020, the Company had $ 102.6 million of remaining performance obligations, the majority of which are expected to be satisfied within the next year.

As of March 31, 2021, the Company had $ 110.6 million of remaining performance obligations, the majority of which are expected to be satisfied within the next year.

NOTE 6—NET INCOME PER COMMON SHARE

1 unchanged sentence

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would share in the net income of the Company.

For the three and nine months ended September 30, 2020, 1.9 million and 3.7 million restricted stock units, respectively, have not been considered in the diluted earnings per share calculation, as the effect would be anti-dilutive.

For the three months ended March 31, 2021 and 2020, 0.1 million and 6.0 million restricted stock units, respectively, have not been considered in the diluted earnings per share calculation, as the effect would be anti-dilutive.

The following tables set forth the computation of basic and diluted earnings per share:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended

Net income (loss)

Weighted average common shares

Earnings per share

Earnings (loss) per share

Net income (loss)

Basic weighted average common shares

1 unchanged sentence

Diluted weighted average common shares

Diluted earnings per share

Diluted earnings (loss) per share

NOTE 7—INCOME TAXES

The Company’s effective tax rate for the three months ended March 31, 2021 and 2020 was 22.7 % and 27.2 % based on pretax income of $ 4.4 million and pretax loss of $ 1.9 million, respectively.

The Company’s effective tax rate for the quarter ended March 31, 2021 was impacted by the earnings and losses in certain foreign jurisdictions and the impact of vesting of restricted stock units.

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

NOTE 8—INCOME TAXES

The Company’s effective tax rate for the three and nine months ended September 30, 2020 was 9.9 % and 57.6 % based on pretax income of $ 2.3 million and $ 3.1 million, respectively.

The Company’s effective tax rate for the quarter ended September 30, 2020 was impacted by the earnings and losses in certain foreign jurisdictions, the impact of a tax law in a foreign jurisdiction, and the impact of vesting of restricted stock units.

The Company’s effective tax rate for the three and nine months ended September 30, 2019 was 57.8 % and 65.5 %.

The difference was primarily due to the impact of earnings and losses in certain foreign jurisdictions.

The Company has recorded the impact of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) signed into law on March 27, 2020.

The CARES Act implemented changes to raise the limitation on interest expense current deductibility and leasehold improvement asset classification for bonus depreciation eligibility, which allowed the Company to reduce prior accruals made for its 2019 income tax provision.

The tax effect of these changes total $ 0.8 million and are included in Prepaid expenses and other current assets and Deferred tax assets;

there is no impact on the Company’s effective tax rate for the three and nine months ended September 30, 2020 as a result of the CARES Act.

NOTE 8—COMMITMENTS AND CONTINGENCIES

The Company is subject to contingencies which arise through the ordinary course of business.

All material liabilities of which management is aware are properly reflected in the financial statements at September 30, 2020 and December 31, 2019.

All material liabilities of which management is aware are properly reflected in the financial statements at March 31, 2021 and December 31, 2020.

Neuralify Contingent Consideration

As of September 30, 2020, the Company has recorded a liability of $ 4.9 million representing the estimated fair value of contingent consideration related to the acquisition of Neuralify, all of which is classified as non-current and included in Other liabilities on the consolidated balance sheet.

As of March 31, 2021, the Company has recorded a liability of $ 5.4 million representing the estimated fair value of contingent consideration related to the acquisition of Neuralify, all of which is classified as current and included in Other current liabilities on the consolidated balance sheet.

NOTE 9—SEGMENT AND GEOGRAPHICAL INFORMATION

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

The segregation of revenues by geographic region is based upon the location of the legal entity performing the services.

The Company does not measure or monitor gross profit or operating income by geography or by service line for the purposes of making operating decisions or allocating resources.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

NOTE 10—FINANCING ARRANGEMENTS AND LONG-TERM DEBT

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● The Company’s direct and indirect existing and future wholly owned domestic subsidiaries serve as guarantors to the Company’s obligations under the senior secured facility.

● At the Company’s option, the credit facility bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate”, (b) the Federal Funds Rate plus 0.5 % per annum and (c) the Eurodollar Rate , plus 1.0 %), plus the applicable margin (as defined below) or (ii) Eurodollar Rate (adjusted for maximum reserves) as determined by the Administrative Agent, plus the applicable margin.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

plus the applicable margin (as defined below) or (ii) Eurodollar Rate (adjusted for maximum reserves) as determined by the Administrative Agent, plus the applicable margin.

