Information Services (III) 10-Q8 Aug 222022 Q2 Quarterly reportFinancial data

Company Profile

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2022	Jul. 29, 2022
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-33287
Entity Registrant Name	Information Services Group Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-5261587
Entity Address, Address Line One	2187 Atlantic Street
Entity Address, City or Town	Stamford
Entity Address, State or Province	CT
Entity Address, Postal Zip Code	06902
City Area Code	203
Local Phone Number	517-3100
Title of 12(b) Security	Shares of Common Stock, $0.001 par value
Trading Symbol	III
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		47,751,512
Entity Central Index Key	0001371489
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 31,473	$ 47,521
Accounts receivable and contract assets, net of allowance of $413 and $40, respectively	68,379	64,344
Prepaid expenses and other current assets	3,660	4,245
Total current assets	103,512	116,110
Restricted cash	81	88
Furniture, fixtures and equipment, net	6,013	5,293
Right-of-use lease assets	4,312	5,293
Goodwill	90,592	90,790
Intangible assets, net	11,350	12,410
Deferred tax assets	2,999	2,197
Other assets	2,416	4,613
Total assets	221,275	236,794
Current liabilities
Accounts payable	11,974	16,162
Current maturities of long-term debt	4,300	4,300
Contract liabilities	7,401	7,049
Accrued expenses and other current liabilities	25,210	29,327
Total current liabilities	48,885	56,838
Long-term debt, net of current maturities	67,454	69,490
Deferred tax liabilities	2,819	2,824
Operating lease liabilities	2,726	3,481
Other liabilities	5,199	5,768
Total liabilities	127,083	138,401
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued
Common stock, $0.001 par value, 100,000 shares authorized; 49,362 shares issued and 47,756 outstanding at June 30, 2022 and 49,362 shares issued and 48,856 outstanding at December 31, 2021	49	49
Additional paid-in capital	232,994	237,628
Treasury stock (1,606 and 506 common shares, respectively, at cost)	(10,523)	(3,871)
Accumulated other comprehensive loss	(9,742)	(6,940)
Accumulated deficit	(118,586)	(128,473)
Total stockholders' equity	94,192	98,393
Total liabilities and stockholders' equity	$ 221,275	$ 236,794

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivables and contract assets, allowances	$ 413	$ 40
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000	10,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000	100,000
Common stock, shares issued	49,362	49,362
Common stock, shares outstanding	47,756	48,856
Treasury stock, shares	1,606	506

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
Revenues	$ 70,701	$ 70,597	$ 143,264	$ 137,168
Operating expenses
Direct costs and expenses for advisors	41,370	43,007	85,325	84,163
Selling, general and administrative	20,885	20,492	40,472	39,532
Depreciation and amortization	1,298	1,255	2,587	2,615
Operating income	7,148	5,843	14,880	10,858
Interest income	44	60	89	131
Interest expense	(610)	(613)	(1,173)	(1,256)
Foreign currency transaction gain (loss)	94	8	118	(3)
Income before taxes	6,676	5,298	13,914	9,730
Income tax provision	1,719	1,192	4,027	2,200
Net income	$ 4,957	$ 4,106	$ 9,887	$ 7,530
Weighted average shares outstanding:
Basic	48,160	48,307	48,343	48,406
Diluted	50,742	51,315	51,034	51,814
Earnings per share:
Basic	$ 0.10	$ 0.08	$ 0.20	$ 0.16
Diluted	$ 0.10	$ 0.08	$ 0.19	$ 0.15
Comprehensive income:
Net income	$ 4,957	$ 4,106	$ 9,887	$ 7,530
Foreign currency translation, net of tax benefit (expense) of $717, $(66), $886 and $277 respectively	(2,268)	209	(2,802)	(852)
Comprehensive income	$ 2,689	$ 4,315	$ 7,085	$ 6,678

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
Foreign currency translation, tax benefit (expense)	$ 717	$ (66)	$ 886	$ 277

