What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-09 compared with 2022-11-04 · 121 added, 137 removed, 219 unchanged (54% of the section changed)

3 unchanged sentences

(In thousands, except par value)

September 30,

Current assets

25 unchanged sentences

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

49,362 shares issued and 47,934 outstanding at September 30, 2022 and 49,362 shares issued and 48,856 outstanding at December 31, 2021

49,472 shares issued and 48,378 outstanding at March 31, 2023 and 49,472 shares issued and 48,300 outstanding at December 31, 2022

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating expenses

5 unchanged sentences

Interest expense

Foreign currency transaction gain (loss)

Foreign currency transaction (loss) gain

Income before taxes

3 unchanged sentences

Comprehensive income:

Foreign currency translation, net of tax benefit of $ 629 , $ 303 , $ 1,515 , and $ 579 , respectively

Foreign currency translation gain (loss), net of tax (expense) benefit of ($ 97 ), and $ 169 , respectively

Comprehensive income

5 unchanged sentences

Stockholders’

Balance June 30, 2022

Other comprehensive loss

Treasury shares repurchased

Proceeds from issuance of ESPP shares

Issuance of treasury shares for RSUs vested

Accrued dividends on unvested shares

Cash dividends paid to shareholders ($ 0.04 per share)

Stock based compensation

Balance September 30, 2022

Comprehensive

Stockholders’

Balance December 31, 2022

Other comprehensive loss

Other comprehensive income

Impact of change in accounting policy (Note 3)

Treasury shares repurchased

4 unchanged sentences

Stock based compensation

Balance September 30, 2022

Balance March 31, 2023

Comprehensive

Stockholders’

Balance June 30, 2021

Balance December 31, 2021

Other comprehensive loss

2 unchanged sentences

Issuance of treasury shares for RSUs vested

Issuance of common stock for RSUs vested

Accrued dividends on unvested shares

Cash dividends paid to shareholders ($ 0.03 per share)

Stock based compensation

Balance September 30, 2021

Comprehensive

Stockholders’

Balance December 31, 2020

Other comprehensive income

Treasury shares repurchased

Proceeds from issuance of ESPP shares

Issuance of treasury shares

Issuance of common stock for RSUs vested

Accrued dividends on unvested shares

Cash dividends paid to shareholders ($ 0.06 per share)

Dividends payable

Cash dividends paid to shareholders

Stock based compensation

Balance September 30, 2021

Balance March 31, 2022

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

2 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

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

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation expense

Amortization of intangible assets

Deferred tax benefit from stock issuances

Deferred tax expense (benefit) from stock issuances

Write-off of deferred financing costs

Amortization of deferred financing costs

1 unchanged sentence

Change in fair value of contingent consideration

Provisions (benefits) for accounts receivable

Deferred tax provision

Provisions for credit losses

Deferred tax (benefit) provision

Changes in operating assets and liabilities:

Accounts receivable and contract assets

Prepaid expense and other assets

Prepaid expenses and other assets

Accounts payable

1 unchanged sentence

Accrued expenses and other liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities

2 unchanged sentences

Cash flows from financing activities

Proceeds from revolving facility (Note 10)

Repayment of outstanding debt (Note 10)

Principal payments on borrowings

Proceeds from issuance of employee stock purchase plan shares

Debt financing costs

Payments related to tax withholding for stock-based compensation

Payment of contingent consideration

Cash dividends paid to shareholders

2 unchanged sentences

Effect of exchange rate changes on cash

Net (decrease) increase in cash, cash equivalents, and restricted cash

Net decrease in cash, cash equivalents, and restricted cash

Cash, cash equivalents , and restricted cash, beginning of period

4 unchanged sentences

Non-cash investing and financing activities:

Issuance of treasury stock for vested restricted stock awards

Issuance of treasury stock for vested restricted stock units

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

4 unchanged sentences

Information Services Group, Inc.

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

A trusted business partner to over 800 clients, including more than 75 of the top 100 enterprises in our markets, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth.

