What changed in this filing

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Item 9A. Controls and Procedures

2025-03-13 compared with 2024-03-08 · 199 added, 169 removed, 861 unchanged (30% of the section changed)

32 unchanged sentences

Executive Compensation

The information required hereunder is incorporated by reference from the sections of our Proxy Statement to be filed in connection with our 2024 Annual Meeting of Stockholders under the captions “Corporate Governance,” “Compensation Committee Report,” “Compensation Discussion and Analysis,”, “Summary Compensation Table” Grants of Plan-Based Awards - Fiscal 2023,” “Outstanding Equity Awards at 2023 Fiscal Year-End,” “Stock Vested During 2023,” “Potential Payments Upon Termination or Change in Control,” “Director Compensation,” “CEO Pay Ratio” and “Pay Versus Performance.

The information required hereunder is incorporated by reference from the sections of our Proxy Statement to be filed in connection with our 2025 Annual Meeting of Stockholders under the captions “Corporate Governance,” “Executive Compensation,” “Summary Compensation Table,” “Outstanding Equity Awards at 2024 Fiscal Year-End,” “Director Compensation” and “Equity Grant Procedures.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table lists information regarding outstanding options and shares reserved for future issuance under our Amended and Restated 2007 Equity and Incentive Award Plan (the “Incentive Plan”) and our Amended and Restated Employee Stock Purchase Plan (the “ESPP”) as of December 31, 2023.

We have not issued any shares of our common stock to employees as compensation under a plan that has not been approved by our stockholders.

Equity Compensation Plan Information

Number of Securities

Remaining Available

Exercise Price

for Future Issuance

of Outstanding

under Equity Compensation

Plans (Excluding

Options, Warrants

Securities Reflected in

Plan Category

and Rights (1)

Column (a) (2)(3)

Approved by Stockholders

Not Approved by Stockholders

Of the 3,921,366 shares listed in this column, none are stock options issued under the Incentive Plan, 3,921,366 shares are restricted stock units issued under the Incentive Plan, and none are options issued during the current offering period under the ESPP.

The weighted-average exercise price includes outstanding options and RSUs, treating RSUs as stock awards with an exercise price of zero.

Includes 640,318 shares available for future issuance under the ESPP.

Also includes 2,231,197 shares that were available for grant under the Incentive Plan as options and SARs and also for restricted stock, RSUs or other awards that could provide to the grantee an opportunity to earn the full value of an underlying share (in other words, such earning opportunity is not limited to the appreciation in value of our stock following the grant of the award).

The other information required hereunder is incorporated by reference from the sections of our Proxy Statement to be filed in connection with our 2024 Annual Meeting of Stockholders under the caption “Security Ownership of Certain Beneficial Owners.”

The information required hereunder is incorporated by reference from the sections of our Proxy Statement to be filed in connection with our 2025 Annual Meeting of Stockholders under the captions “Equity Compensation Plan Information Table” and “Security Ownership of Certain Beneficial Owners.”

Certain Relationships and Related Transactions, and Director Independence

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(a)(3) Exhibits:

We hereby file as part of this Annual Report on Form 10−K the Exhibits listed in the attached Exhibit Index.

The information called for by this Item is incorporated by reference from the Exhibit Index included in this Annual Report on Form 10-K.

Form 10-K Summary

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We have audited the accompanying consolidated balance sheets of Information Services Group, Inc.

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income and comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income and comprehensive income, of stockholders’ equity and of cash flows for the years then ended, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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Accounts payable

Current maturities of long-term debt

Contract liabilities

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Interest expense

Foreign currency transaction (loss) gain

Gain on the sale of business

Foreign currency transaction loss

Income before taxes

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Comprehensive income:

Foreign currency translation gain (loss), net of tax expense (benefit) of $ 212 , ($ 859 ) and ($ 724 ), respectively

Foreign currency translation (loss) gain, net of tax (benefit) expense of $( 331 ), and $ 212 , respectively

Comprehensive income:

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Balance December 31, 2022

Other comprehensive loss

Other comprehensive gain

Impact of change in accounting policy (Note 2)

Treasury shares repurchased

Proceeds from issuance of ESPP shares

Issuance of treasury shares

Issuance of common stock for RSUs vested

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Issuance of common stock for RSUs vested

Issuance of common stock for Change 4 Growth acquisition

Accrued dividends on unvested shares

Cash dividends paid to shareholders ($ 0.15 per share)

Stock based compensation

Balance December 31, 2022

Other comprehensive gain

Impact of change in accounting policy (Note 3)

Treasury shares repurchased

Proceeds from issuance of ESPP shares

Issuance of common stock for RSUs vested

Issuance of common stock for Change 4 Growth

Accrued dividends on unvested shares

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Cash flows from operating activities

