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sgrp20251231_10k.htm
0001004989 SPAR GROUP, Inc. false --12-31 FY 2025 true true true false Cybersecurity holds a significant role within our risk management procedures and remains a focal point for our Board and management. Under the Board's oversight of general risk identification and management activities, the Audit Committee monitors cybersecurity risks. Committee members engage in comprehensive discussions with management regarding these risks, as well as the measures taken to safeguard the Company's information systems and security, along with reviewing management's steps towards data privacy protection. Additionally, the Audit Committee receives annual cybersecurity updates from senior management, covering both existing and emerging risks, management's responses and mitigation efforts, any cybersecurity or data privacy incidents, and the status of key information security initiatives. Furthermore, our Board members regularly hold informal discussions with management about cybersecurity news events and any updates to our cybersecurity risk management and strategy programs. Cybersecurity holds a significant role within our risk management procedures and remains a focal point for our Board and management. Under the Board's oversight of general risk identification and management activities, the Audit Committee monitors cybersecurity risks. Committee members engage in comprehensive discussions with management regarding these risks, as well as the measures taken to safeguard the Company's information systems and security, along with reviewing management's steps towards data privacy protection. Additionally, the Audit Committee receives annual cybersecurity updates from senior management, covering both existing and emerging risks, management's responses and mitigation efforts, any cybersecurity or data privacy incidents, and the status of key information security initiatives. Furthermore, our Board members regularly hold informal discussions with management about cybersecurity news events and any updates to our cybersecurity risk management and strategy programs. Cybersecurity holds a significant role within our risk management procedures and remains a focal point for our Board and management. Under the Board's oversight of general risk identification and management activities, the Audit Committee monitors cybersecurity risks. Committee members engage in comprehensive discussions with management regarding these risks, as well as the measures taken to safeguard the Company's information systems and security, along with reviewing management's steps towards data privacy protection. Additionally, the Audit Committee receives annual cybersecurity updates from senior management, covering both existing and emerging risks, management's responses and mitigation efforts, any cybersecurity or data privacy incidents, and the status of key information security initiatives. Furthermore, our Board members regularly hold informal discussions with management about cybersecurity news events and any updates to our cybersecurity risk management and strategy programs. Cybersecurity holds a significant role within our risk management procedures and remains a focal point for our Board and management. Under the Board's oversight of general risk identification and management activities, the Audit Committee monitors cybersecurity risks. Committee members engage in comprehensive discussions with management regarding these risks, as well as the measures taken to safeguard the Company's information systems and security, along with reviewing management's steps towards data privacy protection. Additionally, the Audit Committee receives annual cybersecurity updates from senior management, covering both existing and emerging risks, management's responses and mitigation efforts, any cybersecurity or data privacy incidents, and the status of key information security initiatives. Furthermore, our Board members regularly hold informal discussions with management about cybersecurity news events and any updates to our cybersecurity risk management and strategy programs. Cybersecurity holds a significant role within our risk management procedures and remains a focal point for our Board and management. Under the Board's oversight of general risk identification and management activities, the Audit Committee monitors cybersecurity risks. Committee members engage in comprehensive discussions with management regarding these risks, as well as the measures taken to safeguard the Company's information systems and security, along with reviewing management's steps towards data privacy protection. Additionally, the Audit Committee receives annual cybersecurity updates from senior management, covering both existing and emerging risks, management's responses and mitigation efforts, any cybersecurity or data privacy incidents, and the status of key information security initiatives. Furthermore, our Board members regularly hold informal discussions with management about cybersecurity news events and any updates to our cybersecurity risk management and strategy programs. true true false false false false true false 0.01 0.01 2,000,000 2,000,000 0 0 0 0 0.01 0.01 47,000,000 47,000,000 24,129,991 24,129,991 23,449,701 23,449,701 632,485 1,205,485 2 1 3 0 2 1 0 0 3 7 3 7 3 5 5 25 1.5 2.0 800,000 3 0 1 4 0 0 no 0 0 no 0 0 0 0 0 117,500 3 0 2 0 1.04 0.13 1.04 0.13 827 545 851 915 State taxes in Georgia, Mississippi, Michigan, and California for 2025 made up the majority (greater then 50 percent) of the tax effect in this category. These expenses are reflected in "Selling, general, and administrative expense" in the consolidated statements of operations and comprehensive loss. 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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2025

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from                    to                  

 

Commission file number 0-27408

SPAR GROUP, INC.
(Exact name of Registrant as specified in its charter)

 

Delaware

33-0684451

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

  

  

110 East Boulevard, Suite 1600 , Charlotte, North Carolina

28203

(Address of principal executive offices)

(Zip Code)

 

Registrant's telephone number, including area code: (704) 837-1651

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.01 per share

SGRP

The NASDAQ Stock Market LLC

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☐  No  ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ☐  No   ☒

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒   No  ☐

 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)  Yes  ☒   No  ☐

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.). (Check one):

 

Large Accelerated Filer ☐Accelerated Filer ☐ 
  
Non-Accelerated Filer ☒Smaller reporting company ☒
  
Emerging Growth Company ☐ 

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

 

 
 

 

Indicate by check mark whether the Registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the Registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

 

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

 

The aggregate market value of the Common Stock of the Registrant held by non-affiliates of the Registrant on December 31, 2025, based on the closing price of the Common Stock of $0.79 per share as reported by the Nasdaq Capital Market on such date, was approximately $9,249,927.

 

The number of shares of the Registrant's Common Stock outstanding as of March 15, 2026, was 24,129,991 shares.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Portions of the Definitive Proxy Statement on Schedule 14A for the registrant's 2026 Annual Meeting of Stockholders, are incorporated by reference into Part III of this Form 10-K, and various Exhibits are incorporated by reference into Part IV of this Form 10-K.

 

 

 

 

 

 

 

 

 

 

 
 

 

 

SPAR GROUP, INC.

ANNUAL REPORT ON FORM 10-K

 

INDEX

 

    

PART I

 

    

 

 

Page 

 

    

Item 1

Business

5

Item 1A

Risk Factors

8

Item 1B

Unresolved Staff Comments

11
Item 1C Cybersecurity 11

Item 2

Properties

12

Item 3

Legal Proceedings

12

Item 4

Mine Safety Disclosures

12

 

    

PART II

 

 

    

Item 5

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

13

Item 6

[Reserved]

 

Item 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

14

Item 7A

Quantitative and Qualitative Disclosures about Market Risk

17

Item 8

Financial Statements and Supplementary Data

17

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

17

Item 9A

Controls and Procedures

18

Item 9B

Other Information

18
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 18

 

    

PART III

 

    

Item 10

Directors, Executive Officers and Corporate Governance

19

Item 11

Executive Compensation

19

Item 12

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

19

Item 13

Certain Relationships and Related Transactions, and Director Independence

19

Item 14

Principal Accountant Fees and Services

19

 

    

PART IV

 

    

Item 15

Exhibits and Financial Statement Schedules

21

Item 16

Form 10-K Summary

26

 

Signatures

27

 

 
 

 

 
 

NOTE ON Forward-Looking Statements

 

This Annual Report on Form 10-K for the year ended December 31, 2025 (this "Annual Report"), contains forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, made by, or respecting, SPAR Group, Inc. ("SGRP" or the "Corporation") and its subsidiaries (and SGRP together with its subsidiaries may be referred to as "SPAR Group", the "Company" "SPAR", "We", or "Our"). There also are "forward-looking statements" contained in SGRP's definitive Proxy Statement respecting its 2026 Annual Meeting of Stockholders (the "Proxy Statement"), which SGRP expects to file on or about May 23, 2026, with the Securities and Exchange Commission (the "SEC"), and SGRP's Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and statements as and when filed with the SEC (including this Annual Report, the Proxy Statement and such Current Reports, each a "SEC Report").

 

Readers can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Words such as "may," "will," "expect," "intend," "believe," "estimate," "anticipate," "continue," "plan," "project," or the negative of these terms or other similar expressions also identify forward-looking statements. Forward-looking statements made by the Company in this Annual Report may include (without limitation) statements regarding: risks, uncertainties, cautions, circumstances and other factors ("Risks"); Those Risks include (without limitation): the impact of the news of the proposed acquisition of the Corporation by Highwire Capital in an all cash transaction (the “Proposed Acquisition”) or developments in it; the uncertainty of the closing of the Proposed Acquisition within the anticipated time period, or at all, due to any reason, including any failure to satisfy the conditions to the consummation of the Proposed Acquisition or to complete any necessary financing arrangements; the risk that the Proposed Acquisition disrupts our current plans and operations or diverts management's attention from its ongoing business; the nature, cost and outcome of any legal proceedings related to the Proposed Acquisition; uncertainty of satisfaction of closing conditions respecting the Proposed Acquisition; the impact of the Corporation’s continued strategic review process, or any resulting action or inaction, should the Proposed Acquisition not occur; the impact of selling certain of the Corporation’s subsidiaries or any resulting impact on revenues, earnings or cash; the impact of adding new directors or new finance team members; the potential and continuing negative effects of the COVID pandemic on the business of the Corporation and its subsidiaries; the Corporation’s potential non-compliance with applicable Nasdaq annual stockholder meeting, director independence, bid price or other rules; the Company’s cash flow or financial condition; and plans, intentions, expectations, guidance or other information respecting the pursuit or achievement of the Corporation’s corporate objectives. The Company's forward-looking statements also include (without limitation) those made in this Annual Report in "Business," "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Directors, Executive Officers and Corporate Governance," "Executive Compensation," "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters," and "Certain Relationships and Related Transactions, and Director Independence."

 

You should carefully review and consider the Company's forward-looking statements (including all risk factors and other cautions and uncertainties) and other information made, contained or noted in or incorporated by reference into this Annual Report, but you should not place undue reliance on any of them. The results, actions, levels of activity, performance, achievements or condition of the Company (including its subsidiaries, assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, legal costs, liabilities, liquidity, locations, marketing, operations, performance, prospects, sales, strategies, taxation or other achievement, results, risks, trends or condition) and other events and circumstances planned, intended, anticipated, estimated or otherwise expected by the Company (collectively, "Expectations"), and our forward-looking statements (including all Risks) and other information reflect the Company's current views about future events and circumstances. Although the Company believes those Expectations and views are reasonable, the results, actions, levels of activity, performance, achievements or condition of the Company or other events and circumstances may differ materially from our Expectations and views, and they cannot be assured or guaranteed by the Company, since they are subject to Risks and other assumptions, changes in circumstances and unpredictable events (many of which are beyond the Company's control). In addition, new Risks arise from time to time, and it is impossible for the Company to predict these matters or how they may arise or affect the Company. Accordingly, the Company cannot assure you that its Expectations will be achieved in whole or in part, that it has identified all potential Risks, or that it can successfully avoid or mitigate such Risks in whole or in part, any of which could be significant and materially adverse to the Company and the value of your investment in the Company's Common Stock. 

 

These forward-looking statements reflect the Company's Expectations, views, Risks and assumptions only as of the date of this Annual Report, and the Company does not intend, assume any obligation, or promise to publicly update or revise any forward-looking statements (including any Risks or Expectations) or other information (in whole or in part), whether as a result of new information, new or worsening Risks or uncertainties, changed circumstances, future events, recognition, or otherwise.  
 
4
 

 

PART I

 

Item 1. Business 

 

Our Company

 

SPAR Group, Inc., a Delaware corporation ("SGRP" or the "Corporation"), and its subsidiaries (together with SGRP, "SPAR Group" or the "Company"), is a leading merchandising and brand marketing services company, providing a broad range of sales enhancing services to retailers across most classes of trade and consumer goods manufacturers and distributors. Our goal is to be the most creative, energizing and effective retail services company that drives sales, margins and operating efficiency for our clients.  

 

As of December 31, 2025, we operated in the United States ("U.S.") and Canada, having exited Mexico, Brazil, South Africa, China, Japan and India during 2024. Now focused on the U.S. and Canada, we successfully execute programs through our robust logistics, reporting and communication technology, which provides clients value through real-time insight on store / product conditions. 

  

With more than 50 years of experience, a focus on excellence and industry leadership, we continue to grow our long-term relationships with some of the world's leading businesses. Our unique combination of resource scale, deep expertise, advanced technology and unwavering commitment to excellence, separates us from the competition.  

  

Our focus is services. Our team works closely with clients to determine their key objectives to execute, focusing on enhancing their sales and profit. At retail, our merchandising brand marketing specialists perform a wide range of programs to maximize product sell-through to consumers. Some of these programs include launching new products, installing displays, assembling product fixtures, and ensuring shelves are fully stocked and reordering when they are not. We also assist with sales and customer service. As retailers adapt to changes and new opportunities, our team engages in the total renovations and transformation of stores, as well as preparing new locations for grand openings. Our distribution associates work in retail and consumer goods distribution centers to prepare the centers to open, testing systems, putting away, picking product and providing peak staffing services for our clients. 

  

We provide the "last two feet" of retail and consumer goods product merchandising and marketing. Our clients make great products. We ensure these products are presented in a compelling and exciting way exactly when and where they need to be to drive sales and margin. Our technology adds to these services by providing clients with detailed insight across all aspects of individual stores. 

  

Our Industry

 

The merchandising and marketing outsourced services industry plays an important role in the growth and performance of some of the world’s most successful product and retail companies. Merchandising services include placing orders, retail shelf maintenance, display setup, reconfiguring products on store shelves and replenishing product inventory. Additional marketing services include, but are not limited to, new store sets and remodels, audits, sales assistance, installation and assembly, product demos/sampling, promotion and more. The Company believes that merchandising and marketing services add value to retailers, manufacturers and other businesses by making a product more visible and more available to consumers.

 

Historically, retailers staffed their stores to ensure the store was well merchandised and product was properly featured and placed. However, in an effort to control costs and improve margins, most retailers have reduced store payroll and increased their reliance on distributors to set up their own products and merchandise the shelves on behalf of the retailer. To begin, distributors utilized their own sales representatives to do this work. Over time, this resulted in competing representatives working in the same stores. This often led to the best presentation of merchandise resulting from the last distributor representative physically in the store. As a result, retailers began looking for third parties who could manage the merchandising process and ensure that the store, in total, was ready for the consumer. The result was the growth of the merchandising and marketing services industry. 

 

We believe this industry will continue to grow and is more important today than ever before. With the acceleration of digital and online retailing, the pressure on the physical store to remain relevant, efficient and compelling has never been higher. In addition, product manufacturers are constantly trying to grab the consumer’s attention and make sure they are everywhere the consumer wants to shop. These are exactly the issues merchandising and marketing services companies solve. 

 

Merchandising and marketing services companies work to ensure the store is exceptionally merchandised and products thoughtfully featured while enabling the retailer to maintain margins and leverage payroll. As the industry evolves, these services will continue to be a significant part of retailer and manufacturer success.

 

With more than 50 years of history, the Company has established itself as a strategic partner to many of the world’s most exciting product manufacturers and retailers. 

 

Our Growth Strategy

 

As the need for flexibility and efficiency in merchandising and marketing services continues to increase, brand owners, consumer goods companies, manufacturers, distributors, and retailers will continue to rely on third-party providers for these services. SPAR Group is uniquely able to meet these needs because of our North America reach, more than 50-year track record, access to thousands of merchandisers, breadth of capability, unwavering focus on excellence and deep expertise. We combine great people, an understanding of what is needed and unique technologies, enabling us to offer enhanced services.

 

To capitalize on the growing demand, the Company’s business strategy is focused on three (3) priorities: 1) Grow the Core Business; 2) Introduce or Acquire New Services; and 3) Invest in Technology. The result of this strategic framework will be top-line growth, expanded margins, more value for clients and higher levels of free cash flow to allow us to invest in future growth.

 

Grow the Core Business

 

The Company is constantly pursuing new core business services while working to earn more business from current clients. We have a significant number of long-tenured clients that, in order to ensure we understand their businesses, SPAR Group invests resources in people, technology and time, and thus we are well-positioned to meet their needs in the future. This includes expanding the services we offer to existing clients. At the same time, we pursue and solicit requests for proposals ("RFPs"), we actively market our services, we participate in industry events, and we continuously look for opportunities to grow our business. We believe our history, relationships, expertise, technology and scale are all competitive advantages for us. 

 

5
 

 

Introduce or Acquire New Services

 

The changing retail landscape and need for enhanced digital, e-commerce, and fulfillment capability along with the opportunities arising from the emergence of Artificial Intelligence ("AI"), deep learning, and computer vision shapes our thinking. The Company believes in testing new ideas and services and applying its considerable existing expertise in new ways to increase revenues and expand client relationships. Our objective is to identify and introduce new or complimentary capabilities that we believe the market and our clients need now and in the future. To accomplish this, we pursue business partnerships, look for acquisitions and joint ventures and explore ideas based on market trends and our own unique client experiences. Our market positioning provides us with an unparalleled window into changes and opportunities in the markets we serve. We carefully measure the results of these tests and look for new services that can have a material impact on our financial and operational performance. 

 

Invest in Technology

 

We believe our current SPARView technology provides us with a competitive advantage in the marketplace. Our technology enables us to communicate, plan, track, analyze, and optimize our merchandising and marketing services work. However, we recognize that technology and our opportunity to successfully leverage technology continues to change. As a result, we are constantly adapting and innovating. We explore relationships within and across geographies and businesses with solution providers, while simultaneously making investments in our own solutions, with a focus to provide clients with better results, through our broader capability. This will facilitate our ability to offer higher value services over time. Our objective is to provide technology to field merchandisers, our client partners and our management to make smarter decisions that yield better customer and Company results.

 

Our Business Segments

 

In 2024, the Company operated through three segments: Americas, Asia Pacific ("APAC"), and Europe, Middle East and Africa ("EMEA"). The Americas segment encompassed the U.S., Canada, Mexico, and Brazil in 2024. The APAC segment included Japan, China, Australia, and India. The EMEA segment consisted of South Africa. As part of the strategic review of our businesses, the Company has exited all its international operations except Canada. As a result, the Company operated in U.S. and Canada in 2025. The financial results for the full year of 2025 incorporated the results of these two segments and the financial results for the full year of 2024 incorporated the results of the U.S., Canada and All Other which included APAC, EMEA, and Mexico.

 

The total business is led and operated from our headquarters in Charlotte, North Carolina. Our Canada business has a regional leadership office in Vaughan, Ontario. 

 

The following table provides details of the structure of our businesses as of December 31, 2025:

 

 

Primary Territory

 Entity Name

SGRP Percentage

Ownership

  

 

Principal Office Location

 

        
United States of America SPAR Marketing Force, Inc. 100%   Charlotte, North Carolina

 

SPAR Assembly and Installation, Inc.

100%

  

Charlotte, North Carolina

 

 Resource Plus of North Florida, Inc. ("RPI")

100%

  

Charlotte, North Carolina
Canada SPAR Canada Inc, 100%   Vaughan, Ontario, Canada

 

The Company tracks and reports certain financial information separately for the individual countries using the same metrics. The primary measurement utilized by management is operating segment gross margin, historically the key indicator of long-term growth and profitability. Certain financial information regarding each of the Company's segments, which includes their respective net revenues, and cost of revenue for each of the years ended December 31, 2025 and 2024, and their respective assets as of December 31, 2025 and 2024, is provided in Note 12 to the Company's Consolidated Financial Statements – Segment Information, below.

 

Our Services

 

The Company currently provides five (5) principal types of services: Merchandising, Marketing and Category Management, Remodel and Retail Transformation, Assembly and Installation, Fulfilment and Distribution, and Business Analytics and Insights.

 

Merchandising, Marketing and Category Management

 

Merchandising, Marketing, and Category Management services are pivotal in ensuring that retail environments are optimally organized, products are well-presented, and promotions are effectively implemented to drive sales and enhance customer engagement. This category encompasses a broad range of activities tailored to maintain and elevate the retail experience, including: (i) resets and cut-ins, which involve the strategic rearrangement or introduction of products within the retail space to keep the store layout fresh and aligned with current marketing strategies or consumer trends; (ii) price and inventory audits, which ensure that pricing is accurate and inventory levels are properly maintained, providing valuable insights for inventory management and pricing strategies; (iii) stock replenishment and rotation services, which are essential for keeping shelves well-stocked and products fresh, especially for perishable goods, thereby enhancing customer satisfaction and minimizing waste; (iv) out of stock management, which focuses on minimizing the occurrence of stockouts and efficiently addressing them when they happen, thus reducing lost sales opportunities and maintaining customer trust; (v) promotional event setup, which entails the planning and execution of in-store events or displays to highlight specific products or sales promotions, creating an engaging shopping experience; (vi) display and shelf services, which focus on the maintenance and arrangement of shelves and displays to ensure products are presented attractively; (vii) planogram maintenance, which ensures that the layout of products on shelves aligns with a strategic plan to optimize retail space and product visibility; (viii) POP (Point of Purchase) installation and management, which involves setting up and managing marketing materials at the point of purchase to capture customer attention and encourage sales; and (ix) display setup and management, which includes the design, assembly, arrangement, and maintenance of product displays to attract customer attention, highlight new products or promotions, and create an engaging shopping environment. Together, these services are crucial for retail success, ensuring products are visible, accessible, and appealing to customers while maintaining a coherent and engaging retail environment that drives shopper engagement and sales performance.

 

Remodel and Retail Transformation

 

Remodel & Retail Transformation encompasses a range of strategic services designed to update and revitalize retail environments, ensuring they meet contemporary shopping expectations and trends. This category includes (i) store remodels, where retail spaces undergo comprehensive renovations to enhance aesthetics, functionality, and shopper experience, (ii) store department resets which involve the reorganization and updating of specific sections within a store to improve navigation and product presentation, (iii) fixture and banner installations, which contribute to refreshing the store's visual appeal and marketing communication, (iv) pop-up store services which offer temporary retail setups that can test new markets, products, or concepts in an agile and cost-effective manner and (v) store closings, managed with a focus on efficiency and minimal disruption, ensuring that transitions are smooth for both the retailer and its customers. Through these services, Remodel & Retail Transformation aims to keep retail environments dynamic, engaging, and aligned with brand identity and consumer expectations.

 

6
 

 

Assembly and Installation

 

Assembly and Installation services play a crucial role in enhancing the retail and consumer experience by ensuring that products are properly assembled and set up, whether in-store, in the office, or within the consumer's home. This category covers a broad spectrum of tasks that facilitate the ready-to-use delivery of products, improving convenience and satisfaction for both retailers and end-users. Services include (i) the assembly of merchandise in stores, such as furniture, desks, bicycles, grills and patio furniture, enabling customers to visualize the final product and making the shopping experience more engaging and efficient; (ii) in-store services, which extend to the maintenance of these products, ensuring they remain in optimal condition for display and use; (iii) office setup/down-sizing services, which cater to businesses undergoing changes in their physical workspace, providing expert assembly and installation support for a seamless transition; (iv) National In-Home Furniture Assembly services, which offer consumers the convenience of having furniture professionally assembled in their homes, eliminating the hassle and time commitment typically associated with DIY assembly; and (v) the assembly and installation of fitness equipment, whether it's in a commercial gym setting or a home fitness space, ensures that equipment is set up safely and correctly, maximizing functionality and user safety. Overall, Assembly and Installation services address a vital need in the post-purchase experience, ensuring products are fully functional and ready for use, thereby enhancing customer satisfaction and loyalty.

 

Fulfillment and Distribution

 

Fulfillment & Distribution is a critical service offering that encompasses a range of services including (i) Distribution Center Staffing, which provides the necessary workforce for the effective operation of distribution centers, including handling and sorting,(ii) POP (Point of Purchase) Fulfillment Services focus on the storage, assembly, and delivery of marketing and promotional materials directly to retail locations, ensuring that displays are ready and available for immediate use, (iii) Kiosk Prep, which involves preparing and equipping kiosks with the necessary products and promotional materials, tailored for specific marketing or sales campaigns, (iv) returns processing, which manages the flow of returned goods, ensuring they are efficiently processed, restocked, or disposed of according to the retailer's policies, (v) picking and packing services, which are crucial for order fulfillment, involving the selection of the correct products from inventory and packing them for shipment to the customer or retail outlet, and (vi) inventory services which provide comprehensive management of stock levels, including tracking, auditing, and reporting, to ensure inventory accuracy and availability. Together, these Fulfillment & Distribution services play an essential role in optimizing our customers' supply chain, enhancing their customers' satisfaction, and maintaining seamless operations from warehouse to consumer.

 

Business Analytics and Insights

 

Business Analytics and Insights services provide a critical foundation for informed decision-making and strategic planning in retail and merchandising environments. This suite of services leverages data analysis and visualization tools to deliver actionable insights that drive efficiency, sales, and customer satisfaction, including: (i) product dashboards, which offer a comprehensive view of product performance, inventory levels, and sales trends, enabling quick adjustments to product strategy and stock management, (ii) stock out reporting, which identifies and analyzes instances where products are unavailable on the shelves, allowing for rapid response to restock items and prevent lost sales opportunities, (iii) visit reporting, which tracks and evaluates the effectiveness and outcomes of merchandising visits, providing insights into operational efficiency and areas for improvement, (iv) real-time service insights, which delivers immediate feedback on the execution of merchandising and marketing initiatives, enabling dynamic adjustments to enhance in-store experiences and promotional effectiveness, (v) share of shelf analytics, which assesses the visibility and presence of products on the retail shelf compared to competitors, crucial for strategic positioning and market share growth, and (vi) photo analysis, which uses visual data to evaluate the compliance and appeal of product displays, ensuring that merchandising standards are met and that displays are engaging to customers. Together, these Business Analytics & Insights services empower businesses with the knowledge to optimize operations, tailor marketing efforts, and ultimately drive better business outcomes through data-driven strategies.

 

Our Customers

 

The Company currently represents numerous manufacturers and retail clients in a wide range of retail markets and stores, and its customers (which it refers to as "clients") include the following markets:

 

Retail markets served include:

 

  ● Mass Merchandisers
  ● Grocery
 

●

HBA
  ● Pharmacies
 

●

Discount
 

●

Dollar
 

●

Convenience
 

●

Cash and Carry
 

●

Home Improvement
 

●

Consumer Electronics
 

●

Automotive
 

●

Office Supply
 

●

Independents

 

Manufacturer markets served include:

 

 

●

Personal Technology
 

●

Consumer Electronics
 

●

Beverage
 

●

Household Products
 

●

Consumables
 

●

Financial Products
 

●

Automotive Aftermarket

 

It is important to note that we also work across all channels: retail and online. Our services make it possible for clients to ensure the online orders can be filled from stores and that the pricing is competitive in individual markets.

 

We are proud to serve some of the world’s most exciting brands and leading retail businesses. In many cases, our clients cross over geographical boundaries and we provide services to support their business around the world. 

 

The Company had two clients that represented 10% or more of the Company's revenue for the year ended December 31, 2025 (Client 1, 16.8%, or approximately $22.8 million and Client 2, 10.8%, or approximately $14.7 million). In 2024 the Company had one client whose revenue represented more than 10% of the revenue (10.5%, or approximately $17.3 million).

 

7
 

Trademarks and Technology Licensing

 

The Company has numerous registered trademarks. Certain of the Company's "SPAR" and related trademarks (the "Licensed Marks") are used: (i) by affiliated companies in the United States, royalty free, and in perpetuity pursuant to license agreements that commenced in 1999; (ii) by the Company’s wholly-owned subsidiaries worldwide royalty free and in perpetuity pursuant to informal license arrangements; (iii) by certain of the Company’s former joint venture subsidiaries in their respective jurisdictions pursuant to license or use agreements for limited terms (executed contemporaneously with the sale of the Company’s joint venture interests in its former joint venture subsidiaries); and (iv) by the Independent Field Vendor providing field specialists to the Company domestically in the United States for limited terms and modest royalties pursuant to a license agreement linked to their field specialist service agreement with the Company.

 

Our Labor Force

 

As of December 31, 2025, the Company's labor force totaled approximately 4,522 including the services of field specialists and field administrators furnished by independent third parties. The Company employed in the U.S. a labor force of 190 full-time employees and 975 part-time employees engaged in operations and in Canada a labor force of 55 full-time employees and 1 part-time employee. In the Company's merchandising, audit, assembly and other services for its clients are performed by field specialists, and the services of a significant portion of them, approximately 2,779 in U.S. and 522 in Canada, were supplied to the Company by an independent vendor (the "Independent Field Vendor").

 

The Company continues to evaluate its business model of using third-party independent contractors as field specialists (whether or not provided by others) in light of changing client requirements and legal and regulatory environments.  

  

The Company considers its relations with its own employees and independent vendors to be generally good. 

