Information Services Group Inc.

For the period ended Mar 31, 2025. Filed May 9, 2025.

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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Mar 31, 2025 · Filed May 9, 2025

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Contents

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

INFORMATION SERVICES GROUP, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)


· · March 31, · · December 31, ·
· 2025 · 2024
ASSETS
Current assets
Cash and cash equivalents	$20,116	$23,075
Accounts receivable and contract assets, net of allowance of $5,095 and $5,047, respectively	62,735	58,822
Prepaid expenses and other current assets	7,250	9,384
Total current assets	90,101	91,281
Restricted cash	86	83
Furniture, fixtures and equipment, net	6,411	6,195
Right-of-use lease assets	5,110	5,437
Goodwill	87,364	87,293
Intangible assets, net	3,242	3,560
Deferred tax assets	6,855	6,997
Other assets	3,196	3,669
Total assets	$202,365	$204,515
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$8,448	$9,192
Contract liabilities	9,980	10,058
Accrued expenses and other current liabilities	18,819	19,170
Total current liabilities	37,247	38,420
Long-term debt, net of current maturities	59,175	59,175
Deferred tax liabilities	1,727	1,750
Operating lease liabilities	3,185	3,416
Other liabilities	5,995	5,468
Total liabilities	107,329	108,229
Commitments and contingencies (Note 7)
Stockholders’ equity
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued	—	—
Common stock, $0.001 par value; 100,000 shares authorized; 49,658 shares issued and 48,111 outstanding at March 31, 2025 and 49,658 shares issued and 48,542 outstanding at December 31, 2024	50	50
Additional paid-in capital	208,526	210,149
Treasury stock (1,547 and 1,116 common shares, respectively, at cost)	(5,511)	(3,996)
Accumulated other comprehensive loss	(9,653)	(10,053)
Accumulated deficit	(98,376)	(99,864)
Total stockholders’ equity	95,036	96,286
Total liabilities and stockholders’ equity	$202,365	$204,515

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share data)


· · Three Months Ended ·
· · March 31, ·
· 2025 · 2024 ·
Revenues	$59,583	$64,269
Operating expenses
Direct costs and expenses for advisors	33,927	41,047
Selling, general and administrative	21,155	24,087
Depreciation and amortization	1,105	1,505
Operating income (loss)	3,396	(2,370)
Interest income	55	257
Interest expense	(1,056)	(1,500)
Foreign currency transaction gain (loss)	3	(7)
Income (loss) before taxes	2,398	(3,620)
Income tax provision (benefit)	910	(231)
Net income (loss)	$1,488	$(3,389)
Weighted average shares outstanding:
Basic	48,369	48,492
Diluted	50,252	48,492
Earnings (loss) per share:
Basic	$0.03	$(0.07)
Diluted	$0.03	$(0.07)
Comprehensive income:
Net income (loss)	$1,488	$(3,389)
Foreign currency translation gain (loss), net of tax expense (benefit) of $126 and $(50), respectively	400	(654)
Comprehensive income (loss)	$1,888	$(4,043)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)


· · · · · · · · · · · · · Accumulated · · · · · ·
· · · · · · · Additional · · · · · Other · · · · · Total
· · Common Stock · · Paid-in · · Treasury · · Comprehensive · · Accumulated · · Stockholders’
· Shares · Amount · Capital · Stock · Loss · Deficit · Equity
Balance December 31, 2024	49,658		$50			$210,149		$(3,996)			$(10,053)	$(99,864)	$96,286
Net income	—		—			—		—			—	1,488	1,488
Other comprehensive income	—		—			—		—			400	—	400
Treasury shares repurchased	—		—			—		(3,421)			—	—	(3,421)
Proceeds from issuance of employee stock purchase plan (ESPP) shares	—		—			(8)		147			—	—	139
Issuance of treasury shares for RSUs vested	—		—			(1,759)		1,759			—	—	—
Accrued dividends on unvested shares	—		—			(31)		—			—	—	(31)
Cash dividends paid to shareholders ($0.045 per share)	—		—			(2,245)		—			—	—	(2,245)
Stock based compensation	—		—			2,420		—			—	—	2,420
Balance March 31, 2025	49,658		$50			$208,526		$(5,511)			$(9,653)	$(98,376)	$95,036