The applicable margin is adjusted quarterly based upon the Company’s quarterly leverage ratio.

4 unchanged sentences

● The senior secured credit facility contains customary events of default, including cross-default to other material agreements, judgment default and change of control.

The Company’s financial statements include outstanding borrowings of $ 79.9 million and $ 86.9 million at September 30, 2020 and December 31, 2019, respectively, which are carried at amortized cost.

The Company’s financial statements include outstanding borrowings of $ 77.7 million and $ 78.8 million at March 31, 2021 and December 31, 2020, respectively, which are carried at amortized cost.

The fair value of debt is classified within Level 3 of the fair value hierarchy.

The fair value of the Company's outstanding borrowings is approximately $ 78.8 million and $ 86.7 million at September 30, 2020 and December 31, 2019, respectively.

The fair value of the Company's outstanding borrowings is approximately $ 76.7 million and $ 77.7 million at March 31, 2021 and December 31, 2020, respectively.

The fair values of debt have been estimated using a discounted cash flow analysis based on the Company's incremental borrowing rate for similar borrowing arrangements.

1 unchanged sentence

The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

As of September 30, 2020, the total principal outstanding under the term loan facility and revolving credit facility was $ 79.9 million and $ 0.0 million, respectively.

The effective interest rate for the term loan facility and revolving credit facility as of September 30, 2020 was 2.48 % and 2.40 %, respectively.

NOTE 11 - RISKS AND UNCERTAINTIES

3 unchanged sentences

The impact of COVID-19 pandemic continues to evolve and, therefore, the Company cannot predict with certainty the extent to which the pandemic will negatively impact our results of operations, cash flows and financial position, liquidity and ability to remain in compliance with our financial covenants.

In the third quarter of 2020, the Company experienced a year-over-year revenue decline and this impact is expected to continue through at least the fourth quarter of 2020.

Given the uncertainty of the marketplace, the Company has implemented business continuity plans to ensure that the Company is able to remain fully operational with a remote workforce, conducted financial modeling scenarios in order to ensure prudent cost containment, and has proactively implemented a series of cash conservation measures.

These measures include actions taken in the second and third quarter of 2020 to reduce personnel costs and other operating expenses, including reductions in staffing and contractor levels, vendor spending, travel, and other measures.

The Company has financial covenants underlying its debt which require an adjusted EBITDA to Debt ratio of 3.25 .

Given the uncertainty of the marketplace, during fiscal year 2020, the Company implemented business continuity plans to ensure that the Company is able to remain fully operational with a remote workforce, conducted financial modeling scenarios in order to ensure prudent cost containment, and has proactively implemented a series of cash conservation measures.

These measures reduced personnel

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

costs and other operating expenses, including reductions in staffing and contractor levels, vendor spending, travel, and other measures.

The Company has financial covenants underlying its debt which require a Debt to adjusted EBITDA ratio of 3.25 .

In light of the pandemic, there is uncertainty regarding the marketplace demand for the Company’s services and thus the Company’s future revenue generation.

4 unchanged sentences

2020 Restructuring Plan

In the third quarter of 2020, the Company took restructuring actions to lower our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business (the “September 2020 Plan”).

In the third and fourth quarters of 2020, the Company took restructuring actions to lower our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business (the “Restructuring Plan”).

Most of these actions are based on our recent experience and learning in the COVID-19 pandemic and a resulting review of our operations, which continues to address certain operating expenses such as occupancy expense and salaries and related expenses.

A summary of the activity affecting the Company's accrued contractual termination benefit liability for the period ended September 30, 2020 is as follows:

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

September 2020 Plan

Balance at June 30, 2020

A summary of the activity affecting the Company's accrued contractual termination benefit liability for the period ended March 31, 2021 is as follows:

Restructuring Plan

Balance at January 1, 2020

Amounts accrued

Amounts paid/incurred

Balance at September 30, 2020

Balance at March 31, 2021

The $ 2.3 million of net restructuring charges was primarily related to contractual termination benefits, and was recorded in selling, general and administrative expenses.

We expect that the remaining actions of the September 2020 Plan will be completed over the next three months .

We expect that the remaining actions of the Restructuring Plan Plan will be completed over the next six months .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements