INFORMATION SERVICES GROUP INC. MANAGEMENT REPORT ON THE FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

You should read the following discussion and analysis in conjunction with our
financial statements and related notes included elsewhere in this report. Except
for historical information, the discussion in this report contains certain
forward-looking statements that involve risks and uncertainties. We have based
these forward-looking statements on our current expectations and assumptions
about future events. In some cases, you can identify forward-looking statements
by terminology, such as "may," "should," "could," "predict," "potential,"
"continue," "expect," "anticipate," "future," "intend," "plan," "believe,"
"estimate," "forecast" and similar expressions (or the negative of such
expressions.) Forward-looking statements include statements concerning 2021
revenue growth rates and capital expenditures. Forward-looking statements are
based on our beliefs as well as assumptions based on information currently
available to us, including financial and operational information, the volatility
of our stock price, current competitive conditions and the impact of COVID-19.
As a result, these statements are subject to various risks and uncertainties.
For a discussion of material risks and uncertainties that the Company faces, see
the discussion in our 2020 Annual Report on Form 10-K titled "Risk Factors" and
in this Quarterly Report on Form 10-Q under Item 1A of Part II, "Risk Factors."



BUSINESS OVERVIEW



ISG (Information Services Group) (Nasdaq: III) is a leading global technology
research and advisory firm. A trusted business partner to over 700 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 approximately 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. For more information, visit
www.isg-one.com.



Our strategy is to strengthen our existing market position and develop new
services and products to support future growth plans. As a result, we are
focused on growing our existing service model, expanding geographically,
developing new industry sectors, productizing market data assets, expanding our
managed services offerings and growing via acquisitions. Although we do not
expect any adverse conditions that will impact our ability to execute against
our strategy over the next twelve months, the more significant factors that
could limit our ability to grow in these areas include global macro-economic
conditions and the impact on the overall sourcing market, competition, our
ability to retain advisors and reductions in discretionary spending with our top
client accounts or other significant client events. Other areas that could
impact the business would also include natural disasters, pandemics, such as
COVID-19, legislative and regulatory changes and capital market disruptions.



We principally derive revenues from fees for services generated on a project by
project basis. Prior to the commencement of a project, we reach agreement with
the client on rates for services based upon the scope of the project, staffing
requirements and the level of client involvement. Revenues for services rendered
are recognized on a time and materials basis or on a fixed fee or capped fee
basis in accordance with accounting and disclosure requirements for revenue
recognition.



Revenues for time and materials contracts are recognized based on the number of
hours worked by our advisors at an agreed upon rate per hour and are recognized
in the period in which services are performed. Revenues for time and materials
contracts are billed monthly, semimonthly or in accordance with the specific
contractual terms of each project.

We also derive our revenues from certain recurring revenue streams.  These
include such annuity-based ISG offerings as ISG GovernX®, Research, Software as
a Subscription (Automation licenses), ISG Inform™ and the multi-year Public
Sector contracts.  These offerings are characterized by subscriptions (i.e.,
renewal centric as opposed to project centric revenue streams) or, in some
instances, multi-year contracts.  Our digital services now span a volume of
offerings and have become embedded as part of even our traditional transaction
services.  Digital enablement provides capabilities, digital insights and better
engagement with clients and partners.

                                       16



Our results are impacted principally by our full time consultants' utilization
rate, the number of business days in each quarter and the number of our
revenue-generating professionals who are available to work. Our utilization rate
can be negatively affected by increased hiring because there is generally a
transition period for new professionals that result in a temporary drop in our
utilization rate. Our utilization rate can also be affected by seasonal
variations in the demand for our services from our clients. The number of
business workdays is also affected by the number of vacation days taken by our
consultants and holidays in each quarter. We typically have fewer business
workdays available in the fourth quarter of the year, which can impact revenues
during that period. Time and expense engagements do not provide us with a high
degree of predictability as to performance in future periods. Unexpected changes
in the demand for our services can result in significant variations in
utilization and revenues and present a challenge to optimal hiring and staffing.
The volume of work performed for any particular client can vary widely from
period to period.



RESULTS OF OPERATIONS FOR THE ENDED THREE MONTHS SEPTEMBER 30, 2021 AND
SEPTEMBER 30, 2020


Revenues


The geographic information on the segment’s turnover is as follows:



                        Three Months Ended September 30,
                                                      Percent
Geographic Area      2021        2020      Change     Change

                                 (in thousands)
Americas           $ 42,825    $ 34,968    $ 7,857         22 %
Europe               20,138      20,928      (790)        (4) %
Asia Pacific          8,132       5,739      2,393         42 %
Total revenues     $ 71,095    $ 61,635    $ 9,460         15 %




Revenues increased $9.5 million, or approximately 15%, for the third quarter of
2021.  The increase in revenue in the Americas was primarily attributable to an
increase in our Advisory and Research service lines.  The increase in revenue in
the Asia Pacific was primarily attributable to an increase in our Advisory
service line.  The decrease in revenue in Europe was primarily attributable to a
decrease in our Advisory service line, partially offset by an increase in
Research service line revenues.  The translation of foreign currency revenues
into U.S. dollars positively impacted performance in Europe and Asia Pacific
compared to the prior year.



Operating Expenses



The following table presents a breakdown of our operating expenses by category:




                                                           Three Months Ended September 30,
                                                                                          Percent
Operating Expenses                                     2021        2020       Change      Change

                                                                    (in thousands)
Direct costs and expenses for advisors               $ 43,249    $ 36,762    $   6,487         18 %
Selling, general and administrative                    19,236      20,318  
   (1,082)        (5) %
Depreciation and amortization                           1,347       1,581        (234)       (15) %
Total operating expenses                             $ 63,832    $ 58,661    $   5,171          9 %




Total operating expenses increased $5.2 million, or approximately 9%, for the
third quarter of 2021.  The increase in operating expenses were primarily due to
higher: contract labor costs of $4.5 million, compensation costs of $2.5
million, and travel and entertainment expenses of $0.2 million.  These costs
were partially offset by lower: restructuring costs of $1.3 million and non-cash
stock compensation of $0.7 million.



Compensation costs consist of a combination of fixed and variable salaries, annual bonuses, benefits and contributions to the profit sharing plan. A portion of the compensation expense of certain billable employees is allocated between direct costs and selling, general and administrative expenses based on the relative time spent between billable and non-billable activities. Premium

                                       17



compensation is determined based on achievement against Company financial and
individual targets and is accrued monthly throughout the year based on
management's estimates of target achievement. Statutory and elective profit
sharing plans are offered to employees as appropriate. Direct costs also include
employee taxes, health insurance, workers compensation and disability insurance.



Sales and marketing costs consist principally of compensation expense related to
business development, proposal preparation and delivery and negotiation of new
client contracts. Costs also include travel expenses relating to the pursuit of
sales opportunities, expenses for hosting periodic client conferences, public
relations activities, participation in industry conferences, industry relations,
website maintenance and business intelligence activities. The Company maintains
a dedicated global marketing function responsible for developing and managing
sales campaigns, brand promotion, the ISG Index and assembling proposals.



We maintain a comprehensive program for training and professional development.
Related expenses include product training, updates on new service offerings or
methodologies and development of project management skills. Also included in
training and professional development are expenses associated with the
development, enhancement and maintenance of our proprietary methodologies and
tools and the systems that support them.



General and administrative expenses consist principally of executive management
compensation, allocations of billable employee compensation related to general
management activities, IT infrastructure, and costs for the finance, accounting,
information technology and human resource functions. General and administrative
costs also reflect continued investment associated with implementing and
operating client and employee management systems. Because our billable personnel
operate primarily on client premises or work remotely, all occupancy expenses
are recorded as general and administrative.



Depreciation and amortization expense in the third quarter of 2021 and 2020 was
$1.3 million and $1.6 million, respectively.  The decrease of $0.2 million in
depreciation and amortization expense was primarily due to prior year intangible
assets that are now fully amortized.  Our fixed assets consist of furniture,
fixtures, equipment (mainly personal computers) and leasehold improvements.
Depreciation expense is generally computed by applying the straight-line method
over the estimated useful lives of assets. We also capitalize certain costs
associated with the purchase and development of internal-use software, system
conversions and website development costs. These costs are amortized over the
estimated useful life of the software or system.



We amortize our intangible assets (e.g. client relationships and databases) over
their estimated useful lives. Goodwill related to acquisitions is not amortized
but is subject to annual impairment testing and interim impairment tests, if
triggering events are identified.



Other income (expenses), net

The following table presents a breakdown of other income (expenses), net:



                                             Three Months Ended September 30,
                                                                            Percent
Other income (expense), net              2021         2020       Change    
Change

                                                      (in thousands)
Interest income                        $      65     $    61    $      4          7 %
Interest expense                           (538)       (687)         149         22 %
Foreign currency gain (loss)                   1        (66)          67        102 %
Total other income (expense), net      $   (472)     $ (692)    $    220   
     32 %



The total decrease in $ 0.2 million, or approximately 32%, is primarily attributable to lower interest expense due to lower debt balances and lower interest rates.


Income Tax Expense


Our quarterly effective tax rate varies from period to period based on the mix
of earnings among the various state and foreign tax jurisdictions in which
business is conducted and the level of non-deductible expenses projected to
be
incurred

                                       18



during the current fiscal year.  Our effective tax rate for the three months
ended September 30, 2021 was 34.9% compared to 9.9% for the quarter ended
September 30, 2020.  The difference for the quarter ended September 30, 2021 was
primarily due to the impact of earnings and losses in certain foreign
jurisdictions, and the impact of vesting of restricted stock units.  The
Company's effective tax rate for the quarter ended September 30, 2021 was higher
than the statutory rate primarily due to the impact of foreign operations.

There were no material changes in the uncertain tax position reserves or valuation allowances during the quarter ended. September 30, 2021.

RESULTS OF OPERATIONS FOR THE NINE ENDED MONTHS SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020



Revenues



Revenues are generally derived from fixed fee contracts as well as engagements
priced on a time and materials basis, which are recorded based on actual time
worked as the services are performed. In addition, we also earn revenues which
are contingent on the attainment of certain contractual milestones.  Revenues
related to materials (mainly out­of­pocket expenses such as airfare, lodging and
meals) required during an engagement generally do not include a profit mark up
and can be charged and reimbursed separately or as part of the overall fee
arrangement. Invoices are issued to clients monthly, semimonthly or in
accordance with the specific contractual terms of each project.



We operate in one segment, fact­based sourcing advisory services. We operate
principally in the Americas, Europe, and Asia Pacific. Our foreign operations
are subject to local government regulations and to the uncertainties of the
economic and political conditions of those areas, and the revenue for our
foreign operations is predominantly invoiced and collected in local currency.



The geographic information on the segment’s turnover is as follows:



                          Nine Months Ended September 30,
                                                         Percent
Geographic Area      2021         2020        Change     Change

                                  (in thousands)
Americas           $ 121,254    $ 103,422    $ 17,832         17 %
Europe                66,595       64,044       2,551          4 %
Asia Pacific          20,414       15,273       5,141         34 %
Total revenues     $ 208,263    $ 182,739    $ 25,524         14 %



Revenues increased $25.5 million, or approximately 14%, for the nine months of
2021.  The increase in revenues in the Americas and Asia Pacific was primarily
attributable to an increase in our Advisory service line.  The increase in
revenues in Europe was primarily attributable to the increase in our Research
service line.  The translation of foreign currency revenues into U.S. dollars
positively impacted performance in Europe and Asia Pacific compared to the
prior
year.



Operating Expenses



The following table presents a breakdown of our operating expenses by category:




                                                 Nine Months Ended September 30,
                                                                                 Percent
Operating Expenses                          2021         2020        Change      Change

                                                          (in thousands)
Direct costs and expenses for advisors    $ 127,412    $ 111,539    $  15,873         14 %
Selling, general and administrative          58,768       60,792      (2,024)        (3) %
Depreciation and amortization                 3,962        4,641        (679)       (15) %
Total operating expenses                  $ 190,142    $ 176,972    $  13,170          7 %




                                       19


Total operating expenses increased $13.2 million, or approximately 7%, for the
nine months of 2021.  The increase in operating expenses were primarily due to
higher: compensation costs of $11.9 million and contract labor of $9.9 million.
 These costs were partially offset by lower: travel and entertainment expenses
of $4.7 million, non-cash stock based compensation of $1.5 million, bad debt
expense of $0.8 million, restructuring costs of $0.5 million, and communication
costs of $0.3 million.



Depreciation and amortization expense in the nine months of 2021 and 2020 was
$4.0 million and $4.6 million, respectively.  The decrease of $0.7 million in
depreciation and amortization expense was primarily due to prior year intangible
assets that are now fully amortized.  Our fixed assets consist of furniture,
fixtures, equipment (mainly personal computers) and leasehold improvements.
Depreciation expense is generally computed by applying the straight-line method
over the estimated useful lives of assets. We also capitalize certain costs
associated with the purchase and development of internal-use software, system
conversions and website development costs. These costs are amortized over the
estimated useful life of the software or system.



We amortize our intangible assets (e.g. client relationships and databases) over
their estimated useful lives. Goodwill related to acquisitions is not amortized,
but is subject to annual impairment testing and interim impairment tests, if
triggering events are identified.



Other income (expenses), net

The following table presents a breakdown of other income (expenses), net:



                                           Nine Months Ended September 30,
                                                                          Percent
Other income (expense), net            2021         2020       Change     Change

                                                    (in thousands)
Interest income                      $     196    $     188    $     8          4 %
Interest expense                       (1,794)      (2,890)      1,096         38 %
Foreign currency (loss) gain               (2)           14       (16)      (114) %
Total other income (expense), net    $ (1,600)    $ (2,688)    $ 1,088     
   40 %



The total decrease in $ 1.1 million, or approximately 40%, is primarily attributable to lower interest expense due to lower debt balances and lower interest rates.


Income Tax Expense


Our quarterly effective tax rate varies from period to period based on the mix
of earnings among the various state and foreign tax jurisdictions in which
business is conducted and the level of non-deductible expenses projected to be
incurred during the current fiscal year.  Our effective tax rate for the nine
months ended September 30, 2021 was 27.7% compared to 57.6% for the nine months
ended September 30, 2020.  The difference for the nine months ended September
30, 2021 was primarily due to the impact of earnings and losses in certain
foreign jurisdictions and the impact of vesting of restricted stock units.  The
Company's effective tax rate for the nine months ended September 30, 2021 was
higher than the statutory rate primarily due to the impact of vesting of
restricted stock units.  There were no significant changes in uncertain tax
position reserves or valuation allowances during the nine months ended September
30, 2021.


NON GAAP FINANCIAL PRESENTATION

This management's discussion and analysis presents supplemental measures of our
performance that are derived from our consolidated financial information but are
not presented in accordance with accounting principles generally accepted in the
United States of America ("GAAP"). We refer to these financial measures, which
are considered "non-GAAP financial measures" under SEC rules, as adjusted
EBITDA, adjusted net income, and adjusted earnings per diluted share, each as
defined below. See "Non-GAAP Financial Measures" below for information about our
use of these non-GAAP financial measures, including our reasons for including
these measures and reconciliations of each non-GAAP financial measure to the
most directly comparable GAAP financial measure.



                                       20



NON-GAAP FINANCIAL MEASURES


We use non-GAAP financial measures to supplement the financial information
presented on a GAAP basis.  We provide adjusted EBITDA (defined as net income,
plus interest, taxes, depreciation and amortization, foreign currency
transaction gains/losses, non-cash stock compensation, change in contingent
consideration, acquisition-related costs, severance, integration and other
expense, and financing-related costs), adjusted net income (defined as net
income, plus amortization of intangible assets, non-cash stock compensation,
foreign currency transaction gains/losses, change in contingent consideration,
acquisition-related costs, severance, integration and other expense,
financing-related costs, and write-off of deferred financing costs on a
tax-adjusted basis) and adjusted net income per diluted share, excluding the net
of tax effect of the items set forth in the table below. These are non-GAAP
measures that the Company believes provide useful information to both management
and investors by excluding certain expenses and financial implications of
foreign currency translations that management believes are not indicative of
ISG's core operations. These non-GAAP measures are used by the Company to
evaluate the Company's business strategies and management's performance.  These
non-GAAP financial measures exclude non-cash and certain other special charges
that many investors believe may obscure the user's overall understanding of the
Company's current financial performance and the Company's prospects for the
future. We believe that these non-GAAP measures provide useful information to
investors because they improve the comparability of the financial results
between periods and provide for greater transparency of key measures used to
evaluate the Company's performance.




                                                      Three Months Ended             Nine Months Ended
                                                        September 30,                  September 30,
                                                     2021            2020           2021           2020

                                                                       (in thousands)
Net income                                        $    4,421       $   2,055      $  11,951      $   1,307
Interest expense (net of interest income)                473             626          1,598          2,702
Income taxes                                           2,370             227          4,570          1,772
Depreciation and amortization                          1,347           1,581          3,962          4,641
Change in contingent consideration                        47              48            113             48
Acquisition-related costs (1)                             18             100           (14)            350
Severance, integration and other expense                  41           1,362          1,341          1,730
Financing-related costs                                    -               -              -             92
Foreign currency transaction (gain) loss                 (1)              66              2           (14)
Non-cash stock compensation                            1,499           2,159          5,075          6,544
Adjusted EBITDA                                   $   10,215       $   8,224      $  28,598      $  19,172





