What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 70 added, 39 removed, 301 unchanged (27% of the section changed)

30 unchanged sentences

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

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

49,472 shares issued and 48,490 outstanding at June 30, 2023 and 49,472 shares issued and 48,300 outstanding at December 31, 2022

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Operating expenses

11 unchanged sentences

Comprehensive income:

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

Foreign currency translation (loss) gain, net of tax benefit (expense) of $ 56 , $ 717 , $( 42 ) , and $ 886 , respectively

Comprehensive income

5 unchanged sentences

Stockholders’

Balance December 31, 2022

Balance March 31, 2023

Other comprehensive income

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 ($ 0.045 per share)

Stock based compensation

Balance June 30, 2023

Comprehensive

Stockholders’

Balance December 31, 2022

Other comprehensive loss

Impact of change in accounting policy (Note 3)

5 unchanged sentences

Stock based compensation

Balance June 30, 2023

INFORMATION SERVICES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands)

Comprehensive

Stockholders’

Balance March 31, 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

Dividend Payable

Cash dividends paid to shareholders ($ 0.04 per share)

Stock based compensation

Balance June 30, 2022

Comprehensive

6 unchanged sentences

Accrued dividends on unvested shares

Dividends payable

Cash dividends paid to shareholders

Cash dividends paid to shareholders ($ 0.07 per share)

Stock based compensation

Balance March 31, 2022

Balance June 30, 2022

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

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

8 unchanged sentences

Provisions for credit losses

Deferred tax (benefit) provision

Deferred tax provision

Changes in operating assets and liabilities:

15 unchanged sentences

Payments related to tax withholding for stock-based compensation

Payment of contingent consideration

Cash dividends paid to shareholders

31 unchanged sentences

NOTE 2—BASIS OF PRESENTATION

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 accompanying unaudited condensed consolidated financial statements as of June 30, 2023 and for the three and six months ended June 30, 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 June 30, 2023, the results of operations for the three and six months ended June 30, 2023 and 2022 and the cash flows for the six months ended June 30, 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 months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three and six months ended June 30, 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”).

6 unchanged sentences

Numerous internal and external factors can affect estimates.

Estimates are also used for but not limited to:

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

Estimates are also used for but are not limited to:

allowance for credit

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

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

losses, 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.

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.

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 June 30, 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.

12 unchanged sentences

Basis of Fair Value Measurements

March 31, 2023

June 30, 2023

Cash equivalents

4 unchanged sentences

Contingent consideration (1)

(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

(1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of June 30, 2023 and December 31, 2022.

The following table represents the change in the contingent consideration liability during the six months ended June 30, 2023:

Six Months Ended

Beginning Balance

Change 4 Growth contingent consideration payment

Accretion of contingent consideration

Ending Balance

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 Company’s financial instruments include outstanding borrowings of $ 79.2 million both as of June 30, 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 value of the Company’s outstanding borrowings was approximately $ 79.9 million and $ 76.5 million as of June 30, 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.

The incremental borrowing rate used to discount future cash flows was 6.9 % and 6.3 % as of June 30, 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.

10 unchanged sentences

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:

We determined the transaction to be an asset acquisition as substantially all the fair value of the gross assets acquired was concentrated in a single identifiable asset:

the software and related intellectual property rights.

10 unchanged sentences

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

This acquisition 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 the closing

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

the closing date.

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

15 unchanged sentences

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.

We enter into contracts that can include various combinations of services, which, depending on the contract type, are sometimes capable of being distinct.

If services are determined to be distinct, they are accounted for as separate performance obligations.

23 unchanged sentences

Contract liabilities

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.

Revenue recognized for the three and six months ended June 30, 2023 that was included in the contract liability balance at January 1, 2023 was $ 1.8 million, and $ 5.3 million respectively, and primarily represented revenue from our subscription contracts.

Remaining Performance Obligations

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.

As of June 30, 2023, the Company had $ 126.0 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 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.

For the three and six months ended June 30, 2023 and 2022, 0.6 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.

2 unchanged sentences

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

Three Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

Weighted average common shares

5 unchanged sentences

NOTE 7—INCOME TAXES

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.

The Company’s effective tax rate for the three and six months ended June 30, 2023 was 37.1 % and 34.7 %, respectively, based on pretax income of $ 3.7 million and $ 8.9 million, respectively.

The Company’s effective tax rate for the quarter ended June 30, 2023 was impacted by non-deductible expenses and earnings and losses in certain foreign jurisdictions and the impact of the vesting of restricted stock units.

The Company’s effective tax rate for the three and six months ended June 30, 2022 was 25.7 % and 28.9 %, respectively.

The difference is primarily due to the impact of earnings and losses in certain foreign jurisdictions and the impact of the 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 as of March 31, 2023 and December 31, 2022.

All material liabilities of which management is aware are properly reflected in the financial statements as of June 30, 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.

As of June 30, 2023, the Company has recorded a liability of $ 4.2 million representing the estimated fair value of contingent consideration related to the acquisition of Change 4 Growth, which is classified as “Accrued expense and other current liabilities” and “Other liabilities” on the consolidated balance sheet.

In April 2023, the Company made a contingent consideration payment of $ 1.5 million.

NOTE 9—SEGMENT AND GEOGRAPHICAL INFORMATION

6 unchanged sentences

Three Months Ended

Six Months Ended

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

15 unchanged sentences

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

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

The Company’s financial statements include outstanding borrowings of $ 79.2 million both as of June 30, 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 value of the Company’s outstanding borrowings was approximately $ 79.9 million and $ 76.5 million as of June 30, 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.

The incremental borrowing rate used to discount future cash flows was 6.9 % and 6.3 % as of June 30, 2023 and December 31, 2022, respectively.

2 unchanged sentences

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.

On August 1, 2023, the Company’s Board of Directors approved (1) a new share repurchase authorization for an additional $ 25.0 million and (2) a third-quarter dividend of $ 0.045 per share, payable September 28, 2023, to shareholders of record as of September 6, 2023.

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