Information Services Group Inc. 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022, as required by Rule 13a-15(b) under the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2022. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022, as required by Rule 13a-15(c) under the Exchange Act. In making this assessment, we used the criteria set forth in the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2022. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears herein. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations on the Effectiveness of Controls Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not 31 Table of Contents absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no controls can provide absolute assurance that misstatements due to error or fraud will not occur, and no evaluation of any such controls can provide absolute assurance that control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls’ effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures. Item 9B. Other Information None. ​ Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. ​ PART III ​ Item 10. Directors, Executive Officers and Corporate Governance (a) Identification of Directors and Executive Officers. The information required hereunder is incorporated by reference from the sections of our Proxy Statement filed in connection with our 2023 Annual Meeting of Stockholders under the caption “Management.” (b) Code of Ethics. The information required hereunder is incorporated by reference from the sections of our Proxy Statement filed in connection with our 2023 Annual Meeting of Stockholders under the caption “Corporate Governance.” (c) Nominating Committee, Audit Committee, Audit Committee Financial Expert. The information required hereunder is incorporated by reference from the sections of our Proxy Statement filed in connection with our 2023 Annual Meeting of Stockholders under the caption “Corporate Governance.” Item 11. Executive Compensation The information required hereunder is incorporated by reference from the sections of our Proxy Statement filed in connection with our 2023 Annual Meeting of Stockholders under the caption “Corporate Governance,” “Executive Compensation,” “Summary Compensation Table” and “Outstanding Equity Awards at 2022 Fiscal Year End.” Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required hereunder is incorporated by reference from the sections of our Proxy Statement filed in connection with our 2023 Annual Meeting of Stockholders under the caption “Security Ownership of Certain Beneficial Owners.” Item 13. Certain Relationships and Related Transactions and Director Independence The information required hereunder is incorporated by reference from the sections in our Proxy Statement filed in connection with our 2023 Annual Meeting of the Stockholders under the caption “Corporate Governance.” Item 14. Principal Accounting Fees and Services The information required hereunder is incorporated by reference from the sections in our Proxy Statement filed in connection with our 2023 Annual Meeting of the Stockholders under the caption “Proposal No. 2 Ratification of Engagement of Independent Registered Public Accounting Firm.” ​ 32 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedule (a)(1) Documents filed as a part of this report: ​ Financial Statements of Information Services Group, Inc.: ​ Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) F-1 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-3 Consolidated Statement of Income and Comprehensive Income for the years ended December 31, 2022 and 2021 F-4 Consolidated Statement of Stockholders’ Equity as of December 31, 2022, and 2021 F-5 Consolidated Statement of Cash Flows for the years ended December 31, 2022 and 2021 F-6 Notes to Consolidated Financial Statements F-7 (a)(2) Financial Statement Schedule Schedule II—Valuation and Qualifying Accounts for the years ended December 31, 2022, and 2021 G-1 ​ (a)(3) Exhibits: We hereby file as part of this Annual Report on Form 10−K the Exhibits listed in the attached Exhibit Index. Item 16. FORM 10-K SUMMARY None ​ 33 Table of Contents Report of Independent Registered Public Accounting Firm ​ To the Board of Directors and Stockholders of Information Services Group, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Information Services Group, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income and comprehensive income, of stockholders’ equity and of cash flows for the years then ended, including the related notes and schedule of valuation and qualifying accounts for the years then ended appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. . F-1 Table of Contents ​ Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition – Estimated Labor Hours to Complete Fixed Fee Contract Performance Obligations As described in Note 2 to the consolidated financial statements, revenues related to fixed fee contracts are recognized as value is delivered to the customer, consistent with the transfer of control to the customer over time. Revenue for these contracts is recognized proportionally over the term of the contract using an input method based on the proportion of labor hours incurred as compared to the total estimated labor hours for the fixed fee contract performance obligations, which management considers to be the best available indicator of the pattern and timing in which contract performance obligations are fulfilled and control transfers to the customer. This percentage is multiplied by the contracted dollar amount of the project to determine the amount of revenue to recognize in an accounting period. Revenue related to fixed fee contracts is a portion of the Company’s total revenue of $286 million for the year ended December 31, 2022. The principal considerations for our determination that performing procedures relating to revenue recognition – estimated labor hours to complete fixed fee contract performance obligations is a critical audit matter are the significant judgment by management when developing the total estimated labor hours to complete fixed fee contract performance obligations used to determine the amount of revenue to recognize, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the total estimated labor hours to complete performance obligations used in revenue recognition for fixed fee contracts. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the determination of total estimated labor hours to complete fixed fee contract performance obligations. The procedures also included, among others, (i) evaluating management’s process for determining the total estimate of labor hours to complete performance obligations; (ii) evaluating the reasonableness of estimated labor hours used by management for a sample of fixed fee contracts; (iii) testing actual hours incurred and recalculating the revenue recognized to date for a sample of fixed fee contracts; and (iv) considering the factors that can affect the accuracy of estimated labor hours for a sample of fixed fee contracts. Evaluating the revenue recognition for fixed fee contracts involved assessing management’s ability to reasonably estimate labor hours to complete the performance obligations by performing a comparison of the original estimated and actual hours incurred on similar completed fixed fee contracts. . /s/ PricewaterhouseCoopers LLP Stamford, Connecticut March 10, 2023 We have served as the Company’s auditor since 2008. ​ ​ F-2 Table of Contents INFORMATION SERVICES GROUP, INC. CONSOLIDATED BALANCE SHEET S (In thousands, except par value) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2022 2021 ASSETS ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 30,587 ​ $ 47,521 ​ Accounts receivable and contract assets, net of allowance of $ 272 and $ 40 , respectively ​ 80,170 ​ 64,344 ​ Prepaid expenses and other current assets ​ 4,724 ​ 4,245 ​ Total current assets ​ 115,481 ​ 116,110 ​ Restricted cash ​ 83 ​ 88 ​ Furniture, fixtures and equipment, net ​ 5,929 ​ 5,293 ​ Right-of-use lease assets ​ 6,780 ​ 5,293 ​ Goodwill ​ 94,972 ​ 90,790 ​ Intangible assets, net ​ 14,380 ​ 12,410 ​ Deferred tax assets ​ 2,818 ​ 2,197 ​ Other assets ​ 2,585 ​ 4,613 ​ Total assets ​ $ 243,028 ​ $ 236,794 ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 15,925 ​ $ 16,162 ​ Current maturities of long-term debt ​ 4,300 ​ 4,300 ​ Contract liabilities ​ 7,058 ​ 7,049 ​ Accrued expenses and other current liabilities ​ 23,908 ​ 29,327 ​ Total current liabilities ​ 51,191 ​ 56,838 ​ Long-term debt, net of current maturities ​ 74,416 ​ 69,490 ​ Deferred tax liabilities ​ 2,391 ​ 2,824 ​ Operating lease liabilities ​ 4,857 ​ 3,481 ​ Other liabilities ​ 9,742 ​ 5,768 ​ Total liabilities ​ 142,597 ​ 138,401 ​ Commitments and contingencies (Note 13) ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity ​ ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.001 par value; 10,000 shares authorized; none issued ​ — ​ — ​ Common stock, $ 0.001 par value, 100,000 shares authorized; 49,472 shares issued and 48,300 outstanding at December 31, 2022 and 49,362 shares issued and 48,856 outstanding at December 31, 2021 ​ 49 ​ 49 ​ Additional paid-in capital ​ 226,293 ​ 237,628 ​ Treasury stock ( 1,172 and 506 common shares, respectively, at cost) ​ ( 7,487 ) ​ ( 3,871 ) ​ Accumulated other comprehensive loss ​ ( 9,677 ) ​ ( 6,940 ) ​ Accumulated deficit ​ ( 108,747 ) ​ ( 128,473 ) ​ Total stockholders’ equity ​ 100,431 ​ 98,393 ​ Total liabilities and stockholders’ equity ​ $ 243,028 ​ $ 236,794 ​ The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents INFORMATION SERVICES GROUP, INC. CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Revenues ​ $ 286,267 ​ $ 277,832 Operating expenses ​ ​ ​ ​ ​ ​ Direct costs and expenses for advisors ​ 169,650 ​ 168,475 Selling, general and administrative ​ 81,769 ​ 78,759 Depreciation and amortization ​ 5,368 ​ 5,331 Operating income ​ 29,480 ​ 25,267 Interest income ​ 189 ​ 