                                                        Three Months Ended                Nine Months Ended
                                                           September 30,                    September 30,
                                                       2021              2020            2021            2020

                                                                          (in thousands)
Net income                                         $       4,421      $    2,055      $   11,951      $    1,307
Non-cash stock compensation                                1,499           2,159           5,075           6,544
Intangible amortization                                      643             913           2,001           2,618
Change in contingent consideration                            47              48             113              48
Acquisition-related costs (1)                                 18             100            (14)             350
Severance, integration and other expense                      41           1,362           1,341           1,730
Financing-related costs                                        -               -               -              92
Write-off of deferred financing costs                          -               -               -             167
Foreign currency transaction (gain) loss                     (1)           
  66               2            (14)
Tax effect (2)                                             (719)         (1,487)         (2,726)         (3,691)
Adjusted net income                                $       5,949      $    5,216      $   17,743      $    9,151




                                       21




                                                      Three Months Ended            Nine Months Ended
                                                        September 30,                 September 30,
                                                     2021           2020           2021           2020
Net income per diluted share                       $    0.09      $    0.04      $    0.23      $    0.03
Non-cash stock compensation                             0.03           0.04           0.10           0.13
Intangible amortization                                 0.01           0.02           0.04           0.05
Change in contingent consideration                      0.00           0.00           0.00           0.00
Acquisition-related costs (1)                           0.00           0.00         (0.00)           0.01
Severance, integration and other expense                0.00           0.03           0.02           0.03
Financing-related costs                                    -              -              -           0.00
Write-off of deferred financing costs                      -              -              -           0.00
Foreign currency transaction (gain) loss              (0.00)           0.00           0.00         (0.00)
Tax effect (2)                                        (0.01)         (0.03)         (0.05)         (0.07)
Adjusted net income per diluted share              $    0.12      $    0.10

$ 0.34 $ 0.18

_________________________________

(1) Includes charges related to acquisition costs and non-cash fair value

adjustments to pre-acquisition contract liabilities.

(2) Marginal tax rate of 32%, reflecting we federal income tax rate of 21% plus

     11% attributable to U.S. states and foreign jurisdictions.



LIQUIDITY AND CAPITAL RESOURCES


Liquidity



Our primary sources of liquidity are cash flows from operations, existing cash
and cash equivalents and our revolving credit facility. Operating assets and
liabilities consist primarily of receivables from billed and unbilled services,
accounts payable, accrued expenses, and accrued payroll and related benefits.
The volume of billings and timing of collections and payments affect these
account balances.



As of September 30, 2021, our cash, cash equivalents and restricted cash were
$54.6 million, a net increase of $10.8 million from December 31, 2020, which was
primarily attributable to the following:



? net cash provided by operating activities of $ 39.5 million;

? treasury shares repurchased from $ 13.4 million;

? payments related to withholding tax for stock-based compensation of $ 6.7

   million;



? repayment of the principal on the loans of $ 3.2 million; and

? cash dividends paid to shareholders of $ 2.9 million.



Capital Resources



On March 10, 2020, the Company amended and restated its senior secured credit
facility to include an $86.0 million term facility and a $54.0 million revolving
facility (the "2020 Credit Agreement").  The material terms under the 2020
Credit Agreement are as follows:



? The Term Loan Facility and the Revolving Credit Facility each have a term

date of March 10, 2025 (the due date “).

The credit facility is secured by all of the interests held by the

Company, and its direct and indirect national subsidiaries and, subject to

? agreed exceptions, direct and indirect “first rank” foreigners of the Company

subsidiaries and perfect first-rank security in all

The tangible and tangible assets of the Company and of its direct and indirect national subsidiaries

   intangible assets.


                                       22


The existing and future direct and indirect domestic assets of the wholly-owned Company

? subsidiaries guarantee the Company’s obligations under the

secure installation.

At the option of the Company, the credit facility bears interest at an annual rate

equal to (i) the “base rate” (which is the greater of (a) the rate

publicly announced from time to time by the administrative officer as his “first

? “, (b) the federal funds rate plus 0.5% per annum and (c) the Eurodollar

Rate, increased by 1.0%, increased by the applicable margin (as defined below) or (ii)

Eurodollar rate (adjusted for maximum reserves) as determined by the

Administrative agent, increased by the applicable margin. The applicable margin is

quarterly adjusted based on the Company’s quarterly leverage ratio.