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

A trusted business partner to more than 900 clients, including more than 75 of the top 100 enterprises in our markets, ISG is committed to helping corporations, public sector organizations and service and technology providers achieve operational excellence and faster growth.

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

5 unchanged sentences

market intelligence and technology research and analysis.

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

Based in Stamford, Connecticut, ISG employs approximately 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data.

For more information, visit www.isg-one.com.

The information on or accessible through our website is not part of and is not incorporated by reference into this Quarterly Report on Form 10-Q, and the inclusion of our website address in this Quarterly Report on Form 10-Q is only for reference.

Our Company was founded in 2006 with the strategic vision to become a high-growth, leading provider of information-based advisory services.

We continue to believe that our vision will be realized through the acquisition, integration and successful operation of market leading brands within the data, analytics and advisory industry.

NOTE 2—BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to Form 10-Q and Article 10 of Regulation S-X.

In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are considered necessary for a fair statement of the financial position of the Company as of September 30, 2022 and the results of operations for the three and nine months ended September 30, 2022 and 2021 and the cash flows for the nine months ended September 30, 2022 and 2021.

The accompanying unaudited condensed consolidated financial statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to Form 10-Q and Article 10 of Regulation S-X.

In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are considered necessary for a fair statement of the financial position of the Company as of March 31, 2023 and the results of operations for the three months ended March 31, 2023 and 2022 and the cash flows for the three months ended March 31, 2023 and 2022.

The condensed consolidated balance sheet as of December 31, 2022 has been derived from the Company’s audited consolidated financial statements.

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

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

7 unchanged sentences

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.

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.

allowance for credit losses, useful lives of furniture, fixtures and equipment and definite lived intangible assets, depreciation expense, fair value

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities, and accrued interest approximated their fair values at September 30, 2022 and December 31, 2021 due to the short-term nature of these accounts.

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

assumptions in evaluating goodwill for impairment, income taxes and deferred tax asset valuation and the valuation of stock-based compensation.

Restricted Cash

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

The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities, and accrued interest approximated their fair values as of March 31, 2023 and December 31, 2022 due to the short-term nature of these accounts.

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

6 unchanged sentences

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

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(tabular amounts in thousands, except per share data)

The following tables summarize the assets and liabilities (as applicable) measured at fair value on a recurring basis at the dates indicated:

Basis of Fair Value Measurements

September 30, 2022

March 31, 2023

Cash equivalents

Contingent consideration (1)

Basis of Fair Value Measurements

2 unchanged sentences

Contingent consideration (1)

(1) Contingent consideration is included in “Accrued expenses and other current liabilities” as of December 31, 2021.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(continued)

(tabular amounts in thousands, except per share data)

The contingent consideration associated with the 2020 acquisition of Neuralify was fully paid in July 2022.

The following table represents the change in the contingent consideration liability during the nine months ended September 30, 2022:

Nine Months Ended

September 30,

(1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of March 31, 2023 and December 31, 2022.

The following table represents the change in the contingent consideration liability during the three months ended March 31, 2023:

Three Months Ended

Beginning Balance

Neuralify earnout adjustment (1)

Neuralify earnout payment

Accretion of contingent consideration

Ending Balance

(1) Neuralify earnout adjustment relates to a change in the achievement of a certain milestone specific to the acquisition.

The Company’s financial instruments include outstanding borrowings of $ 71.3 million at September 30, 2022 and $ 74.5 million at December 31, 2021, which are carried at amortized cost.

The Company’s financial instruments include outstanding borrowings of $ 79.2 million both as of March 31, 2023 and December 31, 2022, respectively, which are carried at amortized cost.

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

The fair value of the Company's outstanding borrowings is approximately $ 69.1 million and $ 73.6 million at September 30, 2022 and December 31, 2021, respectively.

The fair value of the Company’s outstanding borrowings was approximately $ 79.8 million and $ 76.5 million as of March 31, 2023 and December 31, 2022, respectively.

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

The incremental borrowing rate used to discount future cash flows is 5.3 % and 2.0 % at September 30, 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.