142 Interest expense ​ ( 3,157 ) ​ ( 2,342 ) Foreign currency transaction gain ​ 170 ​ 44 Income before taxes ​ 26,682 ​ 23,111 Income tax provision ​ 6,956 ​ 7,582 Net income ​ ​ 19,726 ​ ​ 15,529 Weighted average shares outstanding: ​ ​ ​ ​ ​ ​ Basic ​ 48,175 ​ 48,638 Diluted ​ 50,420 ​ 51,756 Earnings per share: ​ ​ ​ ​ ​ ​ Basic ​ $ 0.41 ​ $ 0.32 Diluted ​ $ 0.39 ​ $ 0.30 Comprehensive income: ​ ​ ​ ​ ​ ​ Net income ​ $ 19,726 ​ $ 15,529 Foreign currency translation loss, net of tax benefit of ($ 859 ), and ($ 724 ), respectively ​ ( 2,737 ) ​ ( 2,269 ) Comprehensive income ​ $ 16,989 ​ $ 13,260 The accompanying notes are an integral part of these consolidated financial statements. ​ F-4 Table of Contents INFORMATION SERVICES GROUP, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ Total ​ ​ Common Stock ​ ​ Paid-in- ​ ​ Treasury ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Shares ​ Amount ​ ​ Capital ​ ​ Stock ​ Loss ​ Deficit ​ Equity Balance December 31, 2020 ​ 48,297 $ 48 $ 248,018 ​ $ ( 256 ) ​ $ ( 4,671 ) ​ $ ( 144,002 ) ​ $ 99,137 Net income — ​ — ​ — ​ — ​ — ​ 15,529 ​ 15,529 Other comprehensive loss — ​ — ​ — ​ — ​ ( 2,269 ) ​ — ​ ( 2,269 ) Treasury shares repurchased — ​ — ​ — ​ ( 16,331 ) ​ — ​ — ​ ( 16,331 ) Proceeds from issuance of ESPP shares — ​ — ​ 61 ​ 549 ​ — ​ — ​ 610 Issuance of treasury shares ​ — ​ ​ — ​ ​ ( 12,167 ) ​ ​ 12,167 ​ — ​ — ​ — Issuance of common stock for RSUs vested 1,065 ​ 1 ​ ( 1 ) ​ ​ — ​ — ​ — ​ — Accrued dividends on unvested shares ​ — ​ — ​ ( 313 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 313 ) Cash dividends paid to shareholders ($ 0.09 per share) ​ — ​ — ​ ​ ( 4,437 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 4,437 ) Stock based compensation — ​ — ​ 6,467 ​ ​ — ​ — ​ — ​ 6,467 Balance December 31, 2021 49,362 $ 49 $ 237,628 ​ $ ( 3,871 ) ​ $ ( 6,940 ) ​ $ ( 128,473 ) ​ $ 98,393 Net income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 19,726 ​ ​ 19,726 Other comprehensive loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,737 ) ​ ​ — ​ ​ ( 2,737 ) Treasury shares repurchased ​ — ​ ​ — ​ ​ — ​ ​ ( 16,124 ) ​ ​ — ​ ​ — ​ ​ ( 16,124 ) Proceeds from issuance of ESPP shares ​ — ​ ​ — ​ ​ ( 249 ) ​ ​ 1,193 ​ ​ — ​ ​ — ​ ​ 944 Issuance of common stock for RSUs vested ​ — ​ ​ — ​ ​ ( 11,315 ) ​ ​ 11,315 ​ ​ ​ ​ ​ — ​ ​ — Issuance of common stock for Change 4 Growth acquisition ​ 110 ​ ​ 0 ​ ​ 600 ​ ​ — ​ ​ — ​ ​ — ​ ​ 600 Accrued dividends on unvested shares ​ — ​ ​ — ​ ​ ( 370 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 370 ) Cash dividends paid to shareholders ($ 0.15 per share) ​ — ​ ​ — ​ ​ ( 7,461 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 7,461 ) Stock based compensation ​ — ​ ​ — ​ ​ 7,460 ​ ​ — ​ ​ — ​ ​ — ​ ​ 7,460 Balance December 31, 2022 49,472 ​ $ 49 ​ $ 226,293 ​ $ ( 7,487 ) ​ $ ( 9,677 ) ​ $ ( 108,747 ) ​ $ 100,431 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents INFORMATION SERVICES GROUP, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ Years Ended December 31, ​ ​ 2022 2021 Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ Net income $ 19,726 ​ $ 15,529 ​ ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation expense 3,045 ​ 2,688 ​ ​ Amortization of intangible assets 2,323 ​ 2,643 ​ ​ Deferred tax benefit from stock issuances ( 1,290 ) ​ ( 2,389 ) ​ ​ Amortization of deferred financing costs 340 ​ 354 ​ ​ Stock-based compensation 7,460 ​ 6,467 ​ ​ Change in fair value of contingent consideration ​ 1,420 ​ ​ 101 ​ ​ Provisions (benefits) for accounts receivable ​ 320 ​ ​ ( 138 ) ​ ​ Deferred tax provision 757 ​ 2,330 ​ ​ Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts receivable and contract assets ( 13,989 ) ​ 2,648 ​ ​ Prepaid expense and other assets ( 948 ) ​ ( 243 ) ​ ​ Accounts payable ( 699 ) ​ 4,503 ​ ​ Contract liabilities ( 76 ) ​ 1,928 ​ ​ Accrued expenses and other liabilities ( 7,243 ) ​ 5,521 ​ ​ Net cash provided by operating activities 11,146 ​ 41,942 ​ ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ Change 4 Growth acquisition (Note 4) ​ ( 3,450 ) ​ ​ — ​ ​ Purchase of furniture, fixtures and equipment ( 3,423 ) ​ ( 2,320 ) ​ ​ Net cash used in investing activities ( 6,873 ) ​ ( 2,320 ) ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ Proceeds from revolving facility ​ 9,000 ​ ​ — ​ ​ Principal payments on borrowings ( 4,300 ) ​ ( 4,300 ) ​ ​ Proceeds from issuance of employee stock purchase plan shares 944 ​ 610 ​ ​ Payments related to tax withholding for stock-based compensation ( 4,054 ) ​ ( 7,109 ) ​ ​ Payment of contingent consideration ​ ( 1,000 ) ​ ​ ( 2,558 ) ​ ​ Cash dividends paid to shareholders ​ ( 7,461 ) ​ ​ ( 4,437 ) ​ ​ Treasury shares repurchased ( 12,070 ) ​ ( 16,331 ) ​ ​ Net cash used in financing activities ( 18,941 ) ​ ( 34,125 ) ​ ​ Effect of exchange rate changes on cash ( 2,271 ) ​ ( 1,713 ) ​ ​ Net (decrease) increase in cash, cash equivalents, and restricted cash ( 16,939 ) ​ 3,784 ​ ​ Cash, cash equivalents , and restricted cash, beginning of period 47,609 ​ 43,825 ​ ​ Cash, cash equivalents , and restricted cash , end of period $ 30,670 ​ $ 47,609 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ ​ ​ ​ ​ ​ Cash paid for: ​ ​ ​ ​ ​ ​ ​ Interest $ 2,397 ​ $ 1,875 ​ ​ Taxes, net of refunds $ 12,516 ​ $ 3,582 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ ​ Issuance of treasury stock for vested restricted stock awards $ 11,315 ​ $ 12,167 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ F-6 Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ (tabular amounts in thousands, except per share data) ​ NOTE 1—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIO NS 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; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation ​ The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. These consolidated financial statements and footnotes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. Unless the context requires otherwise, references to the Company include ISG and its consolidated subsidiaries. ​ ​ Use of Estimates ​ ​ The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. 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 evaluating goodwill for impairment, income taxes and deferred tax asset valuation and the valuation of stock-based compensation. Business Combinations ​ ​ We have acquired businesses critical to the Company’s long-term growth strategy. Results of operations for acquisitions are included in the accompanying consolidated statement of comprehensive income from the date of acquisition. Acquisitions are accounted for using the purchase method of accounting and the purchase price is allocated to the net assets acquired based upon their estimated fair values at the date of acquisition. The excess of the purchase price over the net assets is recorded as goodwill. Acquisition-related costs are expensed as incurred and recorded in selling, general and administrative expenses. ​ Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents, including certain money market accounts. The Company principally maintains its cash in money market and bank deposit accounts in the United States of America, which typically exceed applicable insurance limits. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. ​ Restricted Cash ​ Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits and are not available for general corporate purposes. ​ Accounts Receivable, Contract Assets and Allowance for Doubtful Accounts Our trade receivables primarily consist of amounts due for services already performed. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to pay fees or for disputes that affect its ability to fully collect billed accounts receivable. The allowance for these risks is prepared by reviewing the status of all accounts and recording reserves on a specific identification method based on previous experiences and historical bad debts. However, our actual experience may vary from these estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay their invoices, we F-7 Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ may need to record additional allowances or write-offs in future periods. To the extent the provision relates to a client’s inability or unwillingness to make required payments, the provision is recorded as bad debt expense, which is classified within selling, general and administrative expense in the accompanying consolidated statement of comprehensive income. Historically, the Company’s bad debt reserves and write-offs have not been significant. ​ The provision for unbilled services is recorded as a reduction to revenues to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. Historically, the Company’s unbilled receivable reserves and write-offs have not been significant. ​ Prepaid Expenses and Other Current Assets ​ Prepaid expenses and other current assets consist primarily of prepaid expenses for insurance, conferences, deposits for facilities, programs, software and promotion items. ​ Furniture, Fixtures and Equipment, net ​ Furniture, fixtures and equipment are recorded at cost. Depreciation is computed by applying the straight-line method over the estimated useful life of the assets, which ranges from two to five years . Leasehold improvements are depreciated over the lesser of the useful life of the underlying asset or the lease term, which generally ranges from two to five years . Repairs and maintenance are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and any associated gain or loss thereon is reflected in the accompanying consolidated statement of comprehensive income. The Company capitalizes internal-use software and website development costs and records these amounts within Furniture, Fixtures and Equipment, net. Accounting standards require that certain costs related to the development or purchase of internal-use software and systems as well as the costs incurred in the application development stage related to