The term loan is repayable in nineteen consecutive quarterly installments of

? $ 1,075,000 everyone who started the June 30, 2020 and a final payment of the

the outstanding principal of the term loan at the maturity date.

Mandatory repayments of term loans will be required from (subject to

exceptions) (i) 100% of the proceeds from sales of assets by the Company and its

? subsidiaries, (ii) 100% of the net proceeds from debt and equity issues

by the Company and its subsidiaries and (iii) 100% of the net proceeds of

recovery and conviction claims from the Company and its subsidiaries.

The senior secured credit facility contains a number of covenants which, between

other things, impose restrictions on matters usually reserved for seniors

secured credit facilities, including restrictions on indebtedness (including

warranty obligations), privileges, fundamental changes, sales or alienation of

? property or assets, investments (including loans, advances, guarantees and

acquisitions), transactions with affiliates, dividends and other payments in

compliance with share capital, optional payments and changes in other elements

debt securities, negative collateral and restricting agreements

breakdowns and changes of activity sectors. In addition, the Company is

respect a total leverage ratio and a fixed charge coverage ratio.

The senior secured credit facility contains typical events of default,

? including cross default to other material agreements, lack of judgment and

   change of control.



The Company's financial statements include outstanding borrowings of $75.6
million at September 30, 2021 and $78.8 million at December 31, 2020, 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 $74.7 million and $77.7 million at September 30,
2021 and December 31, 2020, 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 1.9%. 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 September 30, 2021 and December 31, 2020,
there were no borrowings under the revolver.



We anticipate that our current cash and the ongoing cash flows from our
operations will be adequate to meet our working capital, capital expenditure,
and debt financing needs for at least the next twelve months. The anticipated
cash needs of our business could change significantly if we pursue and complete
additional business acquisitions, if our business plans change, if economic
conditions change from those currently prevailing or from those now anticipated,
or if other unexpected circumstances arise that may have a material effect on
the cash flow or profitability of our business, including the potential impacts
of the COVID-19 pandemic and the severity of the related economic downturn and
length of time of an economic recovery. If we require additional capital
resources to grow our business, either internally or through acquisition, or
maintain liquidity, we may seek to sell additional equity securities or to
secure additional debt financing. The sale of additional equity securities or
certain forms of debt financing could result in additional dilution to our
stockholders. We may not be able to obtain financing arrangements in amounts or
on terms acceptable to us in the future.



The Company has financial covenants underlying its debt which require a Debt to
adjusted EBITDA ratio of 3.25.  In light of the pandemic, there is uncertainty
regarding the marketplace demand for the Company's services and thus the
Company's future revenue generation.  Accordingly, in light of this uncertainty,
the Company has developed plans to further reduce operating expenses to the
extent more prolonged revenue shortfalls are experienced which would prevent

                                       23


the Company to comply with its financial commitments. The Company is currently meeting its financial commitments.

Dividend program

In August 2021, the Company announced it will pay a third-quarter dividend of
$0.03 per share of common stock. The Company expects to pay a total cash
dividend of $0.12 per share over the four quarters ending March 2022. On
November 4, 2021, the Board of Directors approved the fourth-quarter dividend of
$0.03 per share, payable December 17, 2021, to shareholders of record as of
December 3, 2021. The dividends are accounted for as a decrease to Stockholders'
Equity. All future dividends will be subject to Board approval.



Off-balance sheet provisions

We do not have any off-balance sheet financing arrangements or liabilities,
guarantee contracts, retained or contingent interests in transferred assets or
any obligation arising out of a material variable interest in an unconsolidated
entity.


Recently published accounting position papers

See note 3 to our condensed consolidated financial statements included elsewhere in this report.

Critical accounting policies and accounting estimates



Our discussion and analysis of our financial condition and results of operations
is based upon our consolidated financial statements. We prepare these financial
statements in conformity with U.S. generally accepted accounting principles. As
such, we are required to make certain estimates, judgments and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the periods presented. We base our estimates on historical experience, available
information and various other assumptions we believe to be reasonable under the
circumstances. On an on-going basis, we evaluate our estimates; however, actual
results may differ from these estimates under different assumptions or
conditions. There have been no material changes or developments in our
evaluation of the accounting estimates and the underlying assumptions or
methodologies that we believe to be Critical Accounting Policies and Estimates
as disclosed in our Annual Report on Form 10-K, for the year ended December 31,
2020.

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50+ tennis group shares a love for the game and camaraderie | Way of life

Every Tuesday and Friday afternoon, Jack Myers and his friends take over three of the …

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