SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2026

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

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 as of March 31, 2026 and December 31, 2025 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

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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, 2026
		Level 1			Level 2			Level 3			Total
Assets:
Cash equivalents		$	98		$	—		$	—		$	98
Total		$	98		$	—		$	—		$	98

Liabilities:
Contingent consideration (1)		$	—		$	—		$	339		$	339
Total		$	—		$	—		$	339		$	339


		Basis of Fair Value Measurements
		December 31, 2025
		Level 1			Level 2			Level 3			Total
Assets:
Cash equivalents		$	98		$	—		$	—		$	98
Total		$	98		$	—		$	—		$	98

Liabilities:
Contingent consideration (1)		$	—		$	—		$	334		$	334
Total		$	—		$	—		$	334		$	334

(1)As of March 31, 2026 and December 31, 2025, the noncurrent contingent consideration is included in “Other liabilities”.

The following table represents the change in contingent consideration liability during the three months ended March 31, 2026:


		Three Months Ended
		March 31,
		2026
Beginning Balance		$	334
Accretion of contingent consideration			5
Ending Balance		$	339

The Company’s accompanying unaudited condensed consolidated financial instruments include outstanding borrowings of $59.2 million at both March 31, 2026 and December 31, 2025, 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 at both March 31, 2026 and December 31, 2025. 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 5.3% at both March 31, 2026 and December 31, 2025, respectively. The Company also considered recent transactions of peer group companies for similar instruments with comparable terms and maturities as well as an analysis of current market conditions and interest rates. In the first quarter of 2026, the Company borrowed $20.0 million and subsequently repaid $20.0 million of the outstanding balance on its revolving credit facility. The Company is currently in compliance with its financial covenants.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Income Statement Disaggregation

In November 2024, the Financial Accounting Standards Board (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.

Intangibles-Goodwill and Other-Internal-Use Software

In September 2025, the FASB issued ASU 2025-06 to modernize the accounting for software costs. Under the new guidance, internal-use software costs are capitalized when management has authorized and committed to funding the project, and it is probable that the software will be completed and used for its intended function. This updated guidance addresses challenges in applying outdated guidance to modern software development methods, such as agile programming, which are incremental and iterative rather than sequential. The ASU is effective on a prospective basis, with the option for

retrospective application, for annual periods beginning after December 15, 2027. The Company is currently evaluating the impact on our consolidated financial statements.

- Definition

Disclosure of accounting policy for the use of estimates in the preparation of financial statements in conformity with generally accepted accounting principles.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
-SubTopic 235
-Name Accounting Standards Codification
-Section S50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478671/942-235-S50-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
-SubTopic 235
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-05(b)(2))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477314/942-235-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 275
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482861/275-10-50-12

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 275
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482861/275-10-50-9

Reference 5: http://www.xbrl.org/2003/role/exampleRef
-Topic 275
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482836/275-10-55-6

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 275
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482861/275-10-50-6

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 275
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482861/275-10-50-4

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-SubTopic 10
-Topic 275
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482861/275-10-50-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (c)
-SubTopic 10
-Topic 275
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482861/275-10-50-1

+ Details

Information Services Group Inc. 10-Q