its website be capitalized and amortized over the estimated useful life of the software or system. They also require that costs related to the preliminary project stage, data conversion and post implementation/operation stage of an internal-use software development project be expensed as incurred. ​ ​ During the years ended December 31, 2022 and 2021, the Company capitalized $ 1.7 million and $ 0.8 million, respectively, of costs associated with system and website development. ​ Goodwill Our goodwill represents the excess of the cost of businesses acquired over the fair value of the net assets acquired at the date of acquisition. Goodwill is not amortized but rather tested for impairment at least annually in accordance with accounting and disclosure requirements for goodwill and other indefinite-lived intangible assets. This test is performed by us during our fourth fiscal quarter or more frequently if we believe impairment indicators are present. A qualitative assessment is performed to determine whether the existence of events or circumstances leads to a determination that it is more likely than not the fair value of the reporting unit is less than its carrying amount. If, based on the evaluation, it is determined to be more likely than not that the fair value is less than the carrying value then goodwill is tested further for impairment. If the fair value of goodwill is lower than its carrying amount, an impairment loss is recognized in an amount equal to the difference. Subsequent increases in value are not recognized in the financial statements. There was no impairment of goodwill during the years ended December 31, 2022 and 2021, nor were any indicators identified in 2022 or 2021 that would suggest that it is more likely than not that the Company’s reporting unit is impaired. Long-Lived Assets Long-lived assets, excluding goodwill and indefinite-lived intangibles, to be held and used by the Company are reviewed to determine whether any significant change in the long-lived asset’s physical condition, a change in industry conditions or a reduction in cash flows associated with the asset group that contains the long-lived asset. If these or other factors indicate the carrying amount of the asset group, which is the lowest level for which identifiable cash flows exist that are separately identifiable from other cash flows, may not be recoverable, the Company determines whether impairment has occurred through the use of an undiscounted cash flow analysis. If impairment F-8 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ has occurred, the Company recognizes a loss for the difference between the carrying amount and the fair value of the asset group. The fair value of the asset group is measured using market prices or, in the absence of market prices, an estimate of discounted cash flows. Cash flows are generally discounted at an interest rate commensurate with our weighted average cost of capital. Assets are classified as held for sale when the Company has a plan for disposal of certain assets and those assets meet the held for sale criteria. ​ Debt Issuance Costs ​ Costs directly incurred in obtaining long-term financing, typically bank and attorney fees, are deferred and are amortized over the life of the related loan. Deferred issuance costs are classified as a direct deduction to the long-term debt in the accompanying consolidated balance sheet. Amortization of debt issuance costs is included in interest expense and totaled $ 0.3 million and $ 0.4 million for the years ended December 31, 2022 and 2021, respectively. Revenue Recognition We recognize our revenues by applying the following five steps: (1) identifying the contract with the customer; (2) identifying the performance obligation(s) in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligation(s); and (5) recognizing revenue when (or as) the Company satisfies the performance obligation(s). We principally derive revenues from fees for services generated on a project-by-project basis. Prior to the commencement of a project, we reach agreement with the client on rates for services based upon the scope of the project, staffing requirements and the level of client involvement. It is our policy to obtain written agreements from clients prior to performing services or when evidence of enforceable rights and obligations is obtained. In these agreements, the clients acknowledge that they will pay based upon the amount of time spent on the project or an agreed upon fee structure. Revenues for time and materials contracts, which may include capped fees or “not-to-exceed” clauses, are recognized based on the number of hours worked by our advisors at an agreed upon rate per hour and are recognized in the period in which services are performed. Revenues for time and materials contracts are billed monthly, semimonthly or in accordance with the specific contractual terms of each project. For contracts with capped fees or not-to-exceed clauses, we monitor our performance and fees billed to ensure that revenue is not recognized in excess of the contractually capped fee. Revenues related to fixed-fee contracts are recognized as value is delivered to the customer, consistent with the transfer of control to the customer over time. Revenue for these contracts is recognized proportionally over the term of the contract using an input method based on the proportion of labor hours incurred as compared to the total estimated labor hours for the fixed-fee contract performance obligations, which we consider the best available indicator of the pattern and timing in which contract performance obligations are fulfilled and control transfers to the customer. This percentage is multiplied by the contracted dollar amount of the project to determine the amount of revenue to recognize in an accounting period. The contracted amount used in this calculation typically excludes the amount the client pays for reimbursable expenses. There are situations where the number of hours to complete projects may exceed our original estimate as a result of an increase in project scope or unforeseen events. The results of any revisions in these estimates are reflected in the period in which they become known. For managed service implementation contracts, revenue is recognized over time as a percentage of hours incurred to date as compared to the total expected hours of the implementation, consistent with the transfer of control to the customer. For ongoing managed services contract, revenue is recognized over time, consistent with the weekly or monthly fee specified within such arrangements. We also derive revenues based on negotiating reductions in network and software costs of companies with the entity’s related service providers and providing other services such as audits of network and communication expenses and consultation for network architecture. These contracts can be fixed in fees or can be based on the level of savings achieved related to its communications costs. Additionally, these contracts can also have a fixed component and a contingent component that is based on the savings generated by the Company. For network and software contingency contracts with termination for convenience clauses, revenue is recognized over time due to the existence of provisions for payment for progress incurred to date plus a reasonable profit margin. The contract periods range from a few months to in excess of a year. We also enter into arrangements for the sale of automation software licenses and related delivery of consulting or implementation services at the same time or within close proximity to one another. Such software-related performance obligations include the sale of on- F-9 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ premise software, hybrid and software-as-a-service licenses, as well as other software-related services. Revenue associated with the software performance obligation is primarily recognized at the point at which the software is installed or access is granted. Revenue associated with events is recognized at the point of time at which the event occurs and is primarily comprised of sponsorships. Conversely, revenue associated with research subscriptions is recognized over time, as the customer accesses our data or related platforms. In addition, we sell research products for which the revenue is recognized at a point in time upon delivery to the client. The agreements entered into in connection with a project typically allow our clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by us through the effective date of the termination. In addition, from time to time, we enter into agreements with clients that limit our right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit us from performing a defined range of services that we might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team. When we recognize revenues in advance of billing, those revenues are recorded as contract assets. When we invoice in advance of completing services or earning revenues, those amounts are recorded as contract liabilities. Reimbursable Expenditures ​ Amounts billed to customers for reimbursable expenditures are included in revenues and the associated costs incurred by the Company are included in direct costs and expenses for advisors in the accompanying consolidated statement of comprehensive income. Non-reimbursable amounts are expensed as incurred. Reimbursable expenditures totaled $ 0.8 million and $ 0.3 million for the years ended December 31, 2022 and 2021, respectively. The increase was attributable to pandemic-related travel restrictions being lifted in 2022. ​ Direct Costs and Expenses for Advisors Direct costs and expenses for advisors include payroll expenses and advisory fees directly associated with the generation of revenues and other program expenses. Direct costs and expenses for advisors are expensed as incurred. ​ Direct costs and expenses for advisors also include expense