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

Adjustments to reconcile net (loss) 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

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Change in fair value of contingent consideration

Gain on the sale on business

Provisions for credit losses

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Cash flows from investing activities

Change 4 Growth acquisition (Note 4)

Divestiture, net of cash disposed (Note 5)

Ventana Research acquisition (Note 4)

Purchase of furniture, fixtures and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

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Repayment of outstanding debt (Note 13)

Principal payments on borrowings

Proceeds from issuance of employee stock purchase plan shares

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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

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Issuance of treasury stock for vested restricted stock units

Additional proceeds received for disposal on sale of business (Note 5)

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

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Information Services Group, Inc.

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

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

sourcing advisory;

managed governance and risk services;

network carrier services;

technology strategy and operations design;

change management;

market intelligence and technology research and analysis.

(the “Company” or “ISG”) is a global AI-centered technology research and advisory firm.

A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth.

The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,300 professionals worldwide working together to help clients maximize the value of their technology investments .

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to pay fees or for disputes that affect its ability to fully collect billed accounts receivable.

The allowance for these risks is prepared by reviewing the status of all accounts and recording reserves on a specific identification method based on previous experiences and historical bad debts.

However, our actual experience may vary from these estimates.

If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay their invoices, we

The allowance for these risks is prepared by reviewing the status of all accounts and recording reserves on a

INFORMATION SERVICES GROUP, INC.

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(tabular amounts in thousands, except per share data)

may need to record additional allowances or write-offs in future periods.

specific identification method based on previous experiences and historical bad debts.

However, our actual experience may vary from these estimates.

If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay their invoices, we may need to record additional allowances or write-offs in future periods.

To the extent the provision relates to a client’s inability or unwillingness to make required payments, the provision is recorded as bad debt expense, which is classified within selling, general and administrative expense in the accompanying consolidated statement of comprehensive income.

Historically, the Company’s bad debt reserves and write-offs have not been significant.

The provision for unbilled services is recorded as a bad debt expense to the extent the provision relates to fee adjustments and other discretionary pricing adjustments.

Historically, the Company’s unbilled receivable reserves and write-offs have not been significant.

The provision for unbilled services is recorded as a bad debt expense however, to the extent an adjustment to unbilled relates to fee adjustments and other discretionary pricing adjustments it is recorded to revenue.

During the fourth quarter of 2023, a client that had engaged us for two multi-year projects, which previously commenced in 2021 and 2022, failed to make payments as per the contracted payment schedule and we ceased performing services under the agreements.

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The specific reserve recorded as of December 31, 2024 represents management's best estimate of the probable amount of collection related to the outstanding amounts under these agreements.

In the event that collection efforts prove unsuccessful, the Company may seek payment through other means, including legal action.

We are currently pursuing legal action against the former client, which has resulted in a favorable preliminary judgment for ISG that is subject to appeal by the former client.

Actual collections from the client may differ from the Company's estimate.

We are currently engaged in litigation with a client over a disputed accounts receivable balance for services rendered and mediation arrangement are currently being explored.

As we believe the balance of approximately $ 4.7 million is collectible, we have not recorded a reserve.

The Company will continue to reassess the need for a reserve in future periods.

Prepaid Expenses and Other Current Assets

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They also require that costs related to the preliminary project stage, data conversion and post implementation/operation stage of an internal-use software development project be expensed as incurred.

During the years ended December 31, 2023, 2022 and 2021 the Company capitalized $ 1.7 million, $ 1.7 million and $ 0.8 million, respectively, of costs associated with system and website development.

During the years ended December 31, 2024 and 2023 the Company capitalized $ 3.2 million and $ 1.7 million, respectively, of costs associated with system and website development.

Our goodwill represents the excess of the cost of businesses acquired over the fair value of the net assets acquired at the date of acquisition.

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This test is performed by us during our fourth fiscal quarter or more frequently if we believe impairment indicators are present.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

A qualitative assessment is performed to determine whether the existence of events or circumstances leads to a determination that it is more likely than not the fair value of the reporting unit is less than its carrying amount.

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Subsequent increases in value are not recognized in the financial statements.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

There was no impairment of goodwill during the years ended December 31, 2024 and 2023.

There were no indicators identified in 2023, 2022 or 2021 that would suggest that it is more likely than not that the Company’s reporting unit is impaired.

There were no indicators identified in 2024 or 2023 that would suggest that it was more likely than not that the Company’s reporting unit was impaired.

Long-Lived Assets

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Deferred issuance costs are classified as a direct deduction to the long-term debt in the accompanying consolidated balance sheet.