 

Our Competition

 

The marketing services industry is highly competitive. The Company's competition in all markets arises from a number of large enterprises. The Company also competes with a large number of relatively small enterprises with specific client, channel or geographic coverage, as well as with the internal marketing and merchandising operations of its existing and prospective clients. The Company believes that the principal competitive factors within its industry favoring the Company include the breadth and quality of its client services, its competitive costs, the development and deployment of its technology, its ability to execute specific client priorities rapidly and consistently over a wide geographic area, and its ability to conceive of ideas and operate as a business partner delivering value above basic services. The Company believes that its current structure favorably addresses these factors and establishes it as a leader in many retailer and manufacturer verticals. The Company also believes it has the ability to execute major initiatives and develop and administer manufacturer and retailer programs throughout the U.S. and Canada.

 

Corporate Website

 

The Company's website can be found at: http://www.sparinc.com, and the Company's SEC filings are available on that website under the Investors section.

 

Item 1A. Risk Factors 

 

Investing in SGRP's common stock ("SGRP Common Stock") is subject to a number of Risks that could cause the Company's actual results to differ materially from those projected or otherwise expected in any forward-looking statements or other information (see Forward-Looking Statements immediately preceding Part I, above). 

  

You should carefully review and consider the following Risks, but you should not place undue reliance on any of them. All forward-looking statements and other information attributable to the Company or persons acting on its behalf are expressly subject to and qualified by all such Risks. 

  

Those Risks reflect our expectations, views and assumptions only as of the date of this Annual Report, and the Company does not intend, assume any obligation, or promise to publicly update or revise any such Risk or information (in whole or in part), whether as a result of new information, new or worsening Risks or uncertainties, changed circumstances, future events, recognition, or otherwise. 

 

The markets we operate in are cyclical and subject to the effects of economic downturns.

 

The markets in which the Company operates are cyclical and subject to the effects of economic downturns. The current political, social and economic conditions, including the impact of terrorism on consumer and business behavior, make it difficult for the Company, its vendors and its clients to accurately forecast and plan future business activities. Substantially all of the Company's key clients are either retailers, manufacturers or those seeking to do product merchandising at retailers. Should the retail or manufacturing industries experience a significant economic downturn, the resultant reduction in product sales could decrease the Company's revenues. The Company also has risks associated with its clients changing their business plans and/or reducing their third-party services' budgets in response to economic conditions, which could also decrease the Company's revenues. Such revenue decreases could have a material adverse effect on the Company or its performance or condition.

 

We can be adversely affected if governments pass legislation that mandates an increase in wages, changes labor laws or otherwise drives market behavior that negatively impacts the business or operations of SPAR Group or our clients.

 

The Company relies on independent contractors as well as other third-party providers to perform work. There is risk that any government legislation that restricts travel, changes labor laws, impacts wages or otherwise incentivizes behavior that negatively impacts our business or our clients could impact our business.  

  

The Company continues to analyze various aspects of potential business impact driven by any legislation in all of the areas we operate. While we do not foresee any material impact in the short-term, the Company will continue to monitor and manage the business accordingly. 

 

Our business depends on variable client projects that can shift from period to period, be delayed, be canceled or otherwise require us to assume higher costs to perform the work.

 

The Company has experienced and, in the future, may experience fluctuations in quarterly operating results and cash flow. Factors that may cause the Company's quarterly operating results and cash flow to vary from time to time and may result in reduced revenue and profits include: (i) the number of active client projects; (ii) seasonality of client products; (iii) client delays, changes and cancellations in projects; (iv) staffing requirements, indemnifications, risk allocations, primary insurance coverages, intellectual property claims and other contractual provisions and concessions demanded by clients that are unilateral, unreasonable and very time consuming to review and attempt to negotiate; (v) the timing requirements of client projects; (vi) the completion of major client projects; (vii) the timing of new engagements; (viii) the timing of personnel cost increases; (ix) service locations and conditions with higher than contemplated personnel costs (remote areas, weather and health closures, higher minimum wages, higher skill sets required, etc.); and (x) the loss of major clients. In addition, the Company is subject to revenue or profit uncertainties resulting from factors such as unprofitable client work and the failure of clients to pay. These revenue fluctuations could materially and adversely affect the Company or its performance or condition, whether actual or as planned, intended, anticipated, estimated or otherwise expected. 

 

8
 

 

Our business could be adversely affected if retailers and manufacturers elect to perform merchandising and marketing services with their own resources or if they have less stores that need our services.

 

The business and growth of the Company depends in part on the continued outsourcing of merchandising and marketing services, which the Company believes has increased from the consolidation of retailers and manufacturers, as well as the desire to seek outsourcing specialists to reduce fixed operation expenses and concentrate internal staff on customer service and sales. There can be no assurance that this outsourcing will continue, as companies may elect to perform such services internally. 

  

In addition, retailers with physical store locations are facing increasing consolidation and competition from eCommerce/virtual stores. The Company's business and growth depends in part on the continuing need for in-store merchandising of products and the continuing success of retailers with physical store locations. There can be no assurance that the in-store merchandising of products will increase or even continue at current levels or that retailers with physical store locations will continue to compete successfully in those stores, and some retailers are shifting their sales focus to their virtual online stores. 

  

A significant decrease in such need for in-store merchandising or success of such physical stores could significantly decrease the Company's revenues and such decreased revenues could have a material adverse effect on the Company or its performance or condition, whether actual or as planned, intended, anticipated, estimated or otherwise expected. 

 

We do work with furniture and other related assembly services at stores, in homes and in offices.
 

The Company's technicians assemble furniture and other products in the stores, homes and offices of customers. Working at a customer's store, home or office could give rise to claims against the Company for errors, omissions or misconduct by those technicians, including (without limitation) objectional behavior, harassment, personal injury, death, damage to or theft of customer property, or other civil or criminal misconduct by such technicians. Claims also could be made against the Company as a result of its involvement in such assembly services due to (among other things) product assembly errors and omissions, product defects, deficiencies, breakdowns or collapse, products that are not merchantable or fit for their particular purpose, products that do not conform to published specifications or satisfy customer expectations, or products that cause personal injury, death or property damage, in each case whether actual, alleged or perceived by customers, and irrespective of how much time may have passed since such assembly. If such claims are asserted and adversely determined against the Company, then to the extent such claims are not covered by indemnification from the product's seller or manufacturer or by insurance, they could have a material adverse effect on the Company or its performance or condition.

 

We depend upon third-party independent contractors and the services they provide.

 

The success of the Company's business in the USA is dependent upon the successful execution and administration of its domestic field services through the services of field specialists, and a significant portion of them are provided to the Company and are engaged by the Independent Field Vendor and located, scheduled, deployed and administered domestically through the services of field administrators. The inability to identify, engage and successfully administer its domestic field services through qualified field specialists and field administrators could have a material adverse effect on the Company or its performance or condition.

 

A significant portion of the services of the field specialists provided to the Company are supplied by the Independent Field Vendor. It is possible that the appropriateness of the treatment of those field specialists as independent contractors by the Independent Field Vendor will be periodically subject to legal review or challenge by various states and others. The Company, in its discretion, may review and decide each request by its Independent Field Vendor for reimbursement of its legal defense expenses on a case-by-case basis, including the relative costs and benefits to the Company of doing so, but the Company has no obligation to do so. 

 

To the Company's knowledge, its Independent Field Vendor is not involved in any material proceeding involving the misclassification of its independent contractors. However: (i) if the Company approves its reimbursement of any material legal defense costs of the Independent Field Vendor; (ii) if the Company somehow becomes liable for any legal expenses incurred by the Independent Field Vendor, any related party or any third party in defending any claim or satisfying any judgment against such parties; (iii) if the Company somehow becomes liable through any judicial determination for any judgment against the Independent Field Vendor, or any related party or other vendor or service provider (in whole or in part); or (iv) if any such proceeding or matter causes: (A) any decrease in the Independent Field Vendor's performance (quality or otherwise); (B) any inability by the Independent Field Vendor to execute the services for the Company or to continue with its present business model; or (C) any increase in the Company's use of employees (rather than independent contractors) as its domestic field specialists; then any of the foregoing, in whole or in part, could have a material adverse effect on the Company or its performance or condition.

 

There can be no assurance that plaintiffs or someone else will not claim that the Company is liable (under applicable law, through reimbursement or indemnification, or otherwise) for any judgment or similar amount imposed against any provider of field specialists or field administrators to the Company, which the Company would defend vigorously if pursued. There can be no assurance that the Company would be able to successfully defend any such claim. Any imposition of liability on the Company for any such judgment or amount could have a material adverse effect on the Company or its performance or condition. 

 

Additionally, the Company believes that its business model of executing a significant portion of its services domestically (other than in California and in performing its non-merchandising services elsewhere, where the Company is using its own employees) through independent contractors provided by others is equally effective but inherently less costly than doing so with employees, both under applicable tax and employment laws and otherwise. However, the Company continues to reevaluate its business model of using third party independent contractors as field specialists in performing merchandising services outside of California in light of changing client requirements and legal and regulatory environments. 

 

We rely on our systems and third-party vendors.

 

The Company relies on its proprietary systems for (among other things) the scheduling, tracking, coordination and reporting of its merchandising and marketing services. In addition to proprietary software and applications of the Company, the systems use and rely upon software (including operating system, office, exchange, data base and server programs) licensed and hardware purchased or leased from third parties and telecommunication services provided by third parties, which third-party software, hardware and telecommunication services may not continue to be available at all or (if available) with the necessary access, uptime, speeds or bandwidth, at reasonable prices or on commercially reasonable terms. Any defect, error or other performance failure in such third-party software, hardware or service also could result in a defect, error or performance failure in our client services. Systems can experience excess traffic and related inefficiencies, from increased demand or otherwise, as well as increased cyberattacks by hackers and other saboteurs. To the extent that systems experience increased demands on current capacity and for additional capacity from (among other things) an increase in the numbers of users, frequency or duration of use, bandwidth requirements of software, applications and users (including the increasing demand from the Company's clients for data-intensive as-serviced pictures from the field specialists), or cyberattacks, there can be no assurance that the Company's technological systems and third-party software, hardware and telecommunication providers will continue to be able to support the demands placed on them by such increased demand or negative events.

 

9
 

 

The Company relies on third-party vendors to provide its telecommunication network access and other services used in its business, and the Company has no control over such third-party providers. Additionally, a cybersecurity breach that results in unauthorized access to sensitive consumer or corporate information contained in these systems may adversely affect the Company's reputation and lead to claims against it. Such claims could include identity theft or other similar fraud-related claims and claims related to violations of applicable data privacy laws. Any system failure, accident or security breach could result in disruptions to the Company's operations. To the extent that any disruption or security breach results in a loss or damage to the Company's data, or results in inappropriate disclosure of confidential information, it could cause significant damage to the Company's reputation, affect its relationships with its customers, lead to claims against it and ultimately harm its business. In addition, the Company may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

 

Any such software, hardware or service unavailability or unreasonable pricing or terms, defect, error or other performance failure in such third-party software, hardware or service, increased capacity demands, disruption in services, security breach or protective measures could increase the Company's costs of operation and reduce its efficiency and performance, which could have a material adverse effect on the Company or its performance or condition, whether actual or as planned, intended, anticipated, estimated or otherwise expected.

 

Our stock is subject to volatility and general market risk.

 

The market price of SGRP Common Stock has historically experienced and may continue to experience significant volatility. During the year ended December 31, 2025, the sale price of SGRP Common Stock fluctuated from $0.768 to $2.04 per share. The Company believes that its Common Stock is subject to wide price fluctuations due to (among other things) the following:

 

 

●

The relatively small public float and corresponding thin trading market for SGRP Common Stock, attributable to (among other things) the large block of voting shares beneficially owned by the Company's Majority Stockholders (as defined below) and generally low trading volumes, and that thin trading market may cause small trades to have significant impacts on SGRP Common Stock price.

 

  ● The substantial beneficial ownership of the Company's voting stock and potential control by Mr. Robert G. Brown and Mr. William H. Bartels and related parties (the "Majority Stockholders"). Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement”) and our By-Laws, Item 3 -- Legal Proceedings, below, Note 6 to the Company's Consolidated Financial Statements - Commitments and Contingencies, and Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below.

 

 

●

Any announcement, estimate or disclosure by the Company, or any projection or other claim or pronouncement by any of the Company's competitors or any financial analyst, commentator, blogger or other person, respecting: (i) any new service created or improved, significant contract, business acquisition or relationship, or other publicized development by the Company or any of its competitors; or (ii) any change, fluctuation or other development in the Company's actual, estimated or desired affiliates, assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, legal costs, liabilities, liquidity, locations, marketing, operations, prospects, sales, strategies, taxation or other achievement, results or condition or in those of any of the Company's competitors, in each case irrespective of accuracy or validity and whether or not adverse or material.

 

 

●

The general volatility of stock markets, consumer and investor confidence, and the general state of the economy (which often affect the prices of stock issued by the Corporation and many others without regard to financial results or condition).

 

If the Corporation issues (other than at fair market value for cash) or the Majority Stockholders sell a large number of shares of SGRP Common Stock, or if the market perceives such an issuance or sale is likely or imminent, the market price of SGRP Common Stock could decline.

 

In addition, the volatility in the market price of SGRP Common Stock could lead to class action securities litigation that could in turn impose substantial costs on the Company, divert management's attention and resources from the day-to-day operations of the Company's business and harm the Corporation's stock price, the Company or its performance or condition.

 

As a small company with stock price volatility, our stock may be de-listed from NASDAQ.

 

There can be no assurance that the Corporation will be able to comply in the future with Nasdaq's Board Independence Rule, Audit Committee Composition Rule, Bid Price Rule or other Nasdaq continued listing requirements. See Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") and our By-Laws, below. If the Corporation fails to satisfy the applicable continued listing requirement again in the future, Nasdaq may commence delisting procedures against the Corporation (during which the Corporation may have additional time of up to six (6) months to appeal and correct its non-compliance). If the SGRP Common Stock shares were ultimately delisted by Nasdaq, trading of the SGRP Common Stock could be limited to "over-the-counter" trades and the market liquidity of the SGRP Common Stock could be adversely affected, which could result in a decrease in the market price of the SGRP Common Stock due to (among other things) the potential for increased spreads between bids and asks, lower trading volumes and reporting delays in over-the-counter trades and the negative implications and perceptions that could arise from such a delisting

 

In addition to the foregoing, if the SGRP Common Stock is delisted from Nasdaq and is traded on the over-the-counter market, the "penny stock" rules, if applicable, could adversely affect the market price of the SGRP Common Stock and increase the transaction costs to sell those shares. The SEC has adopted specific rules regulating "penny stock", including additional risk disclosure requirements by broker dealers. If applicable in the future, the penny stock rules may also restrict the ability of broker-dealers to sell the SGRP Common Stock and may adversely affect the ability of investors to sell their shares.

 

We have inherent risk of failure to maintain effective internal controls.

 

Establishing and maintaining effective internal control over financial reporting and disclosures are necessary for the Company to provide reliable financial and other reporting in accordance with accounting principles generally accepted and applicable securities and other laws in the United States and all other countries in which we operate. Because of its inherent limitations, internal controls over financial and other reporting are not intended to provide absolute assurance that the Company could prevent or detect a misstatement of its financial statements or other reports or any misconduct or fraud. Any failure to maintain an effective system of internal control over financial and disclosure reporting could limit the Company's ability to report its financial results and file its other reports accurately and timely or to detect and prevent misconduct or fraud. A significant financial or disclosure reporting failure or material weakness in internal control over financial or other reporting could cause a loss of investor confidence and a decline in the market price of the SGRP Common Stock. The Company's management is responsible for establishing and maintaining adequate internal controls over its financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act. As disclosed in Item 9A of Part II of this report, the Company identified material weaknesses in its internal controls as of December 31, 2024. These material weaknesses resulted in errors in revenue, expense, accrual accounts and prepaid accounts reconciliation at year end as well as a material error in the calculation and presentation of the sale of international components and the deconsolidation of one subsidiary.

 

The Company devoted significant resources to the remediation efforts to address the identified material weaknesses and prevent additional material weaknesses from occurring.  The Company concluded that, as of December 31, 2025, the previously identified material weaknesses had been remediated following the completion of the remediation plan, however it cannot be assured that the measures we have taken will be sufficient to avoid potential future material weaknesses.  Accordingly, if the remedial measures are insufficient to address the material weaknesses or if additional material weaknesses or significant deficiencies in the internal controls are discovered or occur in the future, the consolidated financial statements may contain material misstatements and the Company could be required to restate its financial results, which could materially and adversely affect the Company's business and results of operations or financial condition, restrict its ability to access the capital markets, require the Company to expend significant resources to correct the weaknesses or deficiencies, subject it to fines, lawsuits, penalties, judgements or other legal expenses, harm its reputation, create delays or the inability to meet future SEC reporting obligations or otherwise cause a decline in investor confidence.

 

10
 

 

Our business is dependent on client payments, business performance and broad economic shifts, and we may be at risk of liquidity constraints and not satisfying all of our credit facility covenants.

 

Our business and cash flow can be adversely affected by adverse changes in our client payments, our business performance and broad economic shifts. There can be no assurances that in the future the Company will not violate covenants of its current or future credit facilities; and if it does violate them, that the Company's lenders will waive any violations of such covenants affecting the Company's ability to maintain adequate lines of credit or sufficient availability under its lines of credit. Accordingly, minimal profitability by the Company, additional one-time charges and changes in the composition and quality of its borrowing base, as well as any failure to maintain sufficient availability or lines of credit from the Company's lenders (which may involve their subjective judgment), could have a material adverse effect on the Company or its performance or condition, whether actual or as planned, intended, anticipated, estimated or otherwise expected.

 

Our business and stock liquidity and market value could be adversely affected if we settle outstanding litigation by making payments or issuing stock.

 

The timing, size and success of litigation settlement efforts and any associated capital commitments cannot be readily predicted. Future litigation settlements may be financed by issuing shares of the SGRP Common Stock (directly or through convertible securities), cash or a combination thereof. If the SGRP Common Stock does not maintain a sufficient market value, or if potential litigants are otherwise unwilling to accept the SGRP Common Stock as part of the consideration for the settlement of their litigation, the Company may be required to obtain additional capital through debt or equity financings. To the extent the SGRP Common Stock is used for all or a portion of the consideration to be paid for legal settlements, dilution may be experienced by existing stockholders. In addition, there can be no assurance that the Company will be able to obtain the additional financing it may need for litigation settlements on terms that the Company deems acceptable. Failure to obtain such capital would materially and adversely affect the Company or its performance or condition. There also can be no assurance that the other parties in any settlement will abide by the terms or any settlement or any related releases. See Item 3 -- Legal Proceedings, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations; Overview and Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below.

 

Our leadership transition in 2025 may result in operational disruptions or changes in our strategic direction.

 

During the fiscal year ended December 31, 2025, the Company appointed a new Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO").  These transitions involve changes in management style and strategic priorities that could result in operational disruptions if not managed effectively.  

 

Our business performance is connected to the experience and retention of key executives.

 

The business strategy, client relationships and operating knowledge are critical to the Company’s long-term success. We believe we have attracted and developed the most experienced and proven executive leadership team in the industry. However, we work in a competitive industry where talent is visible, and other companies may approach and attract our key executives. We continuously review the terms and incentives for our executives to retain them and competitively compensate them to deliver industry leading results on behalf of all shareholders.

 

Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") and our By-Laws.

 

The Company's co-founders, Mr. Robert G. Brown and Mr. William H. Bartels, are significant stockholders ("Significant Stockholders”) and together with certain related parties (collectively, the "Majority Stockholders") beneficially own approximately 46.2% of the SGRP Common Stock and could acquire more. That amount was calculated using their respective individual beneficial ownership, on December 31, 2025, which includes the amounts they represented in the CIC Agreement and subsequent Form 4 filings, the total outstanding ownership (24,129,991 shares) of the SGRP Common Stock on a non-diluted basis as of December 31, 2025. See Security Ownership of Certain Beneficial Owners and Management, in Part III below, Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, and Item 13. Certain Relationships and Related Transactions, and Director Independence, and Note 10 to the Company's Consolidated Financial Statements- Related Party Transactions, below. Although the CIC Agreement currently requires arbitration and prohibits the Majority Stockholders from using written stockholder consents, calling for special stockholder meetings, commencing certain litigation, and taking other specified actions, the CIC Agreement expires in January 2027.

 

As significant stockholders, the Majority Stockholders can have an impact on the nomination and election of directors and the passage of other shareholder meeting proposals.

 

Item 1B. Unresolved Staff Comments

 

None.

 

Item 1C. Cybersecurity

 

SPAR Group Inc. recognizes the increased cybersecurity threats and sophisticated, targeted computer crime and the risk it poses to our operations. We rely on information technology and data to operate our business and develop, market and deliver our products and services to our customers.

 

Our cybersecurity risk management program is led by our Chief Technology Officer (“CTO”), who is directly responsible for establishing cybersecurity strategies and structures and managing ongoing cybersecurity risk management activities. Our CTO is part of the executive management team, and updates our CEO and executive management periodically on the cybersecurity enhancement and the development and implementation of our roadmap.

 

We have strategically embedded cybersecurity risk management within an enterprise-wide framework, ensuring that it permeates across various facets of our operations. This integrated approach encompasses administrative protocols, operational strategies, organizational structures, physical safeguards, and technical measures, all tailored to align with the scope and nature of our business.

 

Cybersecurity Risk Management and Strategy

 

We believe this integrated approach allows cybersecurity considerations to be an integral part of our decision-making processes. Our day-to-day cybersecurity work is led by our CTO and a managed services provider with expertise in mitigating cyber risk. The CTO works closely with our executive management to continuously evaluate and address cybersecurity risks in alignment with our business and operational needs.

 

Cybersecurity risks related to our business, technical operations, privacy and compliance issues are identified and addressed through a combination of third-party assessments, internal audit, IT security, governance, risk and compliance reviews. To defend, detect and respond to cybersecurity incidents, we, among other things:

 

 

●

Proactively review threat intelligence and other information obtained from governmental, public or private sources,
 

●

Perform network vulnerability scans, cyber-hygiene assessments, and continually evaluate and address perceived gaps,

 

●

Conduct companywide cyber awareness training and on-going new employee cyber training,

 

●

Deploy a wide array of industry leading 3rd party solutions to continuously monitor network and endpoints,

 

●

On-going testing and evaluation of backup processes,

 

●

Perform disaster recovery tabletop exercises to assess readiness for possible events.

 

11
 
 

As noted, to operate our business, we utilize certain third-party service providers to perform a variety of functions and provide certain security-related services, such as outsourced business critical functions, professional services, SaaS platforms, managed services, cloud-based infrastructure, data center facilities, content delivery to customers, encryption and authentication technology, corporate productivity services, and other functions; as well as third parties that assist us to identify, assess and manage cybersecurity risks, including professional services firms, threat intelligence service providers, cybersecurity software providers, penetration testing firms and other vendors that help to identify, assess or manage cybersecurity risks.

 

In addition, we have implemented an incident response and breach management plan which has four overarching and interconnected stages:

 

 

●

Detection of a security incident,

 

●

Identification and containment,

 

●

Response, eradication and recovery,

 

●

Post-incident analysis and future preparations.

 

The plan also provides the process and workflow of communication for escalation of incidents to executive leadership to determine incident classification, impact severity, and if and what further actions are warranted. Incident responses are overseen by leaders from our internal Information Technology organization and third party managed services provider.
 

Cybersecurity Governance

 

Cybersecurity holds a significant role within our risk management procedures and remains a focal point for our Board and management. Under the Board's oversight of general risk identification and management activities, the Audit Committee monitors cybersecurity risks. Committee members engage in comprehensive discussions with management regarding these risks, as well as the measures taken to safeguard the Company's information systems and security, along with reviewing management's steps towards data privacy protection. Additionally, the Audit Committee receives annual cybersecurity updates from senior management, covering both existing and emerging risks, management's responses and mitigation efforts, any cybersecurity or data privacy incidents, and the status of key information security initiatives. Furthermore, our Board members regularly hold informal discussions with management about cybersecurity news events and any updates to our cybersecurity risk management and strategy programs.

 

Our third party managed services providers offer insights and guidance to our Software, Infrastructure Engineering, and Executive teams. With backgrounds spanning: information technology, security, systems, programming, and corporate strategy, their team is equipped to oversee prevention, detection, mitigation, and remediation of cybersecurity incidents. They actively engage in managing our cybersecurity risk processes, including participating in our incident response plan, and regularly report relevant matters to the Chief Technology Officer and the Audit Committee.

 

We carry insurance that provides protection against the potential losses arising from a cybersecurity incident. However, there is no assurance that our insurance coverage will cover, or be sufficient to cover, all losses or claims that may result from a cybersecurity incident.

 

Last year

 

During the last fiscal year, 2025, the Company did not encounter any material cybersecurity incidents, nor did it incur any notable expenses as a result.
 

Item 2. Properties

 

The Company does not own any real property. The Company leases certain office space and storage facilities for its corporate headquarters, and subsidiaries under various operating leases. These leases generally require the Company to pay rents at market rates, subject to periodic adjustments, plus other charges, including utilities, real estate taxes and common area maintenance. The Company believes its relationships with its landlords to be generally good. However, as these leased facilities generally are used for offices and storage, the Company believes that other leased spaces could be readily found and utilized on similar terms should the need arise.

 

The Company relocated its corporate headquarters from Auburn Hills, Michigan to its existing operations office in Charlotte, North Carolina, in November of 2025. The Company also maintains its data processing center in Southfield, Michigan and its warehouse in Auburn Hills, Michigan, which was exited in January 2026 and entered a new arrangement in January of 2026 for an outsourced warehouse in Fort Lauderdale, Florida.

 

The following is a list of the headquarter locations for the Company subsidiaries:

 

 

Charlotte, North Carolina (Corporate Headquarters, Resource Plus)

Southfield, Michigan (Data Center)

 

Vaughan, Ontario, Canada
 

 

Item 3. Legal Proceedings 

 

The Company is a party to various legal actions and administrative proceedings arising in the normal course of business. In the opinion of Company management, resolution of these matters is not anticipated to have a material adverse effect on the Company or its estimated or desired affiliates, assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, legal costs, liabilities, liquidity, locations, marketing, operations, prospects, sales, strategies, taxation or other achievement, results or condition.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

12
 

 

PART II

 

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

The Company's Capital Stock Generally

 

SGRP's Certificate of Incorporation authorizes it to issue 47,000,000 shares of SGRP Common Stock ("SGRP Shares"), each with a par value of $0.01 per share, and which all have the same voting, dividend and liquidation rights. SGRP Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP." On December 31, 2025, there were 24,129,991 SGRP Shares outstanding in the aggregate (which does not include those held as Treasury Shares), and there were approximately 11,708,769 SGRP Shares (or approximately 49%) beneficially owned by non-affiliates of SGRP in the aggregate on a non-diluted basis (i.e., SGRP's public float). See Item IA - Risk Factors - Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") and our By-Laws, Security Ownership of Certain Beneficial Owners and Management, in Part III below, and Note 10 to the Company's Consolidated Financial Statements- Related Party Transactions, below.

 

SGRP's Certificate of Incorporation also authorizes it to issue 3,000,000 shares of preferred stock with a par value of $0.01 per share (the "SGRP Preferred Stock"), which may have such preferences and priorities over the SGRP Common Stock and other rights, powers and privileges as Board of Directors of SGRP (the "Board") may establish in its discretion from time to time.

 

The Corporation filed a "Certificate of Designation of Series "B" Preferred Stock of SPAR Group, Inc.” (the "Preferred Designation") with the Secretary of State of Delaware, which designation had been approved by the Board on January 25, 2022. The Preferred Designation created a series of 2,000,000 shares of Preferred Stock designated as "Series B Preferred Stock” with a par value of $.01 per share (the "Preferred Stock"). The Preferred Stock shares do not carry any voting or dividend rights and automatically convert on vesting into the SGRP Common Stock on a 1 for 1.5 basis. See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below. However, the holders of the Series B Preferred Stock have a liquidation preference over the SGRP Common Stock and vote together for matters pertaining only to the Series B Preferred Stock (such as amending SGRP's Certificate of Designation of Series B Preferred Stock) where only the holders of the Series B Preferred Stock are entitled to vote. The holders of outstanding Series A Preferred Stock do not have the right to vote for directors or other matters submitted to the holders of the SGRP Common Stock.