accruals for discretionary bonus payments. Bonus accrual levels are adjusted throughout the year based on actual and projected Company performance. ​ Stock-Based Compensation We grant restricted stock units with a fair value that is determined based on the closing price of our common stock on the date of grant. Such grants generally vest ratably over a two -to- four - year period for employees and a three-year period for directors. Stock-based compensation expense is recognized ratably over the applicable service period. We follow the provisions of accounting and disclosure requirements for share-based payments, including the measurement and recognition of all share-based compensation under the fair value method. ​ Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash investments with high-quality financial institutions. The Company extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history and generally does not require collateral. ​ Treasury Stock The Company makes treasury stock purchases in the open market pursuant to the share repurchase program, which was most recently approved by the Board of Directors on August 5, 2021. ​ Treasury stock is recorded on the consolidated balance sheet at cost as a reduction of stockholders’ equity. Shares are released from Treasury at original cost on a first-in, first-out basis, with any gain or loss on the sale reflected as an adjustment to additional paid-in capital. ​ F-10 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenue and expense items are translated at average exchange rates for the reporting period. Resulting translation adjustments are included in the accompanying statement of comprehensive income and accompanying statement of stockholders’ equity as a component of Accumulated Other Comprehensive Loss . ​ The functional currency of the Company and its subsidiaries is the respective local currency. The Company has contracts denominated in foreign currencies, and therefore a portion of the Company’s revenues are subject to foreign currency risks. Transactional currency gains and losses that arise from transactions denominated in currencies other than the functional currencies of our operations are recorded in Foreign Currency Translation in the accompanying consolidated statement of comprehensive income. ​ Fair Value of Financial Instruments The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities and accrued interest approximate fair value. 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 goodwill, intangible assets and other long-lived assets and assets acquired and liabilities assumed in a business combination. Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy: ● Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market; ● Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and ● Level 3 measurements include those that are unobservable and of a highly subjective measure. During 2022, there were no transfers of our financial assets between Level 1, Level 2 or Level 3 measures. Our financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. F-11 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ The following tables summarize assets and liabilities measured at fair value on a recurring basis at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis of Fair Value Measurements ​ ​ December 31, 2022 ​ ​ ​ Level 1 ​ Level 2 ​ Level 3 ​ ​ Total ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents $ 18 $ — $ — $ 18 ​ Total $ 18 $ — $ — $ 18 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent consideration (1) $ — $ — $ 5,593 $ 5,593 ​ ​ $ — $ — $ 5,593 $ 5,593 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis of Fair Value Measurements ​ ​ December 31, 2021 ​ ​ ​ Level 1 ​ Level 2 ​ Level 3 ​ ​ Total ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents $ 1,018 $ — $ — $ 1,018 ​ Total $ 1,018 $ — $ — $ 1,018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent consideration (2) $ — $ — $ 2,420 $ 2,420 ​ ​ $ — $ — $ 2,420 $ 2,420 ​ (1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of December 31, 2022. (2) Contingent consideration is included in “Accrued expenses and other current liabilities” as of December 31, 2021. The fair value measurement of 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 2.5 % and 2.0 % for December 31, 2022, and 2021, respectively. The following table represents the change in the contingent consideration liability during the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ Beginning Balance ​ ​ $ 2,420 ​ $ 5,319 Neuralify earnout adjustment (1) ​ ​ ​ ( 1,420 ) ​ ​ — Neuralify earnout payment ​ ​ ​ ( 1,000 ) ​ ​ ( 3,000 ) Change 4 Growth contingent consideration accrued ​ ​ ​ 5,560 ​ ​ — Accretion of contingent consideration ​ ​ 33 ​ 101 Ending Balance ​ ​ $ 5,593 ​ $ 2,420 (1) Neuralify earnout adjustment relates to a change in the achievement of a certain milestone specific to the acquisition. F-12 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ The Company’s financial instruments include outstanding borrowings of $ 79.2 million as of December 31, 2022 and $ 74.5 million as of December 31, 2021, 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 was approximately $ 76.5 million and $ 73.6 million at December 31, 2022 and December 31, 2021, 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 was 6.3 % and 2.0 % for December 31, 2022 and 2021, 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 and interest rates. As of December 31, 2022 and 2021, there were $ 9.0 million and $ 0.0 million borrowings, respectively, under the revolver. The Company was in compliance with its financial covenants under the 2020 Credit Agreement as of December 31, 2022. Income Taxes We use the asset and liability method to account for income taxes, including recognition of deferred tax assets and liabilities for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax basis. We review our deferred tax assets for recovery. A valuation allowance is established when we believe that it is more likely than not that some portion of its deferred tax assets will not be realized. Changes in the valuation allowance from period to period are included in our tax provision in the period of change. For uncertain tax positions, we use the prescribed model for assessing the financial recognition and measurement of all tax positions taken or expected to be taken in tax returns. This guidance provides clarification on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. Our provision for income taxes also includes the impact of provisions established for uncertain income tax positions, as well as the related interest. Recently Issued Accounting Pronouncements In June 2016, the FASB issued new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable, and available-for-sale debt securities. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses and additional disclosures. As a smaller reporting company, this guidance is effective for fiscal years beginning after December 15, 2022. The Company does not expect the adoption of this guidance to have a material impact on its financial statements. ​ NOTE 3—REVENUE The majority of our revenue is derived from contracts that can span from a few months to several years. We enter into contracts that can include various combinations of services, which, depending on contract type, are sometimes capable of being distinct. If services are determined to be distinct, they are accounted for as separate performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. 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, is not distinct. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using our best estimate of the standalone selling price, or SSP, of each distinct product or service in the contract. The Company establishes SSP based on management’s estimated selling price or observable prices of products or services sold separately in comparable circumstances to similar clients. 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. Contract Balances The timing of revenue recognition, billings and cash collections result in billed accounts receivables, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities). Our clients are billed based on the type of arrangement. A portion of our services is billed monthly based on hourly or daily rates. There are also client engagements in which we bill a fixed amount for our services. This may be one single amount covering the whole engagement or several amounts for various phases, functions, or milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits before F-13 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ revenue is recognized, resulting in contract liabilities. 