The incremental borrowing rate used to discount future cash flows was 6.5 % and 6.3 % as of March 31, 2023, and December 31, 2022, 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.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(tabular amounts in thousands, except per share data)

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.

In June 2016, the Financial Accounting Standards Board (FASB) issued new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable and contract assets, 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, which is not expected to have a material impact on the Company’s consolidated financial statements.

We adopted this standard using the modified retrospective approach with an effective date of January 1, 2023.

The Company recognized a cumulative-effect adjustment increasing accumulated deficit and increasing the allowance for credit losses by $ 0.1 million.

NOTE 4 — ACQUISITIONS

Neuralify Acquisition

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

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

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

In October 2021, the 18 -month period was extended six months to July 2022.

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

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

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”, is being depreciated over four years .

Change 4 Growth Acquisition

On October 31, 2022, a subsidiary of the Company executed an Asset Purchase Agreement with Change 4 Growth, LLC (“Change 4 Growth”) and consummated the acquisition of substantially all the assets, and assumed certain liabilities, of Change 4 Growth.

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 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 consideration transferred to acquire Change 4 Growth and the amounts of identified assets acquired, and liabilities assumed as of the agreement date:

Accrued working capital adjustment

ISG common stock

Contingent consideration

Total allocable purchase price

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

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

Contingent consideration

Total allocable purchase price

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

the closing date.

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

Accounts receivable

Contract assets

Accounts receivable and contract assets

Intangible assets

Accounts payable

Accounts payable and accrued expense

Contract liabilities

Net assets acquired

Agreemint Acquisition

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.

The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, were the inclusion of the 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 year ended December 31, 2022.

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

Purchase Price

Amortizable intangible assets:

Trademark and trade name

Customer relationships

Noncompete agreements

Total intangible assets

NOTE 5—REVENUE

4 unchanged sentences

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, not distinct.

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

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.

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

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 results in billed accounts receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities).

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.

8 unchanged sentences

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

September 30,

Contract assets

Contract liabilities

Revenue recognized for the three and nine months ended September 30, 2022 that was included in the contract liability balance at January 1, 2022 was $ 0.7 million and $ 6.4 million, respectively, and represented primarily revenue from our fixed fee and subscription contracts.

Revenue recognized for the three months ended March 31, 2023 that was included in the contract liability balance at January 1, 2023 was $ 3.5 million, and primarily represented revenue from our subscription contracts.

Remaining Performance Obligations

As of September 30, 2022, the Company had $ 123.4 million of remaining performance obligations, the majority of which are expected to be satisfied within the next twelve months.

As of March 31, 2023, the Company had $ 132.6 million of remaining performance obligations, the majority of which are expected to be satisfied within the next twelve months.

NOTE 6—NET INCOME PER COMMON SHARE

1 unchanged sentence

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

For both the three and nine months ended September 30, 2022, 0.0 million restricted stock units, respectively, have not been considered in the diluted earnings per share calculation, as the effect would be anti-dilutive.

For the three months ended March 31, 2023 and 2022, 0.1 million and 0.0 million restricted stock units, respectively, have not been considered in the diluted earnings per share calculation, as the effect would be anti-dilutive.

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

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

Three Months Ended September 30,

Nine Months Ended September 30,

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended

Weighted average common shares

5 unchanged sentences

NOTE 7—INCOME TAXES

The Company’s effective tax rate for the three and nine months ended September 30, 2022 was 18.0 % and 25.4 % based on pretax income of $ 6.8 million and $ 20.7 million, respectively.

The Company’s effective tax rate for the quarter ended September 30, 2022 was impacted by the earnings and losses in certain foreign jurisdictions and the impact of vesting of restricted stock units.

The Company’s effective tax rate for the three and nine months ended September 30, 2021 was 34.9 % and 27.7 %.

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

The Company’s effective tax rate for the three months ended March 31, 2023 and 2022 was 32.9 % and 31.9 % respectively, based on pretax income of $ 5.2 million and $ 7.2 million, respectively.

The Company’s effective tax rate for the quarter ended March 31, 2023 was impacted by the non-deductible expenses and earnings and losses in certain foreign jurisdictions and the impact of vesting of restricted stock units.