 

On January 28, 2022, pursuant to the CIC Agreement, SGRP issued to the Majority Stockholders 2,000,000 restricted shares of Series B Preferred Stock, which have all vested and automatically converted into 3,000,000 SGRP Shares pursuant to the 1:1.5 conversion ratio set forth in the Preferred Designation and the CIC Agreement. The CIC Agreement expires on January 28, 2027. See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below. All of the Preferred Stock issued under the CIC Agreement have been converted into SGRP Shares as of December 31, 2024, and there are no shares of Preferred Stock currently outstanding. Since there are no more shares of Series B Preferred Stock outstanding, SGRP may change or cancel the authorized Series B Preferred Stock, and to the extent it reduces such authorization without issuance, it can create other series of Preferred Stock with potentially different dividends, preferences and other terms.

 

Market Information

 

SGRP's Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP". As of December 31, 2025, there were approximately 148 stockholders of record, which includes DTC (on behalf of all street holders).  The Corporation estimates that there are currently a total of 1,600 holders of SGRP Shares, which includes the aggregate of those held of record and those held in street name through DTC. SGRP is currently under a Nasdaq notice respecting a potential delisting of the SGRP Shares that was received on January 12, 2026 (see below).

 

Failure to Maintain the Minimum Bid Price under Nasdaq Rules and Potential Delisting

 

On January 12, 2026, SGRP received a notification letter from Nasdaq that SGRP's common stock failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by the Listing Rules of Nasdaq. The Company has been given a compliance period of 180 calendar days in which to regain compliance. Specifically, if at any time during this 180 day period the closing bid price of SGRP’s Shares security is at least $1 for a minimum of ten consecutive business days, Nasdaq will provide SGRP written confirmation of compliance and this matter will be closed by Nasdaq. See Item 1A - Risk Factors - As a small company with stock price volatility, our stock may be delisted from Nasdaq.

 

Dividends

 

The Corporation has never declared or paid any cash dividends on the SGRP Shares and does not currently anticipate paying cash dividends on SGRP Shares in the foreseeable future. The Corporation historically has retained earnings to finance its operations and fund future growth of the business. Any payment of future dividends will be at the discretion of the Board and will depend upon, among other things, the Corporation's earnings, financial condition, capital requirements, cash flow, level of indebtedness, contractual restrictions in respect to the payment of dividends and other factors that the Board deems relevant.

 

Equity Compensation

 

Information regarding the Company's equity compensation plans may be found in Item 11 of this Annual Report, which is hereby incorporated by reference.

 

Stock Repurchase Program

 

On March 28, 2024, the Board approved SGRP's repurchase of up to 2,500,000 SGRP's Shares under the 2024 Stock Repurchase Program (the "2024 Stock Repurchase Program"), under which repurchases were made from time to time over a one-year period in the open market and through privately-negotiated transactions, subject to cash availability and general market and other conditions. Pursuant to the 2024 Stock Repurchase Program, on May 3, 2024, the Board and its Audit Committee approved SGRP's Repurchase Agreement with William H. Bartels for SGRP's private repurchase of 1,000,000 shares of SGRP's Common Stock from William H. Bartels, dated and effective as of April 30, 2024, at a purchase price of $1.80 per share (the Nasdaq closing price on April 29, 2024). Upon their repurchase those shares became Treasury Shares.  Mr. Bartels was a Director at the time of such repurchase.  Mr. Bartels also is a significant stockholder of SGRP, one of the founders of SGRP, and is an affiliate and related party of SGRP. There were no other share repurchases to date under the 2024 Stock Repurchase Program, which expired on March 28, 2025.

 

SGRP Common Stock Issuances

 

During 2024 the Corporation issued 1,208,742 SGRP Shares (including Treasury Shares and new shares of SGRP Common Stock) in support of its requirement to satisfy the conversion of vested and surrendered Series B Preferred Stock (see above), benefit awards and stock purchase plans, including employee Restricted Stock Units that vested and settled with stock, and the exercise of vested employee stock options. See The Company's Capital Stock Generally, in Item 5 above, and Note 11 to the Company's Consolidated Financial Statements – Share Based Compensation, below.

 

13
 

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Overview of Our Business

 

SPAR Group is a leading merchandising and brand marketing services company, providing a broad range of sales enhancing services to retailers across most classes of trade and consumer goods manufacturers and distributors around the world. The Company’s goal is to be the most creative, energizing and effective retail services company that drives sales, margins and operating efficiency for our clients. 

 

As of December 31, 2025, the Company operated in the U.S. and Canada. During 2024, the Company strategically exited international operations in Mexico, Brazil, South Africa, China, Japan and India.

 

With more than 50 years of experience and a diverse network of merchandising specialists around the world, the Company continues to grow its relationships with some of the world’s leading businesses. The combination of resource scale, deep expertise, advanced technology and unwavering commitment to excellence, separates the Company from the competition. 

 

The Company is dedicated to delivering a spectrum of specialized services tailored to enhance retail operations and profitability. Our team collaborates closely with clients to identify their primary goals, ensuring the execution of strategies that boost sales and profit margins. With a focus on merchandising and brand marketing, our specialists deploy a variety of programs aimed at maximizing product sell-through to consumers. These initiatives range from launching new products and setting up promotional displays to assembling fixtures and ensuring consistent stock availability, thus facilitating efficient reordering processes. Furthermore, we extend our expertise to sales enhancement and customer service improvement. As the retail landscape evolves, our team is adept at undertaking comprehensive store renovations and preparing new locations for their grand openings, ensuring they meet the modern consumer's expectations. Additionally, our distribution associates play a pivotal role in retail and consumer goods distribution centers, preparing these facilities for operation, optimizing system functionality, managing product logistics, and providing essential staffing solutions to meet our clients' needs effectively.

 

The Company’s business is led and operated from its headquarters in Charlotte, North Carolina, with local leadership and offices in the U.S. and Canada. 

 

EBITDA and Adjusted EBITDA

 

EBITDA and Adjusted EBITDA is a non-GAAP measure of our operating performance and should not be considered as an alternative to net income as a measure of financial performance or any other performance measure derived in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). "EBITDA" is defined as net income before (i) depreciation and amortization, (ii) interest expense, net, and (iii) income tax expense. "Adjusted EBITDA" is defined as net (loss) income before (i) depreciation and amortization of long-lived assets, (ii) interest expense (iii) income tax expense, (iv) restructuring expenses, (v) impairment, (vi) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations, (vii) special items as determined by management, and (viii) review of strategic alternatives, which includes primarily legal, consulting, and investment bank fees. This metric is a supplemental measure of our operating performance that is neither required by, nor presented in accordance with, U.S. GAAP.

 

We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in future periods, and any such modification may be material. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

 

Our management believes Adjusted EBITDA is helpful in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We also use Adjusted EBITDA to supplement U.S. GAAP measures of performance in the evaluation of the effectiveness of our business strategies and to make budgeting decisions.

 

Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations include:

 

 

●

Adjusted EBITDA does not reflect our cash expenditure or future requirements for capital expenditures or contractual commitments;
 

●

Adjusted EBITDA does not reflect changes in our cash requirements for our working capital needs;
 

●

Adjusted EBITDA does not reflect the interest expense and the cash requirements necessary to service interest or principal payments on our debt;
 

●

Adjusted EBITDA does not reflect cash requirements for replacement of assets that are being depreciated and amortized;
 

●

Adjusted EBITDA does not reflect non-cash compensation, which is a key element of our overall long-term compensation;
 

●

Adjusted EBITDA does not reflect the impact of certain cash charges or cash receipts resulting from matters we do not find indicative of our ongoing operations; and
 

●

Other companies in our industry may calculate Adjusted EBITDA differently than we do.

 

Our loss from continuing operations was approximately $24.6 million and $1.8 million for the years ended December 31, 2025, and December 31, 2024. Our Consolidated EBITDA loss was approximately $16.5 million and income of $3.6 million for the years ended December 31, 2025 and 2024 respectively. The following is a reconciliation of our net income to Adjusted EBITDA for the periods presented:

   

Year Ended December 31,

  

(in thousands)

  

2025

    

2024

  

Loss from continuing operations

   $ (24,626 )   $ (1,806 )

Depreciation and amortization

     1,634       1,553  

Interest expense

     2,415       2,191  

Income tax expense

     4,073       144  

EBITDA of discontinued operations

     -       1,475  

Subtotal of adjustments to loss from continuing operations

     8,122       5,363  

Consolidated EBITDA

   $ (16,504 )   $ 3,557  

Review of strategic alternatives

     525       5,221  

Gain on sale of businesses

     -       (2,536 )

Restructuring costs and severance

     4,765       -  

Legal costs / settlements - non-recurring

     1,277       100  

Share-based compensation

     140       137  

Other one-time expense

     1,235       171  

Consolidated Adjusted EBITDA

   $ (8,562 )   $ 6,650  

Adjusted EBITDA attributable to non-controlling interest

     -       (1,034 )

Adjusted EBITDA attributable to SPAR Group, Inc.

   $ (8,562 )   $ 5,616  

 

14
 

 

Results of Operations

 

The following table sets forth selected financial data for the years indicated (dollars in millions):

   

Year Ended December 31,

  
   

2025

    

%

    

2024

    

%

  

Net revenues

   $ 136.1       100.0 %   $ 163.6       100.0 %

Cost of revenues

     114.4       84.1       130.0       79.5  

Selling, general and administrative expense

     32.2       23.7       33.9       20.7  

Restructuring costs and severance

     4.8       3.5       -       -  

Gain on sale of business

     -       -       (2.5 )     (1.5 )

Depreciation and amortization

     1.6       1.2       1.5       0.9  

Interest expense

     2.4       1.8       2.2       1.3  

Other expense, net

     1.3       1.0       0.2       0.1  

Loss from continuing operations before income tax expense

     (20.6 )     (15.1 )     (1.7 )     (1.0 )

Income tax expense

     4.0       2.9       0.1       0.1  

Net loss from continuing operations

     (24.6 )     (18.1 )     (1.8 )     (1.1 )

Net loss from discontinued operations

     -       -       (0.9 )     (0.6 )

Net loss

     (24.6 )     (18.1 )     (2.7 )     (1.7 )

Net income attributable to non-controlling interest

     -       -       (0.5 )     (0.3 )

Net loss attributable to SPAR Group, Inc.

   $ (24.6 )     (18.1 %)   $ (3.2 )     (2.0 %)

 

Results of operations for the year ended December 31, 2025, compared to the year ended December 31, 2024.

 

Net Revenues

 

Consolidated net revenues for the year ended December 31, 2025, were $136.1 million compared to $163.6 million for the year ended December 31, 2024, a decrease of $27.5 million or 16.8%. This decrease in revenue was primarily driven by the sale of all international operations, except Canada, during various times throughout 2024. 

 

U.S. net revenues totaled $122.1 million and $117.5 million for the years ended December 31, 2025 and 2024, respectively. The increase of $4.6 million or 3.9% is driven by continued growth in the U.S. market.

 

Canada net revenues totaled $14.0 million and $14.3 million for the years ended December 31, 2025 and 2024, respectively, a decrease of $0.3 million or 2.1%.

 

All Other net revenues totaled $31.8 million for the year ended December 31, 2024. The Company exited all international operations, except Canada, in 2024.

 

Cost of Revenue

 

The Company's cost of revenue consists of its in-store labor and field management wages, related benefits, travel and other direct labor-related expenses and was 84.1% of net revenue for the year ended December 31, 2025 compared to 79.5% of net revenues for the year ended December 31, 2024. The decline in margin in 2025 was driven by significant growth in revenue from the remodel business, which is lower margin than the traditional merchandising business.

 

U.S. cost of revenue as a percent of net revenue was 85.6% and 79.5% for the years ended December 31, 2025 and 2024, respectively. The increase in cost of 6.1% was the result of higher costs in our U.S. business related to the high proportion of revenue growth in the remodel business. 

 

The Canada cost of revenue as a percent of net revenue was 70.9% and 68.8% for the years ended December 31, 2025 and 2024, respectively. This increase in cost of  2.1% was the result of increased merchandising business with a large client which has a lower profit margin.

 

All Other cost of revenue as a percent of net revenues was 84.2% for the year ended December 31, 2024. The Company exited all international operations, except Canada in 2024.

 

Selling, General and Administrative Expense

 
Selling, general and administrative expense ("SG&A") for the Company include its corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expenses. SG&A expenses were approximately  $32.2 million, or  23.7% of net revenue, and approximately  $33.9 million, or  20.7% of net revenue for the years ended  December 31, 2025 and 2024, respectively. SG&A expenses for the year-ended  December 31, 2025 includes expenses of approximately $2.0 million related to strategic initiatives, legal costs, expenses incurred to resolve prior year restatements, and shareholder matters. For the year-ended December 31, 2024, includes expenses of approximately $5.5 million related to costs to execute sales of international operations and transaction costs associated with strategic initiatives. 

 

U.S. SG&A expenses totaled $29.5 million and $25.2 million for the years ended December 31, 2025 and 2024, respectively. The increase in expense of 17.1% was the result of strategic initiatives, legal costs, expenses incurred to resolve prior year restatements, and shareholder matters.

 

Canada SG&A expenses totaled $2.7 million and $2.7 million for the years ended December 31, 2025 and 2024, respectively. 

 

All Other SG&A expenses totaled $6.0 million for the year ended December 31, 2024. The Company exited all international operations, except Canada in 2024.

 

Restructuring Costs and Severance

 

Restructuring costs and severance for the Company include costs related to relocating its corporate headquarters from Auburn Hills, Michigan to its existing operations office in Charlotte, North Carolina, in November of 2025 and the severance of certain Executives during this move. Restructuring costs and severance were approximately $4.8 million and $0.0 million for the year ended December 31, 2025 and 2024, respectively.

 

15
 

 

Depreciation and Amortization

 

Depreciation and amortization expense was approximately $1.6 million and $1.5 million for the years ended December 31, 2025 and 2024, respectively.

 

Interest Expense

 

The Company's interest expense was $2.4 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively.

 

Other Expenses, Net

 

Other expenses, net was $1.2 and $0.2 million for the years ended December 31, 2025 and 2024, respectively. 

 

Income Tax Expense

 

The Company had income tax expense of $4.1 million, with an effective tax rate of (19.8%), and $0.1 million, with an effective rate of (8.7%) for the years ended December 31, 2025 and 2024, respectively. For the year ended December 31, 2025, our effective income tax rate varied from the U.S. federal statutory rate of 21.0% primarily as a result of the valuation allowance, executive compensation disallowed pursuant to Section 162(m), adjustments in tax credits, foreign rate differential and other permanent differences. For the year ended December 31, 2024, our effective income tax rate varied from the U.S. federal statutory rate of 21.0% primarily as a result of Brazilian withholding taxes, foreign disregarded income, and permanent differences.

 

Net Income Attributable to Non-Controlling Interest

 

Net income attributable to noncontrolling interest was $0.0 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively.

 

Critical Accounting Policies and Estimates

 

The Company’s critical accounting policies, including the assumptions and judgments underlying them, are disclosed in Note 2 to the Company’s consolidated financial statements included elsewhere in this Annual Report on Form 10-K. These policies have been consistently applied in all material respects and address matters such as impairment of long-lived assets, intangible assets, and goodwill, revenue recognition, allowance for credit losses, and internal use software. While the estimates and judgments associated with the application of these policies may be affected by different assumptions or conditions, the Company believes the estimates and judgments associated with the reported amounts are appropriate under the circumstances.

 

Impairment of Long-Lived Assets, Intangible Assets, and Goodwill

 

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of the Company’s property and equipment and may not be recoverable. When indicators of potential impairment exist, the Company assesses the recoverability of the assets by estimating whether the Company will recover its carrying value through the undiscounted future cash flows generated by the use of the asset and its eventual disposition. Based on this analysis, if the Company does not believe that it will be able to recover the carrying value of the asset, the Company records an impairment loss to the extent that the carrying value exceeds the estimated fair value of the asset. If any assumptions, projections or estimates regarding any asset change in the future, the Company may have to record an impairment to reduce the net book value of such individual asset.

 

When facts and circumstances indicate that the carrying value of definite-lived intangible assets may not be recoverable, the Company assesses the recoverability of the carrying value by preparing estimates of sales volume and the resulting profit and cash flows expected to result from the use of the asset or asset group and its eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, the Company recognizes an impairment loss. The impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the fair value. The Company uses a variety of methodologies to determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions hypothetical marketplace participants would use.

 

Goodwill is subject to annual impairment tests and interim impairment tests if impairment indicators are present. The Company performs the annual impairment test on October 31 each year. The impairment tests require the Company to first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. The Company is not required to calculate the fair value of a reporting unit unless it determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. If it is determined that it is more likely than not, or if the Company elects not to perform a qualitative assessment, the Company proceeds with the quantitative assessment. Under the quantitative test, if the fair value of a reporting unit exceeds its carrying amount, then goodwill of the reporting unit is considered to not be impaired. If the carrying amount of the reporting unit exceeds its fair value, then an impairment loss is recognized in an amount equal to the excess, up to the value of the goodwill.

 

Revenue Recognition

 

The Company generates its revenues by providing merchandising services to its clients. Revenues are recognized when the Company satisfies a performance obligation by transferring services promised in a contract to a customer and in an amount that reflects the consideration that the Company expects to receive in exchange for those services. Performance obligations in the Company’s contracts represent distinct or separate services that we provide to the Company’s customers; generally, the Company’s contracts have a single performance obligation. If, at the outset of an arrangement, the Company determines that a contract with enforceable rights and obligations does not exist, revenues are deferred until all criteria for an enforceable contract are met.

 

The Company’s merchandising services are provided over time, generally on a daily, weekly, or monthly basis, and transaction price is based on the contractually-specified rate-per-driver metric (i.e., rate per hour, rate per store visit, or rate per item assembled, or rate by task). The Company recognizes revenues for its contracts based on the contractually specified rate-per-driver metric(s) utilizing the right-to-invoice practical expedient because the Company has a right to consideration for merchandising services completed to date. Most of the Company’s contracts have a duration of one year or less and over 90% of the Company’s contracts are completed in less than 30 days.

 

Customer deposits, which are considered advances on future work, are deferred and recorded as revenue in the period in which the services are provided.

 

Allowance for Credit Losses

 
The Company continually monitors the collectability of its accounts receivable based upon current client credit information and financial condition. Balances that are deemed to be uncollectible after the Company has attempted reasonable collection efforts are written off through a charge to the bad debt allowance and a credit to accounts receivable. Accounts receivable balances, net of any applicable reserves or allowances, are stated at the amount that management expects to collect from the outstanding balances. The Company provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance for credit losses based in part on management’s assessment of the current status of individual accounts.
16
 

 

Based on management’s assessment, the Company established an allowance for credit losses of $0.0 million and $0.4 million as of December 31, 2025 and 2024, respectively. Credit loss expense was $0.1 million and $0.4 million for the years ended December 31, 2025 and 2024, respectively. 

 

Internal Use Software

 

The Company capitalizes certain costs associated with its internally developed software. The Company capitalizes the costs of materials and services incurred in developing or obtaining internal use software and such costs include, but are not limited to: the cost to purchase software, the cost to write program code, and payroll and related benefits and travel expenses for those employees who are directly involved with and who devote time to the Company’s software development projects. Capitalization of such costs begins during the application development stage once the preliminary project stage is complete, management authorizes and commits to funding the project, and it is probable that the project will be completed and that the software will be used to perform the function intended. Capitalization ceases when the project is substantially complete and ready for its intended purpose. Costs incurred during preliminary project and post-implementation stages, as well as software maintenance and training costs, are expensed in the period in which they are incurred.

 

The Company capitalized approximately $2.4 million and $1.0 million of costs related to software developed for internal use for the years ended December 31, 2025 and 2024, respectively, and recognized approximately $1.4 million and $1.4 million of amortization of capitalized software for the years ended December 31, 2025 and 2024

 

Income Taxes

 

The Company records deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determinations, the Company considers all available evidence, including future reversals of existing deferred tax liabilities, projected future taxable income, feasible and prudent tax planning strategies, and recent financial operating results. If the Company determines that it will not be able to realize deferred income tax assets in the future, a valuation allowance is recorded. If sufficient positive evidence arises in the future indicating that all or a portion of the deferred tax assets meet the more likely than not standard for realization, the valuation allowance would be reduced accordingly in the period that such a conclusion is reached.

 

Valuation allowances of $7.6 million and $0.0 million at December 31, 2025 and 2024, respectively, related principally to deferred tax assets for net operating losses ("NOLs"), disallowed interest expense and tax credits that are uncertain as to realizability.

 

An income tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on its technical merits. The unrecognized tax reserves at December 31, 2025 and 2024 were $0.16 million and $0.11 million respectively, excluding accrued interest and penalties.

 

The Company has historically calculated its quarterly tax provision based on its best estimate of the full year tax rate applicable to the quarter. The Company did not significantly change the methodology for calculating income tax expenses, deferred tax assets and liabilities and reserves for uncertain tax positions for the years presented. See Note 5, Income Taxes in the Notes to Consolidated Financial Statements for additional information."

 

Recent Accounting Pronouncements

 

See the sections titled "Summary of Significant Accounting Policies— Recently Adopted Accounting Pronouncements” and "—Recently issued accounting pronouncements not yet adopted” in Note 2 to the Company's Consolidated Financial Statements, Summary of Significant Accounting Policies, included elsewhere in this Annual Report on Form 10‑K.

 

Liquidity and Capital Resources

 

Funding Requirements

 

Management believes that based upon the continuation of the Company's existing credit facilities, projected results of operations, vendor payment requirements and other financing available to the Company (including amounts due to affiliates), sources of cash availability should be manageable and sufficient to support ongoing operations over the next year. However, delays in collection of receivables due from any of the Company's major clients, a significant reduction in business from such clients, or a negative economic downturn could have a material adverse effect on the Company's business, cash resources and ongoing ability to fund operations.

 

The Company is a party to both U.S. and Canada credit facilities. These credit facilities require compliance with their respective financial covenants. For the year ended December 31, 2025, the Company was in compliance with all financial covenants under these arrangements. See Note 4 to the Company's Consolidated Financial Statements, Debt, included elsewhere in this Annual Report on Form 10-K.

 

Cash Flows for the Years Ended December 31, 2025 and 2024

 

Net cash used in operating activities was $18.4 million for the year ended December 31, 2025 and net cash used in operating activities was $0.7 million for the year ended December 31, 2024. The year-over-year increase in net cash used by operating activities was mainly driven by lower operating income and unfavorable changes in working capital, largely due to the timing of customer collections, partially offset by favorable timing of payments to suppliers.

 

Net cash used in investing activities was $1.1 million for the year ended December 31, 2025 compared to cash provided by investing activities of $9.9 million for the year ended December 31, 2024. The net use of cash for investing activities was primarily attributable to the costs associated with software developed for internal use, implementation of a new enterprise resource planning system, and expenditures related to outfitting the new corporate headquarters.

 

Net cash provided by financing activities was $4.5 million for the year ended December 31, 2025 compared to cash used in financing activities of $1.7 million for the year ended December 31, 2024. The year-over-year increase in cash from financing activities was driven by borrowings under the line of credits and sale of treasury shares.

 

For the year ended December 31, 2025, the Company experienced a net decrease in cash and cash equivalents amounting to approximately $15.0 million, net of the impact of foreign exchange rate fluctuations of $0.0 million. The year-over-year decrease in cash and cash equivalents was due to lower operating income and unfavorable changes in working capital, largely due to the timing of customer collections, the costs associated with software developed for internal use, expenditures related to outfitting the new corporate headquarters, offset by favorable timing of payments to suppliers.

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

 

The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.

 

Item 8. Financial Statements and Supplementary Data 

 

See Item 15 of this Annual Report on Form 10-K.

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 

 

None

 

17
 

 

Item 9A. Controls and Procedures

 

Management's Evaluation of Disclosure Controls and Procedures

 

Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The Chief Executive Officer and the Chief Financial Officer, as our principal financial and accounting officer, have reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.

 

Management’s Report on Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

Because of its inherent limitations, internal control over financial reporting may not detect or prevent misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management utilized the criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to conduct an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2025. 

 

Remediation of Previously Reported Material Weaknesses in Internal Control over Financial Reporting

 

As previously described in the Explanatory Note to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2024, as amended and filed on July 17, 2025, the Company identified material weaknesses in internal control over financial reporting related to the financial statement close process (i) to ensure the completeness and accuracy of certain amounts and disclosures, specifically related to the preparation and review of balance sheet account reconciliations and presentation of segment disclosures; and (ii) over non-recurring transactions, including accounting for the deconsolidation and sale of the international components. The Company subsequently devoted significant resources to implementing remediation measures. During the fourth quarter of 2025, the Company concluded that, as of December 31, 2025, the previously identified material weaknesses had been remediated following the completion of its remediation plan. The remediation plan included the following: (i) implementing a modern and more efficient ERP system, (ii) hiring a new Corporate Controller and Chief Financial Officer, (iii) consolidating the finance team into a single office, and (iv) simplifying the organizational structure through the divesture of all international operations except Canada.

 

Changes in Internal Controls Over Financial Reporting

 

Other than remediation measures discussed above, there were no changes in internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control system over financial reporting.

 

 

Item 9B. Other Information 

 

a. During the fourth quarter of 2025, none of our directors or executive officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Regulation S-K).

 

b. As previously disclosed in the Current Report on Form 8-K filed with the U.S. SEC on March 19, 2026, SPAR Marketing Force, Inc. ("SMF"), a wholly owned subsidiary of the Company, issued a Senior Unsecured Promissory Note (the "Original Note") to PC Group, Inc. ("PC Group") evidencing a $4,000,000 unsecured loan arrangement.

 

On March 27, 2026, SMF issued an Amended and Restated Senior Unsecured Promissory Note (the "New Note") to PC Group, which amends, restates and replaces, in its entirety, the Original Note. The New Note has substantially identical terms and conditions to the Original Note, except as follows: (a) the New Note is effective as of March 17, 2026 (the "Effective Date"); (b) at the maturity date of the New Note, $800,000, subject to adjustment as described in the New Note, will be credited against the outstanding loan amount; and (c) SMF will be required to make cash payments to maintain the value of the equity consideration issued pursuant to the New Note, up to a maximum of $800,000, if (x) the Company issues or sells common stock (or convertible equity securities) at a price below $0.80 per share and (y) on each anniversary of the Effective Date, if on such date the Company's common stock is trading at less than $0.80 per share.

 

The foregoing description of the New Note does not purport to be complete and is qualified in its entirety by the terms and conditions of the New Note, which is filed as Exhibits 10.77, to this Annual Report on Form 10-K and incorporated herein by reference.

 
 

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 

Not applicable.

 

18
 

 

PART III

 

"Reference is made below to SGRP’s definitive Proxy Statement for its 2026 Annual Meeting of Stockholders, which SGRP plans to file pursuant to Regulation 14A on or about April 30, 2026, with the meeting scheduled to be held on or before June 11, 2026. For clarity (and without limitation), information appearing in the sections of such Proxy Statement entitled (a) "PROPOSAL 3 – TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE NAMED EXECUSTIVE OFFICERS, AS DISCLOSED IN THE PROXY STATEMENT (I.E. "SAY ON PAY")”, (b) "PROPOSAL 4 – TO SELECT, ON AN ADVISORY BASIS, WHETHER THE CORPORATION SHOULD REQUEST AN ADVISORY VOTE FROM ITS STOCKHOLDERS RESPECTING COMPENSATION OF THE NAMED EXECUTIVE OFFICERS EVERY ONE, TWO OR THREE YEARS(I.E. "SAY ON FREQUENCY")", and (c) "REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS” shall not be deemed to be incorporated by reference in this Annual Report.

 

Item 10. Directors, Executive Officers and Corporate Governance

 

Reference is made to the information set forth in the 2026 Proxy Statement under the captions: "DIRECTORS AND EXECUTIVE OFFICERS", INCLUDING (WITHOUT LIMITATION) "The Board of Directors of the Corporation”, and "Executives and Officers of the Corporation”, and "Corporate Governance”, including (without limitation) "Board Structure, Leadership and Risk Oversight", "Board Meetings", "Board Size, Quorum and Voting", "Board Committees", "Audit Committee", "Compensation Committee", "Governance Committee", "Director Nominations: Experience, Integrity, Diversity and other Criteria", "Director Independence", "Contractually Dedicated Seats", "2026 By-Laws", "significant Stockholder Governance Limitations", " Limitation of Liability and Indemnification Matters", and "Ethics Codes"; and "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS", including (without limitation) "Security Ownership of Certain Beneficial Owners and Management:, "Section 16(a) Beneficial Ownership Reporting Compliance"; and "Audit and Compensation Committee Interlocks and Insider Participation".