										Accumulated
					Additional				Other			Total
	Common Stock	Paid-in		Treasury		Comprehensive	Accumulated		Stockholders’
	Shares	Amount		Capital		Stock	Loss		Deficit		Equity
Balance December 31, 2023	49,472		$49			$217,684		$(3,959)			$(8,989)	$(102,703)	$102,082
Net loss	—		—			—		—			—	(3,389)	(3,389)
Other comprehensive loss	—		—			—		—			(654)	—	(654)
Treasury shares repurchased	—		—			—		(2,531)			—	—	(2,531)
Proceeds from issuance of ESPP shares	—		—			(41)		226			—	—	185
Issuance of treasury shares for RSUs vested	—		—			(1,076)		1,076			—	—	—
Accrued dividends on unvested shares	—		—			102		—			—	—	102
Cash dividends paid to shareholders ($0.045 per share)	—		—			(2,397)		—			—	—	(2,397)
Stock based compensation	—		—			2,249		—			—	—	2,249
Balance March 31, 2024	49,472		$49			$216,521		$(5,188)			$(9,643)	$(106,092)	$95,647

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


· · Three Months Ended
· · March 31,
	2025		2024
Cash flows from operating activities
Net income (loss)		$1,488		$(3,389)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation expense		787		750
Amortization of intangible assets		318		755
Deferred tax expense (benefit) from stock issuances		112		(30)
Amortization of deferred financing costs		56		56
Stock-based compensation		2,420		2,249
Change in fair value of contingent consideration		12		26
Provisions for credit losses		37		179
Deferred tax (benefit) provision		(128)		(1,464)
Changes in operating assets and liabilities:
Accounts receivable and contract assets		(5,515)		4,056
Prepaid expenses and other assets		2,965		1,393
Accounts payable		(1,300)		(706)
Contract liabilities		(78)		(1,474)
Accrued expenses and other liabilities		(196)		(68)
Net cash provided by operating activities		978		2,333
Cash flows from investing activities
Purchase of furniture, fixtures and equipment		(837)		(1,022)
Net cash used in investing activities		(837)		(1,022)
Cash flows from financing activities
Proceeds from revolving facility (Note 9)		5,000		—
Repayment of outstanding debt (Note 9)		(5,000)		(5,000)
Additional proceeds from the sale of the automation business		1,954		—
Proceeds from issuance of employee stock purchase plan shares		139		185
Payments related to tax withholding for stock-based compensation		(756)		(379)
Cash dividends paid to shareholders		(2,245)		(2,397)
Treasury shares repurchased		(2,565)		(2,127)
Net cash used in financing activities		(3,473)		(9,718)
Effect of exchange rate changes on cash		376		(277)
Net decrease in cash, cash equivalents, and restricted cash		(2,956)		(8,684)
Cash, cash equivalents, and restricted cash, beginning of period		23,158		22,809
Cash, cash equivalents, and restricted cash, end of period		$20,202		$14,125

Supplemental disclosures of cash flow information:
Cash paid for:
Interest		$1,062		$1,473
Taxes, net of refunds		$512		$1,030

Non-cash investing and financing activities:
Issuance of treasury stock for vested restricted stock units		$1,759		$1,076

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(tabular amounts in thousands, except per share data)

(unaudited)

NOTE 1—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Information Services Group, Inc. (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. For more information, visit www.isg-one.com. The content on the Company’s 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 with the strategic vision to become a high-growth, leading provider of information-based advisory services and continues to believe that its 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 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, 2025, the results of operations for the three months ended March 31, 2025 and 2024 and the cash flows for the three months ended March 31, 2025 and 2024. The condensed consolidated balance sheet as of December 31, 2024 has been derived from the Company’s audited consolidated financial statements. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

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, 2024, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC.

Sale of Automation Business Line

Based on the achievement of certain contractual requirements for the year ended December 31, 2024, during the first quarter of 2025, the Company received additional proceeds in cash from the sale of its Automation business line from UST Global Inc. of $2.0 million.

NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results may differ

from those estimates. The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the revenue recognition guidance for contracts in which control is transferred to the customer over time affect the amounts of revenues, expenses, contract assets and contract liabilities. Numerous internal and external factors can affect estimates. Estimates are also used for but are not limited to 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.

Fair Value

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, 2025 and December 31, 2024 due to the short-term nature of these accounts.

Fair value measurements were applied with respect to the Company’s non-financial assets and liabilities measured on a nonrecurring basis, which would consist of measurements primarily to goodwill, intangible assets and other long-lived assets and assets acquired and liabilities assumed in a business combination.

Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy:

●	Level 1 measurements include unadjusted quoted market prices for identical assets or liabilities in an active market;

●

Level 2 measurements include quoted market prices for identical assets or liabilities in an active market that have been adjusted for items such as effects of restrictions for transferability and those that are not quoted but are observable through corroboration with observable market data, including quoted market prices for similar assets; and

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

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


· · Basis of Fair Value Measurements ·
· · March 31, 2025 ·
· Level 1 · Level 2 · Level 3 · Total
Assets:
Cash equivalents	$96	$—	$—	$96
Total	$96	$—	$—	$96

Liabilities:
Contingent consideration (1)	$—	$—	$1,237	$1,237
Total	$—	$—	$1,237	$1,237


· · Basis of Fair Value Measurements ·
· · December 31, 2024 ·
· Level 1 · Level 2 · Level 3 · Total
Assets:
Cash equivalents	$84	$—	$—	$84
Total	$84	$—	$—	$84

Liabilities:
Contingent consideration (1)	$—	$—	$1,225	$1,225
Total	$—	$—	$1,225	$1,225

(1)	The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities” and “Other liabilities,” respectively, as of March 31, 2025 and December 31, 2024.

The following table represents the change in contingent consideration liability during the three months ended March 31, 2025:

· · · ·
	Three Months Ended
	March 31,
	2025
Beginning Balance		$1,225
Accretion of contingent consideration		12
Ending Balance		$1,237

The Company’s accompanying unaudited condensed consolidated financial instruments include outstanding borrowings of $59.2 million both as of March 31, 2025 and December 31, 2024, 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 $59.5 million and $59.6 million as of March 31, 2025 and December 31, 2024, respectively. The fair values of debt have been estimated using a discounted cash flow analysis based on the Company’s incremental borrowing rate for similar borrowing arrangements. The incremental borrowing rate used to discount future cash flows was 6.1% and 6.4% as of March 31, 2025 and December 31, 2024, 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.

Recently Issued Accounting Pronouncements

Income Taxes

In December 2023, the Financial Accounting Standards Board (the “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 and is not expected to have a material impact on the Company’s consolidated financial statements.

Income Statement Disaggregation

In November 2024, the FASB issued ASU 2024-03 to improve the disaggregation of income statement expenses. This updated 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 permitted for annual financial statements that have not yet been issued. The Company does not expect ASU 2024-03 to have a material impact on the Company’s consolidated financial statements.

NOTE 4—REVENUE

The majority of the Company’s revenue is derived from contracts that can span from a few months to several years. The Company enters into contracts that can include various combinations of services, which, depending on contract type, are sometimes capable of being distinct. If services are determined to be distinct, they are accounted for as separate performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company’s contracts have a single performance obligation as the respective 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 its 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.

The Company’s contracts may include promises to transfer multiple services and products to a client. Determining whether services and products are considered distinct performance obligations that should be accounted for separately versus together may require judgment.

Contract Balances

The timing of revenue recognition, billings and cash collections result in billed accounts receivables, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities). The Company’s clients are billed based on the type of arrangement. A portion of the Company’s services are billed monthly based on hourly or daily rates. There are also client engagements in which the Company bills a fixed amount for its services. This may be one single amount covering the whole engagement or several amounts for various phases, functions or milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits before revenue is recognized, resulting in contract liabilities. Contract assets and liabilities are generally reported in the current assets and current liabilities sections of the consolidated balance sheet, at the end of each reporting period, based on the timing of the satisfaction of the related performance obligation(s). For multi-year contract sales with annual invoicing, the Company performs a significant financing component calculation and recognizes the associated interest income throughout the duration of the financing period. In addition, it reclassifies the resulting contract asset balances as current and noncurrent receivables as receipt of the consideration is conditional only on the passage of time and there are no performance risk factors present. See the table below for a breakdown of the Company’s contract assets and contract liabilities as of the periods presented:

· · · · · ·
· March 31, · December 31,
· 2025 · 2024
Contract assets	$19,839	$18,335
Contract liabilities	$9,980	$10,058

Revenue recognized for the three months ended March 31, 2025 that was included in the contract liability balance at January 1, 2025 was $5.1 million, primarily representing revenue from the Company’s subscription, fixed-fee, and research contracts.

Remaining Performance Obligations

As of March 31, 2025, the Company had $120.5 million of remaining performance obligations, the majority of which are expected to be satisfied within the next twelve months.

Accounts Receivable and contract assets

During the fourth quarter of 2023, a client that had engaged the Company for two multi-year projects, which previously commenced in 2021 and 2022, failed to make payments as per the contracted payment schedule, and the Company therefore ceased performing services under the agreements. After unsuccessful negotiations, the Company provided the client with notice that it would be terminating the respective projects. Accordingly, during the fourth quarter of 2023, the Company recorded through bad debt expense an allowance for doubtful accounts reserve of $4.8 million associated with this client. 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. The reserve that was recorded remained unchanged as of March 31, 2025. The Company is currently pursuing legal action against the former client, which has resulted in a favorable preliminary judgment for ISG that is being appealed by the former client. Actual collections from the client may differ from the Company' s estimate.