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid In Capital [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2020	$ 48	$ 248,018	$ (256)	$ (4,671)	$ (144,002)	$ 99,137
Balance (in shares) at Dec. 31, 2020	48,297
Increase (Decrease) in Stockholders' Equity
Net income					7,530	7,530
Other comprehensive loss				(852)		(852)
Treasury shares repurchased			(11,216)			(11,216)
Proceeds from issuance of ESPP shares		21	266			287
Issuance of treasury shares for RSUs vested		(6,323)	6,323
Issuance of common stock for RSUs vested	$ 1	(1)
Issuance of common stock for RSUs vested (in shares)	1,065
Accrued dividends on unvested shares		(130)				(130)
Cash dividends paid to shareholders		(1,451)				(1,451)
Stock based compensation		3,576				3,576
Balance at Jun. 30, 2021	$ 49	243,710	(4,883)	(5,523)	(136,472)	96,881
Balance (in shares) at Jun. 30, 2021	49,362
Balance at Dec. 31, 2021	$ 49	237,628	(3,871)	(6,940)	(128,473)	$ 98,393
Balance (in shares) at Dec. 31, 2021	49,362					49,362
Increase (Decrease) in Stockholders' Equity
Net income					9,887	$ 9,887
Other comprehensive loss				(2,802)		(2,802)
Treasury shares repurchased			(11,523)			(11,523)
Proceeds from issuance of ESPP shares		(100)	548			448
Issuance of treasury shares for RSUs vested		(4,323)	4,323
Accrued dividends on unvested shares		(257)				(257)
Cash dividends paid to shareholders		(3,399)				(3,399)
Stock based compensation		3,445				3,445
Balance at Jun. 30, 2022	$ 49	$ 232,994	$ (10,523)	$ (9,742)	$ (118,586)	$ 94,192
Balance (in shares) at Jun. 30, 2022	49,362					49,362

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities
Net income	$ 9,887	$ 7,530
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	1,532	1,257
Amortization of intangible assets	1,055	1,358
Deferred tax benefit from stock issuances	(464)	(1,358)
Amortization of deferred financing costs	172	179
Stock-based compensation	3,445	3,576
Change in fair value of contingent consideration	1,420	66
Provisions (benefits) for accounts receivable	363	(149)
Deferred tax provision	540	1,785
Changes in operating assets and liabilities:
Accounts receivable and contract assets	(3,773)	(2,300)
Prepaid expense and other assets	2,626	1,290
Accounts payable	(4,484)	4,849
Contract liabilities	352	2,365
Accrued expenses	(7,735)	482
Net cash provided by operating activities	4,936	20,930
Cash flows from investing activities
Purchase of furniture, fixtures and equipment	(2,104)	(965)
Net cash used in investing activities	(2,104)	(965)
Cash flows from financing activities
Principal payments on borrowings	(2,150)	(2,150)
Proceeds from issuance of employee stock purchase plan shares	448	287
Payments related to tax withholding for stock-based compensation	(1,362)	(4,595)
Cash dividends paid to shareholders	(3,399)	(1,451)
Treasury shares repurchased	(9,596)	(11,216)
Net cash used in financing activities	(16,059)	(19,125)
Effect of exchange rate changes on cash	(2,828)	(778)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(16,055)	62
Cash, cash equivalents, and restricted cash, beginning of period	47,609	43,825
Cash, cash equivalents, and restricted cash, end of period	31,554	43,887
Non-cash investing and financing activities:
Issuance of treasury stock for vested restricted stock awards	$ 4,323	$ 6,323

DESCRIPTION OF ORGANIZATION AND

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS	6 Months Ended
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS	Jun. 30, 2022
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS	NOTE 1—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Information Services Group, Inc. (the “Company”, or “ISG”) is a leading global technology research and advisory firm. A trusted business partner to over 800 clients, including more than 75 of the top 100 enterprises in our markets, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm 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. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data.

BASIS OF PRESENTATION

BASIS OF PRESENTATION	6 Months Ended
BASIS OF PRESENTATION	Jun. 30, 2022
BASIS OF PRESENTATION
BASIS OF PRESENTATION	NOTE 2—BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are considered necessary for a fair statement of the financial position of the Company as of June 30, 2022 and the results of operations for the three and six months ended June 30, 2022 and 2021 and the cash flows for the six months ended June 30, 2022 and 2021. The condensed consolidated balance sheet as of December 31, 2021 has been derived from the Company’s audited consolidated financial statements. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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, 2021, which are included in the Company’s 2021 Annual Report on Form 10-K filed with the SEC.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Jun. 30, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates 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 at June 30, 2022 and December 31, 2021 due to the short-term nature of these accounts. Fair value measurements were applied with respect to our nonfinancial assets and liabilities measured on a nonrecurring basis, which would primarily consist of measurements to contingent consideration in a business combination. 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 measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements June 30, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 19 $ — $ — $ 19 Total $ 19 $ — $ — $ 19 Basis of Fair Value Measurements December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 1,018 $ — $ — $ 1,018 Total $ 1,018 $ — $ — $ 1,018 Liabilities: Contingent consideration (1) $ — $ — $ 2,420 $ 2,420 Total $ — $ — $ 2,420 $ 2,420 (1) Due to a restructuring of the earn-out provision associated with the 2020 acquisition of Neuralify, the $1.0 million contingent consideration became a fixed amount as of June 30, 2022 and the amount accrued was fully paid in July 2022. The following table represents the change in the contingent consideration liability during the six months ended June 30, 2022: Six Months Ended June 30, 2022 Beginning Balance $ 2,420 Neuralify earnout adjustment (1) (1,420) Ending Balance $ 1,000 (1) The Company’s financial instruments include outstanding borrowings of $72.3 million at June 30, 2022 and $74.5 million at December 31, 2021, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company's outstanding borrowings is approximately $70.7 million and $73.6 million at June 30, 2022 and December 31, 2021, respectively. The fair values of debt have been estimated using a discounted cash flow analysis based on the Company's incremental borrowing rate for similar borrowing arrangements. The incremental borrowing rate used to discount future cash flows is 3.8% and 2.0% at June 30, 2022 and December 31, 2021, respectively. The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions. Recently Issued Accounting Pronouncements In June 2016, the FASB issued new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable, and available-for-sale debt securities. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses and additional disclosures. As a smaller reporting company, this guidance is effective for fiscal years beginning after December 15, 2022, which is not expected to have a material impact on the Company’s consolidated financial statements.

ACQUISITIONS

ACQUISITIONS	6 Months Ended
ACQUISITIONS	Jun. 30, 2022
ACQUISITIONS
ACQUISITIONS	NOTE 4 — ACQUISITIONS Neuralify Acquisition On July 8, 2020, a subsidiary of the Company executed an Asset Purchase Agreement with Neuralify, LLC (“the Agreement”), a firm focused on intelligent automation enablement solutions and services, and consummated the acquisition of substantially all of the assets and assumed certain liabilities of Neuralify, LLC. The primary reason for the acquisition was to expand the capabilities of ISG’s pure-play automation service line, ISG Automation. The purchase price was comprised of $2.3 million of cash consideration paid at closing and certain former employees of Neuralify, LLC will also have the right to receive additional consideration paid via earn-out payments during the next 18 months, if certain financial targets are met. In October 2021, the 18-month period was extended six months to July 2022. On the date of the Agreement, the Company estimated such earn-out payments would be up to $4.9 million. The following table summarizes the consideration transferred to acquire Neuralify, LLC and the amounts of identified assets acquired, and liabilities assumed as of the Agreement date: Cash $ 2,282 Contingent consideration 4,900 Total allocable purchase price $ 7,182 The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, are the inclusion of legacy Neuralify workforce and know-how which expands the Company’s pure-play automation service line, ISG Automation. Costs associated with this acquisition are included in the selling, general and administrative expenses in the Consolidated Statement of Income and Comprehensive Income and totaled $0.1 million during the year ended December 31, 2020. This business combination was accounted for under the acquisition method of accounting, and as such, the aggregate purchase price was allocated to the assets acquired and liabilities assumed based on estimated fair values as of the closing date. Based on the valuation and other factors as described above, the purchase price assigned to intangible assets were as follows: Accounts receivable $ 226 Contract assets 1 Intangible assets 1,970 Accounts payable (79) Contract liabilities (280) Net assets acquired $ 1,838 Goodwill $ 5,344 The Consolidated Statement of Income and Comprehensive Income includes the results of the Neuralify acquisition subsequent to the closing. Had the acquisition occurred as of January 1, 2020, the impact on the Company’s results of operations would not have been material. As of June 30, 2022, the Company has recorded a liability of $1.0 million representing the estimated fair value of contingent consideration related to the acquisition of Neuralify, which is classified as current and included in “Accrued expenses and other current liabilities” on the Consolidated Balance Sheet. Agreemint Acquisition On March 28, 2022, ISG executed an asset purchase agreement for the purchase of substantially all of the assets of Agreemint, which is an automated, platform-based contracting solution that will enhance the value of ISG GovernX and our other platform solutions now in development. We determined the transaction to be an asset acquisition as substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset: the software and related intellectual property rights. The cash paid for the acquisition as of the balance sheet date is reflected in Cash flows from investing activities of the Statement of Cash Flows. The related software acquired, which is capitalized within “Furniture, fixtures and equipment, net”, will be depreciated over four years when put into service at the end of the transition period underway to integrate the offering with our ISG GovernX cloud solution.

REVENUE

REVENUE	6 Months Ended
REVENUE	Jun. 30, 2022
REVENUE
REVENUE	NOTE 5—REVENUE The majority of our revenue is derived from contracts that can span from a few months to several years. We enter into contracts that can include various combinations of services, which, depending on contract type, are sometimes capable of being distinct. 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 our contracts have a single performance obligation as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, not distinct. For contracts with multiple performance obligations, including our managed service (GovernX) implementation, software and implementation, and research and subscription contracts, the Company allocates the transaction price to each performance obligation using our best estimate of the standalone selling price, or SSP, of each distinct good or service in the contract. Our contracts may include promises to transfer multiple services and products to a client. Determining whether services and products are considered distinct performance obligations that should be accounted for separately versus together may require judgment. Contract Balances The timing of revenue recognition, billings, and cash collections results in billed accounts receivables, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities). Our clients are billed based on the type of arrangement. A portion of our services is billed monthly based on hourly or daily rates. There are also client engagements in which we bill a fixed amount for our 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, we sometimes receive 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 software sales with annual invoicing, we perform a significant financing component calculation and recognize the associated interest income throughout the duration of the financing period. In addition, we reclassify 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 contract assets and contract liabilities. June 30, December 31, 2022 2021 Contract assets $ 25,880 $ 18,639 Contract liabilities $ 7,401 $ 7,049 Revenue recognized for the three and six months ended June 30, 2022 that was included in the contract liability balance at January 1, 2022 was $2.1 million and $5.7 million, respectively, and represented primarily revenue from our fixed fee and subscription contracts. Remaining Performance Obligations As of June 30, 2022, the Company had $119.1 million of remaining performance obligations, the majority of which are expected to be satisfied within the next twelve months.

NET INCOME PER COMMON SHARE

NET INCOME PER COMMON SHARE	6 Months Ended
NET INCOME PER COMMON SHARE	Jun. 30, 2022
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE	NOTE 6—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 both the three and six months ended June 30, 2022, 0.0 million The following tables set forth the computation of basic and diluted earnings per share: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Basic: Net income $ 4,957 $ 4,106 $ 9,887 $ 7,530 Weighted average common shares 48,160 48,307 48,343 48,406 Earnings per share $ 0.10 $ 0.08 $ 0.20 $ 0.16 Diluted: Net income $ 4,957 $ 4,106 $ 9,887 $ 7,530 Basic weighted average common shares 48,160 48,307 48,343 48,406 Potential common shares 2,582 3,008 2,691 3,408 Diluted weighted average common shares 50,742 51,315 51,034 51,814 Diluted earnings per share $ 0.10 $ 0.08 $ 0.19 $ 0.15

INCOME TAXES

INCOME TAXES	6 Months Ended
INCOME TAXES	Jun. 30, 2022
INCOME TAXES
INCOME TAXES	NOTE 7—INCOME TAXES The Company’s effective tax rate for the three and six months ended June 30, 2022 was 25.7% and 28.9% based on pretax income of $6.7 million and $13.9 million, respectively. The Company’s effective tax rate for the quarter ended June 30, 2022 was impacted by the earnings and losses in certain foreign jurisdictions and the impact of vesting of restricted stock units. The Company’s effective tax rate for the three and six months ended June 30, 2021 was 22.5% and 22.6%. The difference was primarily due to the impact of earnings and losses in certain foreign jurisdictions and the impact of vesting of restricted stock units.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
COMMITMENTS AND CONTINGENCIES	Jun. 30, 2022
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	NOTE 8—COMMITMENTS AND CONTINGENCIES The Company is subject to contingencies which arise through the ordinary course of business. All material liabilities of which management is aware are properly reflected in the financial statements at June 30, 2022 and December 31, 2021.