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 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ 2022 2021 Contract assets ​ $ 32,249 ​ $ 18,639 Contract liabilities ​ $ 7,058 ​ $ 7,049 ​ Revenue recognized for the year ended December 31, 2022 that was included in the contract liability balance at January 1, 2022 was $ 6.7 million and represented primarily revenue from our fixed-fee and subscription contracts. Remaining performance obligations As of December 31, 2022, the Company had $ 130.0 million of remaining performance obligations, the majority of which are expected to be satisfied within the next year. ​ NOTE 4 — ACQUISITION ​ Agreemint Acquisition ​ On March 28, 2022, ISG executed an asset purchase agreement for the purchase of substantially all of the assets of Agreemint, which is an automated, platform-based contracting solution that will enhance the value of ISG GovernX and our other platform solutions now in development. We determined the transaction to be an asset acquisition as substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset: the software and related intellectual property rights. The cash paid for the acquisition as of the balance sheet date is reflected in Cash flows from investing activities of the Statement of Cash Flows. The related software acquired, which is capitalized within “Furniture, fixtures and equipment, net”, will be depreciated over four years when put into service at the end of the transition period underway to integrate the offering with our ISG GovernX cloud solution. ​ Change 4 Growth Acquisition ​ On October 31, 2022, a subsidiary of the Company executed an Asset Purchase Agreement with Change 4 Growth, LLC and consummated the acquisition of substantially all the assets, and assumed certain liabilities, of Change 4 Growth, LLC. The purchase price was comprised of $ 3.8 million of cash consideration, $ 0.6 million of shares of ISG common stock issued promptly after closing and Change 4 Growth, LLC will also have the right to receive additional consideration paid via earn-out payments, if certain financial targets are met. At the agreement date, the company estimated such earn-out payment would be $ 5.6 million. ​ The following table summarizes the preliminary consideration transferred to acquire Change 4 Growth, LLC and the amounts of identified assets acquired, and liabilities assumed as of the agreement date: ​ ​ ​ ​ Cash $ 3,450 Accrued working capital adjustment ​ ​ 378 ISG common stock ​ 600 Contingent consideration ​ 5,560 Total allocable purchase price ​ $ 9,988 F-14 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ ​ The amount of recognized identifiable assets acquired and liabilities assumed as of the agreement date: ​ ​ ​ ​ Accounts receivable and contract assets ​ $ 1,841 Intangible assets ​ 4,300 Accounts payable and accrued expense ​ ​ ( 428 ) Contract liabilities ​ ( 85 ) Net assets acquired ​ $ 5,628 ​ ​ ​ ​ Goodwill ​ $ 4,360 ​ The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, were the inclusion of legacy Change 4 Growth workforce and associated organizational change management expertise to enhance and expand the offerings of the ISG Enterprise Change service line. Costs associated with this acquisition are included in the selling, general and administrative expense in the Consolidated Statement of Income and Comprehensive Income and totaled $ 0.2 million during the year ended December 31, 2022. 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: ​ ​ ​ ​ ​ ​ ​ ​ Purchase Price Estimated ​ Allocation Useful Lives Amortizable intangible assets: ​ ​ ​ ​ ​ Trademark and trade name ​ $ 1,100 3 years Customer relationships ​ ​ 2,900 ​ 8 years Noncompete agreements ​ ​ 300 ​ 2 years Total intangible assets ​ $ 4,300 ​ ​ ​ The Consolidated Statement of Income and Comprehensive Income includes revenue from the Change 4 Growth acquisition subsequent to the closing. Had the acquisition occurred as of January 1, 2022, approximately $ 7.0 million of revenue would have been recognized. NOTE 5—NET INCOME PER COMMON SHARE Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. 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. F-15 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ The following tables set forth the computation of basic and diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2022 2021 Basic: ​ ​ ​ ​ ​ ​ Net income ​ $ 19,726 ​ $ 15,529 Weighted average common shares ​ 48,175 ​ 48,638 Earnings per share ​ $ 0.41 ​ $ 0.32 Diluted: ​ ​ ​ ​ ​ ​ Net income ​ $ 19,726 ​ $ 15,529 ​ ​ ​ ​ ​ ​ ​ Basic weighted average common shares ​ 48,175 ​ 48,638 Potential common shares ​ 2,245 ​ 3,118 Diluted weighted average common shares ​ 50,420 ​ 51,756 Diluted earnings per share ​ $ 0.39 ​ $ 0.30 ​ ​ NOTE 6—ACCOUNTS RECEIVABLE AND CONTRACT ASSETS Accounts receivable and contract assets, net of allowance, consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2022 2021 Accounts receivable ​ $ 47,611 ​ $ 45,531 ​ Contract assets ​ 32,249 ​ 18,639 ​ Receivables from related parties ​ 310 ​ 174 ​ ​ ​ $ 80,170 ​ $ 64,344 ​ ​ NOTE 7—FURNITURE, FIXTURES AND EQUIPMENT Furniture, fixtures and equipment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ Estimated Useful Lives 2022 2021 Computer hardware, software and other office equipment 2 to 5 years ​ $ 3,343 ​ $ 6,104 ​ Furniture, fixtures and leasehold improvements 2 to 5 ​ years ​ 3,235 ​ 4,765 ​ Software and development costs 3 to 5 ​ years ​ 10,870 ​ 9,173 ​ Accumulated depreciation ​ ​ ​ ​ ​ ( 11,519 ) ​ ( 14,749 ) ​ ​ ​ ​ ​ ​ ​ $ 5,929 ​ $ 5,293 ​ ​ Depreciation expense was $ 3.0 million and $ 2.7 million for both years ended December 31, 2022 and 2021, respectively. NOTE 8—LEASES ​ The Company recognizes lease payments in the consolidated statements of income on a straight-line basis over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. The Company leases its office space and office equipment under long-term operating lease agreements which expire at various dates through March 2027, some of which include options to extend the leases for up to 3 years , and some of which included options to terminate the leases within 1 year. Under the operating leases, the Company pays certain operating expenses relating to the office equipment and leased property. F-16 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ The components of lease expense were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2022 2021 Lease cost ​ ​ ​ ​ ​ ​ Operating lease cost ​ $ 2,128 ​ $ 2,170 Finance lease cost: ​ ​ ​ ​ ​ ​ Amortization of right-of-use assets ​ ​ 375 ​ ​ 253 Interest on lease liabilities ​ ​ 40 ​ ​ 9 Short-term lease cost ​ 44 ​ 42 Variable lease cost ​ 225 ​ 110 Sublease income ​ ( 187 ) ​ ( 250 ) Total lease cost ​ $ 2,625 ​ $ 2,334 ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information related to leases was as follows ​ ​ ​ ​ ​ ​ Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ Operating cash flows from finance leases ​ $ 40 ​ $ 9 Operating cash flows from operating leases ​ $ 2,594 ​ $ 2,720 Financing cash flows from finance leases ​ $ 381 ​ $ 253 ​ Supplemental balance sheet information related to leases was as follows: ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except lease term and discount rate) ​ Years Ended December 31, ​ 2022 2021 Operating leases ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ $ 6,780 ​ $ 5,293 ​ ​ ​ ​ ​ ​ ​ Current operating lease liabilities (1) ​ $ 2,399 ​ 2,520 Non-current operating lease liabilities ​ 4,857 ​ 3,481 Total operating lease liabilities ​ $ 7,256 ​ $ 6,001 ​ ​ ​ ​ ​ ​ ​ Finance leases ​ ​ ​ ​ ​ ​ Finance lease right-of-use assets (2) ​ $ 110 ​ $ 451 ​ ​ ​ ​ ​ ​ ​ Current finance lease liabilities (1) ​ $ 65 ​ 395 Non-current finance lease liabilities ​ 46 ​ 61 Total finance lease liabilities ​ $ 111 ​ $ 456 ​ ​ ​ ​ ​ ​ ​ Weighted average remaining lease term (in years) ​ ​ ​ ​ ​ ​ Operating leases ​ ​ 3.8 ​ ​ 3.3 Finance leases ​ ​ 2.0 ​ ​ 1.3 Weighted average discount rate ​ ​ ​ ​ ​ ​ Operating leases ​ ​ 7.9 % ​ ​ 6.0 % Finance leases ​ ​ 5.4 % ​ ​ 2.9 % ​ (1) Current lease liabilities are included in “Accrued expenses and other current liabilities.” (2) Finance lease right-of-assets are included in “Furniture, fixtures and equipment, net” ​ F-17 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ Maturities of lease liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ Finance ​ ​ ​ ​ Leases ​ Leases Year Ending December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ $ 2,492 ​ $ 66 2024 ​ ​ ​ ​ ​ 2,200 ​ ​ 34 2025 ​ ​ ​ ​ ​ 1,953 ​ ​ 16 2026 ​ ​ ​ ​ 1,282 ​ — 2027 ​ ​ ​ ​ 351 ​ — Thereafter ​ ​ ​ ​ ​ 213 ​ ​ — Total lease payments ​ ​ ​ ​ 8,491 ​ 116 Less imputed interest ​ ​ ​ ​ ​ ( 1,235 ) ​ ​ ( 5 ) Total ​ ​ ​ ​ $ 7,256 ​ $ 111 ​ ​ ​ NOTE 9—INTANGIBLE ASSETS The carrying amount of intangible assets, net of accumulated amortization and impairment charges, as of December 31, 2022 and 2021 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ ​ ​ ​ Accumulated ​ Currency ​ Net Book ​ ​ Estimated Useful Lives ​ Amount ​ Acquisitions ​ Amortization ​ impact ​ Value ​ Amortizable intangibles: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships 2 to 15 years ​ $ 75,283 ​ $ 2,900 ​ $ ( 70,273 ) ​ $ ( 115 ) ​ $ 7,795 ​ Noncompete agreements 4 to 7 ​ years ​ 5,962 ​ 300 ​ ( 5,987 ) ​ ​ — ​ 275 ​ Software 3 to 4 ​ years ​ 1,660 ​ — ​ ( 1,557 ) ​ ​ — ​ 103 ​ Backlog 1 to 2 ​ years ​ 5,002 ​ — ​ ( 4,981 ) ​ ​ ( 21 ) ​ — ​ Databases 4 to 15 ​ years ​ 13,218 ​ — ​ ( 7,905 ) ​ ​ ( 183 ) ​ 5,130 ​ Trademark and trade names 3 to 5 ​ years ​ 1,490 ​ 1,100 ​ ( 1,513 ) ​ ​ — ​ 1,077 ​ Intangibles ​ ​ ​ ​ $ 102,615 ​ $ 4,300 ​ $ ( 92,216 ) ​ $ ( 319 ) ​ $ 14,380 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ ​ ​ ​ Accumulated ​ Currency ​ Net Book ​ Estimated Useful Lives ​ Amount Acquisitions ​ Amortization impact Value Amortizable intangibles: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships 2 to 15 years ​ $ 75,283 ​ $ — ​ $ ( 68,677 ) ​ $ ( 111 ) ​ $ 6,495 ​ Noncompete agreements 4 to 7 ​ years ​ 5,962 ​ — ​ ( 5,960 ) ​ ​ — ​ 2 ​ Software 3 to 4 ​ years ​ 1,660 ​ — ​ ( 1,534 ) ​ ​ — ​ 126 ​ Backlog 1 to 2 ​ years ​ 5,002 ​ — ​ ( 4,981 ) ​ ​ ( 21 ) ​ — ​ Databases 4 to 15 ​ years ​ 13,218 ​ — ​ ( 7,371 ) ​ ​ ( 180 ) ​ 5,667 ​ Trademark and trade names 3 to 5 ​ years ​ 1,490 ​ — ​ ( 1,370 ) ​ ​ — ​ 120 ​ Intangibles ​ ​ ​ ​ $ 102,615 ​ $ — ​ $ ( 89,893 ) ​ $ ( 312 ) ​ $ 12,410 ​ ​ F-18 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ Amortization expense was $ 2.3 million and $ 2.6 million for the years ended December 31, 2022 and 2021, respectively. The estimated future amortization expense subsequent to December 31, 2022 is as follows: ​ ​ ​ ​ ​ ​ 2023 $ 3,126 2024 ​ 2,550 ​ 2025 ​ 2,052 ​ 2026 ​ 1,533 ​ 2027 ​ ​ 1,344 ​ Thereafter ​ 3,775 ​ ​ ​ $ 14,380 ​ ​ NOTE 10—GOODWILL The changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 Balance as of January 1 ​ ​ ​ ​ ​ Goodwill ​ $ 91,130 ​ $ 91,130 Foreign currency impact ​ ​ ( 340 ) ​ ​ ( 122 ) Balance as of January 1 ​ ​ 90,790 ​ ​ 91,008 ​ ​ ​ ​ ​ ​ ​ Change 4 Growth acquisition ​ ​ 4,360 ​ ​ — Foreign currency impact and adjustments ​ ( 178 ) ​ ​ ( 218 ) ​ ​ ​ 4,182 ​ ​ ( 218 ) Balance as of