Amortization of debt issuance costs is included in interest expense and totaled $ 0.2 million, $ 0.3 million and $ 0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Amortization of debt issuance costs is included in interest expense and totaled $ 0.2 million in each of the years ended December 31, 2024, and 2023.

Revenue Recognition

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The contracted amount used in this calculation typically excludes the amount the client pays for reimbursable expenses.

There are situations where the number of hours to complete projects may exceed our original estimate as a result of an increase in project scope or unforeseen events.

The results of any revisions in these estimates are reflected in the period in which they become known.

For managed service implementation contracts, revenue is recognized over time as a percentage of hours incurred to date as compared to the total expected hours of the implementation, consistent with the transfer of control to the customer.

For ongoing managed services contract, revenue is recognized over time, consistent with the weekly or monthly fee specified within such arrangements.

There are situations where the number of hours to complete projects may exceed our original estimate as a

INFORMATION SERVICES GROUP, INC.

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(tabular amounts in thousands, except per share data)

result of an increase in project scope or unforeseen events.

The results of any revisions in these estimates are reflected in the period in which they become known.

For ongoing managed services contract, revenue is recognized over time, consistent with the weekly or monthly fee specified within such arrangements.

We also derive revenues based on negotiating reductions in network and software costs of companies with the entity’s related service providers and providing other services such as audits of network and communication expenses and consultation for network architecture.

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We also enter into arrangements for the sale of automation software licenses and related delivery of consulting or implementation services at the same time or within close proximity to one another.

Such software-related performance obligations include the sale of on-premise software, hybrid and software-as-a-service licenses, as well as other software-related services.

Such software-related performance obligations include the sale of on-premises software, hybrid and software-as-a-service licenses, as well as other software-related services.

Revenue associated with the software performance obligation is primarily recognized at the point at which the software is installed or access is granted.

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Non-reimbursable amounts are expensed as incurred.

Reimbursable expenditures totaled $ 1.5 million $ 0.8 million and $ 0.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The increase was attributable to pandemic-related travel restrictions being lifted and attending more in person meetings with clients to drive revenue.

Reimbursable expenditures totaled $ 1.6 million and $ 1.5 million for the years ended December 31, 2024 and 2023, respectively.

The increase was attributable to more in person meetings with clients to drive revenue when compared to prior year.

Direct Costs and Expenses for Advisors

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We grant restricted stock units with a fair value that is determined based on the closing price of our common stock on the date of grant.

Such grants generally vest ratably over a two -to- four - year period for employees and a three-year period for directors.

Such grants generally vest ratably over a one -to- four - year period for employees and a three-year period for directors.

Stock-based compensation expense is recognized ratably over the applicable service period.

We follow the provisions of accounting and disclosure requirements for share-based payments, including the measurement and recognition of all share-based compensation under the fair value method.

INFORMATION SERVICES GROUP, INC.

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(tabular amounts in thousands, except per share data)

We follow the provisions of accounting and disclosure requirements for share-based payments, including the measurement and recognition of all share-based compensation under the fair value method.

Concentration of Credit Risk

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Treasury Stock

The Company makes treasury stock purchases in the open market pursuant to the share repurchase program, which was most recently approved by the Board of Directors on August 1, 2023.

Treasury stock is recorded on the consolidated balance sheet at cost as a reduction of stockholders’ equity.

The Company makes treasury stock purchases in the open market pursuant to its share repurchase program, which was most recently approved by the Board of Directors on August 1, 2023.

Treasury stock is recorded on the accompanying Consolidated Balance Sheets at cost as a reduction of stockholders’ equity.

Shares are released from Treasury at original cost on a first-in, first-out basis, with any gain or loss on the sale reflected as an adjustment to additional paid-in capital.

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Revenue and expense items are translated at average exchange rates for the reporting period.

Resulting translation adjustments are included in the accompanying statement of comprehensive income and accompanying statement of stockholders’ equity as a component of Accumulated Other Comprehensive Loss .

Resulting translation adjustments are included in the accompanying Consolidated Statement of income and Comprehensive Income and Consolidated Statement of Stockholders’ Equity as a component of Accumulated Other Comprehensive Loss .

The functional currency of the Company and its subsidiaries is the respective local currency.

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

These cash outflow projections have then been discounted using a rate of 4.9 % and 2.5 % for December 31, 2023, and 2022, respectively.

These cash outflow projections have then been discounted using a rate of 4.9 % for both December 31, 2024 and 2023, respectively.