NOTE 8—COMMITMENTS AND CONTINGENCIES

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

All material liabilities of which management is aware are properly reflected in the financial statements at September 30, 2022 and December 31, 2021.

All material liabilities of which management is aware are properly reflected in the financial statements as of March 31, 2023 and December 31, 2022.

Change 4 Growth Contingent Consideration

As of March 31, 2023, 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 9—SEGMENT AND GEOGRAPHICAL INFORMATION

1 unchanged sentence

The Company operates principally in the Americas, Europe and Asia Pacific.

Geographical revenue information for the segment is as follows:

Three Months Ended

Nine Months Ended

September 30,

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

Geographical revenue information for the segment is as follows:

Three Months Ended

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

1 unchanged sentence

NOTE 10—FINANCING ARRANGEMENTS AND LONG-TERM DEBT

On March 10, 2020, the Company amended and restated its senior secured credit facility to include a $ 86.0 million term facility and to increase the revolving commitments per the revolving facility (as amended by that certain First Amendment to Credit Agreement, dated as of June 1, 2022, the “2020 Credit Agreement”) from $ 30.0 million to $ 54.0 million.

On February 22, 2023, the Company amended and restated its senior secured credit facility to increase the revolving commitments per the revolving facility (the “2023 Credit Agreement”) from $ 54.0 million to $ 140.0 million and eliminate its term loan.

The material terms under the 2023 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 revolving credit facility has a maturity date of February 22, 2028 (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 (as defined below) or (ii) Eurodollar Rate (adjusted for maximum reserves) as determined by the Administrative Agent, plus the applicable margin.

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

● The term loan is repayable in nineteen consecutive quarterly installments of $ 1,075,000 each 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 net proceeds from issuances of debt and equity by the Company and its subsidiaries and (ii) 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 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 $ 71.3 million and $ 74.5 million at September 30, 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 is approximately $ 69.1 million and $ 73.6 million at September 30, 2022 and December 31, 2021, respectively.

The fair values of debt have been

● 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) Term SOFR, plus 1.0 % ), plus the applicable margin (as defined below) or (ii) Term SOFR (which is the Term SOFR screen rate for the relevant interest period plus a credit spread adjustment of 0.10 % ) as determined by the Administrative Agent, plus the applicable margin.

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

Prior to the end of the first quarter-end following the closing of the credit facility, the applicable margin shall be a percentage per annum equal to 0.50 % for the revolving loans maintained as Base Rate loans or 1.50 % for the revolving loans maintained as Term SOFR loans.

● 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 dispositions 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 distributions and changes in line of business.

In addition, the Company is required to comply with a consolidated leverage ratio and consolidated interest coverage ratio.

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

estimated using a discounted cash flow analysis based on the Company's incremental borrowing rate for similar borrowing arrangements.

The incremental borrowing rate used to discount future cash flows is 5.3 % and 2.0 % at September 30, 2022 and December 31, 2021, respectively.

● 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 at both March 31, 2023 and December 31, 2022, 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 $ 79.8 million and $ 76.5 million as of March 31, 2023 and December 31, 2022, 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 6.5 % and 6.3 % as of March 31, 2023 and December 31, 2022, respectively.

As of September 30, 2022 and December 31, 2021, there were no outstanding borrowings under the revolver.

The Company is currently in compliance with its financial covenants.

NOTE 11—SUBSEQUENT EVENT

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 of the assets, and assumed certain liabilities, of Change 4 Growth, LLC.

The purchase price was comprised of $ 3.0 million of cash consideration paid at closing, $ 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 during the next 26 months , if certain financial targets are met.

NOTE 11—SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were available to be issued and has determined that there have been no events that have occurred that would require adjustments to the disclosures of the financial statements.

In May 2023, the Company announced it will pay a quarterly dividend of $ 0.045 per share of common stock.

The Company expects to pay a total cash dividend of $ 0.18 per share for the four quarters ending March 31, 2024.

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

What changed 10-Q

Item 1. Financial Statements