SEGMENT AND GEOGRAPHICAL INFORM

SEGMENT AND GEOGRAPHICAL INFORMATION	6 Months Ended
SEGMENT AND GEOGRAPHICAL INFORMATION	Jun. 30, 2022
SEGMENT AND GEOGRAPHICAL INFORMATION
SEGMENT AND GEOGRAPHICAL INFORMATION	NOTE 9—SEGMENT AND GEOGRAPHICAL INFORMATION The Company operates as one reportable segment consisting primarily of fact-based sourcing advisory services. The Company operates principally in the Americas, Europe and Asia Pacific. Geographical revenue information for the segment is as follows: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Revenues Americas $ 39,448 $ 40,339 $ 80,885 $ 78,429 Europe 23,255 23,715 46,718 46,457 Asia Pacific 7,998 6,543 15,661 12,282 $ 70,701 $ 70,597 $ 143,264 $ 137,168 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 by service line for the purposes of making operating decisions or allocating resources.

FINANCING ARRANGEMENTS AND LONG

FINANCING ARRANGEMENTS AND LONG-TERM DEBT	6 Months Ended
FINANCING ARRANGEMENTS AND LONG-TERM DEBT	Jun. 30, 2022
FINANCING ARRANGEMENTS AND LONG-TERM DEBT
FINANCING ARRANGEMENTS AND LONG-TERM DEBT	NOTE 10—FINANCING ARRANGEMENTS AND LONG-TERM DEBT On March 10, 2020, the Company amended and restated its senior secured credit facility to include a $86.0 million term facility and to increase the revolving commitments per the revolving facility (as amended by that certain First Amendment to Credit Agreement, dated as of June 1, 2022, the “2020 Credit Agreement”) from $30.0 million to $54.0 million. The material terms under the 2020 Credit Agreement are as follows: ● Each of the term loan facility and revolving credit facility has a maturity date of March 10, 2025 (the “Maturity Date”). ● The credit facility is secured by all of the equity interests owned by the Company, and its direct and indirect domestic subsidiaries and, subject to agreed exceptions, the Company’s direct and indirect “first-tier” foreign subsidiaries and a perfected first priority security interest in all of the Company’s and its direct and indirect domestic subsidiaries’ tangible and intangible assets. ● The Company’s direct and indirect existing and future wholly owned domestic subsidiaries serve as guarantors to the Company’s obligations under the senior secured facility. ● At the Company’s option, the credit facility bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate”, (b) the Federal Funds Rate plus 0.5% per annum and (c) the Eurodollar Rate, plus 1.0% ), plus the applicable margin (as defined below) or (ii) Eurodollar Rate (adjusted for maximum reserves) as determined by the Administrative Agent, plus the applicable margin. The applicable margin is adjusted quarterly based upon the Company’s quarterly leverage ratio. ● The term loan is repayable in nineteen consecutive quarterly installments of $1,075,000 each that commenced on June 30, 2020 and a final payment of the outstanding principal amount of the term loan on the Maturity Date. ● Mandatory repayments of term loans shall be required from (subject to agreed exceptions) (i) 100% of the net proceeds from issuances of debt and equity by the Company and its subsidiaries and (ii) 100% of the net proceeds from insurance recovery and condemnation events of the Company and its subsidiaries. ● The senior secured credit facility contains a number of covenants that, among other things, place restrictions on matters customarily restricted in senior secured credit facilities, including restrictions on indebtedness (including guarantee obligations), liens, fundamental changes, sales or disposition of property or assets, investments (including loans, advances, guarantees and acquisitions), transactions with affiliates, dividends and other payments in respect of capital stock, optional payments and modifications of other material debt instruments, negative pledges and agreements restricting subsidiary distributions and changes in line of business. In addition, the Company is required to comply with a total leverage ratio and fixed charge coverage ratio. ● The senior secured credit facility contains customary events of default, including cross-default to other material agreements, judgment default and change of control. The Company’s financial