What changed in this filing

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Item 1. Financial Statements

2024-05-10 compared with 2023-11-03 · 126 added, 125 removed, 254 unchanged (50% of the section changed)

3 unchanged sentences

(In thousands, except par value)

September 30,

Current assets

11 unchanged sentences

Accounts payable

Current maturities of long-term debt

Contract liabilities

12 unchanged sentences

100,000 shares authorized;

49,472 shares issued and 48,808 outstanding at September 30, 2023 and 49,472 shares issued and 48,300 outstanding at December 31, 2022

49,472 shares issued and 48,329 outstanding at March 31, 2024 and 49,472 shares issued and 48,653 outstanding at December 31, 2023

Additional paid-in capital

6 unchanged sentences

INFORMATION SERVICES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

Operating expenses

2 unchanged sentences

Depreciation and amortization

Operating income

Operating (loss) income

Interest income

Interest expense

Foreign currency transaction (loss) gain

Income before taxes

Income tax provision

Foreign currency transaction loss

(Loss) income before taxes

Income tax (benefit) provision

Net (loss) income

Weighted average shares outstanding:

Earnings per share:

Comprehensive income:

Foreign currency translation loss, net of tax benefit of $ 128 , $ 629 , $ 86 and $ 1,515 , respectively

Comprehensive income

(Loss) earnings per share:

Comprehensive (loss) income:

Net (loss) income

Foreign currency translation (loss) gain, net of tax expense of $( 50 ), and $( 97 ), respectively

Comprehensive (loss) income

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

INFORMATION SERVICES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

1 unchanged sentence

Stockholders’

Balance June 30, 2023

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 ($ 0.045 per share)

Stock based compensation

Balance September 30, 2023

Comprehensive

Stockholders’

Balance December 31, 2023

Other comprehensive loss

Impact of change in accounting policy (Note 3)

Treasury shares repurchased

4 unchanged sentences

Stock based compensation

Balance September 30, 2023

INFORMATION SERVICES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands)

Comprehensive

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

Balance March 31, 2024

Comprehensive

1 unchanged sentence

Balance December 31, 2022

Other comprehensive loss

Other comprehensive gain

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

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

INFORMATION SERVICES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

Net (loss) income

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

1 unchanged sentence

Amortization of intangible assets

Deferred tax benefit from stock issuances

Deferred tax (benefit) expense from stock issuances

Write-off of deferred financing costs

3 unchanged sentences

Provisions for credit losses

Deferred tax provision

Deferred tax (benefit) provision

Changes in operating assets and liabilities:

4 unchanged sentences

Accrued expenses and other liabilities

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities

4 unchanged sentences

Repayment of outstanding debt (Note 10)

Principal payments on borrowings

Proceeds from issuance of employee stock purchase plan shares

1 unchanged sentence

Payments related to tax withholding for stock-based compensation

Payment of contingent consideration

Cash dividends paid to shareholders

18 unchanged sentences

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;

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

sourcing advisory;

4 unchanged sentences

market intelligence and technology research and analysis.

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.

Based in Stamford, Connecticut, ISG employs over 1,500 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.

The content on our website is available for informational purposes only.

It should not be relied upon for investment purposes, nor is it incorporated by reference into this Form 10-Q or any other filings.

The 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, 2023 and for the three and nine months ended September 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 September 30, 2023, the results of operations for the three and nine months ended September 30, 2023 and 2022 and the cash flows for the nine months ended September 30, 2023 and 2022.

The accompanying unaudited condensed consolidated financial statements 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, 2024, the results of operations for the three months ended March 31, 2024 and 2023 and the cash flows for the three months ended March 31, 2024 and 2023.

The condensed consolidated balance sheet as of December 31, 2023 has been derived from the Company’s audited consolidated financial statements.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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”).

Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the financial statements for the fiscal year ended December 31, 2023, which are included in the Company’s 2023 Annual Report on Form 10-K filed with the SEC.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(tabular amounts in thousands, except per share data)

NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5 unchanged sentences

Estimates are also used for but are not limited to:

allowance for credit

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(tabular amounts in thousands, except per share data)

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.

allowance for credit 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 September 30, 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 March 31, 2024 and December 31, 2023 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

September 30, 2023

March 31, 2024

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 September 30, 2023 and December 31, 2022.

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

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, 2024 and December 31, 2023.

The following table represents the change in the contingent consideration liability during the three months ended March 31, 2024:

Three 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 September 30, 2023, and December 31, 2022, which are carried at amortized cost.