 

Item 11. Executive Compensation 

 

Reference is made to the information set forth in the 2026 Proxy Statement under the captions: "COMPENSATION OF EXECUTIVES AND DIRECTORS", including (without limitation) "Executive Compensation Summary", "Summary Compensation Table", "Narrative to Summary Compensation Table", "Chief Executive Officer (PEO) Pay Versus Performance Table", "2025, 2024, 2023 and 2022 Deferred Compensation Agreements", "Outstanding Equity Awards at Fiscal Year-End", "Compensation of Directors", and "Discussion of Directors' Compensation"; "COMPENSATION PLANS", including (without limitation) "Inducement Stock Based Award Summary", "2020, 2018 and 2008 Plans", "Share Based Compensation", "2008 Plan Summary", "2018 Plan Summary", "2020 Plan Summary", "CEO Inducement Award Summary", "CEO Inducement Award RSU Summary", "Share-Based Compensation Expense", and "Employee Stock Purchase Plans"; and "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS", including (without limitation) "Security Ownership of Certain Beneficial Owners and Management", "Section 16(a) Beneficial Ownership Reporting Compliance"; and "Audit and Compensation Committee Interlocks and Insider Participation".

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 

 

Reference is made to the information set forth in the 2026 Proxy Statement under the captions: "COMPENSATION OF EXECUTIVES AND DIRECTORS", including (without limitation) "Executive Compensation Summary", "Summary Compensation Table", "Narrative to Summary Compensation Table", "Chief Executive Officer (PEO) Pay Versus Performance Table", "2025, 2024, 2023 and 2022 Deferred Compensation Agreements", "Outstanding Equity Awards at Fiscal Year-End", "Compensation of Directors", and "Discussion of Directors' Compensation"; "COMPENSATION PLANS", including (without limitation) "Inducement Stock Based Award Summary", "2020, 2018 and 2008 Plans", "Share Based Compensation", "2008 Plan Summary", "2018 Plan Summary", "2020 Plan Summary", "CEO Inducement Award Summary", "CEO Inducement Award RSU Summary", "Share-Based Compensation Expense", and "Employee Stock Purchase Plans"; and "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters", including (without limitation) "Security Ownership of Certain Beneficial Owners and Management", "Section 16(a) Beneficial Ownership Reporting Compliance"; and "Audit and Compensation Committee Interlocks and Insider Participation".

 

Item 13. Certain Relationships and Related Transactions, and Director Independence 

 

Reference is made to the information set forth in the 2026 Proxy Statement under the captions: "CORPORATE GOVERNANCE", including (without limitation) "Director Independence", "Contractually Dedicated Seats", "2026 By-Laws", "Significant Stockholder Governance Limitations"; and "TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS", including (without limitation) "Related Party Transactions", "Change of Control, Voting and Restricted Stock Agreement", "Other Domestic Related Party Transactions", "International Joint Venture Transactions to Sell the Company’s Ownership Interests to Related JV Parties", "Agreement to sell the Company’s ownership interest in its South African Joint Venture", "Agreement to sell the Company’s ownership interest in its Chinese Joint Venture", "Agreement to sell the Company’s Brazilian subsidiary that owns its interest in its Brazilian Joint Venture", "Agreement to sell SPAR's 100% ownership interest in SPAR Japan", "Agreement to sell SPAR's 51% ownership interest in its Indian Joint Venture", "Agreement to sell SPAR's 51% ownership interest in its Mexican Joint Venture", "Summary of Certain Related Party Transactions", and "Other Related Party Transactions and Arrangements".

 

Item 14. Principal Accountant Fees and Services

 

BDO USA, P.C. ("BDO"), an independent registered accounting firm, has served as the Company's principal independent registered accounting firm since October 2013 to audit the consolidated financial statements of the Company, including the Company’s consolidated financial statements for its year ending December 31, 2025, for the Company's business in the United States and Canada.

 

In the past, BDO audited certain foreign subsidiaries of SGRP through BDO's affiliates in those countries, but the Company has disposed of most of its foreign operating joint venture subsidiaries as described in the 2025 Annual Report and other SEC reports. 

 

Audit Fees

 

The aggregate fees billed to the Company for professional accounting services by BDO, including the audit of the Company's annual financial statements for the years ended December 31, 2025 and 2024, are set forth in the table below (amounts in thousands):

 

 

2025

 2024

Audit fees

 $ 886 $ 782

Audit-related fees

   34   30

Tax fees

   12   11

Total

 $ 932 $ 823

 

 

19
 

 

For purposes of the preceding table professional fees are classified as follows:

 

 

 

●

Audit fees — These are fees for professional services performed for the audit of our annual financial statements and the required review of quarterly financial statements and other procedures performed by the independent registered accounting firm in order for them to be able to form an opinion on the Company's consolidated financial statements. These fees also cover services that are normally provided by independent registered accounting firm in connection with statutory and regulatory filings or engagements.

 

●

Audit-related fees — These are fees for assurance and related services that traditionally are performed by an independent registered accounting firm that are reasonably related to the performance of the audit or review of the financial statements. Audit related fees in the above table represent fees for the audit of the Corporation's 401(k).

 

●

Tax fees — These are fees for all professional services performed by professional staff in our independent registered accounting firm's tax division, except those services related to the audit of the Company's financial statements. These include fees for tax compliance, tax planning and tax advice, including federal, state and local issues.

 

Since the Audit Committee's formation in 2003, as required by applicable law and Nasdaq rules, each audit-related or tax or other non-audit service performed by the Company's independent registered accounting firm either: (i) was approved in advance on a case-by-case basis by SGRP's Audit Committee; or (ii) fit within a pre-approved "basket" of audit-related or tax and other non-audit services of limited amount, scope and duration established in advance by SGRP's Audit Committee. In connection with the standards for independence of the Company's independent registered accounting firm promulgated by the SEC, the Audit Committee considers (among other things) whether the provision of such services would be compatible with maintaining the independence of the Company's registered independent accounting firm.

 

 

20
 

 

 

PART IV

 

Item 15. Exhibits and Financial Statement Schedules

 

     Index to Financial Statements filed as part of this report:

 

Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Troy, Michigan; PCAOB ID#243)

28

  
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 202429
  

Consolidated Balance Sheets as of December 31, 2025 and 2024

30
  

Consolidated Statement of Stockholders' Equity for the years ended December 31, 2025 and 2024

31
  

Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024

32
  

Notes to Consolidated Financial Statements

33

 

 

 

 

Exhibits

 

Exhibit

Number

 

Description

   
2.1 Agreement and Plan of Merger, dated August 30, 2024, by and among Highwire Capital, LLC, Highwire Merger Co. I, Inc. and SPAR Group, Inc. (incorporated by reference to Exhibit 2.1 to SGRP’s Current Report on Form 8-K, as filed with the SEC on September 3, 2024).
   

3.1

 

Certificate of Incorporation of SPAR Group, Inc. (referred to therein under its former name of PIA Merchandising Services, Inc.), as amended, incorporated by reference to the Corporation’s Registration Statement on Form S-1 (Registration No. 33-80429), as filed with the SEC on December 14, 1995, and the Certificate of Amendment filed with the Secretary of State of the State of Delaware on July 8, 1999 (which, among other things, changes the Corporation’s name to SPAR Group, Inc.), (incorporated by reference to Exhibit 4.1 to the Corporation’s Registration Statement on Form S-8 (Registration No. 33-80429) as filed with the SEC on April 2, 2021).

   

3.2

 

Certificate of Elimination of the Certificate of Designation of Series "A" Preferred Stock of SPAR Group, Inc., adopted as of January 25, 2022 (incorporated by reference to Exhibit 3.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).

   

3.3

 

Certificate of Designation of Series "B” Convertible Preferred Stock of SPAR Group, Inc., adopted January 25, 2022 (incorporated by reference to Exhibit 3.2 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).

   

3.4

 

Amended and Restated By-Laws of SPAR Group, Inc., as adopted, restated, effective and dated January 22,2026 (incorporated by reference to Exhibit 3.3 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2026). 

   

3.5

 

Amended and Restated Charter of the Audit Committee of the Board of Directors of SPAR Group, Inc., adopted, restated, effective and dated August 12, 2020, (incorporated by reference to Exhibit 3.4 to the First Amendment to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, as filed with the SEC on April, 29, 2021 ("SGRP's 2020 Annual Report Amendment"). 

   

3.6

 

Charter of the Compensation Committee of the Board of Directors of SPAR Group, Inc., Amended, Restated and Dated (as of) August 11, 2020, (incorporated by reference to Exhibit 3.5 to the First Amendment to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, as filed with the SEC on April, 29, 2021 ("SGRP's 2020 Annual Report Amendment").

   

3.7

 

Charter of the Governance Committee of the Board of Directors of SPAR Group, Inc., Dated (as of) April 23, 2020 and As Amended through March 18, 2021 (incorporated by reference to Exhibit 3.6 to the First Amendment to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, as filed with the SEC on April, 29, 2021 ("SGRP's 2020 Annual Report Amendment").

   

3.8

 

SPAR Group, Inc. Statement of Policy Respecting Stockholder Communications with Directors, adopted on May 18, 2004 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on May 27, 2004). 

   

3.9

 

SPAR Group, Inc. Statement of Policy Regarding Director Qualifications and Nominations, adopted on May 18, 2004 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on May 27, 2004).

   

3.10

 

SPAR Group, Inc. Statement of Policy Respecting Complaints and Communications by Employees and Others as Amended and Restated as of August 13, 2015 (also known as the Whistleblower Policy) (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the SEC on April 2, 2018). 

   

3.11

 

SGRP 2024 Stock Repurchase Program as approved by SGRP's Audit Committee and adopted by its Board of Directors on March 28, 2024 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on April 3, 2024).

   

4.1

 

Form of SGRP's Common Stock Certificate (incorporated by reference to SGRP's Pre-Effective Amendment No. 1 to its Registration Statement on Form S-3 (Registration No. 333-162657) as filed with the SEC on February 7, 2011).

   

4.2

 

Form of SGRP's Series B Preferred Stock Certificate (incorporated by reference to SGRP’s Annual Report on Form 10-K, as filed with the SEC on April 17, 2023)

   

4.3 

 

Registration Rights Agreement entered into as of January 21, 1992, by and between SGRP (as successor to, by merger in 1996 with, PIA Holding Corporation, f/k/a RVM Holding Corporation, the California Limited Partnership, The Riordan Foundation and Creditanstalt-Bankverine (incorporated by reference to the Form S-1).

21
 

 

   

4.4

 

Summary Description and Prospectus dated August 24, 2009, respecting the SPAR Group, Inc. 2008 Stock Compensation Plan, as amended (incorporated by reference to Exhibit 99(a)(1)(G) to SGRP's SC TO-I).

   

10.1

 

2021 Stock Compensation Plan of SPAR Group, Inc., effective as of August 12, 2021 (incorporated by reference to Appendix A to the Corporation’s Definitive Proxy Statement filed with the SEC on July 13, 2021).

   

10.2

 

2020 Stock Compensation Plan of SPAR Group, Inc., effective as of January 19, 2021 (incorporated by reference to Annex B to the Corporation’s Definitive Proxy Statement filed with the SEC on December 10, 2020).

   

10.3

 

2018 Stock Compensation Plan of SGRP, effective as of May 2, 2018 (incorporated by reference to Annex A to SGRP's Definitive Proxy Statement filed with the SEC on April 18, 2018).

   

10.4

 

2008 Stock Compensation Plan, effective as of May 29, 2008, and as amended through May 28, 2009 (the "SGRP 2008 Plan") (incorporated by reference to SGRP's Current Report on Form 8-K dated June 4, 2009, as filed with the SEC on June 4, 2009).

   

10.5

 

Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and Kori G. Belzer (incorporated by reference to Exhibit 10.6 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.6

 

 

Phantom Stock Unit Grant and Agreement entered into and effective as of March 24, 2022, between SGRP and Kori G. Belzer (incorporated by reference to Exhibit 10.7 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.7

 

 

Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and Antonio Calisto Pato (incorporated by reference to Exhibit 10.8 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.8

 

Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and William Linnane (incorporated by reference to Exhibit 10.9 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.9

 

Phantom Stock Unit Grant and Agreement entered into and effective as of March 24, 2022, between SGRP and William Linnane (incorporated by reference to Exhibit 10.10 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.10

 

Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and Ron Lutz (incorporated by reference to Exhibit 10.11 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.11

 

Phantom Stock Unit Grant and Agreement entered into and effective as of March 24, 2022, between SGRP and Ron Lutz (incorporated by reference to Exhibit 10.12 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.12

 

Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and Mike Matacunas (incorporated by reference to Exhibit 10.13 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.13

 

Inducement RSU Contract between SPAR Group, Inc. and Antonio Calisto Pato dated March 10, 2023 (incorporated by reference to Exhibit 10.14 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.14

 

Inducement RSU Contract, between SPAR Group, Inc. and William Linnane, dated August 2, 2021 (incorporated by reference to Exhibit 10.6 to the Corporation’s Annual Report on Form 10-K as filed with the SEC on April 15, 2022).

   

10.15

 

Inducement RSU Contract, between SPAR Group, Inc. and Ron Lutz, dated August 2, 2021 (incorporated by reference to Exhibit 10.7 to the Corporation’s Annual Report on Form 10-K as filed with the SEC on April 15, 2022).

   

10.16

 

Inducement Nonqualified Stock Option Contract, between SGRP and Mike Matacunas, dated February 22, 2021 (incorporated by reference to Exhibit 4.5 to the Corporation’s Registration Statement on Form S-8 (Registration No. 33-80429) as filed with the SEC on April 2, 2021).

   

10.17

 

Inducement RSU Contract, between SGRP and Mike Matacunas, dated February 22, 2021 (incorporated by reference to Exhibit 10.9 to the Corporation’s Annual Report on Form 10-K as filed with the SEC on April 15, 2022).

   

10.18

 

Inducement Nonqualified Stock Option Contract, between SGRP and Fay DeVriese, dated August 31, 2020 (incorporated by reference to Exhibit 4.4 to the Corporation’s Registration Statement on Form S-8 (Registration No. 33-80429) as filed with the SEC on April 2, 2021).

   
10.19 2024 Stock Repurchase Program (incorporated by reference to Exhibit 99.1 to SGRP's Current Report on Form 8-K as filed with the SEC on April 3, 2024).
   
10.20 2022 Stock Repurchase Program (incorporated by reference to Exhibit 99.1 to SGRP's Current Report on Form 8-K as filed with the SEC on May 24, 2022).
   

10.21

 

2001 Employee Stock Purchase Plan (incorporated by reference to SGRP's Proxy Statement for SGRP's annual stockholders meeting held on August 2, 2001, as filed with the SEC on July 12, 2001).

22
 

 

   

10.22

 

2001 Consultant Stock Purchase Plan (incorporated by reference to SGRP's Proxy Statement for SGRP's Annual meeting held on August 2, 2001, as filed with the SEC on July 12, 2001).

   
10.23 Independent Contractor's Agreement between SPAR Group, Inc. and Willliam Bartels dated as of October 1, 2025 (as filed herewith).
   
10.24 Consulting Services Agreement between SPAR Group, Inc. and Ron Lutz dated as of August 25, 2025 (incorporated by reference to Exhibit 10.6 to SGRP's Current Report on Form 8-K, as filed with the SEC on August 29, 2025).
   

10.25

 

Consulting Agreement dated January 27, 2022, effective February 1, 2022, between SGRP and Thenablers, Ltd., which is wholly owned by and will provide certain consulting services from Panagiotis ("Panos") N. Lazaretos (who retired as a SGRP director effective January 25, 2022) to SGRP regarding global sales and new markets’ expansion (incorporated by reference to Exhibit 10.3 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).

   

10.26

 

Consulting Agreement dated January 25, 2022, and effective January 26, 2022, between SGRP and James R. Brown, Sr. (who retired as a SGRP director effective January 25, 2022) (incorporated by reference to Exhibit 10.2 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).

   

10.27

 

Change of Control, Voting and Restricted Stock Agreement, effective January 28, 2022, by and among SGRP, Robert G. Brown, William H. Bartels, SPAR Administrative Services, Inc., a Nevada corporation, and SPAR Business Services, Inc., a Nevada corporation (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).

   

10.28

 

Change of Control Severance Agreement between SGRP and Antonio Calisto Pato dated as of February 28, 2023 (incorporated by reference to Exhibit 10.25 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.29

 

Corrective Global Amendment to Change of Control Severance Agreements between SGRP, Fay DeVriese, William Linnane and Ron Lutz made and entered into and effective as of August 10, 2022 (incorporated by reference to Exhibit 10.26 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.30

 

Amended and Restated Change of Control Severance Agreement (the "CICSA”) between SGRP and Fay DeVriese made and entered into effective as of August 13, 2021 (incorporated by reference to Exhibit 10.1 to SGRP's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, as filed with the SEC on November 15, 2021).

   

10.31

 

Change of Control Severance Agreement between SGRP and William Linnane dated as of July 12, 2021 (incorporated by reference to Exhibit 10.18 to the Corporation’s Annual Report on Form 10-K as filed with the SEC on April 15, 2022. 

   

10.32

 

Change of Control Severance Agreement between SGRP and Ron Lutz dated as of July 12, 2021 (incorporated by reference to Exhibit 10.19 to the Corporation’s Annual Report on Form 10-K as filed with the SEC on April 15, 2022).

   

10.33

 

Change of Control Severance Agreement by and among SGRP, SPAR Marketing Force, Inc. and Mike Matacunas dated as of January 26, 2021 (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on February 16, 2021).

   

10.34

 

Amended and Restated Change of Control Severance Agreement between Kori G. Belzer and SGRP, dated as of August 10, 2022 (incorporated by reference to Exhibit 10.2 to SGRP's Quarterly Report on Form 10-Q, as filed with the SEC on August 15, 2022).

   

10.35

 

Amended and Restated Change of Control Severance Agreement between Lawrence David Swift and SGRP dated as of August 10, 2022 (incorporated by reference to Exhibit 10.3 to SGRP's Current Report on Form 8-K, as filed with the SEC on August 14, 2022).

   
10.36 
   
10.37 

Supplemental Mutual Release Pursuant to Change in Control Severance Agreement between SPAR Group, Inc. and Kori Belzer dated as of August 25, 2025 (incorporated by reference to Exhibit 10.8 to SGRP’s Current Report on Form 8-K, as filed with the SEC on August 29, 2025).

   
10.38 Severance Agreement and General Release between SPAR Group, Inc. and Antonio Calisto Pato dated as of December 12, 2025 (as filed herewith).
   
10.39 Employment Agreement between SPAR Group, Inc. and Steven Hennen dated as of December 8, 2025 (incorporated by reference to Exhibit 10.1 to SGRP’s Current Report on Form 8-K, as filed with the SEC on December 11, 2025).
   
10.40 Employment Agreement between SPAR Group, Inc. and William Linnane dated as of August 25, 2025 (incorporated by reference to Exhibit 10.3 to SGRP’s Current Report on Form 8-K, as filed with the SEC on August 29, 2025).
   
10.41 Departure Agreement between SPAR Group, Inc. and Ron Lutz dated as of August 25, 2025 (incorporated by reference to Exhibit 10.4 to SGRP’s Current Report on Form 8-K, as filed with the SEC on August 29, 2025).
   
10.42 Supplemental Mutual Release Pursuant to Change in Control Severance Agreement between SPAR Group, Inc. and Ron Lutz dated as of August 25, 2025 (incorporated by reference to Exhibit 10.5 to SGRP’s Current Report on Form 8-K, as filed with the SEC on August 29, 2025).
   
10.43 Transition Agreement between SPAR Group, Inc. and Michael R. Matacunas dated as of August 25, 2025 (incorporated by reference to Exhibit 10.1 to SGRP’s Current Report on Form 8-K, as filed with the SEC on August 29, 2025).
   

10.44

 Mutual Release of Claims between SPAR Group, Inc and Michael R. Matacunas dated as of August 25, 2025 (incorporated by reference to Exhibit 10.2 to SGRP’s Current Report on Form 8-K, as filed with the SEC on August 29, 2025).
   

10.45

 

Trademark License Agreement dated as of July 8, 1999, by and between SPAR InfoTech, Inc., and SPAR Trademarks, Inc. (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2002, as filed with the SEC on March 31, 2003).

   

10.46

 

Trademark License Agreement dated as of July 8, 1999, by and between SPAR Marketing Services, Inc. (now known as SPAR Business Services, Inc.), and SPAR Trademarks, Inc. (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2002, as filed with the SEC on March 31, 2003).

23
 

 

   

10.47

 

Business Manager Agreement (re joint ownership of certain software) dated as of July 8, 1999, among SPAR Business Services, Inc. (f/k/a SPAR Marketing Services, Inc.), SPAR InfoTech, Inc., and SPAR Marketing Force, Inc.(incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1999, as filed with the SEC on May 1, 2000).

   

10.48

 

Joint Venture Agreement dated as of September 13, 2016, by and between JK Consultoria Empresarial Ltda.-ME, a limitada formed under the laws of Brazil, Earth Investments, LLC, a Nevada limited liability company, and SGRP Brasil Participações Ltda., a limitada formed under the laws of Brazil (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the SEC on April 2, 2018).

   
10.49 Share Purchase Agreement by and between on one side SPAR International Ltd. and SPAR Group International, Inc. as sellers, and, on the other side, JK Consultoria Empresarial Ltda. as purchaser, and, as intervening and consenting parties SGRP Brasil Participacoes Ltda. Jonathan Dagues Martins and, as guarantors SPAR Brasil Servicos De Merchandising E Tecnologia S.A., SGRP Servicos Ltda., SPAR Brasil Servicos Ltda., SPAR Brasil Servicos Temporarios Ltda., plus Trade Do Brasil Prestacao De Servicos Ltda. dated as of March 26, 2024 (as filed herewith).
   

10.50

 

Joint Venture Contract dated July 4, 2014, among SPAR China Inc., established and existing under the laws of Hong Kong, Wedone Shanghai, Co., Ltd., organized and existing under the laws of P.R. China, Shanghai Gold Pack Investment Management Co., Ltd., organized and existing under the laws of P.R. China, and XU Gang, an Australian citizen (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the SEC on April 17, 2017).

   

10.51

 

Joint Venture Agreement dated as of September 3, 2012, by and between Combined Manufacturers National (Pty) Ltd and SGRP Meridian (Pty) Ltd, respecting SGRP's additional consolidated subsidiary in South Africa (incorporated by reference to SGRP's Annual Report on Form 10-K, as filed with the SEC on April 2, 2013).

   

10.52

 

Joint Venture Agreement dated as of August 30, 2012, by and between National Merchandising of America, Inc., a Georgia corporation, SPAR NMS Holdings, Inc., a Nevada corporation and consolidated subsidiary of SGRP, and National Merchandising Services, LLC, a Nevada limited liability company and consolidated subsidiary of SGRP (incorporated by reference to SGRP's Quarterly Report on Form 10-Q, as filed with the SEC on November 9, 2012).

   

10.53

 

Joint Venture Agreement dated as of August 2, 2011, by and among Todopromo, S.A. de C.V., Sepeme, S.A. de C.V., Top Promoservicios, S.A. de C.V., Conapad, S.C., Mr. Juan Francisco Medina Domenzain, Mr. Juan Francisco Medina Staines, Mr. Jorge Carlos Medina Staines, Mr. Julio Cesar Hernandez Vanegas, and SPAR Group International, Inc., respecting SGRP's consolidated subsidiary in Mexico (incorporated by reference to SGRP's Annual Report on Form 10-K, as filed with the SEC on April 2, 2013).

   

10.54

 

Joint Venture Agreement dated as of March 29, 2006, by and between FACE AND COSMETIC TRADING SERVICES PTY LIMITED and SPAR International Ltd., respecting the Company's subsidiary in Australia (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as filed with the SEC on April 2, 2007).

   

10.55

 

Joint Venture Shareholders Agreement between Friedshelf 401 (Proprietary) Limited, SPAR Group International, Inc., Derek O'Brien, Brian Mason, SMD Meridian CC, Meridian Sales & Merchandising (Western Cape) CC, Retail Consumer Marketing CC, Merhold Holding Trust in respect of SGRP Meridian (Proprietary) Limited, dated as of June 25, 2004, respecting SGRP's consolidated subsidiary in South Africa (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as filed with the SEC on April 12, 2005).

   
10.56 Sale of Shares Agreement among SPAR Group, International, Inc. (a SGRP subsidiary), as seller, and Friedshelf (Pty) Ltd. Lindicom Proprietary Limited, and Lindicom Empowerment Holdings Proprietary Limited as buyers, dated as of February 7, 2024 (incorporated by reference Exhibit 99.2 to SGRP’s Current Report on Form 8-K, as filed with the SEC on May 2, 2024).
   

10.57

 

$2,750,000.00 secured Promissory Note from SMF to Richard Justus dated as of April 18, 2024 (the "Richard Justus Note") (as filed herewith).

   

10.58

 

Securities Pledge and Escrow Agreement securing the Richard Justus Note between SMF and Richard Justus dated as of April 18, 2024 (as filed herewith).

   

10.59

 

Guaranty of the Richard Justus Note by SGRP, in favor of Richard Justus dated as of April 18, 2024 (as filed herewith).

   

10.60

 Consent for Richard Justus Note from North Mill Capital, LLC dated as of April 26, 2024 (as filed herewith).
   
10.61 Securities Purchase Agreement between SMF and Richard Justus dates as of April 18, 2024 (as filed herewith).
   

10.62

 

Collateral Assignment (Security Agreement) (Trademarks) effective: April 10, 2019, from SPAR Trademarks, Inc., to North Mill, (incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the SEC on April 24, 2019).

   

10.63

 

Collateral Pledge Agreement dated as of April 10, 2019, by SGRP, the US NM Borrower and SPAR Acquisition, Inc., in favor of North Mill, (incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the SEC on April 24, 2019).

   

10.64

 

Corporate Guaranty dated as of April 10, 2019, from the NM Guarantors to North Mill, (incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the SEC on April 24, 2019).

   

10.65

 

Loan and Security Agreement entered into as of April 10, 2019, by and among North Mill Capital LLC, a Delaware limited liability company ("North Mill"), SPAR Marketing Force, Inc., a Nevada corporation (the "US NM Borrower"), SPAR Canada Company, an unlimited company organized under the laws of Nova Scotia (the "Canadian NM Borrower"), and each of SPAR Group, Inc., a Delaware corporation ("SGRP"), and SPAR Acquisition, Inc., SPAR Canada, Inc., SPAR Trademarks, Inc., and SPAR Assembly & Installation, Inc., each a Nevada corporation (including SGRP, each as a "NM Guarantor"), (incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the SEC on April 24, 2019).

   

10.66

 

Waiver and Modification Agreement entered in as of January 4, 2021, and effective as of December 31, 2020 (the "Modification Agreement"), among North Mill Capital, LLC ("NM"), SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties" (incorporated by reference to Exhibit 99.1 to SGRP's Current Report on Form 8-K as filed with the SEC on January 11, 2021).

24
 

 

   

10.67

 

Second Modification Agreement dated as of March 22, 2021, and effective as of April 1, 2021 (the "Second Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 99.1 to SGRP’s Current Report on Form 8-K as filed with the SEC on March 29, 2021).

   

10.68

 

Third Modification Agreement dated as of December 16, 2021, and effective as of December 1, 2021 (the "Third Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 10.57 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.69

 

Fourth Modification Agreement dated as of July 1, 2022, and effective as of June 30, 2022 (the "Fourth Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 10-Q for the quarter ended June 30, 2022, as filed with the SEC on August 15, 2022).

   

10.70

 

Fifth Modification Agreement entered into as of August 9, 2022 (the "Fifth Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 10.59 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).

   

10.71

 

Sixth Modification Agreement entered into as of February 1, 2023 (the "Sixth Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 8-K as filed with the SEC on March 2, 2023).

   
10.72 
   
10.73 Eighth Modification Agreement entered into as of October 9, 2025, by and among North Mill Capital LLC, d/b/a SLR Business Credit, SPAR Marketing Force, Inc., and SPAR Canada Company, as Borrowers, and confirmed by the following Guarantors, SPAR Group, Inc. ("SGRP"), and certain of its direct and indirect subsidiaries, namely SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (incorporated by reference to Exhibit 10.1 to SGRP’s Current Report on Form 8-K as filed with the SEC on October 16, 2025).
   