statements include outstanding borrowings of $72.3 million and $74.5 million at June 30, 2022 and December 31, 2021, respectively, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company's outstanding borrowings is approximately $70.7 million and $73.6 million at June 30, 2022 and December 31, 2021, respectively. The fair values of debt have been estimated using a discounted cash flow analysis based on the Company's incremental borrowing rate for similar borrowing arrangements. The incremental borrowing rate used to discount future cash flows is 3.8% and 2.0% at June 30, 2022 and December 31, 2021, respectively. The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions and interest rates. As of June 30, 2022 and December 31, 2021, there were no borrowings under the revolver. The Company is currently in compliance with its financial covenants.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Jun. 30, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates	Use of Estimates
Restricted Cash	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	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 at June 30, 2022 and December 31, 2021 due to the short-term nature of these accounts. Fair value measurements were applied with respect to our nonfinancial assets and liabilities measured on a nonrecurring basis, which would primarily consist of measurements to contingent consideration in a business combination. 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 measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements June 30, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 19 $ — $ — $ 19 Total $ 19 $ — $ — $ 19 Basis of Fair Value Measurements December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 1,018 $ — $ — $ 1,018 Total $ 1,018 $ — $ — $ 1,018 Liabilities: Contingent consideration (1) $ — $ — $ 2,420 $ 2,420 Total $ — $ — $ 2,420 $ 2,420 (1) Due to a restructuring of the earn-out provision associated with the 2020 acquisition of Neuralify, the $1.0 million contingent consideration became a fixed amount as of June 30, 2022 and the amount accrued was fully paid in July 2022. The following table represents the change in the contingent consideration liability during the six months ended June 30, 2022: Six Months Ended June 30, 2022 Beginning Balance $ 2,420 Neuralify earnout adjustment (1) (1,420) Ending Balance $ 1,000 (1) The Company’s financial instruments include outstanding borrowings of $72.3 million at June 30, 2022 and $74.5 million at December 31, 2021, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company's outstanding borrowings is approximately $70.7 million and $73.6 million at June 30, 2022 and December 31, 2021, respectively. The fair values of debt have been estimated using a discounted cash flow analysis based on the Company's incremental borrowing rate for similar borrowing arrangements. The incremental borrowing rate used to discount future cash flows is 3.8% and 2.0% at June 30, 2022 and December 31, 2021, respectively. The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In June 2016, the FASB issued new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable, and available-for-sale debt securities. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses and additional disclosures. As a smaller reporting company, this guidance is effective for fiscal years beginning after December 15, 2022, which is not expected to have a material impact on the Company’s consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	Jun. 30, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary of assets measured at fair value on a recurring basis	Basis of Fair Value Measurements June 30, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 19 $ — $ — $ 19 Total $ 19 $ — $ — $ 19 Basis of Fair Value Measurements December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 1,018 $ — $ — $ 1,018 Total $ 1,018 $ — $ — $ 1,018 Liabilities: Contingent consideration (1) $ — $ — $ 2,420 $ 2,420 Total $ — $ — $ 2,420 $ 2,420 (1)
Schedule of change in the contingent consideration liability	Six Months Ended June 30, 2022 Beginning Balance $ 2,420 Neuralify earnout adjustment (1) (1,420) Ending Balance $ 1,000 (1)