The following table represents the change in the contingent consideration liability during the years ended December 31, 2024 and 2023:

Beginning Balance

Neuralify earnout adjustment (1)

Neuralify earnout payment

Change 4 Growth earnout adjustment (1)

Change 4 Growth contingent consideration payment

Change 4 Growth contingent consideration accrued

Ventana contingent consideration accrued

Ventana earnout adjustment (1)

Ventana contingent consideration 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.

(1) The Change 4 Growth and Ventana earnout adjustment relate to the expected target achievement not being met for certain milestones specific to the respective acquisitions.

INFORMATION SERVICES GROUP, INC.

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(tabular amounts in thousands, except per share data)

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

The Company’s financial statements include outstanding borrowings of $ 59.2 million as of December 31, 2024 and $ 79.2 million as of December 31, 2023, which are carried at amortized cost.

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

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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 that quarter.

In 2024, the Company borrowed $ 28.0 million and subsequently repaid $ 48.0 million of the outstanding balance on its revolving credit facility.

The Company is currently in compliance with its financial covenants.

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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.

In June 2016, the Financial Accounting Standards Board (the “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.

1 unchanged sentence

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

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 analyses.

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

The Company is a single reportable segment entity.

We adopted this standard by disclosing our services as a single reportable segment entity.

Refer to Note 18 for more details.

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 its consolidated financial statements.

Income Statement Disaggregation

In November 2024, the FASB issued updated guidance ASU 2024-03, to improve the disaggregation of income statement expenses.

This guidance requires additional disclosure of certain amounts included in the expense captions presented on the statement of operations as well as disclosures about selling expenses.

The ASU is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

Early adoption is

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

permitted for annual financial statements that have not yet been issued.

The Company is in the process of assessing the impact the adoption of this guidance will have on the Company’s financial statement disclosures.

NOTE 3—REVENUE

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This may be one single amount covering the whole engagement or several amounts for various phases, functions or milestones.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

billing occurs subsequent to revenue recognition, resulting in contract assets.

Generally, billing occurs subsequent to revenue recognition, resulting in contract assets.

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

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Contract liabilities

Non-current contract assets of $ 2.7 million as of December 31, 2024 and $ 4.4 million as of December 31, 2023, are included in “Other assets” on the Consolidated Balance Sheet.

Revenue recognized for the year ended December 31, 2024 that was included in the contract liability balance at January 1, 2024 was $ 8.6 million and represented primarily revenue from our fixed-fee, research, and subscription contracts.

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As of December 31, 2024, the Company had $ 109.2 million of remaining performance obligations, the majority of which are expected to be satisfied within the next year.

Out-of-Period Adjustment

In conjunction with the Company’s close process for the second quarter of 2024, management identified a $ 0.5 million error related to revenue incorrectly recognized during the third quarter of 2022.

Accordingly, the Company recorded a $ 0.5 million adjustment in the

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

current period to reduce revenue.

Management evaluated the pre-tax impact of this error of $ 0.5 million on the Company’s previously reported interim and annual financial statement for Q3 2022 and full year 2022 consolidated financial statements and determined that the impact of this misstatement is not material to the consolidated financial statements of the current annual period or for any prior quarterly or annual periods.

NOTE 4 — ACQUISITION

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At the agreement date, the Company estimated such earn-out payment would be $ 1.7 million.

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:

The following table summarizes the final consideration transferred to acquire Ventana Research and the amount of identified assets acquired, and liabilities assumed, as of the agreement date:

Contingent consideration

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software technology vendors.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(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 $ 0.1 million during the year ended December 31, 2023.

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Total intangible assets

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

The Consolidated Statement of Income and Comprehensive Income includes revenue from the Ventana Research acquisition subsequent to the closing.

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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.

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 the right for Change 4 Growth 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.

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The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, were the inclusion of legacy Change 4 Growth workforce and associated organizational change management expertise to enhance and expand the offerings of the ISG Enterprise Change service line.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

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Total intangible assets

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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The Consolidated Statement of Income and Comprehensive Income includes revenue from the Change 4 Growth acquisition subsequent to the closing.

Had the acquisition occurred as of January 1, 2022, approximately $ 7.0 million of revenue would have been recognized.

NOTE 5—DIVESTITURES

On October 1, 2024, the Company completed the sale of its Automation business line to UST Global Inc for $ 27 million in an all-cash transaction, of which $ 20 million was paid in cash at closing and $ 7 million was placed in escrow, with $ 4 million of the escrowed amount being released within 90 days of closing of the transaction based upon receipt of a consent, delivery of a notice, or the entering into a spin-off agreement with a list of clients whose contracts require one of the foregoing actions.

The remaining $ 3 million of the escrowed amount will be released following the end of the quarter ending March 31, 2025, based upon achievement of certain revenue targets by the divested Automation business for the period from October 1, 2024 to March 31, 2025.