10.74

 

US$30 million Sixth Amended and Restated Revolving Credit Master Promissory Note executed and delivered by SMF to NM and dated as of October 9, 2025 (incorporated by reference to Exhibit 10.2 to SGRP’s Current Report on Form 8-K as filed with the SEC on October 16, 2025).

   

10.75

 

CDN$6 million Fifth Amended and Restated Revolving Credit Master Promissory Note executed and delivered by SCC to NM and dated as of October 9, 2025 (incorporated by reference to Exhibit 10.3 to SGRP’s Current Report on Form 8-K as filed with the SEC on October 16, 2025).

   

10.76

 

Limited Mutual Release Agreement, dated as of January 18, 2019, among Robert G. Brown, William H. Bartels, Christiaan Olivier, Lorrence T. Kellar, Jack W. Partridge, Arthur B. Drogue and R. Eric McCarthey (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 25, 2019).

   
10.77 Text of Letter to SGRP, from the Nasdaq Stock Market, Inc. ("Nasdaq"), dated March 11, 2025 (incorporated by reference to Exhibit 99.1 to SGRP’s Current Report on Form 8-K, as filed with the SEC on March 17, 2025).
   
10.78 Amended and Restated Unsecured Promissory Note and Share Grant effective as of March 27, 2026, issued by SPAR Marketing Force, Inc., as borrower, and SPAR Group, Inc., as guarantor, to PC Group, Inc., as lender (as filed herewith).
   

14.1

 

SPAR Group Code of Ethical Conduct for its Directors, Executives, Officers, Employees, Consultants and other Representatives Amended and Restated (as of) March 15, 2018 (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the SEC on April 2, 2018).

25
 

 

 

   

19.1

 

Statement of Policy Regarding Personal Securities Transactions in SGRP Stock and Non-Public Information, as adopted, restated, effective and dated as of May 1, 2004, and as further amended through March 10, 2011 (incorporated by reference to SGRP's Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on March 15, 2011).

   

21.1

 

List of Subsidiaries (as filed herewith).

   

23.1

 

Consent of BDO USA, P.C. (as filed herewith).

   

31.1

 

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (as filed herewith).

   

31.2

 

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (as filed herewith).

   

32.1

 

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (as filed herewith).

   

32.2

 

Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (as filed herewith).

   
97 Spar Group, Inc. Compensation Recovery Policy
   

101.INS*

 

Inline XBRL Instance

   

101.SCH*

 

Inline XBRL Taxonomy Extension Schema

   

101.CAL*

 

Inline XBRL Taxonomy Extension Calculation

   

101.DEF*

 

Inline XBRL Taxonomy Extension Definition

   

101.LAB*

 

Inline XBRL Taxonomy Extension Labels

   

101.PRE*

 

Inline XBRL Taxonomy Extension Presentation

   

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

 

 

* XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

Item 16. Form 10-K Summary

 

None.

 

26
 

 

SIGNATURES 

 

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

 

 

SPAR Group, Inc.

 
  

 

 

 

By:

/s/ William Linnane

 

 

 

William Linnane

 

 

 

President and Chief Executive Officer

 
    

 

Dated as of: March 31, 2026

 

 

KNOW ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Steven Hennen and William Linnane and each of them, jointly and severally, his attorneys-in-fact, each with full power of substitution, for each of them in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each said attorneys-in-fact or his substitute or substitutes, may do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated.

 

SIGNATURE

 

TITLE

   

/s/ William Linnane

 President, Chief Executive Officer and Director,

     William Linnane

 

(Principal Executive Officer)

Dated as of: March 31, 2026

 

 

 

  
/s/ James R. Gillis Director
     James R. Gillis  
Dated as of: March 31, 2026  
   
/s/ John Bode 

Director

     John Bode

  
Dated as of: March 31, 2026

 

 

 

  
/s/ Linda Houston 

Director

     Linda Houston

  
Dated as of: March 31, 2026

 

 

 

  
/s/ Tim Cook 

Director

     Tim Cook

 

 
Dated as of: March 31, 2026

 

 

 

  
/s/ James R. Brown, Sr Director

James R. Brown, Sr

  
Dated as of: March 31, 2026  
   
/s/ Panagiotis Lazaretos Director
Panagiotis Lazaretos  
Dated as of: March 31, 2026  
   
/s/ Steven Hennen Chief Financial Officer,
     Steven Hennen Treasurer and Secretary (Principal Financial and Accounting Officer)
Dated as of: March 31, 2026  

 

 

 

 

 

 

27
 

 

 

Report of Independent Registered Public Accounting Firm

 

Shareholders and Board of Directors

SPAR Group, Inc.

Charlotte, NC

 

Opinion on the Consolidated Financial Statements

 

We have audited the accompanying consolidated balance sheets of SPAR Group, Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Critical Audit Matter

 

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 

Revenue recognition 

 

As indicated in Note 2 to the consolidated financial statements, the Company generates revenues by providing merchandising services to its customers, generally on a daily, weekly, or monthly basis. The Company recognizes revenues as the services are performed based on the contractually-specified rate-per-driver metric (i.e., rate per hour, rate per store visit, rate per item assembled, or rate by task). For the year ended December 31, 2025, the Company’s net revenues were $136.1 million.

 

We identified revenue recognition from merchandising services as a critical audit matter due to the large volume of customer contracts and transactions. Auditing merchandising services revenue was especially challenging due to the extent of audit effort required to address the matter.

 

The primary procedures we performed to address this critical audit matter included: 

 

 

●

Testing the accuracy and existence of revenue recognized for a sample of revenue transactions by inspecting source documents such as customer contracts, invoices, cash receipts, and other documents for each applicable per-driver metric (i.e., hours worked, store visits, items assembled, or tasks performed).

 

 

●

Testing the cut off of revenue recognized for a sample of revenue transactions prior to and subsequent to December 31, 2025.

 

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2013

Troy, Michigan

March 31, 2026

 

 

 

 

28
 
 

 

SPAR Group, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Loss 

(In thousands, except per share data)

 

 

Year Ended December 31,

 
 

2025

 

2024

 

Net revenues

$136,104 $163,629 

Cost of revenue

 114,411  130,032 

Gross profit

 21,693  33,597 

Selling, general and administrative expense

 32,197  33,880 

Restructuring costs and severance

 4,765  - 

Gain on sale of business

 -  (2,536)

Depreciation and amortization

 1,634  1,553 

Operating (loss) income

 (16,903) 700 

Interest expense

 2,415  2,191 

Other expenses, net

 1,235  171 

Loss before income tax expense

 (20,553) (1,662)

Income tax expense

 4,073  144 

Loss from continuing operations

 (24,626) (1,806)
       

Discontinued Operations

      

Income from discontinued operations

 -  1,381 

Loss on disposal of business

 -  (1,188)

Income tax expense

 -  (1,074)

Net loss from discontinued operations

 -  (881)

Net loss

 (24,626) (2,687)

Net income attributable to non-controlling interest

 -  (463)

Net loss attributable to SPAR Group, Inc.

$(24,626)$(3,150)
       

Basic loss per common share attributable to SPAR Group, Inc. from continuing operations

 (1.04) (0.09)

Diluted loss per common share attributable to SPAR Group, Inc. from continuing operations

 (1.04) (0.09)

Basic loss per common share attributable to SPAR Group, Inc. from discontinued operations

 -  (0.04)

Diluted loss per common share attributable to SPAR Group, Inc. from discontinued operations

 -  (0.04)

Basic loss per common share attributable to SPAR Group, Inc.

 (1.04) (0.13)

Diluted loss per common share attributable to SPAR Group, Inc.

 (1.04) (0.13)
       

Weighted average common shares – basic

 23,619  23,555 

Weighted average common shares – diluted

 23,619  23,555 
       

Net loss

$(24,626)$(2,687)

Other comprehensive loss:

      

Foreign currency translation adjustments

 44  (1,553)

Comprehensive loss

 (24,582) (4,240)

Comprehensive income attributable to non-controlling interest

 -  (172)

Comprehensive loss attributable to SPAR Group, Inc.

$(24,582)$(4,412)

 

See accompanying notes to the Company's consolidated financial statements.

 

29
 

 

 

SPAR Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

 

  

December 31, 2025

  

December 31, 2024

 

Assets

        

Current assets:

        

Cash and cash equivalents

 $3,262  $18,221 

Accounts receivable, net

  27,006   24,766 

Prepaid expenses and other current assets

  1,168   3,009 

Total current assets

  31,436   45,996 
         

Property and equipment, net

  3,601   2,015 

Operating lease right-of-use assets

  4,861   630 

Goodwill

  856   856 

Intangible assets, net

  709   841 

Deferred income taxes

  18   4,259 

Other assets

  2,578   1,834 

Total Assets

 $44,059  $56,431 
         

Liabilities and equity

        

Current liabilities:

        

Accounts payable

 $9,342  $8,767 

Accrued expenses and other current liabilities

  5,576   3,533 

Customer incentives and deposits

  1,221   892 

Lines of credit and short-term loans

  20,442   16,082 

Current portion of long-term debt

  500   500 

Current operating lease liabilities

  643   276 

Total current liabilities

  37,724   30,050 

Operating lease liabilities, less current portion

  4,395   353 

Deferred income taxes

  34   – 

Long-term debt

  1,284   1,722 

Total Liabilities

 $43,437  $32,125 
         

Commitments and contingencies – See Note 6

          
         

Equity:

        

SPAR Group, Inc. equity

        

Preferred stock, Series - B. $.01 par value:

        

Authorized and available shares– 2,000,000 Issued and outstanding shares– 0 at December 31, 2025 and 0 at December 31, 2024

  –   – 

Common stock, $.01 par value:

        

Authorized shares – 47,000,000 Issued and outstanding shares – 24,129,991 at December 31, 2025 and 23,449,701 at December 31, 2024

  241   234 

Treasury stock, at cost 632,485 shares at December 31, 2025 and 1,205,485 Shares at December 31, 2024

  (1,047)  (2,075)

Additional paid-in capital

  19,749   19,886 

Accumulated other comprehensive loss

  (1,154)  (1,198)

(Accumulated deficit)/Retained earnings

  (17,167)  7,459 

Total equity

  622   24,306 

Total liabilities and equity

 $44,059  $56,431 

 

See accompanying notes to the Company's consolidated financial statements.

 

30
 
 

SPAR Group, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

(In thousands)

 

   

Common Stock

    

Series B Preferred Stock

    

Treasury Stock

    

Additional Paid-In

    

Accumulated Other Comprehensive

    

Retained

    

Non- Controlling

    

Total

  
   

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Gain/(Loss)

    

Earnings

    

Interest

    

Equity

  
                                                                                         

Balance at January 1, 2024

     23,241     $ 232       650     $ 7       205     $ (285 )   $ 21,004     $ (3,341 )   $ 10,609     $ 12,020     $ 40,246  
                                                                                         

Share-based compensation

     –       –       –       –       –       –       137       –       –       –       137  

Conversion of Series B convertible preferred stock

     975       10       (650 )     (7 )     –       –       (1 )     –       –       –       2  

Exercise of stock options

     233       2       –       –       –       –       (398 )     –       –       –       (396 )

Purchase of treasury shares

     (1,000 )     (10 )     –       –       1,000       (1,790 )     –       –       –       –       (1,800 )

Sale of international operations

     –       –       –       –       –       –       –       3,524       –       (10,616 )     (7,092 )

Purchase of non-controlling interest

     –       –       –       –       –       –       (856 )     –       –       (1,695 )     (2,551 )

Other comprehensive (loss) income, net of tax

     –       –       –       –       –       –       –       (1,381 )     –       (172 )     (1,553 )

Net (loss) income

     –       –       –       –       –       –       –       –       (3,150 )     463       (2,687 )

Balance at December 31, 2024

     23,449     $ 234       -     $ -       1,205     $ (2,075 )   $ 19,886     $ (1,198 )   $ 7,459     $ -     $ 24,306  
                                                                                         

Share-based compensation

     –       –       –       –       –       –       140       –       –       –       140  

Sale of treasury shares

     573       5       –       –       (573 )     1,028       (277 )     –       –       –       756  

Issuance of shares for restricted stock units

     107       2       –       –       –       –       –       –       –       –       2  

Other comprehensive income, net of tax

     –       –       –       –       –       –       –       44       –       –       44  

Net loss

     –       –       –       –       –       –       –       –       (24,626 )     –       (24,626 )

Balance at December 31, 2025

     24,129     $ 241     $ -     $ -       632     $ (1,047 )   $ 19,749     $ (1,154 )   $ (17,167 )   $ -     $ 622  

 

See accompanying notes to the Company's consolidated financial statements.

 

31
 
 

SPAR Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

 

  

Year Ended December 31,

 
  

2025

  

2024

 

Cash flows from operating activities:

        

Net loss

 $(24,626) $(2,687)

Adjustments to reconcile net loss to net cash used by operating activities

        

Depreciation and amortization

  1,634   1,553 

Loss on property, plant and equipment disposal

  47   - 

Amortization of operating lease assets

  476   545 

Amortization of debt issuance cost

  62   - 

Provision for expected credit losses

  -   128 

Deferred income tax expense (benefit)

  3,819   (1,500)

Share based compensation

  140   137 

Gain on disposal of business

  -   (2,536)

Changes in operating assets and liabilities, net of business disposals:

        

Accounts receivable

  (3,903)  (2,089)

Prepaid expenses and other assets

  1,099   416 

Accounts payable

  414   7,459 

Operating lease liabilities

  (408)  (541)

Accrued expenses, other current liabilities and customer incentives and deposits

  2,803   (1,124)

Net cash used in continuing operations

  (18,443)  (239)

Net cash used in discontinued operations

  -   (426)

Net cash used in operating activities

  (18,443)  (665)

Cash flows from investing activities:

        

Proceeds from sale of international operations, net of cash transferred

  1,918   7,259 

Purchases of property and equipment and internal use software

  (2,978)  (1,129)

Net cash (used in) provided by investing activities of continuing operations

  (1,060)  6,130 

Net cash provided by investing activities of discontinued operations

  -   3,751 

Net cash (used in) provided by investing activities

  (1,060)  9,881 

Cash flows from financing activities:

        

Borrowings under lines of credit

  134,812   132,133 

Repayments under lines of credit

  (130,542)  (128,347)

Payment of notes to seller

  (500)  (1,843)

Proceeds from the sale of treasury shares

  756   - 

Repurchase of common stock

  -   (1,800)

Payments to acquire noncontrolling interests

  -   (500)

Proceeds from long-term debt

  -   15 

Net cash provided by (used in) financing activities of continuing operations

  4,526   (341)

Net cash used in financing activities of discontinued operations

  -   (1,315)

Net cash provided by (used in) financing activities

  4,526   (1,656)
         

Effect of foreign exchange rate changes on cash

  18   (58)

Net (decrease)/increase in cash and cash equivalents

  (14,959)  7,502 

Cash and cash equivalents at beginning of year

  18,221   10,719 

Cash and cash equivalents at end of year

 $3,262  $18,221 
         

Supplemental disclosure of cash flows information

        

Interest paid

 $2,412  $2,059 
Noncash investment in internal use software, included in accounts payable $154  $- 

Income taxes paid

 $149  $277 

Promissory notes issued to Resource Plus non-controlling interest

 $-  $2,500 

 

 

See accompanying notes to the Company's consolidated financial statements.

 

32
 

SPAR Group, Inc. and Subsidiaries


Notes to Consolidated Financial Statements

 

1. Nature of the Business

 

SPAR Group, Inc. ("SGRP" or the "Corporation"), and its subsidiaries (and SGRP together with its subsidiaries may be referred to as "SPAR Group", the "Company", "SPAR", "We", or "Our") is a merchandising and brand marketing services company, providing a broad range of services to retailers, consumer goods manufacturers and distributors around the world. 
 

2. Summary of Significant Accounting Policies

 

Principles of Consolidation 

 

The Company consolidates its 100%-owned subsidiaries. All significant intercompany transactions have been eliminated in the consolidated financial statements. 

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the amounts disclosed for contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting year. Significant balances subject to such estimates and assumptions include carrying amounts of property and equipment and intangible assets, valuation allowances for receivables, carrying amounts for deferred tax assets and liabilities, and liabilities incurred from operations and customer incentives. Actual results could differ from those estimates.

 

Segment Reporting

 

Reportable segments are components of the Company for which separate financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker ("CODM”) in assessing performance and deciding how to allocate resources. The Company's CODM is the Chief Executive Officer ("CEO").

 

In November 2025, the Company appointed a new CEO, William Linnane. During the fourth quarter of 2025, revised internal reporting began to be provided to and reviewed by the CODM. The Company provides similar merchandising, marketing, and business services in the United States ("U.S.") and Canada, and the CODM now reviews financial information by two geographic components: (i) U.S. and (ii) Canada, for purposes of allocating resources and assessing performance. As a result, beginning in the fourth quarter of 2025, the Company determined that it has two reportable segments: U.S. and Canada. For the first three quarters of 2025, the previous CODM managed all business activities on a consolidated basis (as the Company exited substantially all of its international operations during the year ended December 31, 2024), and as a result, the Company had one reportable segment. Segment information for the year ended December 31, 2024 has been recast to reflect this reportable segment structure.

 

For the year ended December 31, 2024, the Company operated in three reportable geographic segments: (i) Americas, comprised of U.S., Canada, and Mexico; (ii) Asia-Pacific ("APAC”), comprised of Japan, China, and India; and (iii) Europe, Middle East and Africa ("EMEA”), comprised of South Africa. Brazil was previously included in the Americas segment; however, as a result of the reclassification of the Brazilian joint venture as discontinued operations in 2024, Brazil was excluded from the Company’s segment reporting for the year ended December 31, 2024.

 

For comparative purposes, prior-period segment information has been recast to conform to the current period presentation.

 

Variable Interest Entities

 

The Company consolidates all entities where a controlling financial interest exists. The Company has considered its relationships with its 51%-owned joint ventures to determine whether the Company has a variable interest in these entities, and if so, whether the Company is the primary beneficiary of the relationship. U.S. GAAP requires variable interest entities ("VIEs”) to be consolidated if an entity’s interest in the VIE is a controlling financial interest. Under the variable model, a controlling financial interest is determined based on which entity, if any, has (i) the power to direct the activities of the VIE that most significantly impacts the VIE’s economic performance and (ii) the obligations to absorb losses that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

 

Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. The consolidation status of a VIE may change as a result of such reassessments. Changes in consolidation status are applied prospectively in accordance with U.S. GAAP.

 

All these entities have been disposed of by December 31, 2024. 

 

Cash Equivalents

 

The Company considers all short-term, highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. There are no cash equivalents at December 31, 2025 or 2024.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash balances with high quality financial institutions and periodically evaluates the creditworthiness of such institutions. At times, the Company’s cash and cash equivalents balances with individual banking institutions are in excess of insured limits. The Company does not believe it is exposed to significant credit risk and the Company has not experienced any losses related to its cash and cash equivalents balances.

 

Two clients each individually accounted for more than 10% of the Company’s net revenue for the years ended December 31, 2025 (Client 1, 16.8%, or approximately $22.8 million and Client 2, 10.8%, or approximately $14.7 million, both in the U.S. segment), and one client whose revenue represented more than 10% of revenue for the year ended  December 31, 2024 (10.5%, or approximately $17.3 million in the U.S. segment). No customer accounted for more than 10% of the Company’s accounts receivable, net as of December 31, 2025 and December 31, 2024. 

 

Revenue Recognition

 

The Company generates its revenues by providing merchandising services to its clients. Revenues are recognized when the Company satisfies a performance obligation by transferring services promised in a contract to a customer and in an amount that reflects the consideration that the Company expects to receive in exchange for those services. Performance obligations in the Company’s contracts represent distinct or separate services that we provide to the Company’s customers; generally, the Company’s contracts have a single performance obligation. If, at the outset of an arrangement, the Company determines that a contract with enforceable rights and obligations does not exist, revenues are deferred until all criteria for an enforceable contract are met.

 

33
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

 

2. Summary of Significant Accounting Policies (continued)

 

The Company’s merchandising services are provided over time, generally on a daily, weekly, or monthly basis, and transaction price is based on the contractually-specified rate-per-driver metric (i.e., rate per hour, rate per store visit, rate per item assembled, or rate by task). The Company recognizes revenues for its contracts based on the contractually-specified rate-per-driver metric(s) utilizing the right-to-invoice practical expedient because the Company has a right to consideration for merchandising services completed to date. In general, (i) Standard Merchandising Service Contracts have a duration of 1 to 3 years with indexed rate increases while individual brand projects can be added with less than 6 months duration. (ii) Retail Remodel Contracts typically auto-renew with annual project SOWs, with regional awards typically granted 6 to 12 months in advance and individual projects assigned quarterly/monthly. (iii) Fulfillment Contracts are typically an annual award and selected projects can be less than 6 months. (iv) Standard Assembly Service Agreements are 1 to 3 years in duration with indexed rates increases. Customer deposits, which are considered advances on future work, are deferred and recorded as revenue in the period in which the services are provided.

 

Unbilled Accounts Receivable

 

Unbilled accounts receivable represents services performed but not billed and are included as accounts receivable.

 

Allowance for Credit Losses 

 

The Company continually monitors the collectability of its accounts receivable based upon current client credit information and financial condition. Balances that are deemed to be uncollectible after the Company has attempted reasonable collection efforts are written off through a charge to the allowance for credit losses and a credit to accounts receivable. Accounts receivable balances, net of any applicable reserves or allowances, are stated at the amount that management expects to collect from the outstanding balances. The Company provides for probable uncollectible amounts through a charge to earnings and a credit to allowance for credit losses based in part on management’s assessment of the current status of individual accounts. 

 

Leases

 

The Company determines if a contract contains a lease at inception. The Company’s material operating leases consist of office space and equipment. The Company recognizes a right-of-use ("ROU”) asset and lease liability for operating leases with a term of greater than one year. The ROU asset is measured as the sum of (1) the present value of all remaining fixed and in-substance fixed payments using the rate implicit in the lease whenever that is readily determinable or the Company’s incremental borrowing rate, (2) any lease payments made at or before the commencement date (less any lease incentives received) and (3) any initial direct costs incurred. The lease liability is measured similarly to the ROU asset, but excludes any payments made before the commencement date and initial direct costs incurred. Lease terms include options to extend or terminate the lease if it is reasonably certain the Company will exercise these options. Expense for operating leases and leases with a term of one year or less is recognized on a straight-line basis over the term of the lease, unless another systematic and rational basis is more representative of the derivation of benefit from use of the leased property. Variable lease payments are recognized in the period in which the related obligation is incurred and consist primarily of payments for insurance and property taxes. Operating lease expense and variable lease payments are recorded in selling, general and administrative expense in the consolidated statements of operations and comprehensive loss.

 

Property and Equipment, Net

 

Property and equipment, including leasehold improvements, are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which range from three to seven years for equipment, three to seven years for furniture and fixtures, and three to five years for capitalized software costs. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the related lease terms, which range from three to fifteen years. Maintenance and minor repairs are expensed as incurred.

 

Internal Use Software 

 

The Company capitalizes certain costs associated with its internally developed software. The Company capitalizes the costs of materials and services incurred in developing or obtaining internal use software and such costs include, but are not limited to: the cost to purchase software, the cost to write program code, and payroll and related benefits for those employees who are directly involved with and who devote time to the Company’s software development projects. Capitalization of such costs begins during the application development stage once the preliminary project stage is complete, management authorizes and commits to funding the project, and it is probable that the project will be completed and that the software will be used to perform the function intended. Capitalization ceases when the project is substantially complete and ready for its intended purpose. Costs incurred during preliminary project and post-implementation stages, as well as software maintenance and training costs, are expensed in the period in which they are incurred.

 

Impairment of Long-Lived Assets

 

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of the Company’s property and equipment and may not be recoverable. When indicators of potential impairment exist, the Company assesses the recoverability of the assets by estimating whether the Company will recover its carrying value through the undiscounted future cash flows generated by the use of the asset and its eventual disposition. Based on this analysis, if the Company does not believe that it will be able to recover the carrying value of the asset, the Company records an impairment loss to the extent that the carrying value exceeds the estimated fair value of the asset. If any assumptions, projections or estimates regarding any asset change in the future, the Company may have to record an impairment to reduce the net book value of such individual asset.

 

Intangible Assets, Net

 

Intangible assets consist primarily of customer contracts and lists, trade names, patents and non-compete agreements, all of which have a finite useful life. Intangible assets are amortized based on the pattern in which the economic benefits of the intangible assets are estimated to be realized. When facts and circumstances indicate that the carrying value of definite-lived intangible assets may not be recoverable, the Company assesses the recoverability of the carrying value by preparing estimates of sales volume and the resulting profit and cash flows expected to result from the use of the asset or asset group and its eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, the Company recognizes an impairment loss. The impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the fair value.

 

Goodwill

 

Goodwill  may result from business acquisitions. Goodwill is assigned to reporting units based on the expected benefit from the synergies arising from each business combination, determined by using certain financial metrics, including the forecast discounted cash flows associated with each reporting unit. The goodwill acquired in a business combination is allocated to the appropriate reporting unit as of the acquisition date. Goodwill is subject to annual impairment tests and interim impairment tests if impairment indicators are present. The Company performs the annual impairment test as of October 31st each year. The impairment tests require the Company to first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. The Company is not required to calculate the fair value of a reporting unit unless it determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. If it is determined that it is more likely than not, or if the Company elects not to perform a qualitative assessment, the Company proceeds with the quantitative assessment. Under the quantitative test, if the fair value of a reporting unit exceeds its carrying amount, then goodwill of the reporting unit is considered to not be impaired. If the carrying amount of the reporting unit exceeds its fair value, then an impairment loss is recognized in an amount equal to the excess, up to the value of the goodwill.

 

34
 
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

 

2. Summary of Significant Accounting Policies (continued)

 

Treasury Stock

 

The Company records treasury stock activities under the cost method whereby the cost of the acquired stock is recorded as treasury stock. The Company’s accounting policy upon the formal retirement of treasury stock is to deduct the par value from the Company’s common stock and to reflect any excess of cost over par value as a reduction to additional paid-in capital (to the extent created by previous issuances of the shares). Upon reissuance or sale of treasury shares, any difference between the proceeds received and the cost of shares is recognized in equity. Gains are credited to additional paid-in capital and losses are first offset against any existing additional paid-in capital related to treasury shares, with any excess charged to retained earnings.

 

Noncontrolling Interest

 

The Company recognizes noncontrolling interest related to VIEs, in which the Company is the primary beneficiary, as equity in the consolidated financial statements separate from the parent entity’s equity. The amount of net income or loss attributable to noncontrolling interests is included in consolidated net income on the face of the consolidated statements of operations and comprehensive loss. Changes in the parent entity’s ownership interest in a subsidiary that do not result in deconsolidation are treated as equity transactions if the parent entity retains its controlling financial interest. In addition, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary will be initially measured at fair value and the difference between the carrying value and fair value of the retained interest will be recorded as a gain or loss. Because these transactions take place between entities under common control, any gains or losses attributable to these transactions are required to be included within additional paid-in-capital on the consolidated balance sheets. During 2024 the Company deconsolidated its entire controlling interest in all its VIEs. As of December 31, 2025, the Company has no continuing involvement in these entities. 

 

Advertising and Promotional Expenses

 

Advertising and promotional expenses are included in selling, general and administrative expenses within the consolidated statements of operations and comprehensive loss and are expensed when incurred. Advertising and promotional expenses were $258,301 and $41,352 during the years ended December 31, 2025, and 2024, respectively.

 

Share-Based Compensation

 

The Company measures all share-based awards granted to employees and directors based on the fair value on the date of the grant and recognizes compensation expense for those awards, over the requisite service period, which is generally the vesting period of the respective award, on a straight-line basis for the entire award. The fair value of stock options is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the fair market value of the Company’s common stock, expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and the Company’s expected dividend yield.

 

The Company classifies share-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified. The Company made a policy election to estimate the number of share-based compensation awards that are expected to vest to determine the amount of compensation expense recognized in earnings. Forfeiture estimates are revised if subsequent information indicates that the actual number of forfeitures is likely to differ from previous estimates.  

 

Excess tax benefits are realized from the exercise of stock options and are reported as a financing cash inflow in the consolidated statement of cash flows.

 

Fair Value Measurements

 

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The U.S. GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

 

 

●

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

 

●

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

 

●

Level 3 – Prices or valuation techniques where little or no market data is available that requires inputs significant to the fair value measurement and unobservable.