December 31 ​ ​ ​ ​ ​ ​ Goodwill ​ ​ 95,490 ​ ​ 91,130 Foreign currency impact and adjustments ​ ​ ( 518 ) ​ ​ ( 340 ) Balance as of December 31 ​ $ 94,972 ​ $ 90,790 ​ ​ NOTE 11—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The components of accrued liabilities for the years ended December 31, 2022 and 2021 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2022 2021 Accrued payroll, incentive, and vacation ​ $ 7,107 ​ $ 7,054 ​ Accrued corporate and payroll related taxes ​ 1,762 ​ 7,931 ​ Contingent consideration—current ​ 1,460 ​ 2,420 ​ Current operating lease liability ​ ​ 2,399 ​ ​ 2,520 ​ Accrued license expense ​ ​ 2,582 ​ ​ 1,445 ​ Other ​ 8,598 ​ 7,957 ​ ​ ​ $ 23,908 ​ $ 29,327 ​ ​ ​ ​ ​ F-19 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ NOTE 12—FINANCING ARRANGEMENTS AND LONG-TERM DEBT Long-term debt consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2022 2021 Senior secured credit facility ​ $ 70,175 ​ $ 74,475 ​ Revolver borrowings ​ 9,000 ​ — ​ Debt issuance costs ​ ( 459 ) ​ ( 685 ) ​ ​ ​ 78,716 ​ 73,790 ​ Less current installments on long term debt ​ 4,300 ​ 4,300 ​ Long-term debt ​ $ 74,416 ​ $ 69,490 ​ ​ Aggregate annual maturities of debt obligations by calendar year are as follows: ​ ​ ​ ​ ​ ​ ​ Debt 2023 ​ $ 4,300 ​ 2024 ​ 4,300 ​ 2025 ​ ​ 70,575 ​ ​ ​ $ 79,175 ​ ​ On March 10, 2020, the Company amended and restated its senior secured credit facility to include an $ 86.0 million term facility and to increase the revolving commitments per the revolving facility (the “2020 Credit Agreement”) from $ 30.0 million to $ 54.0 million. The material terms under the 2020 Credit Agreement are as follows: ● Each of the term loan facility and revolving credit facility has a maturity date of March 10, 2025 (the “Maturity Date”). ● The credit facility is secured by all of the equity interests owned by the Company, and its direct and indirect domestic subsidiaries and, subject to agreed exceptions, the Company’s direct and indirect “first-tier” foreign subsidiaries and a perfected first priority security interest in all of the Company’s and its direct and indirect domestic subsidiaries’ tangible and intangible assets. ● 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 or (ii) Eurodollar Rate (adjusted for maximum reserves) as determined by the Administrative Agent (as defined in the 2020 Credit Agreement), plus the applicable margin. The applicable margin is adjusted quarterly based upon the Company’s quarterly leverage ratio. ● The term loan is repayable in nineteen consecutive quarterly installments of $ 1,075,000 that commenced on June 30, 2020 and a final payment of the outstanding principal amount of the term loan on the Maturity Date. ● Mandatory repayments of term loans shall be required from (subject to agreed exceptions) (i) 100 % of the proceeds from asset sales by the Company and its subsidiaries, (ii) 100 % of the net proceeds from issuances of debt and equity by the Company and its subsidiaries and (iii) 100 % of the net proceeds from insurance recovery and condemnation events of the Company and its subsidiaries. ● The senior secured credit facility contains a number of covenants that, among other things, place restrictions on matters customarily restricted in senior secured credit facilities, including restrictions on indebtedness (including guarantee obligations), liens, fundamental changes, sales or disposition of property or assets, investments (including loans, advances, guarantees and acquisitions), transactions with affiliates, dividends and other payments in respect of capital stock, optional payments and modifications of other material debt instruments, negative pledges and agreements restricting subsidiary F-20 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ distributions and changes in line of business. In addition, the Company is required to comply with a total leverage ratio and fixed charge coverage ratio. ● 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 $ 79.2 million and $ 74.5 million as of December 31, 2022 and December 31, 2021, 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 was approximately $ 76.5 million and $ 73.6 million at December 31, 2022 and December 31, 2021, 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 was 6.3 % and 2.0 % as of December 31, 2022 and December 31, 2021, 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 and interest rates. As of December 31, 2022 and December 31, 2021 there were $ 9.0 million and $ 0.0 million borrowings, respectively, under the revolver. The Company was in compliance with its financial covenants under the 2020 Credit Agreement as of December 31, 2022. Refer to Note 18 – Subsequent Event for additional information regarding the Company’s 2020 Credit Agreement. NOTE 13—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 December 31, 2022 and 2021. ​ Change 4 Growth Contingent Consideration ​ As of December 31, 2022, the Company has recorded a liability of $ 5.6 million representing the estimated fair value of contingent consideration related to the acquisition of Change 4 Growth, of which $ 1.5 million was classified as current and included in accrued expenses on the consolidated balance sheet. NOTE 14—RELATED PARTY TRANSACTIONS From time to time, the Company may have receivables and payables with employees and shareholders. The Company had outstanding receivables from related parties, including shareholders, totaling $ 0.3 million and $ 0.2 million as of December 31, 2022 and 2021, respectively, and no outstanding payables. These transactions related to personal withholding taxes paid on behalf of expatriate employees. NOTE 15—INCOME TAXES The components of income before income taxes for the years ended December 31, 2022 and 2021 consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2022 2021 Domestic ​ $ 17,281 ​ $ 9,984 ​ Foreign ​ 9,401 ​ 13,127 ​ Total income before income taxes ​ $ 26,682 ​ $ 23,111 ​ ​ F-21 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ The components of the 2022 and 2021 income tax provision are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2022 2021 Current: ​ ​ ​ ​ ​ ​ ​ Federal ​ $ 3,840 ​ $ 2,194 ​ State ​ 929 ​ 617 ​ Foreign ​ 2,720 ​ 4,830 ​ Total current provision ​ 7,489 ​ 7,641 ​ Deferred: ​ ​ ​ ​ ​ ​ ​ Federal ​ ( 226 ) ​ ( 786 ) ​ State ​ 113 ​ 38 ​ Foreign ​ ( 420 ) ​ 689 ​ Total deferred (benefit) expense ​ ( 533 ) ​ ( 59 ) ​ Total ​ $ 6,956 ​ $ 7,582 ​ ​ The differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate of 21 % for both years ended December 31, 2022 and 2021 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2022 2021 Tax provision computed at 21 % $ 5,603 ​ $ 4,853 ​ Nondeductible expenses ​ 149 ​ 91 ​ State income taxes, net of federal benefit ​ 875 ​ 624 ​ Tax impact of foreign operations ​ 238 ​ 2,045 ​ Valuation allowances increase (release) ​ ( 44 ) ​ 52 ​ Net decrease of uncertain tax positions ​ — ​ ( 31 ) ​ Other ​ 135 ​ ( 52 ) ​ Income tax provision ​ $ 6,956 ​ $ 7,582 ​ Effective income tax rates ​ 26.1 % 32.8 % ​ F-22 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2022 ​ 2021 ​ Noncurrent deferred tax asset ​ ​ ​ ​ ​ ​ ​ Compensation related expenses ​ $ 1,748 ​ $ 1,242 ​ Foreign currency translation ​ 3,281 ​ 2,422 ​ U.S. foreign tax credit carryovers ​ 2,527 ​ 1,903 ​ Foreign net operating loss carryovers ​ 2,129 ​ 2,208 ​ Accruals and reserves ​ 557 ​ 990 ​ Operating lease right-of-use assets ​ ​ 2,080 ​ ​ 1,651 ​ Other ​ 316 ​ 466 ​ Valuation allowance for deferred tax assets ​ ( 3,704 ) ​ ( 3,315 ) ​ Total noncurrent deferred tax asset ​ 8,934 ​ 7,567 ​ Noncurrent deferred tax liability ​ ​ ​ ​ ​ ​ ​ Depreciable assets ​ ( 367 ) ​ ( 468 ) ​ Prepaids ​ ( 137 ) ​ ( 392 ) ​ Intangible assets ​ ( 1,235 ) ​ ( 787 ) ​ Investment in foreign subsidiaries ​ ( 2,370 ) ​ ( 2,157 ) ​ Foreign earnings distribution taxes ​ ( 1,224 ) ​ ( 1,038 ) ​ Foreign intangibles and reserves ​ ( 1,211 ) ​ ( 1,884 ) ​ Operating lease liabilities ​ ​ ( 1,963 ) ​ ​ ( 1,468 ) ​ Total noncurrent deferred tax liability ​ ( 8,507 ) ​ ( 8,194 ) ​ Net noncurrent deferred tax assets/(liability) ​ 427 ​ ( 627 ) ​ Net deferred tax assets/(liability) ​ $ 427 ​ $ ( 627 ) ​ ​ A valuation allowance was established at December 31, 2022 and 2021 due to estimates of future utilization of net operating loss carryovers in the U.S. and certain foreign jurisdictions, derived primarily from acquisitions and recorded through purchase accounting. The valuation allowance at December 31, 2022 and 2021 also includes a full valuation for the Company’s foreign tax credit carryovers and foreign taxes on its controlled foreign corporations. As of December 31, 2022, the Company had foreign net operating loss (NOL) carryforwards of approximately $ 10.3 million. If not utilized, these NOL carryforwards begin to expire in 2023. The Company also has a federal tax credit carryforward of approximately $ 2.5 million, which will begin to expire in 2026, if not utilized. Uncertain tax positions Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more likely than not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. It is the Company’s policy to accrue for interest and penalties related to its uncertain tax positions within income tax expense. F-23 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ A tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2022 2021 Balance, beginning of year ​ $ 1,639 ​ $ 1,569 ​ Additions as a result of tax positions taken during the current period ​ 76 ​ 101 ​ Reductions as a result of tax positions taken during a prior period ​ — ​ ( 31 ) ​ Balance, end of year ​ $ 1,715 ​ $ 1,639 ​ ​ We do not expect our unrecognized tax benefits to significantly change in the next twelve months. The Company has recognized through income tax expense approximately $ 1.0 million of interest and penalties related to uncertain tax positions. The amount of unrecognized tax benefit, if recognized, that would impact the effective tax