Upon the achievement of certain contractual requirements, for the year ended December 31, 2024 the company received an additional $ 2.1 million in cash and recorded a receivable of $ 1.9 million related to the escrowed amounts.

The $ 1.9 million receivable is recorded in Prepaid expenses and other current assets on the Consolidated Balance sheet as of December 31, 2024 and was subsequently collected in the first quarter of 2025.

The gain on sale of $ 4.5 million was recognized in Gain on the sale of business and $ 2.9 million of disposition expenses was recognized in Selling, general and administrative within the Consolidated Statement of Income and Comprehensive Income for the year ended December 31, 2024.

The Company did not report the sale in discontinued operations as it was not a strategic shift that would have a major effect on the Company’s operations and financial results.

NOTE 6—NET INCOME PER COMMON SHARE

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Year Ended December 31,

Net income (loss)

Weighted average common shares

Earnings per share

Earnings (loss) per share

Net income (loss)

Basic weighted average common shares

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Diluted weighted average common shares

Diluted earnings per share

Diluted earnings (loss) per share

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

NOTE 7—ACCOUNTS RECEIVABLE AND CONTRACT ASSETS

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Years Ended December 31,

Accounts receivable

Accounts receivable, net of allowance

Contract assets

Receivables from related parties

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

NOTE 8—FURNITURE, FIXTURES AND EQUIPMENT

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Accumulated depreciation

Depreciation expense was $ 3.1 million, $ 3.0 million and $ 2.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Depreciation expense was $ 3.3 million and $ 3.1 million for the years ended December 31, 2024 and 2023, respectively.

NOTE 9—LEASES

The Company recognizes lease payments in the consolidated statements of income on a straight-line basis over the lease term.

The Company recognizes lease payments in the Consolidated Statements of Income and Comprehensive Income on a straight-line basis over the lease term.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments.

The Company leases its office space and office equipment under long-term operating lease agreements which expire at various dates through November 2030, some of which include options to extend the leases for up to 3 years , and some of which included options to terminate the leases within 1 year.

The Company leases its office space and office equipment under long-term operating lease agreements which expire at various dates through October 2033, some of which include options to extend the leases for up to 3 years , and some of which included options to terminate the leases within 1 year.

Under the operating leases, the Company pays certain operating expenses relating to the office equipment and leased property.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

The components of lease expense were as follows:

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Variable lease cost

Sublease income

Total lease cost

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Financing cash flows from finance leases

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

Supplemental balance sheet information related to leases was as follows:

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(2) Finance lease right-of-assets are included in “Furniture, fixtures and equipment, net.”

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

Maturities of lease liabilities were as follows:

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Less imputed interest

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

NOTE 10—INTANGIBLE ASSETS

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Trademark and trade names

Amortization expense was $ 3.2 million, $ 2.3 million and $ 2.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The estimated future amortization expense subsequent to December 31, 2023 is as follows:

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

Amortization expense was $ 2.6 million and $ 3.2 million for the years ended December 31, 2024 and 2023, respectively.

The estimated future amortization expense subsequent to December 31, 2024 is as follows:

NOTE 11—GOODWILL

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Long-term debt consists of the following:

Senior secured credit facility

Revolving borrowings

Debt issuance costs

Less current installments on long term debt

Repayments of revolver

Borrowings of revolver

Long-term debt

The revolving loan repayment of the outstanding principal amount and interest payment is due on the maturity date of February 22, 2028.

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 (as further amended on June 27, 2024, the “2023 Credit Agreement”).

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

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

● At the Company’s option, the credit facility bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate,” (b) the Federal Funds Rate plus 0.5 % per annum and (c) 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.

● 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 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.

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● 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 $ 59.2 million as of December 31, 2024 and $ 79.2 million as of December 31, 2023, which are carried at amortized cost.

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

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

The Company’s financial statements include outstanding borrowings of $ 79.2 million both as of December 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 $ 59.6 million and $ 79.8 million at December 31, 2024 and December 31, 2023, respectively.

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

In 2024, the Company borrowed $ 28.0 million and subsequently repaid $ 48.0 million of its revolving credit facility.

The Company is currently in compliance with its financial covenants.

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

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

Management believes that all material liabilities of which it is aware are properly reflected in the financial statements at December 31, 2024 and 2023.

Ventana Research Contingent Consideration

As of December 31, 2023, 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, which was classified as “Accrued expenses and other current liabilities” and “Other liabilities” on the consolidated balance sheet.

As of December 31, 2024, the Company has recorded a liability of $ 0.7 million representing the estimated fair value of contingent consideration related to the acquisition of Ventana Research, which was classified as non-current and included in “Other liabilities” on the Consolidated Balance Sheets.