 

If the inputs used to measure the fair value fall within different levels of the hierarchy, the fair value is determined based upon the lowest level input that is significant to the fair value measurement. Whenever possible, the Company uses quoted market prices to determine fair value. In the absence of quoted market prices, the Company uses independent sources and data to determine fair value.

 

The fair value of the long-term portion of the Resource Plus Seller Notes is determined using a discounted cash flow methodology. Under this approach, the expected future cash flows of the notes are discounted to their present value using a discount rate derived from observable market data, such as current interest rates or yield curves for similar instruments. This valuation technique utilizes inputs classified as Level 2 under the ASC 820 fair value hierarchy. Accordingly, the carrying amount of the long-term portion of the Resource Plus Seller Notes approximates its fair value, as it represents the present value of the notes’ future cash flows.

 

Restructuring Costs and Severance

 

The Company periodically undertakes restructuring initiatives to optimize its cost structure and operations. These activities may include employee termination benefits, facility closures, lease exit costs, and contract termination costs and other one-time expenses. The Company’s restructuring accruals require the use of significant estimates and judgments, particularly with respect to the timing and amount of expected cash outflows and the identification of costs directly associated with exit activities. These estimates are evaluated on a regular basis and may be adjusted as new information becomes available. Changes in estimates are recognized in the period in which they are identified and may result in increases or decreases to previously recorded restructuring liabilities. Actual results could differ from these estimates due to changes in market conditions, negotiations with third parties, or variations in the execution of restructuring plans.

 

Restructuring costs and severance costs for the Company include severance costs paid in connection with the reorganization of the Company's executive team and expenses related to the move of the Company's headquarters from Auburn Hills, Michigan to its existing operations office in Charlotte, North Carolina, in November 2025. For the year ended December 31, 2025, the Company recognized expense of $4.8 million, which consist of $4.2 million for termination and severance costs and $0.6 million for relocation expense. The costs are presented within "Restructuring costs and severance" in the Consolidated Statements of Operations and Comprehensive Loss. Liabilities of $0.4 million for employee severance is included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets as of December 31, 2025. There was no restructuring activity for the year ended December 31, 2024.

 

35
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

 

2. Summary of Significant Accounting Policies (continued)

 

Income Taxes 

 

Income tax provisions and benefits are made for taxes currently payable or refundable, and for deferred income taxes arising from future tax consequences of events that were recognized in the Company’s financial statements or tax returns and tax credit carry forwards. The effects of income taxes are measured based on enacted tax laws and rates applicable to periods in which the differences are expected to reverse. If necessary, a valuation allowance is established to reduce deferred income tax assets to an amount that will more likely than not be realized.

 

The calculation of income taxes involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step involves evaluating the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step involves estimating and measuring the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as the Company has to determine the probability of various possible outcomes. The Company’s evaluation of uncertain tax positions is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

 

Recently Adopted Accounting Pronouncements 

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires companies to report specific categories of rate reconciliation, certain details of income taxes paid and certain information by tax jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company implemented this ASU prospectively for the fiscal year ending December 31, 2025.

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

On November 4, 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures which requires disaggregated disclosure of income statement expenses for public business entities (PBEs). The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for all PBEs for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company does not believe adoption will have a material effect on its consolidated financial statements and related disclosures.
 

 

36
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

 

3. Supplemental Balance Sheet Information

 

  

For the Year Ended December 31,

 

Summary of Results from Discontinued Operations:

 

2024

 

(in thousands)

    

Net revenues

 $33,185 

Cost of revenues

  28,325 

Gross Profit

  4,860 

Selling, general, and administrative expenses

  3,385 

Loss on disposal of business

  1,188 

Depreciation and amortization

  63 

Income from operations before tax

  224 

Income tax expense

  1,074 

Interest expense

  31 

Loss from discontinued operations, net of tax

 $(881)

 

  

December 31,

 

Accounts receivable, net, consists of the following:

 

2025

  

2024

 

(in thousands)

        

Trade

 $17,774  $12,059 

Unbilled

  8,841   9,284 

Non-trade

  391   3,834 

Gross accounts receivable

  27,006   25,177 

Less allowance for credit losses

  -   (411)

Accounts Receivable, net

 $27,006  $24,766 

 

  

December 31,

 

Activity in allowance for credit losses

 

2025

  

2024

 

(in thousands)

        

Beginning balance in allowance for credit losses

 $411  $1,461 

Current provision for expected credit losses

  -   128 

Allowances associated with businesses sold

  -   (12)

Write-offs charged against the allowance

  (411)  (1,166)

Ending balance in allowance for credit losses

 $-  $411 

 

  

December 31,

 

Property and equipment consist of the following:

 

2025

  

2024

 

(in thousands)

        

Equipment

 $3,904  $4,060 

Furniture and fixtures

  1,027   591 

Leasehold improvements

  538   384 

Capitalized internal use software costs

  21,329   18,967 

Capitalized software in development

  92   - 
   26,890   24,002 

Less accumulated depreciation and amortization

  (23,289)  (21,987)

Property and equipment, net

 $3,601  $2,015 

 

Depreciation expense (including amortization of internal use software and intangible assets as described below) was $1.6 million and $1.6 million for the years ended  December 31, 2025 and 2024, respectively. The Company capitalized $2.4 million and $1.0 million of costs related to internal use software in the years ended December 31, 2025 and 2024. The Company recognized approximately $1.4 million and $1.3 million of amortization expense related to internal use software for the years ended December 31, 2025 and 2024, respectively.

 

Goodwill consist of the following:

  U.S.   All Other   Total 

(in thousands)

            

Balance at January 1, 2024

            

Aggregate goodwill acquired

 $856  $438  $1,294 

Sale of business

  -   (438)  (438)

Balance at December 31, 2024

  856   -   856 

Balance at December 31, 2025

 $856  $-  $856 

 

37
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

 

3. Supplemental Balance Sheet Information (continued)

 
 

December 31,

 

Intangible assets consist of the following:

 

2025

  

2024

 

(in thousands)

        

Trade names

 $900  $900 

Patents

  870   870 

Gross intangible assets

  1,770   1,770 

Less accumulated amortization

  (1,061)  (929)

Intangible assets, net

 $709  $841 

 

The Company is amortizing its intangible assets over lives ranging from 5 to 25 years. Amortization expense for the years ended  December 31, 2025 and 2024 was approximately $0.1 million and $0.2 million, respectively.

 

The annual amortization for each of the following years succeeding  December 31, 2025 is summarized as follows (in thousands):

(in thousands)

    

Year

 

Amount

 

2026

 $133 

2027

  36 

2028

  36 

2029

  36 

2030

  36 

Thereafter

  432 

Total

 $709 

 

 

  

December 31,

 

Accrued expenses and other current liabilities:

 

2025

  

2024

 

(in thousands)

        

Taxes payable

 $1,607  $137 

Accrued salaries and wages

  1,905   1,644 

Accrued third party labor

  198   131 

Other

  1,866   1,621 

Accrued expenses and other current liabilities

 $5,576  $3,533 

 

38
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)
 

4. Debt

 

North Mill Capital Credit Facility

 

The Company, through SPAR Marketing Force, Inc. ("SMF") and SPAR Canada Company ULC ("SCC", and collectively with SMF, the “NM Borrowers”), has a secured revolving credit facility in the United States (the "US Revolving Credit Facility") and Canada (the "Canada Revolving Credit Facility", and collectively with the US Revolving Credit Facility, the "NM Credit Facility") with North Mill Capital, LLC, d/b/a SLR Business Credit ("NM").

 

In order to obtain, document and govern the NM Credit Facility, SMF, SCC, SGRP and certain of SGRP's direct and indirect subsidiaries in the United States and Canada (including SMF and SCC as borrowers and SGRP as a guarantor, collectively, the "NM Loan Parties") entered into a Loan and Security Agreement with NM dated as of April 10, 2019, which, as amended from time to time (as amended, the "NM Loan Agreement"), governs the NM Credit Facility. Pursuant to the NM Loan Agreement, the NM Borrowers agreed to reimburse NM for legal and documentation fees incurred in connection with the NM Loan Agreement and such amendments.

 

On July 1, 2022, the NM Loan Parties and NM executed and delivered a Fourth Modification Agreement, effective as of June 30, 2022 (the "Fourth Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to extend the NM Credit Facility from October 10, 2023, to October 10, 2024, and increased the amount of the US Revolving Credit Facility to $17.5 million while the Canada Revolving Credit Facility remained at CDN$1.5 million. In addition, the Fourth Modification Agreement permanently increased SMF's borrowing base availability for billed receivables to up to 90% from 85%, and unbilled receivables to up to 80% from 70%, and increased the cap on unbilled accounts for SMF to $6.5 million from $5.5 million.

 

On August 9, 2022, the NM Loan Parties and NM executed and delivered a Fifth Modification Agreement, effective immediately (the "Fifth Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to temporarily increase the borrowing base availability under the NM Credit Facility, and the NM Borrowers agreed to pay certain additional fees.

 

On February 1, 2023, the NM Loan Parties and NM executed and delivered a Sixth Modification Agreement, effective immediately (the "Sixth Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to increase the amount of the US Revolving Credit Facility to $28.0 million and increase the Canada Revolving Credit Facility to CDN$2.0 million. In addition, the Sixth Modification Agreement increased the cap on unbilled accounts in the borrowing base for SMF to $7.0 million from $6.5 million.

 

On March 27, 2024, the NM Loan Parties and NM executed and delivered a Seventh Modification Agreement, effective immediately (the "Seventh Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to extend the NM Credit Facility from October 10, 2024 to October 10, 2025.

 

On October 9, 2025, the NM Loan Parties and NM executed and delivered an Eighth Modification Agreement, effective immediately (the "Eight Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to and extend the NM Credit Facility from  October 9, 2025 to  October 10, 2027, to increase the amount of the US Revolving Credit Facility to $30.0 million, and increase the Canada Revolving Credit Facility to $6.0 million. In addition, the Eight Modification Agreement increased the cap on unbilled accounts in the borrowing base for SMF to $15.0 million from $7.0 million and increased the cap on eligible unbilled accounts in the Canadian Borrower's borrowing base to $2.0 million (from the prior cap of CDN$800,000). The Eighth Modification Agreement also converted the balance to USD from CAD and modified the minimum interest charges payable under the Canadian Revolving Credit Facility, which are now based on a minimum outstanding balance of $1.0 million (increased from $0.5 million).

 

To evidence the increase in the US Revolving Credit Facility, SMF executed and delivered to NM a $30 million Sixth Amended and Restated Revolving Credit Master Promissory Note (the "Restated US Note"), which amends, restates, supersedes and replaces the prior US$ note. To evidence the increase in the Canadian Revolving Credit Facility, SCC executed and delivered to NM a $6 million Fifth Amended and Restated Revolving Credit Master Promissory Note (the "Restated Canadian Note"), which amends, restates, supersedes and replaces the prior CDN$ note.

 

The Restated US Note and Restated Canadian Note (together, the "NM Notes") and the NM Loan Agreement together require the NM Borrowers to pay interest on the loans thereunder equal to: (i) the Prime Rate designated from time to time by Wells Fargo Bank; plus (ii) one and one quarter percentage points (1.25%,) or an aggregate minimum of 6.75% per annum. In addition, the NM Borrowers are paying a facility fee to NM in an amount equal to: (i) For the US facility, for the year commencing on October 10, 2025, 0.60% of the applicable US Benchmark Advance Amount ($24.0 million), with an additional $6,000 charged at the first occurrence of each $1.0 million increment above the benchmark (up to the US advance limit) and (ii) for the Canadian Facility for the year commencing on October 10, 2025, 0.60% calculated on $2.0 million, and thereafter on the Canadian Benchmark Advance Amount ($2.0 million), with an additional $6,000 charged at the first occurrence of each $1.0 million increment above the benchmark (up to the Canadian advance limit).

 

As of December 31, 2025, the aggregate interest rate was 8.00% per annum and the aggregate outstanding loan balance was approximately $20.4 million, which is included within lines of credit and short-term loans in the consolidated balance sheets. The aggregate outstanding loan balance is divided between the US Revolving Credit Facility and the Canada Revolving Credit Facility as follows: (i) the outstanding loan balance under the US Revolving Credit Facility was approximately $17.3 million; and (ii) the outstanding loan balance under the Canada Revolving Credit Facility was approximately $3.1 million.

 

The NM Credit Facility contains certain financial and other restrictive covenants and also limits certain expenditures by the NM Loan Parties, including maintaining a positive trailing EBITDA for each the NM Borrowers (i.e., SMF and SCC) and imposes limits on all of the NM Loan Parties (including SGRP) on non-ordinary course payments and transactions, incurring or guaranteeing indebtedness, increases in executive, officer or director compensation, capital expenditures and certain other investments. The NM Loan Parties were in compliance with such covenants as of December 31, 2025. The obligations of the NM Borrowers are secured by the receivables and other assets of the NM Borrowers and substantially all of the assets of the other NM Loan Parties, however, the obligations are not secured by any equity in, financial asset respecting or asset of any Excluded Subsidiary meaning each of the following direct or indirect subsidiaries of SGRP: (i) Resource Plus of North Florida, Inc. (“Resource Plus”), Mobex of North Florida, Inc., and Leasex, LLC, and their respective subsidiaries; (ii) NMS Retail Services ULC, which is an inactive Nova Scotia ULC; (iii) SPAR Group International, Inc.; (iv) SPAR FM Japan, Inc.; (v) SPAR International, Ltd.; (vi) SPAR Group International, Inc., (vii) NMS Retail Services, ULC (viii) BDA Resources, LLC, (ix) SPAR, Inc., (x) SPAR NMS Holdings, Inc,. (xi) SPAR Merchandising & Assembly, Inc. (xii) SPAR Field Administration, Inc., (xiii) each other subsidiary formed outside of the United States or Canada; and (xiv) any other entity in which any such subsidiary is a partner, joint venture or other equity investor.

 

Resource Plus – Seller Notes

 

On  April 18, 2024, the Company entered into a Securities Purchase Agreement to buy from Mr. Richard Justus the remaining minority joint venture interests of Resource Plus and its sister companies, Mobex of North Florida, Inc., and Leasex, LLC. Based on the terms set in the original joint venture agreement, the Company will pay a total of $3.0 million in annual payments over a five-year period. $0.25 million was paid within the five business days of closing, and the remaining $2.75 million will be paid pursuant to a Secured Promissory Note. The agreement resulted in the termination of all relevant shareholder and operating agreements, although specific confidentiality obligations remain effective for three years post-closing and specific mutual releases were provided. The purchase was closed and completed on  May 1, 2024. As of  December 31, 2025, $1.0 million has been paid and the remaining $2.0 million Promissory Note is outstanding and is reported on the balance sheet (net of discount) in current portion of long-term debt and long-term debt, net of current portion. 

 

39
 

 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

 

4. Debt (continued)

 

Summary of the Company’s lines of credit (dollars in thousands):

  

Interest Rate as of

  

Balance as of

  

Interest Rate as of

  

Balance as of

 
  

December 31, 2025

  

December 31, 2025

  

December 31, 2024

  

December 31, 2024

 

USA / Canada North Mill Capital

  8.00%  20,442   9.40%  16,082 

Total

     $20,442      $16,082 

 

The effective interest rate on these instruments is not materially different from the stated rate.

 

Summary of Unused Company Credit and Other Debt Facilities (in thousands): 

  

December 31, 2025

  

December 31, 2024

 

Unused Availability:

        

United States / Canada

  13,935   13,310 

Total Unused Availability

 $13,935  $13,310 

 

Summary of the Company's Seller Notes (dollars in thousands):

  

Interest Rate

  

Balance

  

Interest Rate

  

Balance

 
  

as of

  

as of

  

as of

  

as of

 
  

December 31, 2025

  

December 31, 2025

  

December 31, 2024

  

December 31, 2024

 

USA - Resource Plus Seller Notes (Current)

  4.30%  500   4.30%  500 

USA - Resource Plus Seller Notes (Long-term)

  4.30%  1,284   4.30%  1,722 
      $1,784      $2,222 

 

40
 

SPAR Group, Inc. and Subsidiaries 

Notes to Consolidated Financial Statements (continued)
 

5. Income Taxes 

 

Income Taxes

 

On July 4, 2025, President Donald J. Trump enacted legislation officially titled “An Act to provide for reconciliation pursuant to title II of H.Con. Res. 14”—commonly known as the One Big Beautiful Bill Act (OBBBA). The bill implemented three main changes to business taxes: 1. 100% bonus depreciation has been reinstated for assets placed in service after January 19, 2025, 2. The deduction for domestic section 174 expenses has been permanently restored and unamortized domestic costs from tax years 2022-2024 may be deducted in 2025 or split between 2025 and 2026, and 3. The addbacks for depreciation, amortization, and depletion when calculated adjusted taxable income for purposes of section 163(j) have been permanently restored. The Company has concluded to continue to capitalize and amortize their domestic section 174 expenses.

 

Loss from continuing operations before income taxes is summarized as follows (in thousands):

  

Year Ended December 31,

 
   2025   2024 

Domestic

 $(21,131) $668 

Foreign

  578   (2,330)

Total:

 $(20,553) $(1,662)

 

The income tax expense from continuing operations is summarized as follows (in thousands):

  

Year Ended December 31,

 
  

2025

  

2024

 

Current tax expense:

        

Federal

 $-  $21 

Foreign

  457   1,401 

State and local

  (203)  222 

Total current tax expense

  254   1,644 
         

Deferred tax expense (benefit):

        

Federal

  3,425   (1,196)

Foreign

  -   (114)

State and local

  394   (190)

Total deferred tax expense (benefit)

  3,819   (1,500)
         

Total income tax expense:

        

Federal

  3,425   (1,175)

Foreign

  457   1,287 

State and local

  191   32 

Total income tax expense

 $4,073  $144 

 

The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference are as follows (in thousands):

  

Year Ended December 31,

 
  

2025

  

Rate

 
         

US federal statutory tax rate

 $(4,316)  21.0%

State and local income taxes, net of federal income tax effect (1)

  210   (1.0%)

Foreign Tax Effects:

        

Foreign tax rate differential

  32   (0.2%)

Effect of cross-border tax laws

  526   (2.6%)

Tax credits

  -   0.0%

Changes in valuation allowance

  6,927   (33.7%)
         

Nontaxable or nondeductible items:

        

Executive compensation disallowed under Section 162(m)

  654   (3.2%)

Other permanent differences

  136   (0.7%)

Other adjustments:

        

Return to provision

  68   (0.3%)

Other

  (164)  0.8%

Effective Tax Rate:

 $4,073   (19.8%)

(1) State taxes in Illinois, Texas, Michigan, and California for 2025 made up the majority (greater than 50 percent) of the tax effect in this category.

 

 

 

 

41
 
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

 

5. Income Taxes (continued)

  

Year Ended December 31,

 
  

2024

  

Rate

 
(in thousands)        

Provision for income taxes at federal statutory rate

 $(349)  21.0%

State income taxes, net of federal benefit

  32   (1.9%)

Permanent differences

  (136)  8.2%

Section 162(m) adjustment

  245   (14.7%)

Return to provision adjustment

  (10)  0.6%

Foreign tax rate differential

  (288)  17.3%

GILTI tax

  284   (17.1%)

Sale of foreign entities

  (369)  22.2%

Transaction costs

  118   (7.1%)

Withholding tax

  1,046   (62.9%)

Subpart F Income

  213   (12.8%)

Foreign tax credit

  (556)  33.5%

Foreign disregarded income

  292   (17.6%)

Change in valuation allowance

  (2)  0.1%

Discontinued operations SG&A allocation

  (430)  25.9%

Other

  54   (3.3%)

Net expense

 $144   (8.7%)

 

Components of income taxes paid, net of refunds consist of the following (in thousands):

 

Year Ended December 31,

 
  

2025

 

Federal

 $15 

State

    

Indiana

  14 

Mississippi

  8 

New Jersey

  8 

North Carolina

  14 

Pennsylvania

  23 

Texas

  53 

Other U.S. States

  14 

Foreign

  - 

Total

 $149 

 

Deferred taxes from continuing operations consist of the following (in thousands):

 

December 31,

 
  

2025

  

2024

 

Deferred tax assets:

        

Net operating loss carryforwards

 $4,693  $389 

Federal research and development credit

  240   164 

Foreign withholding tax

  796   872 

Accrued payroll

  110   4 

Transaction costs

  –   753 

Allowance for credit losses and other receivable

  –   93 

Share-based compensation expense

  250   258 

Business interest limitation

  1,237   889 

Operating lease liability

  1,134   128 

Capitalized software development costs

  –   277 

Other

  695   891 

Total deferred tax assets, gross

  9,155   4,718 

Valuation allowance

  (7,622)  - 

Total deferred tax assets

  1,533   4,718 
         

Deferred tax liabilities:

        

Goodwill & intangible assets of subsidiaries

  334   291 

Allowance for credit losses and other receivable

  2   - 

Right to use asset

  1,094   127 

Capitalized software development costs

  28   - 

Depreciation

  91   41 

Total deferred tax liabilities

  1,549   459 

Net deferred income taxes

 $(16) $4,259 

 

As of December 31, 2025, the Company’s deferred tax assets were primarily the result of the business interest limitation and net operating losses. The Company has gross U.S. Federal NOL carryforwards of $20.6 million and tax effected amount of $4.3 million. $20.0 million of the U.S Federal NOL carryforward has no expiration date. The remaining $0.6 million has expiration dates beginning in 2026 through 2035. The Company has a U.S. State NOL deferred tax asset of $0.4 million of varying expiration dates from 2025 to 2041. The Company has $0.2 million of U.S. Research and Development credits with expiration dates ranging from 2031 to 2035. The Company has $0.8 million of U.S. foreign tax credits with expiration dates ranging from 2033 to 2034.

 

42
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

5. Income Taxes (continued)

 

A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized in a particular tax jurisdiction. All available evidence, both positive and negative, is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a deferred tax asset. Judgement must be used in considering the relative impact of negative and positive evidence. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025.  Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. Based on the weight of the available evidence, the Company provided a valuation allowance against its US and state deferred tax assets. The valuation allowance was $7.6 million and $0.0 million as of December 31, 2025 and 2024 respectively. A valuation allowance was not provided for the foreign deferreds.

 

 (in thousands): 

2025

  

2024

 

Valuation allowance, beginning of year

 $-  $- 

Income tax expense:

        

Decrease/(increase) in valuation allowance

  (7,622)  - 

Valuation allowance, end of year

 $(7,622) $- 

 

A reconciliation of the beginning and ending amount of uncertain tax position reserves is as follows (in thousands):

  

Year Ended December 31,

 
   2025   2024 

Beginning balance

 $114  $54 

Additions based on tax positions related to the current year

  43   60 

Ending balance

 $157  $114 

 

The provision for income taxes includes the impact of uncertain tax position reserves and changes to reserves that are considered appropriate. As of December 31, 2025, included in the balance of uncertain tax position reserves are $0.16 million of reserves that, if recognized, would affect the effective rate of income from continuing operations. Interest and penalties that the tax law requires to be paid on the underpayment of taxes should be accrued on the difference between the amount claimed or expected to be claimed on the return and the tax benefit recognized in the financial statements. The Company's policy is to record this interest and penalties as additional tax expense. We accrued penalties of $0.6 thousand and interest of $3 thousand during 2025 and in total, as of December 31, 2025 recognized a liability related to the uncertain tax position reserves noted above for penalties of $16 thousand and interest of $23 thousand. During 2024, we accrued penalties of $0.8 thousand and interest of $3 thousand and in total, as of December 31, 2024, recognized a liability of penalties of $16 thousand and interest of $20 thousand. 

 

In management's view, the Company's tax reserves at December 31, 2025 and 2024, for potential domestic state tax liabilities were sufficient.

 

SPAR and its subsidiaries file numerous consolidated, combined and separate company income tax returns in the U.S. Federal jurisdiction and in many U.S. states and foreign jurisdictions. With few exceptions, SPAR is subject to U.S. Federal, state and local income tax examinations for the years 2022 through the present. Foreign entities are subject to tax audits that vary based on jurisdiction. However, tax authorities have the ability to review years prior to the position taken by the Company to the extent that SPAR utilized tax attributes carried forward from those prior years.
 

 

 

43
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

 

6. Commitments and Contingencies

 

Legal Matters

 

The Company is a party to various legal actions and administrative proceedings arising in the normal course of business. In the opinion of Company's management, resolution of these matters is not anticipated to have a material adverse effect on the Company or its estimated or desired affiliates, assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, legal costs, liabilities, liquidity, locations, marketing, operations, prospects, sales, strategies, taxation or other achievement, results or condition.
 

 

7. Common Stock

 

As of December 31, 2025, the Corporation's certificate of incorporation authorized the Corporation to issue 47,000,000 shares of common stock, par value $0.01 per share. The voting, dividend and liquidation rights of the holders of the Corporation's common stock are subject to and qualified by the rights, powers and preferences of the holders of the Corporation's Series B convertible preferred stock. Each share of the Corporation's common stock is entitled to one vote on all matters submitted to a vote of the Corporation's stockholders. Holders of the Corporation's common stock are entitled to receive dividends as may be declared by the Corporation's board of directors (the "Board"), if any, subject to the preferential dividend rights of the Corporation's Series B convertible preferred stock. No cash dividends had been declared or paid during the periods presented.

 

On  March 28, 2024, the Board approved SGRP's repurchase of up to 2,500,000 of SGRP's Shares of Common Stock ("SGRP Shares") under the 2024 Stock Repurchase Program (the "2024 Stock Repurchase Program"), which repurchases would be made from time to time over a one-year period in the open market and through privately-negotiated transactions, subject to cash availability and general market and other conditions. Pursuant to the 2024 Stock Repurchase Program, on  May 3, 2024, SGRP's Board and its Audit Committee approved SGRP's Repurchase Agreement with William H. Bartels for SGRP's private repurchase of 1,000,000 shares of SGRP's Common Stock from William H. Bartels, dated and effective as of  April 30, 2024, at a purchase price of $1.80 per share (the Nasdaq closing price on  April 29, 2024). Upon their repurchase those shares became Treasury Shares. Mr. Bartels is a Director and significant stockholder of SGRP, is one of the founders of the Company, and is an affiliate and related party of SGRP. There have been no other share repurchases to date under the 2024 Stock Repurchase Program, which expired on March 28, 2025.
 

 

8. Preferred Stock

 

The Corporation’s certificate of incorporation authorizes it to issue 3,000,000 shares of preferred stock with a par value of $0.01 per share, which may have such preferences and priorities over the Corporation’s common stock and other rights, powers and privileges as the Board of may establish in its discretion.

 

In January 2022, the Corporation filed a "Certificate of Designation of Series "B” Preferred Stock of SPAR Group, Inc.” (the "Preferred Designation”) with the Secretary of State of Delaware, which designation had been approved by the Board in January 2022. The Preferred Designation created a series of 2,000,000 shares of convertible preferred stock designated as "Series B” convertible preferred stock, par value of $0.01 per share.

 

The Series B convertible preferred stock do not carry any voting or dividend rights and upon vesting converted into the Corporation's common stock at a ratio of 1-to-1.5. The holders of the Series B convertible preferred stock had a liquidation preference over the Corporation's common stock and voted together for matters pertaining only to the Series B convertible preferred stock where only the holders of the Series B convertible preferred stock are entitled to vote. The holders of outstanding Series B Preferred Stock do not have the right to vote for directors or other matters submitted to the holders of the Corporation's common stock.

 

In January 2022, 2,000,000 shares of Series B convertible preferred stock were issued to the majority stockholders and related parties pursuant to the Change of Control, Voting and Restricted Stock Agreement.

 

During the year ended December 31, 2022, 1,145,247 shares of Series B convertible preferred stock converted to 1,717,870 shares of the Corporation's common stock. As of the year ended December 31, 2022, 854,753 shares of Series B convertible preferred stock were outstanding, which upon vesting would automatically convert into 1,282,129 shares of the Corporation's common stock. 

 

During the year ended   December 31, 2023, all of the remaining 854,753 shares of Series B convertible preferred stock vested and automatically became convertible into 1,282,129 shares of the Corporation's common stock of which 307,129 shares of the Corporation's Common Stock were issued prior to   December 31, 2023. The remaining 975,000 shares of SGRP Common Stock were in the process of being issued and the remaining shares of Series B Preferred Stock were in the process of being returned and cancelled at  December 31, 2023. These issuances and cancellations were completed during the quarter ending  March 31, 2024. 

 

SGRP may change or cancel the authorized Series B Preferred Stock, and to the extent it reduces such authorization without issuance, it can create other series of Preferred Stock with potentially different dividends, preferences and other terms.
 