ACQUISITIONS (Tables)

ACQUISITIONS (Tables)	6 Months Ended
ACQUISITIONS (Tables)	Jun. 30, 2022
ACQUISITIONS
Schedule of consideration transferred and the amounts of identified assets acquired, and liabilities assumed as of the Agreement date	Cash $ 2,282 Contingent consideration 4,900 Total allocable purchase price $ 7,182
Schedule of purchase price assigned to intangible assets and the amortization period	Accounts receivable $ 226 Contract assets 1 Intangible assets 1,970 Accounts payable (79) Contract liabilities (280) Net assets acquired $ 1,838 Goodwill $ 5,344

REVENUE (Tables)

REVENUE (Tables)	6 Months Ended
REVENUE (Tables)	Jun. 30, 2022
REVENUE
Schedule of contract assets and contract liabilities	June 30, December 31, 2022 2021 Contract assets $ 25,880 $ 18,639 Contract liabilities $ 7,401 $ 7,049

NET INCOME PER COMMON SHARE (Ta

NET INCOME PER COMMON SHARE (Tables)	6 Months Ended
NET INCOME PER COMMON SHARE (Tables)	Jun. 30, 2022
NET INCOME PER COMMON SHARE
Schedule of computation of basic and diluted earnings per share	Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Basic: Net income $ 4,957 $ 4,106 $ 9,887 $ 7,530 Weighted average common shares 48,160 48,307 48,343 48,406 Earnings per share $ 0.10 $ 0.08 $ 0.20 $ 0.16 Diluted: Net income $ 4,957 $ 4,106 $ 9,887 $ 7,530 Basic weighted average common shares 48,160 48,307 48,343 48,406 Potential common shares 2,582 3,008 2,691 3,408 Diluted weighted average common shares 50,742 51,315 51,034 51,814 Diluted earnings per share $ 0.10 $ 0.08 $ 0.19 $ 0.15

SEGMENT AND GEOGRAPHICAL INFO_2

SEGMENT AND GEOGRAPHICAL INFORMATION (Tables)	6 Months Ended
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables)	Jun. 30, 2022
SEGMENT AND GEOGRAPHICAL INFORMATION
Schedule of geographical revenue information for the segment	Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Revenues Americas $ 39,448 $ 40,339 $ 80,885 $ 78,429 Europe 23,255 23,715 46,718 46,457 Asia Pacific 7,998 6,543 15,661 12,282 $ 70,701 $ 70,597 $ 143,264 $ 137,168

DESCRIPTION OF ORGANIZATION A_2

DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) - Minimum	Jun. 30, 2022 employee client country
Number of clients	800
Number of clients from top 100 enterprises in the markets	75
Number of digital-ready professionals \| employee	1,300
Number of countries \| country	20

SUMMARY OF SIGNIFICANT ACCOUN_4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Liabilities:
Contingent consideration	$ 1,000	$ 2,420
Change in the contingent consideration liability
Beginning Balance	2,420
Neuralify earnout adjustment	(1,420)
Ending Balance	1,000
Outstanding borrowings	72,300	74,500
Fair value of outstanding borrowing	$ 70,700	$ 73,600
Debt instrument, valuation technique, extensible list	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Debt instrument, measurement input, extensible list	us-gaap:MeasurementInputDiscountRateMember	us-gaap:MeasurementInputDiscountRateMember
Debt instrument, measurement input	0.038	0.020
Recurring
Assets:
Cash equivalents	$ 19	$ 1,018
Total	19	1,018
Liabilities:
Contingent consideration		2,420
Total		2,420
Change in the contingent consideration liability
Beginning Balance	2,420
Recurring \| Level 1
Assets:
Cash equivalents	19	1,018
Total	19	1,018
Recurring \| Level 3
Liabilities:
Contingent consideration		2,420
Total		$ 2,420
Change in the contingent consideration liability
Beginning Balance	$ 2,420

ACQUISITIONS - Neuralify Acquis

ACQUISITIONS - Neuralify Acquisition (Details) - Neuralify acquisition - USD ($) $ in Thousands		1 Months Ended
	Jul. 08, 2020	Oct. 31, 2021
Business Acquisition [Line Items]
Cash	$ 2,282
Contingent consideration	4,900
Total allocable purchase price	$ 7,182
Term of contingent consideration (in months)	18 months	18 months
Term of contingent consideration, extension term (in months)		6 months

ACQUISITIONS - Neuralify Acqu_2

ACQUISITIONS - Neuralify Acquisition - Acquisition costs and identified assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Jun. 30, 2022	Dec. 31, 2021	Jul. 08, 2020
Identified assets acquired, and liabilities assumed
Goodwill		$ 90,592	$ 90,790
Neuralify acquisition
Identified assets acquired, and liabilities assumed
Accounts receivable				$ 226
Contract assets				1
Intangible assets				1,970
Accounts payable				(79)
Contract liabilities				(280)
Net assets acquired				1,838
Goodwill				$ 5,344
Neuralify acquisition \| Accrued expenses and other current liabilities
Identified assets acquired, and liabilities assumed
Fair value of contingent		$ 1,000
Neuralify acquisition \| Selling, general and administrative expenses
Identified assets acquired, and liabilities assumed
Acquisition related cost	$ 100

ACQUISITIONS - Agreement Acquis

ACQUISITIONS - Agreement Acquisition (Details)	Mar. 28, 2022
Agreement Acquisition \| Software And Software Development Costs
Asset Acquisition [Line Items]
Estimated useful life of assets	4 years

REVENUE - Contract Balances (De

REVENUE - Contract Balances (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
REVENUE
Contract assets	$ 25,880	$ 18,639
Contract liabilities	$ 7,401	$ 7,049