The Company is currently engaged in litigation with a client over a disputed accounts receivable balance for services rendered, and mediation arrangements are currently being explored. As the Company believes the balance of approximately $4.7 million is collectible, it has not recorded a reserve. The Company will continue to reassess the need for a reserve in future periods.

NOTE 5—NET INCOME PER COMMON SHARE

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would share in the net income of the Company. For the three months ended March 31, 2025 and March 31, 2024,1.1 million and 4.2 million restricted stock units, respectively, have not been considered in the diluted earnings per share calculation, as the effect would be anti-dilutive.

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


	Three Months Ended March 31,

	2025		2024
Basic:
Net income (loss)		$1,488		$(3,389)
Weighted average common shares		48,369		48,492
Earnings (loss) per share		$0.03		$(0.07)
Diluted:
Net income (loss)		$1,488		$(3,389)

Basic weighted average common shares		48,369		48,492
Potential common shares		1,883		—
Diluted weighted average common shares		50,252		48,492
Diluted earnings (loss) per share		$0.03		$(0.07)

NOTE 6—INCOME TAXES

The Company’s effective tax rate for the three months ended March 31, 2025 and 2024 was 37.9% and 6.4%, respectively, based on pretax income and loss of $2.4 million and $3.6 million, respectively. The Company’s effective tax rate for the quarter ended March 31, 2025 was impacted by non-deductible expenses and earnings and losses in certain foreign jurisdictions.

NOTE 7—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, 2025 and December 31, 2024.

Ventana Research Contingent Consideration

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 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.

As of March 31, 2025, 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 is classified as noncurrent and included in other liabilities on the condensed consolidated balance sheet.

Change 4 Growth Contingent Consideration

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.

As of March 31, 2025, 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 condensed consolidated balance sheet. The Company paid $0.5 million in cash consideration in April 2025, which was related to 2024 performance.

NOTE 8—SEGMENT AND GEOGRAPHICAL INFORMATION

The Company operates asone reportable segment consisting primarily of fact-based sourcing advisory services. The Company operates principally in the Americas, Europe and Asia Pacific.

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 revenue information for the segment is as follows:

· · · · · · ·
· · Three Months Ended ·
· · March 31, ·
· 2025 · 2024
Revenues · · · · · · ·
Americas	$41,002	$40,840
Europe	13,794	17,796
Asia Pacific	4,787	5,633
	$59,583	$64,269

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.

The following table represents a breakdown of net income that is used to help determine how resources are allocated:


· · Three Months Ended
· · March 31,
	2025		2024

Revenue		$59,583		$64,269
Less:
Compensation expense		39,988		42,418
Contract labor		4,279		4,910
License fees expense		519		4,200
Travel and entertainment		2,376		2,819
Professional fees		1,895		1,770
Computer expense		1,123		1,295
Restructuring costs		383		2,978
Other segment expenses		4,519		4,744
Depreciation and amortization		1,105		1,505
Interest income		(55)		(257)
Interest expense		1,056		1,500
Foreign currency translation		(3)		7
Income tax provision		910		(231)
Net income (loss)		$1,488		$(3,389)

NOTE 9—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 from $54.0 million to $140.0 million and eliminate its term loan (as further amended, the “2023 Credit Agreement”). The material terms under the 2023 Credit Agreement are as follows. Capitalized terms used but not defined herein have the meanings ascribed to them in the 2023 Credit Agreement:

●	The revolving credit facility has a maturity date of February 22, 2028.

●

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, 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. For the first three months of 2025, the applicable margin was decreased by 0.25% percentage of the revolving loans maintaining a Base Rate loans of 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. In addition, the Company is required to comply with a consolidated leverage ratio and consolidated interest coverage ratio.

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

The Company’s financial statements include outstanding borrowings of $59.2 million at both March 31, 2025 and December 31, 2024, 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 $59.5 million and $59.6 million as of March 31, 2025 and December 31, 2024, respectively. The fair values of debt have been estimated using a discounted cash flow analysis based on the Company’s incremental borrowing rate for similar borrowing arrangements. The incremental borrowing rate used to discount future cash flows was 6.1% and 6.4% as of March 31, 2025 and December 31, 2024, 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. During the first quarter of 2025, the Company borrowed $5.0 million and subsequently repaid $5.0 million of the revolver loan during the quarter. The Company is currently in compliance with its financial covenants.

NOTE 10—SUBSEQUENT EVENTS

On May 6, 2025, the Company’s Board of Directors (the “Board”) approved a second-quarter dividend of $0.045 per share, payable June 27, 2025, to shareholders of record as of June 6, 2025. The dividends are accounted for as a decrease to Stockholders’ Equity. All future dividends will be subject to the Board’s approval.

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