 

9. Retirement Plans

 

The Company has a 401(k) Profit Sharing Plan covering substantially all eligible domestic employees. The Company made discretionary contributions of $0.0 million and $0.1 million for the years ended  December 31, 2025 and 2024, respectively.
 

 

44
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)

 

10. Related Party Transactions 

 

Domestic Related Party Transactions

 

On  December 1, 2021, the Company entered into the Agreement for Marketing and Advertising Services (the "WB Agreement") with WB Marketing, Inc., which later became Qantm Creative (the "Agent", and together with the Company, the "Parties"). The Agent is an entity owned and controlled by Mrs. Jean Matacunas who is the wife of former President and Chief Executive Officer, Michael R. Matacunas. Mr. Matacunas is also a minority owner of the Agent. The service fees paid to Qantm Creative for the years ended December 31, 2025 and 2024, were $229,000 and $104,000, respectively. The Company cancelled this agreement in November 2025.

 

On December 22, 2023, the Company entered into an agreement with National Retail Remodel Services (the "Buyer") to sell its 51% ownership interest in National Merchandising Services, LLC ("NMS") to the Buyer for total consideration of $1,441,004. The transaction closed on December 31, 2023. Per the agreement, the purchase price is due from the Buyer as follows: (1) a payment of $700,000 due immediately to the escrow agent upon closing, releasable to the Company in January 2024; (2) $523,000 in the form of the Buyer's promissory note due and payable on  January 31, 2024; and (3) a payment of up to $209,004 contingent upon collection of an outstanding receivable. The $700,000 and $523,000 portions of consideration for this transaction are recorded in "Other Receivables" at December 31, 2023 and were received in first quarter of 2024. The Company’s December 31, 2023 financial results include a loss on this sale of approximately $427,000, primarily reflecting the write-off of remaining goodwill related to NMS. As of December 31, 2025, payment upon collection of the outstanding receivables has not been made and attempts to collect are ongoing. The Company has not included the receivables related to this collection on its balance sheet. 

 

Summary of Certain Related Party Transactions

 

The following costs of affiliates were charged to the Company (in thousands):

  

Year Ended December 31,

 
  

2025

  

2024

 

Services provided by affiliates:

        

Advertising and promotional materials (Qantm Creative) (1)

 $229  $- 

Office lease expenses (RJ Holdings) (1)

  -   4 

Consulting and administrative services (RJ Holdings) (1)

  -   161 

Other (1)

  -   50 

Total services provided by affiliates

 $229  $215 

(1)     These expenses are reflected in "Selling, general, and administrative expense" in the consolidated statements of operations and comprehensive loss.

 

Bartels' Retirement and Director Compensation

 

William H. Bartels retired as an employee of the Company as of January 1, 2020. Mr. Bartels is a significant stockholder of SGRP, is one of the founders of the Company, and is an affiliate and related party of SGRP. Mr. Bartels retired from the Board on August 12, 2025.  

 

Effective as of January 18, 2020, SPAR's Governance Committee proposed and unanimously approved retirement benefits for Mr. Bartels, for the five-year period commencing January 1, 2020, and ending December 31, 2024 (the "Five-Year Period"), for Mr. Bartels. The aggregate value of benefits payable to Mr. Bartels is approximately $0.2 million per year and a total of $1.1 million for the Five-Year Period.  As of December 31, 2025, all retirement benefits have been paid.

 

Pursuant to the 2024 Stock Repurchase Program, on  May 3, 2024, SGRP's Board and its Audit Committee approved SGRP's Repurchase Agreement with William H. Bartels for SGRP's private repurchase of 1,000,000 shares of SGRP's Common Stock from William H. Bartels, dated and effective as of  April 30, 2024, at a purchase price of $1.80 per share (the Nasdaq closing price on  April 29, 2024). 

 

Willliam H. Bartels Independent Contractor Agreement

 

On October 1, 2025, the Company entered into an Independent Contractor Agreement with Mr. William H. Bartels (the "Bartels Consulting Agreement”), following his retirement from the Board. Mr. Bartels’ Consulting Agreement provides for monthly payments of $10,000 and expires on December 31, 2026, but may be extended by the parties in writing in their discretion. Under the Bartels Consulting Agreement, Mr. Bartels will provide consulting services from time to time at the request of the Company’s executive management or the Chairman of the Board. 

 

Other Related Party Transactions and Arrangements

 

On   April 18, 2024, the Company entered into a Securities Purchase Agreement to buy from Mr. Richard Justus the remaining minority joint venture interests of Resource Plus and its sister companies, Mobex of North Florida, Inc., and Leasex, LLC. Based on the terms set in the original joint venture agreement, the Company will pay a total of $3 million in annual payments over a five-year period. $0.3 million was paid within the five business days of closing, and the remaining $2.8 million will be paid pursuant to a Secured Promissory Note. The agreement resulted in the termination of all relevant shareholder and operating agreements, although specific confidentiality obligations remain effective for three years post-closing and specific mutual releases were provided. The purchase was closed and completed on  May 1, 2024. As of  December 31, 2025, $1.0 million has been paid and the remaining $2.0 million Promissory Note is outstanding and is reported on the balance sheet (net of discount) in current portion of long-term debt and long-term debt, net current portion.

 

International Transactions

 

Agreement to sell the Company’s ownership interest in its South African Joint Venture

 

Prior to  March 31, 2024, SGRP Meridian Proprietary Limited ("Meridian") was a consolidated international subsidiary of the Company and was owned 51% by the Company and 49% by Friedshelf (Pty) Ltd., Lindicom Proprietary Limited, and Lindicom Empowerment Holdings Proprietary Limited ("Local Owners"). On  February 7, 2024, the Company entered into an agreement to sell its 51% ownership interest in Meridian to the Local Owners for 180,700,000 South African Rand, 80% of which would be paid upon closing. 

 

The closing conditions under that agreement were satisfied in all material respects by  March 31, 2024. and on  April 29, 2024 the Company received 144,560,000 South African Rand from the Local Buyers (or approximately $7.7 million). The remaining purchase price of approximately $1.9 million was received as of  December 31, 2025. The Company has also licensed certain technology (including SPARView) and trademarks to Meridian in connection with the sale. The Company recognized a pre-tax gain of approximately $7.2 million on this transaction, which is presented within “Gain on sale of business” in the Consolidated Statements of Operations and Comprehensive Loss. The Company has no continuing involvement in Meridian.

 

45
 

SPAR Group, Inc. and Subsidiaries 

Notes to Consolidated Financial Statements (continued)

 

10. Related Party Transactions (continued)

 

Agreement to sell the Company’s ownership interest in its Chinese Joint Venture

 

On  February 23, 2024, the Company entered into an agreement to sell its 51% ownership interest in SPAR (Shanghai) Marketing Management Co., Ltd. to Shanghai Jingbo Enterprise Consulting Co., Ltd. and Shanghai Wedone Marketing Management Co. Ltd.  The total price paid to the Company is $200,000. The sale was completed in April 2024. The Company has recognized a loss of $1.1 million in the second quarter of 2024 as a result of this transaction, which is presented within “Gain on sale of business” in the Consolidated Statements of Operations and Comprehensive Loss. The Company has no continuing involvement in SPAR (Shanghai) Marketing Management Co., Ltd.

 

Agreement to sell the Company’s Brazilian subsidiary that owns its interest in its Brazilian Joint Venture

 

On  March 26, 2024, the Company signed a share purchase agreement with JK Consultoria Empresarial Ltda. ("JKC") for JKC to acquire the Company's Brazilian holding company (which in turn owns the Company's 51 percent interest in its Brazilian joint venture subsidiary) for BRL 58.9 million or approximately $11.8 million. Closing of the sale occurred in  June 2024. The Company has recognized a loss of $1.2 million in the second quarter of 2024 as a result of this transaction, which is presented within “Loss on disposal of business” in the Consolidated Statements of Operations and Comprehensive Loss. The Company has no continuing involvement in the Brazilian Joint Venture.  

 

Agreement to sell SPAR's 100% ownership interest in SPAR Japan

 

On  July 23, 2024, the Company entered into an agreement to sell its 100% ownership interest in SPAR Japan for $500,000. The sale closed on  August 30, 2024. The Company has recognized a loss of $0.7 million in the third quarter of 2024 as a result of this transaction, which is presented within “Gain on sale of business” in the Consolidated Statements of Operations and Comprehensive Loss. The Company has no continuing involvement in SPAR Japan. 

 

Agreement to sell SPAR's 51% ownership interest in its Indian Joint Venture

 

On  August 31, 2024, the Company closed on an agreement to sell its 51% ownership interest in its Indian Joint venture for $500,000. The sale closed on  September 25, 2024. The Company has recognized a loss of $1.4 million in the third quarter of 2024 as a result of this transaction, which is presented within “Gain on sale of business” in the Consolidated Statements of Operations and Comprehensive Loss. The Company has no continuing involvement in the Indian Joint Venture. 

 

Agreement to sell SPAR's 51% ownership interest in its Mexican Joint Venture

 

On December 19, 2024, the Company closed on an agreement to sell its 51% ownership interest in its Mexican Joint venture for $417,000. The sale closed on  December 19, 2024. The Company has recognized a loss of $1.1 million in the fourth quarter of 2024 as a result of this transaction, which is presented within “Gain on sale of business” in the Consolidated Statements of Operations and Comprehensive Loss. As of December 31, 2025, the Company had a receivable of $390,000 included in accounts receivable, net in the accompanying consolidated balance sheets. The Company has no continuing involvement in the Mexican Joint Venture. 
 

 

46
 

SPAR Group, Inc. and Subsidiaries 

Notes to Consolidated Financial Statements (continued)

 

11. Share Based Compensation 

 

As of December 31, 2025, the Company has outstanding stock options and unvested restricted stock units granted under its 2008 Stock Compensation Plan, 2018 Stock Compensation Plan, 2020 Stock Compensation Plan and 2021 Stock Compensation Plan, which generally permitted stock-based awards under terms determined by the Company’s board of directors. Stock options and RSUs generally provided for vesting over service periods of one to four years, with option exercise prices generally equal to fair market value on the date of grant. As of December 31, 2025, no further shares were available under these plans for future awards. The Company also granted stock options and restricted stock units as inducements under contracts with selected executives.

 

Stock options

 

2008 Plan Summary

 

The Company’s 2008 Stock Compensation Plan, as amended, provides for equity-based awards to employees, directors, and eligible consultants. Awards under the Plan may take the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units (RSUs), stock appreciation rights (SARs), or other stock-based awards, all of which are classified as equity. Awards are generally settled by issuing shares of the Company’s common stock. Stock options and SARs are granted with exercise prices at least equal to the fair market value of the common stock on the grant date and typically have a contractual term of up to ten years. In accordance with ASC 718, the Company measures stock-based compensation expense for awards under the Plan at the grant-date fair value and recognizes it over the awards’ requisite service or performance period (generally the vesting period). The fair value of stock option and SAR grants is estimated on the grant date using the Black-Scholes option pricing model, while the fair value of restricted stock and RSUs is based on the market price of the Company’s stock at grant. Awards generally vest over a multi-year period of continuous service (e.g. four-year graded vesting for stock options) or upon achievement of specified performance goals, as applicable. Unvested awards are generally forfeited upon termination of employment or service, unless the Company’s Compensation Committee exercises its discretion to accelerate vesting or provide for alternative vesting arrangements in certain cases. The 2008 Plan Stock option award activity for the years ended   December 31, 2025 and 2024 is summarized below for the periods presented. 

          

Weighted-

     
      

Weighted-

  

Average

  

Aggregate

 
      

Average

  

Remaining

  

Intrinsic

 
      

Exercise

  

Contractual

  

Value

 

Option Awards

 

Shares

  

Price

  

Term (Years)

  

(thousands)

 

Outstanding at January 1, 2024

  222,000  $1.01   3.27  $12 

Granted

  –   –   –   – 

Exercised / cancelled

  (79,000)  0.97   –   98 

Forfeited or expired

  (56,000)  –   –   – 

Outstanding at December 31, 2024

  87,000  $1.01   2.66  $73 

Granted

  –   –   –   – 

Exercised / cancelled

  –   –   –   – 

Forfeited or expired

  (10,000)  1.05   –   – 

Outstanding at December 31, 2025

  77,000  $1.11   1.60  $- 

Exercisable at December 31, 2025

  77,000  $1.11   1.60  $- 

 

The Company recognized no stock-based compensation expense relating to stock option awards during the years ended December 31, 2025 and 2024 for the 2008 plan. There were no shares exercised in 2025. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended  December 31, 2025 and 2024, was $0.

 

2018 Plan Summary

 

SPAR Group’s 2018 Stock Compensation Plan provides for stock-based awards including stock options, stock appreciation rights (“SARs”), restricted stock, and restricted stock units (“RSUs”). All awards under the plan are classified as equity instruments and are generally settled by issuing shares of the Company’s common stock. Stock options are granted with exercise prices at least equal to the fair market value of the stock on the grant date and have a contractual term of up to ten years. The fair value of stock option and SAR awards is measured on the grant date using the Black-Scholes option pricing model, and the fair value of restricted stock and RSU awards is determined based on the market price of the Company’s common stock on the grant date. Awards generally vest over the recipients’ requisite service period, often in equal annual installments over four years from the grant date. Stock-based compensation cost is measured at the grant-date fair value of awards and recognized as expense on a straight-line basis over the vesting period, net of estimated forfeitures. If an award is forfeited before it vests, any previously recognized compensation expense is reversed. The plan also provides for accelerated vesting of outstanding awards under certain conditions such as the participant’s death, disability, or a change in control, which would result in immediate recognition of any remaining unrecognized compensation cost. 2018 Plan Stock option award activity for the years ended  December 31, 2025 and 2024 are summarized below. 

 

          

Weighted-

     
      

Weighted-

  

Average

  

Aggregate

 
      

Average

  

Remaining

  

Intrinsic

 
      

Exercise

  

Contractual

  

Value

 

Option Awards

 

Shares

  

Price

  

Term (Years)

  

(thousands)

 

Outstanding at January 1, 2024

  145,000  $0.94   4.79  $26 

Granted

  –   –   –   – 

Exercised/cancelled

  (75,000)  0.99   –   90 

Forfeited or expired

  (30,000)  –   –   – 

Outstanding at December 31, 2024

  40,000  $0.93   3.80  $40 

Granted

  –   –   –   – 

Exercised

  –   –   –   – 

Forfeited or expired

  –   –   –   – 

Outstanding at December 31, 2025

  40,000  $0.93   2.80  $3 

Exercisable at December 31, 2025

  40,000  $0.93   2.80  $3 

 

The Company recognized no stock-based compensation expense relating to stock option awards during the years ended December 31, 2025 and 2024 under the 2018 plan. There were no shares exercised in 2025. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended  December 31, 2025 and 2024, was $0.

 

47
 

SPAR Group, Inc. and Subsidiaries 

Notes to Consolidated Financial Statements (continued)

 

11. Share Based Compensation (continued)

 

2020 Plan Summary

 

Under the 2020 Stock Compensation Plan, SPAR Group grants equity-classified stock-based awards exclusively in the form of non-qualified stock options (NQSOs). The plan does not authorize incentive stock options, stock appreciation rights, restricted stock, or restricted stock units. Each option award is settled by issuing shares of the Company’s common stock upon exercise. In accordance with ASC 718, the Company measures stock-based compensation expense for stock options at the grant-date fair value of the award (estimated using the Black-Scholes option pricing model) and recognizes it over the requisite service period (generally the vesting period) on a straight-line basis. The total expense is adjusted for estimated forfeitures of awards to reflect only those options expected to vest. Stock options under the 2020 Plan generally vest in annual installments over approximately four years of continuous service. The options have a contractual term of five years from the grant date. If a participant’s service terminates before an option is fully vested, any unvested portion is forfeited (no acceleration occurs on termination). Vested options typically remain exercisable for up to three months following termination of service, including in cases of retirement, death, or disability. In the event of a participant’s death, any remaining unvested options become fully vested immediately and are exercisable for up to three months thereafter by the participant’s estate or legal representative. 2020 Plan Stock option award activity for the years ended  December 31, 2025 and 2024 are summarized below. 

 

          

Weighted-

     
      

Weighted-

  

Average

  

Aggregate

 
      

Average

  

Remaining

  

Intrinsic

 
      

Exercise

  

Contractual

  

Value

 

Option Awards

 

Shares

  

Price

  

Term (Years)

  

(thousands)

 

Outstanding at January 1, 2024

  355,000  $1.55   2.10  $- 

Granted

  –   –   –   – 

Exercised/cancelled

  (22,500)  1.55   –   17 

Forfeited or expired

  (220,000)  –   –   – 

Outstanding at December 31, 2024

  112,500  $1.55   1.10  $44 

Granted

  –   –   –   – 

Exercised

  –   –   –   – 

Forfeited or expired

  (12,500)  1.55   –   – 

Outstanding at December 31, 2025

  100,000  $1.55   0.10  $- 

Exercisable at December 31, 2025

  100,000  $1.55   0.10  $- 

 

The Company recognized $2,200 and $19,500 in stock-based compensation expense relating to stock option awards during the years ended  December 31, 2025 and 2024, respectively. There were no shares exercised in 2025.

 

As of  December 31, 2025, there was no remaining unrecognized stock-based compensation expense related to stock options. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended  December 31, 2025, and 2024, was $559 and $5,800, respectively.

 

CEO Inducement Plan Summary

 

The Company granted a nonqualified stock option as an inducement award to the prior CEO, outside of the Company’s stockholder-approved equity plan. This stock option is classified as an equity award and carries a ten-year term. The grant-date fair value of the option was measured using the Black-Scholes option pricing model. The resulting compensation cost is recognized over the award’s requisite service period (the vesting period) on a straight-line basis. Vesting and Forfeiture Provisions: The option vested 100% on February 22, 2022. Upon vesting, any exercised portions were settled in shares of the Company’s common stock. The CEO Inducement Plan stock option award activity for the years ended  December 31, 2025 and 2024 are summarized below. 

 

          

Weighted-

     
      

Weighted-

  

Average

  

Aggregate

 
      

Average

  

Remaining

  

Intrinsic

 
      

Exercise

  

Contractual

  

Value

 

Option Awards

 

Shares

  

Price

  

Term (Years)

  

(thousands)

 

Outstanding at January 1, 2024

  630,000  $1.90   7.15  $- 

Granted

  -   -   -   - 

Exercised/cancelled

  -   -   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at December 31, 2024

  630,000  $1.90   6.15  $25 

Granted

  -   -   -   - 

Exercised

  -   -   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at December 31, 2025

  630,000  $1.90   5.15  $- 

Exercisable at December 31, 2025

  630,000  $1.90   5.15  $- 

 

The Company recognized $0 stock-based compensation expense relating to stock option awards during the years ended  December 31, 2025 and 2024. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended  December 31, 2025 and 2024, was $0.

 

As of  December 31, 2025, there was no unrecognized share-based compensation expense related to stock options granted under the CEO Inducement Plan. 

 

48
 

SPAR Group, Inc. and Subsidiaries 

Notes to Consolidated Financial Statements (continued)

 

11. Share Based Compensation (continued)

 
Restricted Stock Units
 
The following table summarizes the activity for Restricted Stock Unit ("RSUs") awards during the years ended  December 31, 2025 and 2024.
      

Weighted-

 
      

Average

 
      

Grant Date

 
      

Fair Value

 
  

Shares

  

per Share

 

Unvested at January 1, 2024

  226,276  $1.19 

Granted

  57,143   1.75 

Vested

  (226,276)  1.19 

Forfeited

  –   - 

Unvested at December 31, 2024

  57,143  $1.75 

Granted

  96,154   1.04 

Vested

  (153,297)  1.30 

Forfeited

  –   - 

Unvested at December 31, 2025

  –  $- 

 

During the years ended December 31, 2025 and 2024, the Company recognized approximately $140,000 and $117,500, respectively, of stock-based compensation expense related to RSUs. During the years ended December 31, 2025 and 2024, the total fair value of RSUs vested was $174,000 and $315,000, respectively. As of December 31, 2025, stock-based compensation expense related to unvested RSUs awards was fully recognized.

 

Phantom Stock Awards

 

The Corporation prepared a 2022 Stock Compensation Plan that would have included Awards for NQSOs and RSUs (as defined below), but that plan was never submitted to its shareholders for approval. However, the Board had previously approved, for certain key executives, incentive stock based awards for 2022 using RSUs or cash. Since there were no plan based RSUs available, those executives instead received phantom stock awards. 

 

On and effective as of  March 24, 2022, the Corporation issued an award of 111,111 Phantom Stock Units to each of its executives: Kori G. Belzer; William Linnane; and Ron Lutz. Each Phantom Stock Unit represents the right of the grantee to receive cash payments based on the fair market value of SGRP's Common Stock at the time of vesting. Vesting will occur in three tranches of one-third each over the three (3) year period following the Grant Date, provided that (i) the Grantee is an employee of the Company at the time and (ii) the Corporation has achieved 90% of the agreed upon the applicable financial target for the year commencing with 2022 (which was EBITDA for 2022), but tranches will rollover to the following year and be payable upon achievement of 120% of the agreed upon the applicable financial target for such following year. The Phantom Stock Units do not possess the rights of common stockholders of the Corporation, including any voting or dividend rights, and cannot be exercised or traded for the SGRP's Common Stock. Due to the cash settlement feature, the Phantom Stock Units are classified as liabilities in accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheet. Accrued expenses and other current liabilities on the Consolidated Balance Sheet included $36,000 and $0 related to Phantom Stock Units as of  December 31, 2025 and December 31, 2024, respectively. During the year ended December 31, 2025, the Company recognized approximately $0.6 million of stock-based compensation expense related to Phantom Stock Units.

 

49
 

SPAR Group, Inc. and Subsidiaries 

Notes to Consolidated Financial Statements (continued)
 

12. Segment Information

 

The Company has two reportable segments: (i) U.S. and (ii) Canada. These operating segments, which also form the Company's reportable segments, are identified in accordance with the changes in the CODM internal review of financial results and the CODM uses this information to evaluate the Company's performance and allocate resources.

 

The CODM assesses performance of the segments based on gross margin. The CODM uses gross margin to develop the annual operating plan and regular forecasting process. Additionally, the CODM considers budget-to-actual variances for this measure on a quarterly basis as well as segment-specific forecasting when making decisions about the allocation of operating and capital resources to each segment.

             
  

Year Ended December 31, 2025

 

(in thousands)

 

U.S.

  

Canada

  

Total

 
             

Net revenues

 $122,053  $14,051  $136,104 

Cost of revenue

  104,482   9,929   114,411 

Segment gross profit

  17,571   4,122   21,693 
             

Reconciling items (income) expense:

            

Selling, general, and administrative expense

         $32,197 

Restructuring costs and severance

          4,765 

Depreciation and amortization

          1,634 

Interest expense

          2,415 

Other expenses, net

          1,235 

Loss before income tax expense

         $(20,553)
             

 

  

Year Ended December 31, 2024

 

(in thousands)

 

US

  

Canada

  

Total

 
             

Net revenues

 $117,507  $14,305  $131,812 

Other net revenues (a)

          31,817 

Consolidated net revenues

          163,629 

Cost of revenue

  93,397   9,848     

Segment gross profit

  24,109   4,457   60,384 
             

Reconciling items (income) expense:

            

Other cost of revenue (a)

         $26,787 

Selling, general, and administrative expense

          33,880 

Gain on sale of business

          (2,536)

Depreciation and amortization

          1,553 

Interest expense

          2,191 

Other expenses, net

          171 

Loss before income tax expense

         $(1,662)

(a) Other net revenues and other cost of revenue includes all international operations that were sold in 2024 that did not qualify for discontinued operation presentation.

 

 

 

There were no inter-segment sales for 2025 or 2024.

 

  

December 31,

 

(in thousands)

 2025  2024 

Assets:

        

United States

 $38,482  $53,767 

Canada

  5,577   2,664 

Total assets

 $44,059  $56,431 

 

Geographic Data 

  

Year Ended December 31,

 
  

2025

  

2024

 

(in thousands)

     

% of consolidated net revenue

      % of consolidated net revenue 

Net revenue:

                

United States

 $122,053   89.7% $117,507   71.8%

Canada

  14,051   10.3%  14,305   8.7%

South Africa

  -   -   8,277   5.1%

Mexico

  -   -   12,235   7.5%

China

  -   -   2,698   1.6%

Japan

  -   -   3,778   2.3%

India

  -   -   4,829   3.0%

Total net revenue

 $136,104   100.0% $163,629   100.0%

 

 

50
 

SPAR Group, Inc. and Subsidiaries 

Notes to Consolidated Financial Statements (continued)

 

 

 

13. Earnings Per Share

 

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

  

Year Ended December 31,

 

(in thousands)

 

2025

  2024 

Numerator:

        

Net loss attributable to SPAR Group, Inc.

 $(24,626) $(3,150)
         

Denominator:

        

Shares used in basic net loss per share calculation

  23,619   23,555 

Effect of diluted securities:

        

Stock options and unvested restricted shares

  –   – 

Shares used in diluted net loss per share calculations

  23,619   23,555 
         

Basic loss per common share attributable to SPAR Group, Inc.

  ($1.04)  ($0.13)

Diluted loss per common share attributable to SPAR Group, Inc.

  ($1.04)  ($0.13)

 

The Company excluded 21,000 stock options and 32,000 RSUs from the computation of diluted net loss per share for the year ended December 31, 2025 because including them would have had an anti-dilutive effect. The Company excluded 103,000 stock options and 71,000 RSUs from the computation of consolidated diluted net loss per share for the year ended December 31, 2024 because including them would have had an anti-dilutive effect.

 

51
 

SPAR Group, Inc. and Subsidiaries 
Notes to Consolidated Financial Statements (continued)
 

14. Leases

 

The Company is a lessee under certain operating leases for office space and equipment. 

 

The components of lease expenses consisted of the following for the periods presented (in thousands):

    

Year Ended

  

Year Ended

 

Lease Costs

 

Classification

 

December 31, 2025

  

December 31, 2024

 

Operating lease cost

 

Selling, General and Administrative Expense

 $827  $545 

Short-term lease cost

 

Selling, General and Administrative Expense

  24   370 

Total lease cost

 $851  $915 

 

The following includes supplemental information for the periods presented (in thousands):

  

Year Ended

  

Year Ended

 
  

December 31, 2025

  

December 31, 2024

 
         

Operating cash flows from operating leases

 $476  $545 
         

Right-of-use assets obtained in exchange for lease obligations

        

Operating leases

 $4,715  $- 

 

Balance sheet information related to leases consisted of the following as of the periods presented (in thousands):

 

 

 

December 31, 2025

  

December 31, 2024

 

Assets:

        

Operating lease right-of-use assets

 $4,861  $630 

Liabilities:

        

Current portion of operating lease liabilities

  643   276 

Non-current portion of operating lease liabilities

  4,395   353 

Total operating lease liabilities

 $5,038  $629 
         

Weighted average remaining lease term - operating leases (in years)

  5.58   2.64 

Weighted average discount rate - operating leases

  8.5%  7.7%

 

The following table summarizes the maturities of lease liabilities as of December 31, 2025 (in thousands):

 

For the Year Ended December 31,

 

Amount

 

2026

 $1,084 

2027

  1,201 

2028

  1,039 

2029

  950 

2030

  977 

Thereafter

  1,094 

Total future operating lease liability

 $6,345 

Less: present value discount

  (1,307)

Present value of operating lease liabilities

 $5,038 

 
 

 

52
 

SPAR Group, Inc. and Subsidiaries 

Notes to Consolidated Financial Statements (continued)

15. Subsequent Events

 

Unsecured Loan Agreement and Share Grant


On March 13, 2026, the Company entered into a $4,000,000 unsecured loan agreement (the "Loan") with PC Group, Inc (“PC Group”). The Loan bears interest at a fixed rate of 8% per annum, with interest-only payments required monthly for a term of 36 months.

 

The Loan provides for a staggered funding schedule as follows:

 

 

●

Initial Drawdown: $3,000,000 was drawn by the Company on March 16, 2026.

 

●

Additional Drawdown: The remaining $1,000,000 is available for drawdown in July 2026.

 

In connection with the Loan, the Company granted PC Group 1,000,000 shares of the Company’s common stock at a deemed value of $0.80 per share, totaling $800,000. Under the terms of the agreement, this $800,000 deemed value will be applied as a reduction to the final principal payoff amount due at the end of the 36-month term.