REVENUE - Narrative (Details)

REVENUE - Narrative (Details) $ in Millions	3 Months Ended	6 Months Ended
REVENUE - Narrative (Details) $ in Millions	Jun. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)
REVENUE
Revenue recognized, included in contract liability balance	$ 2.1	$ 5.7
Remaining performance obligations	$ 119.1	$ 119.1

NET INCOME PER COMMON SHARE - A

NET INCOME PER COMMON SHARE - Antidilutive Securities (Details) - shares shares in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022
Restricted Stock Units R S U
Antidilutive securities
Securities considered antidilutive (in shares)	0	0

NET INCOME PER COMMON SHARE (De

NET INCOME PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Basic:
Net income	$ 4,957	$ 4,106	$ 9,887	$ 7,530
Weighted average common shares (in shares)	48,160	48,307	48,343	48,406
Earnings per share (in dollars per share)	$ 0.10	$ 0.08	$ 0.20	$ 0.16
Diluted:
Net income	$ 4,957	$ 4,106	$ 9,887	$ 7,530
Basic weighted average common shares (in shares)	48,160	48,307	48,343	48,406
Potential common shares (in shares)	2,582	3,008	2,691	3,408
Diluted weighted average common shares (in shares)	50,742	51,315	51,034	51,814
Diluted earnings per share (in dollars per share)	$ 0.10	$ 0.08	$ 0.19	$ 0.15

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
INCOME TAXES
Effective income tax rates (as a percent)	25.70%	22.50%	28.90%	22.60%
Pretax income	$ 6,676	$ 5,298	$ 13,914	$ 9,730

SEGMENT AND GEOGRAPHICAL INFO_3

SEGMENT AND GEOGRAPHICAL INFORMATION (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) segment	Jun. 30, 2021 USD ($)
Segment and geographical information
Number of segments \| segment			1
Revenues	$ 70,701	$ 70,597	$ 143,264	$ 137,168
Americas
Segment and geographical information
Revenues	39,448	40,339	80,885	78,429
Europe
Segment and geographical information
Revenues	23,255	23,715	46,718	46,457
Asia Pacific
Segment and geographical information
Revenues	$ 7,998	$ 6,543	$ 15,661	$ 12,282

FINANCING ARRANGEMENTS AND LO_2

FINANCING ARRANGEMENTS AND LONG-TERM DEBT (Details)	Mar. 10, 2020 USD ($) installment	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)	Mar. 09, 2020 USD ($)
FINANCING ARRANGEMENTS AND LONG-TERM DEBT
Outstanding borrowings		$ 72,300,000	$ 74,500,000
Fair value of outstanding borrowing		$ 70,700,000	$ 73,600,000
Debt Instrument, Valuation Technique [Extensible List]		us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Debt Instrument, Measurement Input [Extensible List]		us-gaap:MeasurementInputDiscountRateMember	us-gaap:MeasurementInputDiscountRateMember
Debt instrument, measurement input		0.038	0.020
Eurodollar
FINANCING ARRANGEMENTS AND LONG-TERM DEBT
Interest rate basis	Eurodollar Rate
2020 Credit Agreement
FINANCING ARRANGEMENTS AND LONG-TERM DEBT
Percentage of net proceeds from issuances of debt and equity used for mandatory repayments of the debt	100%
Percentage of net proceeds from insurance recovery and condemnation events used for mandatory repayments of the debt	100%
2020 Credit Agreement \| Federal Funds Rate
FINANCING ARRANGEMENTS AND LONG-TERM DEBT
Applicable margin (as a percent)	0.50%
2020 Credit Agreement \| Eurodollar
FINANCING ARRANGEMENTS AND LONG-TERM DEBT
Applicable margin (as a percent)	1%
2020 Credit Agreement \| Term loan facility
FINANCING ARRANGEMENTS AND LONG-TERM DEBT
Maximum borrowing capacity	$ 86,000,000
Number of quarterly installments \| installment	19
Periodic repayment	$ 1,075,000
2020 Credit Agreement \| Revolving Credit Facility
FINANCING ARRANGEMENTS AND LONG-TERM DEBT
Maximum borrowing capacity	$ 54,000,000			$ 30,000,000
Borrowings under the revolver		$ 0	$ 0