The Company’s financial instruments include outstanding borrowings of approximately $ 74.2 million and $ 79.2 million as of March 31, 2024, and December 31, 2023, 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 $ 79.9 million and $ 76.5 million as of September 30, 2023 and December 31, 2022, respectively.

The fair value of the Company’s outstanding borrowings was approximately $ 74.8 million and $ 79.8 million as of March 31, 2024 and December 31, 2023, 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 7.0 % and 6.3 % as of September 30, 2023 and December 31, 2022, respectively.

The incremental borrowing rate used to discount future cash flows was 7.2 % and 6.9 % as of March 31, 2024 and December 31, 2023, 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.

In the third quarter of 2023, the Company borrowed $ 5.0 million against the revolver and subsequently repaid $ 5.0 million during the quarter.

The Company is currently in compliance with its financial covenants.

INFORMATION SERVICES GROUP, INC.

2 unchanged sentences

Recently Issued Accounting Pronouncements

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.

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.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued updated guidance to enhance the transparency of income tax disclosure by requiring disaggregated information about an entity’s effective tax rate reconciliation, as well as information on taxes paid.

This updated guidance is effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact on our consolidated financial statements.

Segment Reporting

In November 2023, the FASB issued amended guidance on segment reporting to improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analysis.

This amended guidance is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

The Company is currently evaluating the impact on our consolidated financial statements.

NOTE 4 — ACQUISITIONS

Ventana Research Acquisition

On October 31, 2023, a subsidiary of the Company executed an Asset Purchase Agreement with Ventana Research, Inc.

(“Ventana Research”) and consummated the acquisition of substantially all assets, and assumed certain liabilities, of Ventana Research.

The purchase price was comprised of $ 1.0 million of cash consideration paid at closing.

Ventana Research 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 $ 1.7 million.

Please see Note 8—Commitments and Contingencies—Ventana Research Contingent Consideration for more.

The following table summarizes the preliminary consideration transferred to acquire Ventana Research, Inc.

and the amount of identified assets acquired, and liabilities assumed, as of the agreement date:

Contingent consideration

Total allocable purchase price

The 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 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

Intangible assets

Contract liabilities

Net assets acquired

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(tabular amounts in thousands, except per share data)

The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, were the inclusion of the legacy Ventana Research workforce and allowing the Company to penetrate an entirely new market sector for software technology vendors.

Costs associated with this acquisition are included in the selling, general and administrative expense in the Consolidated Statements of Income and Comprehensive Income and totaled $ 0.1 million during the year ended December 31, 2023.

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

Purchase Price

Amortizable intangible assets:

Trademark and trade name

Customer relationships

Noncompete agreements

Total intangible assets

Change 4 Growth Acquisition

2 unchanged sentences

At the agreement date, the Company estimated such earn-out payment would be $ 5.6 million.

Please see Note 8—Commitments and Contingencies—Change 4 Growth Contingent Consideration for more.

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:

4 unchanged sentences

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 the fair values as of the closing date.

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

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

Accounts receivable and contract assets

3 unchanged sentences

Net assets acquired

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.

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

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:

7 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 the contract type, are sometimes capable of being distinct.

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.

2 unchanged sentences

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

For contracts with multiple performance obligations, we allocate 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.

We establish 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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(tabular amounts in thousands, except per share data)

Contract Balances

10 unchanged sentences

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

INFORMATION SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(tabular amounts in thousands, except per share data)

September 30,

Contract assets

Contract liabilities

Revenue recognized for the three and nine months ended September 30, 2023 that was included in the contract liability balance at January 1, 2023 was $ 0.6 million and $ 5.9 million, respectively, and primarily represented revenue from our subscription contracts.

Revenue recognized for the three months ended March 31, 2024 that was included in the contract liability balance at January 1, 2024 was $ 5.7 million, primarily representing revenue from our subscription contracts.

Remaining Performance Obligations

As of September 30, 2023, the Company had $ 109.2 million of remaining performance obligations, the majority of which are expected to be satisfied within the next twelve months.

As of March 31, 2024, the Company had $ 112.5 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 and nine months ended September 30, 2023, 0.5 million and 1.2 million restricted stock units, respectively, and for both the three and nine months ended September 30, 2022, 0.0 million restricted stock units, 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, 2024 and 2023, 4.2 million and 0.1 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.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(tabular amounts in thousands, except per share data)

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net (loss) income

Weighted average common shares

Earnings per share

(Loss) earnings per share

Net (loss) income

Basic weighted average common shares

1 unchanged sentence

Diluted weighted average common shares

Diluted earnings per share

Diluted (loss) earnings per share

NOTE 7—INCOME TAXES

The Company’s effective tax rate for the three and nine months ended September 30, 2023 was 33.2 % and 34.1 %, respectively, based on pretax income of $ 4.8 million and $ 13.7 million, respectively.