rate is $ 1.7 million. With few exceptions, the Company is no longer subject to U.S. federal, state, local or non-U.S. income tax examinations by tax authorities for years before 2015. NOTE 16—STOCK-BASED COMPENSATION PLANS The Amended and Restated 2007 Equity and Incentive Award Plan (“Incentive Plan”) and Amended and Restated 2007 Employee Stock Purchase Plan (“ESPP”) were approved by the Company’s stockholders at our 2014 annual meeting with a subsequent amendment to the Incentive Plan approved by the Company’s stockholders at our 2017 annual meeting as discussed below. Subject to the terms of the Incentive Plan, the Incentive Plan authorizes the grant of awards, which awards may be made in the form of (i) nonqualified stock options; (ii) stock options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code (stock options described in clause (i) and (ii), “options”); (iii) stock appreciation rights (“SARs”); (iv) restricted stock and/or restricted stock units; (v) other stock based awards; (vi) performance-based awards, which are equity awards or incentive awards intended to qualify for full tax deductibility by the company under Code Section 162 (m); and (vii) incentive awards, a cash-denominated award earnable by achievement of performance goals. The issuance of shares or the payment of cash upon the exercise of an award or in consideration of the cancellation or termination of an award shall reduce the total number of shares available under the Incentive Plan, as applicable. The provisions of each award will vary based on the type of award granted and will be specified by the Compensation Committee of the Board of Directors. Those awards which are based on a specific contractual term will be granted with a term not to exceed ten years . The SARs granted under the Incentive Plan are granted with an exercise price equal to the fair market value of the Common Shares at the time the SARs are granted. At the 2020 Annual Meeting, our stockholders approved an amendment to the Incentive Plan to increase the number of shares of common stock available for issuance under the Incentive Plan by 5,500,000 shares (the “Incentive Plan Amendment”). As of December 31, 2022, there were 3,085,373 and 847,124 shares available for grant under the Incentive Plan and ESPP, respectively. The Company recognized $ 7.5 million and $ 6.5 million in employee stock-based compensation expense during the years ended December 31, 2022 and 2021, respectively. This expense was recorded in selling, general and administrative in the consolidated statement of comprehensive income. Restricted Share Awards/Units The Incentive Plan provides for the granting of restricted share units (“RSU”), the vesting of which is subject to conditions and limitations established at the time of the grant. Recipients of RSU awards will not have the rights of a shareholder of the Company until such date as the Common Shares are issued or transferred to the recipient. If the employee retires (at the normal retirement age stated in the applicable retirement plan or applicable law, if there is a mandatory retirement age), the restricted shares continue to vest on the same schedule as if the employee remained employed with the Company. Upon a termination of employment due to an employee’s death or permanent disability, the restricted shares become 100 % vested. Dividends accrue and will be paid if and when the restricted shares vest. The Company also granted RSUs to specific employees which have the following characteristics: ● Performance-Based RSU Vesting (Stock Price): Provided the employee continues to be employed through specific date set forth in the award, the RSUs will vest on such date if specific financial performance is met, otherwise the RSUs will be forfeited. F-24 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ ● Time-Based RSU Vesting: So long as the employee continues to be employed through the anniversary of the grant date, the RSUs will become 100 % vested on such date. If an employee’s employment is terminated (i) at any time during the vesting period due to the employee’s death, disability or retirement prior to the applicable vesting date or (ii) so long as the employee continues to be employed through the vesting dates detailed in the award agreement, the RSUs will become vested according to the agreement. However, no shares will be distributed until the applicable pro rata vesting date (and, in the case of the Performance-Based RSUs, only if and to the extent that the performance target is achieved). In all other terminations occurring prior to the applicable vesting date, the RSUs will expire. Pursuant to the terms of the Incentive Plan, in the event of a change in control, the Compensation Committee of the Board of Directors may accelerate vesting of the outstanding awards of RSUs then held by participants. All RSUs will be payable in shares of the Company’s common stock immediately upon vesting. As part of the Incentive Plan Amendment, dividends/dividend equivalents may be paid or credited on other stock-based awards (such as restricted stock units), but those dividends/dividend equivalents must be subject to the same vesting (or more stringent vesting) applicable to the underlying awards. The fair value of RSUs is determined based on the closing price of the Company’s shares on the grant date. The total fair value is amortized to expense on a straight-line basis over the vesting period. A summary of the status of the Company’s RSUs issued under its Incentive Plan as of December 31, 2022 and changes during the years then ended, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ Average ​ ​ ​ ​ ​ Grant Date ​ ​ ​ RSU ​ Fair Value ​ Non-vested at December 31, 2020 6,866 ​ $ 2.31 ​ Granted 1,112 ​ $ 6.07 ​ Vested ( 3,680 ) ​ $ 2.46 ​ Forfeited ( 278 ) ​ $ 2.51 ​ Non-vested at December 31, 2021 4,020 ​ $ 3.20 ​ Granted 1,527 ​ $ 6.57 ​ Vested ( 1,610 ) ​ $ 2.88 ​ Forfeited ( 117 ) ​ $ 3.37 ​ Non-vested at December 31, 2022 3,820 ​ $ 4.68 ​ ​ The total fair value of RSUs vested during the years ended December 31, 2022 and 2021 was $ 4.7 million and $ 9.0 million, respectively. As of December 31, 2022, there was $ 10.3 million of unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 2.1 years. There were 3.9 million shares available for issuance at December 31, 2022 under the Incentive Plan. Employee Stock Purchase Plan The Company uses the Black-Scholes option pricing model to estimate the fair value of shares expected to be issued under the Company’s employee stock purchase plan. The ESPP provides that a total of 3.6 million shares of Common Stock are reserved for issuance under the plan. The ESPP, which is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code, is implemented utilizing three -month offerings with purchases occurring at three -month intervals. The ESPP administration is overseen by the Compensation Committee of the Company’s Board of Directors. Employees are eligible to participate if they are employed by the Company for at least 20 hours per week and more than five months in a calendar year. The ESPP permits eligible employees to purchase Common Stock through payroll deductions, ranging from one to ten percent of their eligible earnings subject to IRS regulated cap of $ 25,000 . The price of Common Stock purchased under the ESPP is 90 % of the fair market value of the Common Stock on the applicable purchase date. Employees may end their participation in an offering at any time during the offering period, and participation ends automatically upon termination of employment. The Compensation Committee may at any time amend or terminate the ESPP, except that no such amendment or termination may adversely affect shares previously granted under the ESPP. The Company may issue new shares for the ESPP using treasury shares or newly issued shares. F-25 ​ Table of Contents INFORMATION SERVICES GROUP, INC. ​ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) ​ (tabular amounts in thousands, except per share data) ​ For the year ended December 31, 2022, the Company issued 191,389 shares for the ESPP. There were 847,124 shares available for purchase at December 31, 2022 under the ESPP. NOTE 17—SEGMENT AND GEOGRAPHICAL INFORMATION The Company operates in one segment, fact-based sourcing advisory services. The Company operates principally in the Americas, Europe and Asia Pacific. The Company’s foreign operations are subject to local government regulations and to the economic and political uncertainties of those areas. Geographical information for the segment is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ December 31, ​ ​ 2022 2021 Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas (1) ​ ​ $ 166,661 ​ $ 160,181 ​ ​ Europe (2) ​ ​ 89,908 ​ 90,256 ​ ​ Asia Pacific (3) ​ ​ 29,698 ​ 27,395 ​ ​ ​ ​ ​ $ 286,267 ​ $ 277,832 ​ ​ Fixed assets ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ ​ $ 3,225 ​ $ 2,598 ​ ​ Europe ​ ​ 1,685 ​ 2,119 ​ ​ Asia Pacific ​ ​ 1,019 ​ 576 ​ ​ ​ ​ ​ $ 5,929 ​ $ 5,293 ​ ​ (1) Substantially all relates to operations in the United States. (2) Includes revenues from operations in Germany of $ 44.2 million and $ 50.0 million in 2022 and 2021, respectively. Includes revenues from operations in the United Kingdom of $ 18.6 million and $ 15.2 million in 2022 and 2021, respectively. (3) Includes revenues from operations in Australia of $ 22.9 million and $ 23.1 million in 2022 and 2021, respectively. 