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

Change 4 Growth Contingent Consideration

As of December 31, 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 was 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 December 31, 2024, the Company has recorded a liability of $ 0.5 million representing the estimated fair value of contingent consideration related to the acquisition of Change 4 Growth, which is classified as current and included in accrued expenses on the Consolidated Balance Sheets.

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 15—RELATED PARTY TRANSACTIONS

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State income taxes, net of federal benefit

Sale on business

Tax impact of foreign operations

Valuation allowances increase (release)

Net decrease of uncertain tax positions

Excess tax benefit & other deferred adjustment

Income tax provision

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foreign tax credit carryovers

capital loss carryover

Foreign net operating loss carryovers

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Net deferred tax assets

A valuation allowance was established at December 31, 2024 for the Company’s U.S.

capital loss carryforward that was generated from the sale of the Company’s automation business in 2024.

A valuation allowance was established at December 31, 2024 and 2023 due to estimates of future utilization of net operating loss carryovers in the U.S.

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The Company also has a federal tax credit carryforward of approximately $ 2.7 million, which will begin to expire in 2027, if not utilized.

As of December 31, 2024, the Company generated a tax capital loss carryforward of $ 8.0 million as a result of the sale of the automation business.

If not utilized, the carryforward will expire in 2029.

Uncertain tax positions

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Additions as a result of tax positions taken during the current period

Reductions as a result of tax positions taken during a prior period

Balance, end of year

6 unchanged sentences

NOTE 17—STOCK-BASED COMPENSATION PLANS

The Amended and Restated 2007 Equity and Incentive Award Plan (“Incentive Plan”) and Amended and Restated 2007 Employee Stock Purchase Plan (“ESPP”) were approved by the Company’s stockholders at our 2014 annual meeting with a subsequent amendment to the Incentive Plan approved by the Company’s stockholders at our 2017 annual meeting as discussed below.

The Amended and Restated 2007 Equity and Incentive Award Plan (the “Incentive Plan”) and Amended and Restated 2007 Employee Stock Purchase Plan (“ESPP”) were approved by the Company’s stockholders at our 2014 annual meeting, with subsequent amendments to the Incentive Plan being approved by the Company’s stockholders at our 2017 annual meeting and 2020 annual meeting and a subsequent amendment to the ESPP being approved by the Company’s stockholders at our 2020 annual meeting.

Subject to the terms of the Incentive Plan, the Incentive Plan authorizes the grant of awards, which awards may be made in the form of (i) nonqualified stock options;

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Those awards which are based on a specific contractual term will be granted with a term not to exceed ten years .

The SARs granted under the Incentive Plan are granted with an exercise price equal to the fair market value of the Common Shares at the time the SARs are granted.

The SARs granted under the Incentive Plan are granted with an exercise price equal to the fair market value of the Company’s common stock at the time the SARs are granted.

At the 2020 annual meeting, our stockholders approved an amendment to the Incentive Plan to increase the number of shares of common stock available for issuance under the Incentive Plan by 5,500,000 shares (the “Incentive Plan Amendment”).

As of December 31, 2024, there were 528,995 and 397,737 shares available for grant under the Incentive Plan and ESPP, respectively.

The Company recognized $ 9.1 million, $ 7.5 million and $ 6.5 million in employee stock-based compensation expense during the years ended December 31, 2023, 2022 and 2021, respectively.

This expense was recorded in selling, general and administrative in the consolidated statement of comprehensive income.

The Company recognized $ 8.0 million and $ 9.1 million in employee stock-based compensation expense during the years ended December 31, 2024 and 2023, respectively.

This expense was recorded in selling, general and administrative in the Consolidated Statement of Income Comprehensive Income.

Restricted Share Awards/Units

The Incentive Plan provides for the granting of restricted share units (“RSU”), the vesting of which is subject to conditions and limitations established at the time of the grant.

The Incentive Plan provides for the granting of restricted share units (“RSUs”), the vesting of which is subject to conditions and limitations established at the time of the grant.

Recipients of RSU awards will not have the rights of a shareholder of the Company until such date as the shares of common stock are issued or transferred to the recipient.

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Dividends accrue and will be paid if and when the restricted shares vest.

The Company also granted RSUs to specific employees which have the following characteristics:

● Performance-Based RSU Vesting (Stock Price):

Provided the employee continues to be employed through specific date set forth in the award, the RSUs will vest on such date if specific financial performance is met, otherwise the RSUs will be forfeited.