The Company’s effective tax rate for the quarter ended September 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 nine

The Company’s effective tax rate for the three months ended March 31, 2024 and 2023 was 6.4 % and 32.9 %, respectively, based on pretax loss and income of $ 3.6 million and $ 5.2 million, respectively.

The Company’s effective tax rate for the quarter ended March 31, 2024 was impacted by non-deductible expenses and earnings and losses in certain foreign jurisdictions.

The Company’s provision (benefit) for income taxes during interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate for the full year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.

When projected “ordinary” income or loss for the full year is close to breakeven, the estimated annual effective tax rate can become volatile due to small changes, resulting in an unreliable estimate of tax for the reporting period.

In such instances, the Company will calculate the interim income tax provision or benefit using a discrete effective tax rate method, as allowed by ASC 740-270 “Income Taxes, Interim Reporting,” based solely on the year-to-date pretax income or loss as adjusted for permanent differences on a pro rata basis.

For the first quarter ended March 31, 2024, we utilized a discrete effective tax rate method to calculate taxes due to circumstances described above where the estimated annual effective tax rate did not provide a reliable estimate.

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, 2024 and December 31, 2023.

Ventana Research Contingent Consideration

As of March 31, 2024, the Company has recorded a liability of $ 1.7 million representing the estimated fair value of contingent consideration related to the acquisition of Ventana Research, of which $ 0.2 million was classified as current and included in accrued expenses on the consolidated balance sheet.

The Company paid $ 0.2 million in April 2024 related to 2023 performance.

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

months ended September 30, 2022 was 18.0 % and 25.4 %, 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 September 30, 2023 and December 31, 2022.

Change 4 Growth Contingent Consideration

As of September 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 expenses 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.

As of March 31, 2024, 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, of which $ 2.2 million was classified as current and included in accrued expenses on the consolidated balance sheet.

The Company paid $ 2.2 million in April 2024, which was comprised of $ 1.5 million of cash consideration and $ 0.7 million of shares of ISG common stock related to 2023 performance.

NOTE 9—SEGMENT AND GEOGRAPHICAL INFORMATION

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

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

1 unchanged sentence

NOTE 10—FINANCING ARRANGEMENTS AND LONG-TERM DEBT

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.

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

The material terms under the 2023 Credit Agreement are as follows.

2 unchanged sentences

● 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) 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,

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

● 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) 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.

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.

During the first quarter of 2024, the applicable margin was increased to a percentage equal to 0.75 % for the revolving loans maintained as Base Rate loans or 1.75 % 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.

1 unchanged sentence

● 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 both as of September 30, 2023 and December 31, 2022, which are carried at amortized cost.

The Company’s financial statements include outstanding borrowings of approximately $ 74.2 million and $ 79.2 million as of March 31, 2024 and December 31, 2023, 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 $ 79.9 million and $ 76.5 million as of September 30, 2023 and December 31, 2022, respectively.

The fair value of the Company’s outstanding borrowings was approximately $ 74.8 million and $ 79.8 million as of March 31, 2024 and December 31, 2023, 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 7.0 % and 6.3 % as of September 30, 2023 and December 31, 2022, respectively.

The incremental borrowing rate used to discount future cash flows was 7.2 % and 6.9 % as of March 31, 2024 and December 31, 2023, respectively.

In the third quarter of 2023, the Company borrowed $ 5.0 million against the revolver and subsequently repaid $ 5.0 million during the quarter.

During the three months ended March 31, 2024, the Company repaid $ 5.0 million of the revolver loan.

The Company is currently in compliance with its financial covenants.

NOTE 11—SUBSEQUENT EVENTS

On October 31, 2023, a subsidiary of the Company executed an Asset Purchase Agreement with Ventana Research, Inc.

and consummated the acquisition of substantially all assets, and assumed certain liabilities, of Ventana Research, Inc.

The purchase price was comprised of $ 1.0 million of cash consideration paid at closing.

Ventana Research, Inc.

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.

On November 1, 2023, the Board approved a fourth-quarter dividend of $ 0.045 per share, payable December 20, 2023, to shareholders of record as of December 5, 2023.

On May 7, 2024, the Company’s Board of Directors (the “Board”) approved a second-quarter dividend of $ 0.045 per share, payable July 5, 2024, to shareholders of record as of June 14, 2024.

The dividends are accounted for as a decrease to Stockholders’ Equity.

All future dividends will be subject to the Board’s approval.

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