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 any other measure or metric, other than consolidated, for the purposes of making operating decisions or allocating resources. NOTE 18—SUBSEQUENT EVENT On February 22, 2023, the Company amended the credit agreement the firm originally entered on March 10, 2020. The amended agreement includes the conversion of the term loan to a $ 140.0 million all-revolver credit facility at more favorable terms, which eliminates mandatory principal payments and extends the agreement’s maturity to February 2028. ​ ​ ​ F-26 ​ Table of Contents EXHIBIT INDEX Exhibit Number Description 2.1 Purchase Agreement, dated as of April 24, 2007, as amended, by and between Registrant and MCP-TPI Holdings, LLC (previously filed as Annex A to the Registrant’s Definitive Proxy Statement filed with the SEC on October 17, 2007 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 2.2 Agreement for the Sale and Purchase of the Entire Issued Share Capital of CCGH Limited, dated as of January 4, 2011, between Registrant and the persons named therein (previously filed as Exhibit 2.1 to the Registrant’s Form 8-K filed with the SEC on January 4, 2011 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 2.3 Asset Purchase Agreement, dated as of February 10, 2011, among Registrant (for specific section only), and Salvaggio & Teal Ltd. (d/b/a Salvaggio, Teal & Associates), Salvaggio & Teal II, LLC, Mitt Salvaggio, Kirk Teal, Nathan Frey, International Consulting Acquisition Corp., (previously filed as Exhibit 2.1to the Registrant’s Form 8-K filed with the SEC on February 11, 2011 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 2.4 Agreement and Plan of Merger, dated as of December 1, 2016, by and among Alsbridge Holdings, Inc., ISG Information Services Group Americas, Inc., Gala Acquisition Sub, Inc., and LLR Equity Partners III, L.P., as representative of the equity holders (previously filed as Exhibit 2.1 to the Registrant’s Form 8-K filed with the SEC on December 2, 2016 (Commission File No. 001-33287), and incorporated herein by reference). ​ ​ 3.1 Amended and Restated Certificate of Incorporation of the Company (previously filed as Exhibit 3.1 to Amendment No. 5 to the Registrant’s Registration Statement on Form S-1 filed with the SEC on January 29, 2007 (Commission File Number: 333-136536), and incorporated herein by reference). ​ ​ 3.2 Amended and Restated By-Laws, dated as of May 13, 2013 (previously filed as Exhibit 3.1 to the Registrant’s Form 8-K filed with the SEC on May 15, 2013 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 3.3 Amendment to the Amended and Restated By-Laws, dated as of November 8, 2017 (previously filed as Exhibit 3.1 to the Registrant’s Form 8 K filed with the SEC on November 13, 2017 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 4.1 Specimen Common Stock Certificate (previously filed as Exhibit 4.2 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 filed with the SEC on December 22, 2006 (Commission File Number: 333-136536), and incorporated herein by reference). ​ ​ 4.2 Description of the Securities of the Registrant (previously filed as Exhibit 4.2 to the Registrant’s Form 10-K filed with the SEC on March 11, 2020 (Commission File Number: 001-33287), and incorporated herein by reference) ​ ​ 10.1 Registration Rights Agreement between the Registrant and the existing Stockholders dated as of February 6, 2007 (previously filed as Exhibit 10.9 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 filed with the SEC on December 22, 2006 (Commission File Number: 333-136536), and incorporated herein by reference). ​ ​ 10.2# Form of Indemnification Agreement for Directors and Officers (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on December 2, 2016 (Commission File No. 001-33287), and incorporated herein by reference). ​ ​ 10.3# Amended and Restated 2007 Employee Stock Purchase Plan (previously filed as Annex B to the Registrant’s Definitive Proxy Statement filed with the SEC on March 20, 2020 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 10.4# Amended and Restated 2007 Equity and Incentive Award Plan (previously filed as Appendix A to the Registrant’s Definitive Proxy Statement filed with the SEC on March 20, 2020 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 10.5*# Form of Restricted Unit Agreement for Directors (Time Based). ​ ​ 10.6*# Form of Restricted Unit Agreement for Executives (Time Based). ​ Table of Contents Exhibit Number Description ​ ​ 10.7*# Form of Restricted Stock Unit Agreement for Executives (Performance Based). ​ ​ 10.8# Form of Restricted Covenant Agreement, (previously filed as Exhibit 10.3 to the Registrant’s Form 8-K filed with the SEC on September 29, 2009 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 10.9# Change in Control Agreement dated as of January 7, 2011, between the Company and Michael P. Connors (previously filed as Exhibit 10.2 to the Registrant’s Form 8-K filed with the SEC on January 7, 2011 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 10.10# Form of Change in Control Agreement for officers (previously filed as Exhibit 10.15 to the Registrant’s Form 10-K filed with the SEC on March 15, 2012 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 10.11# Employment Agreement for Michael P. Connors, dated December 16, 2011 (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on December 21, 2011 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 10.12# Amendment No. 1 to Employment Agreement for Michael P. Connors previously filed as Exhibit 10.21 to the Registrant’s Form 10-K filed with the SEC on March 7, 2014 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 10.13 Securities Purchase Agreement, dated as of December 1, 2016, by and between Information Services Group, Inc. and Chevrillon & Associés SCA (previously filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 2, 2016 (File No. 001-33287), and incorporated herein by reference). ​ ​ 10.14# Amendment No. 2 to Employment Agreement for Michael P. Connors (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on December 16, 2016 (Commission File Number: 001 33287), and incorporated herein by reference). ​ ​ 10.15# Employment Letter for Thomas Kucinski, dated May 15, 2017 (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on May 15, 2017 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 10.16# Amendment No. 3 to Employment Agreement for Michael P. Connors (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on December 30, 2020 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 10.17# Employment Letter for Humberto P. Alfonso, dated April 30, 2021 (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on May 5, 2021 (Commission File Number: 001-33287), and incorporated herein by reference). ​ 10.18 Third Amended and Restated Credit Agreement, dated as of February 22, 2023 among Information Services Group, Inc., various lenders and Bank of America, N.A., as Administrative Agent (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on February 23, 2023 (Commission File Number: 001-33287), and incorporated herein by reference). ​ 11.0* Computation of Earnings Per Share (included in Consolidated Statement of Comprehensive Income to the Consolidated Financial Statements included in Part II—Item 8 herein). ​ ​ 14.0 Code of Ethics and Business Conduct for Directors, Officers and Employees (previously filed as Exhibit 14.1 to the Registrant’s Form 8-K filed with the SEC on August 7, 2012 (Commission File Number: 001-33287), and incorporated herein by reference). ​ ​ 21.1* Subsidiaries of the Company. ​ ​ 23.1* Consent of Independent Registered Public Accounting Firm. ​ ​ ​ Table of Contents Exhibit Number Description 24.1* Power of Attorney. ​ ​ 31.1* Certification of Chief Executive Officer Pursuant to SEC Rule 13a-14(a)/15d-14(a). ​ ​ 31.2* Certification of Chief Financial Officer Pursuant to SEC Rule 13a-14(a)/15d-14(a). ​ ​ 32.1* Certification of Chief Executive Officer Pursuant to 18 U.S.C. §1350. ​ ​ 32.2* Certification of Chief Financial Officer Pursuant to 18 U.S.C. §1350. ​ ​ 101* The following financial statements from ISG’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 10, 2023, formatted in XBRL (Extensible Business Reporting Language); (i) Consolidated Balance Sheet, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements. ​ ​ 104* Cover Page formatted in Inline XBRL and contained in Exhibit 101 attachments. * Filed herewith. # Indicates Item 15(a)(3) exhibit (management contract or compensation plan or arrangement). ​ ​ Table of Contents SIGNATURES Pursuant to the requirements of the Section 13 or 15(d) 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, in the city of Stamford, in the State of Connecticut on March 10, 2023. ​ ​ ​ ​ INFORMATION SERVICES GROUP, INC. ​ ​ ​ ​ By: /s/ Michael P. Connors ​ ​ Michael P. Connors Chairman and Chief Executive Officer ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf and in the capacities and on the dates indicated. ​ ​ ​ ​ Name Position Date ​ ​ ​ /s/ Michael P. Connors Michael P. Connors Chairman and Chief Executive Officer (Principal Executive Officer) March 10, 2023 ​ ​ ​ ​ ​ ​ /s/ Humberto P. Alfonso Humberto P. Alfonso Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) March 10, 2023 ​ ​ ​ ​ ​ ​ *Neil G. Budnick Neil G. Budnick Director March 10, 2023 ​ ​ ​ ​ ​ ​ *Gerald S. Hobbs Gerald S. Hobbs Director March 10, 2023 ​ ​ ​ ​ ​ ​ *Kalpana Raina Kalpana Raina Director March 10, 2023 ​ ​ ​ ​ ​ ​ *Donald C. Waite III Donald C. Waite III Director March 10, 2023 ​ ​ ​ ​ ​ ​ *Christine Putur Christine Putur Director March 10, 2023 ​ ​ ​ ​ ​ ​ ​ ​ *Bruce N. Pfau Bruce N. Pfau Director March 10, 2023 ​ ​ ​ ​ ​ ​ ​ ​ *By: /s/ Michael P. Connors Michael P. Connors** ​ ​ ** By authority of the power of attorney filed as Exhibit 24.1 hereto ​ ​ ​ ​ ​ Table of Contents INFORMATION SERVICES GROUP, INC. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at Charges to ​ Balance at ​ ​ Beginning ​ Costs and ​ Additions/ ​ End of ​ Description ​ of Period ​ Expenses ​ (Deductions) ​ Period ​ Year ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for doubtful accounts ​ $ 40 ( 320 ) 552 ​ $ 272 ​ Allowance for tax valuation ​ $ 3,315 ( 44 ) ​ 433 ​ $ 3,704 ​ Year ended December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for doubtful accounts ​ $ 368 138 ( 466 ) ​ $ 40 ​ Allowance for tax valuation ​ $ 3,707 52 ( 444 ) ​ $ 3,315 ​ ​ ​ ​ ​ G-1 ​