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

The Company has also granted RSUs to specific employees which have the following characteristics:

● Performance-Based RSU Vesting (Stock Price):

Provided the employee continues to be employed through the specific date set forth in the award, the RSUs will vest on such date if specific financial performance conditions are met, otherwise the RSUs will be forfeited.

● Time-Based RSU Vesting:

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As part of the Incentive Plan Amendment, dividends/dividend equivalents may be paid or credited on other stock-based awards (such as restricted stock units), but those dividends/dividend equivalents must be subject to the same vesting (or more stringent vesting) applicable to the underlying awards.

The fair value of RSUs is determined based on the closing price of the Company’s shares on the grant date.

The fair value of RSUs is determined based on the closing price of the Company’s common stock on the grant date.

The total fair value is amortized to expense on a straight-line basis over the vesting period.

A summary of the status of the Company’s RSUs issued under its Incentive Plan as of December 31, 2024, and changes during the years then ended, is presented below:

Non-vested at December 31, 2020

(in thousands)

Non-vested at December 31, 2022

1 unchanged sentence

Non-vested at December 31, 2024

The total fair value of RSUs vested during the years ended December 31, 2023, 2022 and 2021 was $ 6.1 million, $ 4.7 million and $ 9.0 million, respectively.

The total fair value of RSUs vested during the years ended December 31, 2024 and 2023 was $ 7.3 million and $ 6.1 million, respectively.

As of December 31, 2024, there was $ 9.5 million of unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 1.5 years.

There were 2.9 million shares available for issuance at December 31, 2023 under the Incentive Plan.

There were 0.9 million shares of common stock available for issuance at December 31, 2024 under the Incentive Plan.

Employee Stock Purchase Plan

The Company uses the Black-Scholes option pricing model to estimate the fair value of shares expected to be issued under the Company’s employee stock purchase plan.

The ESPP provides that a total of 3.6 million shares of common stock are reserved for issuance under the plan.

The ESPP provides that a total of 3.6 million shares of common stock is reserved for issuance under the plan.

The ESPP, which is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code, is implemented utilizing three -month offerings with purchases occurring at three -month intervals.

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The ESPP permits eligible employees to purchase common stock through payroll deductions, ranging from one to ten percent of their eligible earnings subject to IRS regulated cap of $ 25,000 .

The price of common stock purchased under the ESPP is 90 % of the fair market value of the common stock on the applicable purchase date.

Employees may end their participation in an offering at any time during the offering period, and participation ends

The price of common stock purchased under the ESPP is 90 % of the fair market value of the common stock on the applicable

INFORMATION SERVICES GROUP, INC.

1 unchanged sentence

(tabular amounts in thousands, except per share data)

automatically upon termination of employment.

purchase date.

Employees may end their participation in an offering at any time during the offering period, and participation ends automatically upon termination of employment.

The Compensation Committee may at any time amend or terminate the ESPP, except that no such amendment or termination may adversely affect shares previously granted under the ESPP.

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The Company’s foreign operations are subject to local government regulations and to the economic and political uncertainties of those areas.

The Company Chief Operating Decision Maker ( the “CODM”) is our Chairman & Chief Executive Officer, Michael Connors.

The CODM uses net income as presented on our Consolidated Statement of Income and Comprehensive Income in evaluating performance and determining how to allocate resources of the company as a whole.

Geographical information for the segment is as follows:

1 unchanged sentence

Substantially all relates to operations in the United States.

Includes revenues from operations in Germany of $ 34.6 million, $ 44.2 million and $ 50.0 million in 2023, 2022 and 2021, respectively.

Includes revenues from operations in the United Kingdom of $ 28.2 million, $ 18.6 million and $ 15.2 million in 2023, 2022 and 2021, respectively.

Includes revenues from operations in Australia of $ 22.6 million, $ 22.9 million and $ 23.1 million in 2023, 2022 and 2021, respectively.

Includes revenues from operations in Germany of $ 29.7 million and $ 34.6 million in 2024 and 2023, respectively.

Includes revenues from operations in the United Kingdom of $ 16.9 million and $ 28.2 million in 2024 and 2023, respectively.

Includes revenues from operations in Australia of $ 18.1 million and $ 22.6 million in in 2024 and 2023, respectively.

INFORMATION SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(tabular amounts in thousands, except per share data)

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

The Company does not measure or monitor gross profit or operating income by geography or any other measure or metric, other than consolidated, for the purposes of making operating decisions or allocating resources.

Compensation expense

Contract labor

Third party costs

Travel and entertainment

Professional fees

Computer expense

Other segment expenses

Depreciation and amortization

Interest income

Interest expense

Gain on the sale of business

Foreign currency translation

Income tax provision

(1) Other segment expenses include communication, occupancy, restructuring, marketing, stock-based compensation, acquisition- and-disposition and other overhead expenses.

NOTE 19—SUBSEQUENT EVENT

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001-33287), and incorporated herein by reference).

Amended and Restated Certificate of Incorporation of the Company (previously filed as Exhibit 3.1 to Amendment No.

Share Purchase Agreement, dated October 1, 2024, by and among ISG Information Services Group Americas, Inc., UST Global Inc and, solely for purposes of Section 10.16 of the Share Purchase Agreement (Guarantee), Information Services Group, Inc.

(previously filed as Exhibit 2.1 to the Registrant’s Form 8-K filed with the SEC on October 2, 2024 (Commission File No.

001-33287), and incorporated herein by reference).

Fourth Amended and Restated Certificate of Incorporation of the Information Services Group, Inc.

(previously filed as Exhibit 3.1 to Amendment No.

5 to the Registrant’s Registration Statement on Form S-1 filed with the SEC on January 29, 2007 (Commission File Number:

333-136536) and incorporated herein by reference).

Amended and Restated By-Laws, dated as of May 13, 2013 (previously filed as Exhibit 3.1 to the Registrant’s Form 8-K filed with the SEC on May 15, 2013 (Commission File Number:

Amended and Restated Bylaws of Information Services Group, Inc., dated as of May 13, 2013 (previously filed as Exhibit 3.1 to the Registrant’s Form 8-K filed with the SEC on May 15, 2013 (Commission File Number:

001-33287), and incorporated herein by reference).

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333-136536), and incorporated herein by reference).

Form of Indemnification Agreement for Directors and Officers (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on December 2, 2016 (Commission File No.

Form of Indemnification Agreement for Directors and Officers (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on November 13, 2017 (Commission File Number:No.

001-33287) and incorporated herein by reference).

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Securities Purchase Agreement, dated as of December 1, 2016, by and between Information Services Group, Inc.

and Chevrillon & Associés SCA (previously filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 2, 2016 (File No.

and Chevrillon & Associés SCA (previously filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on December 2, 2016 (Commission File Number.

001-33287), and incorporated herein by reference).

9 unchanged sentences

001-33287), and incorporated herein by reference).

Employment Letter for Michael A.

Sherrick, dated June 21, 2023 (previously filed as Exhibit 10.1 to the

Registrant ’ s Form 8-K filed with the SEC on June 23, 2023 (Commission File Number:

001-33287), and

incorporated herein by reference).

Third Amended and Restated Credit Agreement, dated as of February 22, 2023, among Information Services Group, Inc., various lenders and Bank of America, N.A., as Administrative Agent (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on February 23, 2023 (Commission File Number:

3 unchanged sentences

001-33287), and incorporated herein by reference).

First Amendment Agreement, dated as of June 27, 2024, to the Third Amended and Restated Credit Agreement, by and among Information Services Group, Inc., the guarantors party thereto, the lenders party to the Third Amended and Restated Credit Agreement and Bank of America, N.A., as administrative agent, swingline lender and letter of credit issue.

Amendment No.

4, dated January 1, 2025, to the Employment Agreement for Michael P.

Connors (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on January 3, 2025 (Commission File Number:

001-33287), and incorporated herein by reference).

Computation of Earnings Per Share (included in Consolidated Statement of Comprehensive Income to the Consolidated Financial Statements included in Part II—Item 8 herein).

1 unchanged sentence

001-33287) and incorporated herein by reference).

Information Services Group, Inc.

Insider Trading Policy.

Subsidiaries of the Company.

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Information Services Group, Inc.

Clawback Policy.

The following financial statements from ISG’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 8, 2024, formatted in XBRL (Extensible Business Reporting Language);

Clawback Policy (previously filed as Exhibit 97.1 to the Registrant’s Form 10-K filed with the SEC on March 8, 2024 (Commission File Number:

001-33287), and incorporated herein by reference).

The following financial statements from ISG’s Annual Report on Form 10-K for the year ended December 31, 2024, filed on March 8, 2024, formatted in inline XBRL (Extensible Business Reporting Language);

(i) Consolidated Balance Sheet, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements.

2 unchanged sentences

# Indicates Item 15(a)(3) exhibit (management contract or compensation plan or arrangement).

† Certain schedules and other similar attachments to this exhibit have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K.

The registrant will provide a copy of such omitted documents to the SEC upon request.

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Stamford, in the State of Connecticut on March 13, 2025.

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March 13, 2025

March 8, 2024

*Christine Putur

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Allowance for tax valuation

Year ended December 31, 2021

Allowance for doubtful accounts

Allowance for tax valuation

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-K

Item 9A. Controls and Procedures