 

The Company has evaluated all subsequent events through March 31, 2026, the date the consolidated financial statements were available to be issued, noting no additional events occurring subsequent to December 31, 2025, that require consideration as adjustments to or disclosures in the consolidated financial statement.

 
53
ex_937936.htm

Exhibit 10.23

 

INDEPENDENT CONTRACTOR’S AGREEMENT

 

THIS INDEPENDENT CONTRACTOR’S AGREEMENT is dated as of this 1st day of October, 2025 by and between WILLIAM BARTELS, whose address is 450 Ocean Drive, Unit 906, Juno Beach, FL 33408 (“Consultant”) and Spar Group, Inc., a Delaware Corporation, whose address is 110 East Boulevard, Suite 1600, Charlotte, NC 28203 (“Company”).

 

W I T N E S S E T H

 

WHEREAS, Consultant previously provided services to the Company and sat on the Board of Directors of the Company; and

 

WHEREAS, Company is in the process of restructuring its executive team and needs assistance from Consultant on such restructuring changes; and

 

WHEREAS, Company desires to engage Consultant for Consultant’s expertise in the Company’s business affairs; and

 

NOW, THEREFORE, for and in consideration of the covenants, agreements and representations contained in this Agreement, as well as other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, both Company and Consultant hereby agree as follows:

 

1.         Scope of Engagement. Subject to Section 2 and 3 herein, Company shall engage Consultant as an independent contractor, the job description for which is to provide assistance to the restructured management team and the Chairman of the Board of Directors as requested from time to time (the “Scope of Work”). Company reserves the right, and Consultant recognizes and agrees that Company shall be able, to unilaterally amend the Scope of Work in Company’s sole and absolute discretion provided the such amendment is reasonable.

 

2.         Term. This Agreement shall commence on the year and date set forth above. Consultant shall remain an independent contractor of Company and this Agreement shall remain pending and in effect for a period ending December 31, 2026; provided that the Consultant’s engagement hereunder may be terminated in accordance with Section 4 hereof. This Agreement may only be extended by a written agreement of the parties.

 

3.         Compensation. Company shall have compensate Consultant at the rate of $10,000 per month during the term of this Agreement.

 

4.         Termination. This Agreement may be terminated as follows:

 

(a)         Termination By Consultant. This Agreement may be terminated by Consultant at any time effective upon sixty (60) days’ prior written notice to Company.

 

(b)         Termination By Company. This Agreement may be terminated by Company at any time and for any reason effective upon sixty (60) days’ written notice to Consultant or on fifteen (15) days prior written notice if Consultant ceases providing the services and Consultant does not reengage to provide the services within such fifteen (15) day period.

 

5.         Termination Payments. In the event of a termination of Consultant’s engagement pursuant to Section 4 herein, all of Consultant’s rights and privileges of access to the Company’s premises shall cease. If the Consultant is terminated by the Company for any reason other than the failure of Bartels to provide the services on behalf of Consultant, the Company shall continue to pay the monthly compensation as provided in Section 3 above for the remaining period of the Term.

 

6.         Confidentiality.

 

(a)         Acknowledgments. Consultant recognizes that Consultant, during the course of its engagement with Company, shall be exposed to, disclosed or come across information, either orally or in writing, which Company considers proprietary, trade secret and confidential and which relate to either (I) Company’s business operations, services, trade secrets, proprietary information, technical knowledge, processes, financial data or pricing information, (ii) customers, client lists, target markets, marketing strategies and client prospect names, client prospect contact information as well as service providers utilized by Company, or (iii) information which has been designated as confidential information by Company (collectively referred to herein as the “Confidential Information”). All of the Confidential Information shall be considered to have been received in confidence by Consultant and is to be used by Consultant solely for the purposes of this Agreement and in furtherance of the Scope of Work. Consultant, either directly or indirectly, as an owner, Consultant, officer, investor or otherwise, shall keep strictly secret and confidential the Confidential Information and shall be prohibited from disclosing or otherwise allowing the use of the Confidential Information to any third-party.

 

(b)         Documents. All of the Confidential Information shall remain the property of Company and no license or intellectual property right to any of the Confidential Information shall be conveyed to Consultant by any disclosure hereunder. Furthermore, all notes, letters, documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of Company or its affiliates and any copies, in whole or in part, thereof (collectively, the “Documents”), whether or not prepared by Consultant, shall be the sole and exclusive property of Company and shall be considered a work for hire by Consultant and Consultant shall have no ownership rights whatsoever in such material. Consultant shall safeguard all Documents and shall surrender same to Company at the time Consultant’s engagement terminates or at such earlier time or times as Company or its designee may specify.

 

(c)         Irreparable Harm. Consultant agrees that the Confidential Information is of critical importance to Company and a violation of this Section 6 would seriously and irreparably impair and damage Company’s business.

 

(d)          Survival. The terms and conditions contained in this Paragraph 6 shall remain in full force and effect throughout the term of this Agreement and for a two (2) year time period following the termination of this Agreement, regardless of who initiated the termination of this Agreement or the reasons therefore.

(e)         Exception. Nothing in this Section 6 shall prevent Consultant from selling or transferring his shares in the Company either on the public market or in a private transaction.

 

7.         Restrictions on Activities of Consultant.

 

(a)    Acknowledgments. Consultant hereby represents and warrants to Company that he is not a party to any restrictive covenant(s) with another entity that would hinder, prevent, or limit Consultant’s ability to perform his/her obligations under this Independent Contractor Agreement, or to otherwise enter into said agreement. Consultant further agrees to indemnify Company for any and all damages, legal fees, and costs incurred by Company which in any way relates to Consultant’s restrictive covenants with another entity as discussed herein.

 

(b)    Non-Solicitation. During the term of this Agreement and for a period of two (2) years after the termination of Consultant’s engagement with Company, Consultant will not solicit, or attempt to solicit, any Company customer or prospective customer, officer, director, independent contractor, consultant, or executive of Company, or any of its subsidiaries or affiliates, to leave his or her engagement with Company or such subsidiary or affiliate, or to otherwise diminish his or her engagement with Company.

 

(c)    Covenant Not to Compete. The Consultant agrees that during its engagement with the Company and for a period of two (2) years following termination of the Consultant’s engagement with the Company for any reason, the Consultant will not, directly or indirectly, work for (as an employee or contractor), provide assistance to (whether for pay or free of charge), own, manage, control or participate in the ownership, management or control of any other corporation, partnership, proprietorship, firm, association, or other business entity that operates a business competitive with or similar to, the business of the Company.

 

8.         Remedies. It is specifically understood and agreed that any breach of the provisions of Section 6 or 7 of this Agreement is likely to result in irreparable injury to Company and that the remedy at law alone will be an inadequate remedy for such breach, and that in addition to any other remedy it may have, Company shall be entitled to enforce the specific performance of this Agreement by Consultant and to seek both temporary and permanent injunctive relief (to the extent permitted by law) without bond and without liability should such relief be denied, modified or violated. Neither the right to obtain such relief nor the obtaining of such relief shall be exclusive or preclude Company from any other remedy. The provisions of Sections 6 and 7 shall survive the termination or expiration of this Agreement, for any reason whatsoever. The provisions contained in Sections 6 and 7 shall be binding upon Consultant as an independent obligation and shall be enforceable even if there is or is claimed to be a breach of this Agreement or any other agreement, understanding, commitment or promise as between Company and Consultant. The time period set forth in Sections 6 and 7 shall be computed by excluding from such computation any time during which Consultant is in violation of any provision of Sections 6 or 7 and any time during which there is pending in any court of competent jurisdiction any action (including appeal) brought by any person, whether or not a party to this Agreement, in which action contests the validity or enforceability of any such covenant, or seeks to avoid performance or enforcement of any such covenant if such action shall be resolved in a manner that upholds any of Company’s claims.

 

9.         Severable Provisions. The provisions of this Agreement are severable and the invalidity of any one or more provisions shall not affect the validity of any other provision. In the event that a court of competent jurisdiction shall determine that any provision of this Agreement or the application thereof is unenforceable in whole or in part because of the duration or scope thereof, the parties hereto agree that said court in making such determination shall have the power to reduce the duration and scope of such provision to the extent necessary to make it enforceable, and that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted by law.

 

10.         Relationship of Parties. The parties agree that the relationship between Company and Consultant shall be as independent contractors and Consultant shall not be deemed the employee, agent, partner or joint venturer of Company. Consultant shall act under its own direction and initiative in carrying out the terms of this Agreement. Company shall have no power to exercise any control over the activities, business or operations of Consultant. All financial and other obligations associated with Consultant’s business are the sole responsibility of Consultant. Consultant acknowledges that as an independent contractor, Company shall not pay any employment or withholding taxes on behalf of Consultant, nor deduct any of these taxes from Consultant’s fee. Consultant shall be solely responsible for, and shall indemnify and hold harmless Company and its shareholders, directors, officers, agents and employees from any and all claims, damages or lawsuits arising out of the acts of Consultant, its employees or agents.

 

11.         Benefits. Consultant shall not be entitled to any benefits of employment from Company, including, without limitation, health insurance, retirement plan, bonus, meals, sick pay or vacation pay, should these benefits be offered to Company’s employees. Additionally, Consultant shall not be covered by Company’s worker’s compensation insurance. Consultant shall not receive from Company any orientation, training or other special programs offered by Company to Company’s employees.

 

12.         Miscellaneous.

 

(a)         Governing Law, Venue. This Agreement shall be construed in accordance with and governed by the laws of the State of Florida, without regard to the conflicts of law rules (whether of the State of Florida or of any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Florida. ANY CLAIM ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT WILL BE INSTITUTED EXCLUSIVELY IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF FLORIDA IN EACH CASE LOCATED IN THE COUNTY OF BROWARD, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH CLAIM. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY'S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY CLAIM BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY CLAIM IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH CLAIM BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(b)         Attorneys’ Fees. Should any dispute arise hereunder the prevailing party shall be entitled to recover all costs, expenses and attorneys’ fees incurred in the dispute, whether or not suit be brought, and such right shall include all of such costs, expenses and attorneys’ fees through appeals or other actions.

 

(c)         Other Agreements. Consultant acknowledges to Company that, as of the effective date of this Agreement, Consultant is not under agreement with any other party which would restrict Consultant from entering into this Agreement or fulfilling its obligations hereunder.

 

(d)         Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

 

(e)         Waiver. No waiver by Company of any provision of this Agreement shall be deemed to be a waiver of any other provision hereof or of any subsequent breach by Consultant of the same, or any other provision or the enforcement thereof. Company’s consent to or approval of any act by Consultant requiring Company’s consent or approval shall not be deemed to render unnecessary the obtaining of Company’s consent to or approval of any subsequent consent or approval by Company, whether or not similar to the act so consented to or approved.

 

(f)         Entire Agreement/Modification. No statements, representations, warranties, either written or oral, from whatever source arising, except as expressly stated herein, shall have any legal validity between the parties or be binding upon any of them. The parties acknowledge that this Agreement contains the entire understanding and agreement of the parties. No modifications hereof shall be effective unless made in writing and executed by the parties hereto with the same formalities as this Agreement is executed.

 

(g)         Joint Preparation. The preparation of this Agreement has been a joint effort of the parties, and the resulting document shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other. It is the party’s further intention that this Agreement be construed liberally to achieve its intent.

 

(h)         Notice. Any notice to be given under this Agreement shall be sent, Via U.S. Regular Mail to either party at the address set forth within this Agreement or as otherwise noticed by either party. Notice shall be effective as of the date it has been postmarked at put into the post box for mailing.

 

(i)         Assignment. Consultant acknowledges that the services rendered pursuant to this Agreement are unique and special. Consultant may not assign or delegate any duties or obligations under this Agreement. Company may assign its duties and rights under this Agreement to its successors or assigns, or to a subsidiary or to a purchaser or transferee of all, or substantially all, of the assets of Company, and all covenants and agreements of Consultant under this Agreement, including, but not limited to, those restrictive covenants set forth in Paragraphs 6 and 7, shall inure to the benefit of and be enforceable by such successors, assigns, subsidiaries, purchasers or transferees.

 

(j)         Duty to Disclose. During the course of Consultant’s engagement with Company and for a period of two (2) years thereafter, Consultant shall inform any actual or prospective employer or entity with which Consultant seeks an independent contracting relationship of the existence of this Agreement and the fact that it contains the restrictive covenants set forth above, and Consultant shall take all reasonable steps necessary to furnish any such actual or prospective employee or entity with a copy of this Agreement.

 

(k)         Amendment. Any provision of this Agreement may be amended only if the parties agree to such amendment in writing.

 

(l)          WAIVER OF TRIAL BY JURY. AS AN INDUCEMENT FOR COMPANY TO ENTER INTO THIS AGREEMENT AND IN CONSIDERATION THEREOF, COMPANY AND CONSULTANT AGREE THAT, IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER COMPANY OR CONSULTANT AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF, OR BY VIRTUE OF THE TERMS OF THIS AGREEMENT, COMPANY AND CONSULTANT SHALL, AND DO HEREBY, ABSOLUTELY AND UNCONDITIONALLY WAIVE TRIAL BY JURY.

 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement, or caused it to be signed by their duly authorized, as of the day and year first set forth above.

 

Company:                                                      Consultant:

 

Spar Group, Inc.                                             

 

By:___________________________________                   _______________________________________

Name: William Linnane                                              William Bartels

Its: President                                             

Date:         03.05.26, Effective 10.01.25                   Date:         10.29.25                                    

 
ex_937941.htm

Exhibit 10.38

 

 

SEVERANCE AGREEMENT AND GENERAL RELEASE

 

 

This SEVERANCE AGREEMENT AND GENERAL RELEASE (this "Agreement") is made and entered into as of the Jl_day of December, 2025, by and between SPAR GROUP, INC. (hereinafter referred to as "Employer"); and ANTONIO CALISTO PATO (hereinafter referred to as "Employee").

 

WHEREAS, Employee and Employer have been discussing Employee's voluntary resignation from the Employer as Chief Financial Officer;

 

WHEREAS, the parties wish to express their understanding as to the Employee's severance from employment with Employer as a result of his voluntary resignation and the rights of the parties hereafter.

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein and other valuable consideration, receipt of which is hereby acknowledged, and intending to be legally bound hereby, it is hereby agreed as follows:

 

l.    Severance; Duties. Employee represents, understands and agrees that Employee's severance of employment with Employer is effective as of March 3, 2026 (the "Severance Date"), and that payment of any severance amount is subject to the expiration of the Revocation Period set forth herein, provided that Employee does not revoke this Agreement.

 

(a)    Duties. From the date of this Agreement through the Severance Date, Employee shall focus his efforts on to assist the new Chief Financial Officer with the following tasks and duties:

 

(i)    Provide assistance in transitioning the tasks, duties and responsibilities of the position of Chief Financial Officer to the new individual hired by}he Employer to serve as Chief Financial Officer.

 

(ii)    Assist new Chief Financial Officer in obtaining access to the Hong Kong bank account of Employer or the Employer's affiliate;

 

(iii)    Assist new Chief Financial Officer in developing procedures and process necessary to remediate the material weaknesses shown on the Employer's audit performed by BDO;

 

 

(iv)

Assist new Chief Financial Officer in resolving outstanding tax matters

 

with Plante Moran; and

 

 

(v)

Assist new Chief Financial Officer with the current sales tax project.

 

2.    Benefits to Employee. As consideration for this Agreement and the covenants, conditions, terms, provisions and general release contained herein, Employer and Employee agree to the following:

 

(a)    Employer shall continue to pay Employee from the date of execution of this Agreement through the Severance Date at his current rate of pay on the current regular payment schedule.

 

(b)    In addition, Employer shall pay Employee as severance his current annual salary in the amount of $350,000.00 (the "Severance Payment"), said Severance Payment consisting of one-year of salary ($350,000.00). The Severance Payment will be subject to applicable payroll and income tax deductions. The Severance Payment shall be made payable to Employee and will be paid via direct deposit using the information on file. Employer shall pay the Severance Payment to Employee in three lump sum payments as follows:

 

$150,000 paid upon expiration of the seven-day revocation period in paragraph 16, below;

$100,000 paid on or before January 16, 2026; and

 

$100,000 paid on or before March 3, 2026.

 

(c)    Employee shall continue to receive all applicable, current employee benefits through the Severance Date. Thereafter, Employee shall have all normal and customary COBRA rights relative to applicable employee benefits. Employee acknowledges that Employee shall not be entitled to a bonus for either calendar year 2025 or for 2026.

 

(d)    Employee acknowledges that the consideration set forth in Sections 2(a) and 2(b) constitutes full and final payment of all amounts due Employee from Employer. Without limiting any other provision of this Agreement, Employee agrees that Employee is entitled to no further payments or benefits, however denominated, from Employer or any of its subsidiaries or affiliates except as provided in or explicitly contemplated by this Agreement.

 

(e)    Employee shall retain any and all rights of indemnification, costs of defense, advancement of expenses, or exculpation as were afforded to him prior to the execution of this Severance Agreement. Employer shall continue to carry director and officer liability insurance covering Employee's activities during the period of his employment through the severance date for a period of not less than six years after the severance date on terms no less favorable than provided to previous, current or future officers and directors.

 

 

3.

Return of Property.

 

Employer acknowledges that Employee has returned to Employer all documents, reports, files, memoranda, and records; credit cards, gas cards, card key passes; door and file keys, other access keys; computer access codes; laptop; trade secrets and other physical or personal property belonging to Employer, including, but not limited to, the Employee's assigned laptop, Home Depot Credit Card, and South State Credit Card. Employee represents that Employee has not retained and will not retain any copies, duplicates, reproductions, or excerpts thereof.

 

 

4.

Release.

 

(a)     "Employer Parties" means (i) Employer and its predecessors, successors, assigns, subsidiaries, parent entities, affiliates; (ii) each of the respective past, present and future officers, board members, managers, directors, equity holders, employees, consultants, advisors, agents, representatives, heirs, executors, trustees, estates, administrators, insurers, attorneys and accountants of the parties listed in clause (i) of this definition; (iii) each of the respective heirs, executors, trustees, estates, administrators, insurers, attorneys, accountants, successors and assigns of the parties listed in clause (i) and (ii) of this definition; and (iv) all parties acting by, through, for, under or in concert with any of the parties listed in clause (i), (ii) or (iii) of this definition.

 

(b)    In exchange for the consideration set forth in Section 2, and except as otherwise provided herein, Employee hereby unconditionally and irrevocably releases and forever discharges Employer Parties, of and from any and all claims and demands whatsoever, known or unknown, at law and in equity, in contract or in tort, including all rights under that certain Change of Control Severance Agreement dated as of February 28, 2023, and any statutory claim for relief of any nature that Employee had, now has, may have at any time in the future, or claims to have or have had, from the beginning of the world through and including the date of this Agreement (collectively, "Employee Released Claims"), and agrees not to sue and not to assert against them any such Employee Released Claims or any other causes of action relating to any Employee Released Claims in any court or before any agency or commission of a local, state and federal government, arising, alleged to have arisen, or which may have been alleged to have arisen, and whether such Employee Released Claims are pursued in a personal or individual capacity, or in a representative capacity, including but not limited to wrongful termination, breach of express or implied contract, unpaid wages, or pursuant to any federal, state, or local employment laws, regulations, or executive orders prohibiting inter alia, age, race, color, sex, sexual preference/orientation, marital status, national origin, religion, handicap, and disability discrimination, such as the Age

 

Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, the Older Workers Benefit Protection Act of 1990, the Sarbanes-Oxley Act, the North Carolina Whistleblower Protection Act, the Immigration Reform and Control Act, the North Carolina Civil Rights Act, the Family and Medical Leave Act, the WARN Act and the North Carolina and Federal Constitutions, all as amended. The Released Claims include any of the following which Employee had, now has, may have at any time in the future, or claims to have or have had, from the beginning of the world through and including the date of this Agreement: (i) any claims, demands or liabilities in connections with violations of all other federal, state, and local laws and regulations prohibiting, without limitation, discrimination in employment, retaliation, conspiracy, tortious or wrongful discharge, breach of an express or implied contract, breach of a covenant of good faith and fair dealing, negligent infliction of emotional distress, defamation, misrepresentation or fraud (other than fraud in the inducement of this Agreement), negligence, negligent supervision, hiring, or retention, assault, battery, detrimental reliance or any other offense; (ii) and all claims for any compensation, including back wages, front pay, bonuses or awards, fringe benefits, change in control payments, reimbursements, reinstatement, pension benefits or any other form of economic loss, all claims for personal injury, actual, incidental, compensatory, special or punitive damages; and (iii) all claims for costs and attorneys' fees.

 

(c)    In exchange for the consideration set forth in Section 1, and except as otherwise provided herein, Employer Parties hereby unconditionally and irrevocably releases and forever discharges Employee, of and from any and all claims and demands whatsoever, known or unknown, at law and in equity, in contract or in tort, including all rights under that certain Change of Control Severance Agreement dated as of February 28, 2023, and any statutory claim for relief of any nature that Employer had, now has, may have at any time in the future, or claims to have or have had, from the beginning of the world through and including the date of this Agreement (collectively, "Employer Released Claims"), and agrees not to sue and not to assert against them any such Employer Released Claims or any other causes of action relating to any Employer Released Claims in any court or before any agency or commission of a local, state and federal government, arising, alleged to have arisen, or which may have been alleged to have arisen, including but not limited to breach of express or implied contract, or pursuant to any federal, state, or local laws. The Employer Released Claims include any of the following which Employer had, now has, may have at any time in the future, or claims to have or have had, from the beginning of the world through and including the date of this Agreement: (i) any claims, demands or liabilities in connections with violations of any federal, state, and local laws and regulations prohibiting, without limitation, conspiracy, breach of an express or implied contract, breach of a covenant of good faith and fair dealing, tortious conduct, defamation, misrepresentation or fraud (other than fraud in the inducement of this Agreement), negligence, gross negligence, gross misconduct, recklessness, willful or wanton behavior, breach of fiduciary duty, breach of any duty owed to Employer, assault, battery, detrimental reliance or any other offense; (ii) all claims for any other form of economic loss, all claims for personal injury, actual, incidental, compensatory, special or punitive damages; and (iii) all claims for costs and attorneys' fees.

 

(d)    Nothing contained herein shall be construed as a waiver by the Parties to enforce the terms of this Agreement in the event of a breach.

 

5.    Restrictive Covenants.As a condition of receiving the Severance Payment, the Employee agrees to be bound by the restrictive covenants set forth in this Section 5.

 

(a)    Non-Disparagement. Employee agrees that Employee will not make, disseminate or participate in making or disseminating any disparaging, defamatory, negative or adverse statements about Employer Parties. Employer Parties agree not to make, disseminate or participate in making or disseminating any disparaging, defamatory, negative or adverse statements about Employee.

 

 

(b)

Confidentiality.

 

The Employee understands and acknowledges that during the course of employment by the Employer, he has had access to and learned about confidential, secret and proprietary documents, materials and other information, in tangible and intangible form, of and relating to the Employer and its businesses and existing and prospective customers, suppliers, investors and other associated third parties ("Confidential Information"). The Employee further understands and acknowledges that this Confidential Information and the Employer's ability to reserve it for the exclusive knowledge and use of the Employer is of great competitive importance and commercial value to the Employer, and that improper use or disclosure of the Confidential Information by the Employee might cause the Employer to incur financial costs, loss of business advantage, liability under confidentiality agreements with third parties, civil damages and criminal penalties.

 

For purposes of this Agreement, Confidential Information includes, but is not limited to, all information not generally known to the public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: business processes, practices, methods, policies, plans, publications, documents, research, operations, services, strategies, techniques, agreements, contracts, terms of agreements, transactions, potential transactions, negotiations, pending negotiations, know-how, trade secrets, computer programs, computer software, applications, operating systems, work-in-process, databases, manuals, records, articles, systems, material, sources of material, supplier information, vendor information, financial information, financial data, results, accounting information, accounting records, legal information, marketing information, advertising information, pricing information, credit information, design information, payroll information, staffing information, personnel information, employee lists, supplier lists, vendor lists, developments, reports, internal controls, security procedures, graphics, drawings, sketches, market studies, sales information, revenue, costs, formulae, notes, communications, algorithms, product plans, designs, styles, models, ideas, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, customer lists, client information, client lists, manufacturing information, factory lists, distributor lists, and buyer lists of the Employer or its businesses or any existing or prospective customer, supplier, investor or other associated third party, or of any other person or entity that has entrusted information to the Employer in confidence.

 

The Employee understands that the above list is not exhaustive, and that Confidential Information also includes the terms of and facts surrounding the Employee's departure, including any terms set forth herein, and other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used.

 

The Employee understands and agrees that Confidential Information developed by him in the course of his employment by the Employer shall be subject to the terms and conditions of this Agreement as if the Employer furnished the same Confidential Information to the Employee in the first instance. Confidential Information shall not include information that is generally available to and known by the public at the time of disclosure to the Employee, provided that such disclosure is through no direct or indirect fault of the Employee or person(s) acting on the Employee's behalf.

 

 

(c)

Disclosure and Use Restrictions.

 

The Employee agrees and covenants: (i) to treat all Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish, communicate or make available Confidential Information, or allow it to be disclosed, published, communicated or made available, in whole or part, to any entity or person whatsoever (including other employees of the Employer) not having a need to know and authority to know and use the Confidential Information in connection with the business of the Employer and, in any event, not to anyone outside of the direct employ of the Employer except as required in the performance of any of the Employee's remaining authorized employment duties to the Employer (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent); and (iii) not to access or use any Confidential Information, and not to copy any documents, records, files, media or other resources containing any Confidential Information, or remove

any such documents, records, files, media or other resources from the premises or control of the Employer, except as required in the performance of any of the Employee's remaining authorized employment duties to the Employer or with the prior consent of an authorized officer acting on behalf of the Employer in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent). Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation or order. The Employee shall promptly provide written notice of any such order to an authorized officer of the Employer.

 

 

(d)

Duration of Confidentiality Obligations.

 

The Employee understands and acknowledges that his obligations under this Agreement with regard to any particular Confidential Information shall commence immediately and shall continue during and after his employment by the Employer until such time as such Confidential Information has become public knowledge other than as a result of the Employee's breach of this Agreement or breach by those acting in concert with the Employee or on the Employee's behalf.

 

(e)    Remedies. In addition to any other legal or equitable remedies available to Employer, if Employee breaches this Agreement, Employee acknowledges that (i) there is no adequate remedy at law available to Employer should Employee violate this Section 5, (ii) such a violation results in irreparable harm to Employer, and (iii) Employer is entitled to seek, from any court of competent jurisdiction, appropriate equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available at law.

 

6.    As a condition of receiving the Severance Payment described above, Employee represents and warrants that Employee has not suffered any type of industrial or work-related injury as a result of employment with the Employer. Employee further represents and warrants that Employee does not possess, nor will Employee file a claim for unpaid wages, overtime, benefits or any other form of compensation with the Department of Labor Standards Enforcement or any other administrative agency or court of law. Employee also represents and warrants that Employee has not filed any complaints, charges, applications or lawsuits against the Employer with any governmental agency or court including, but not limited to, the Department of Fair Employment and Housing, the United States Equal Employment Opportunity Commission, any administrative agency in the State of North Carolina.

 

7.    No Admission of Wrongdoing. Employee acknowledges that neither this Agreement nor compliance with any of the terms or benefits under this Agreement shall in any way be construed as an admission of wrongdoing of any kind by Employer, or that Employee has any rights whatsoever against Employer (except as provided for in this Agreement). Employer acknowledges that neither this Agreement nor compliance with any of the terms or benefits under this Agreement shall in any way be construed as an admission of wrongdoing of any kind by Employee, or that Employer has any rights whatsoever against Employee (except as provided for in this Agreement).

 

8.    Notice. Any notice that is required to be given under this Agreement shall be sufficient if in writing and if sent postage prepaid by registered or certified mail, return receipt requested; or by overnight delivery; by courier; in the case of Employee to his last place of residence as shown on Employer's company records, as may be updated from time to time by Employee or in the case of Employer to its principal office, or such other place as it may designate. All notices to Employer shall be delivered via certified mail or overnight mail to 110 East Boulevard, Suite 1600, Charlotte, NC 28203.

 

9.    No Waiver. Unless agreed in writing, the failure of either party, at any time, to require performance by the other of any provision hereunder shall not affect its right thereafter to enforce the same, nor shall a waiver by either party of any breach of any provision hereof be taken or held to be a waiver of any other preceding or succeeding breach of any term or provision of this Agreement.

10.    Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the contents hereof and supersedes all prior agreements and understandings between the parties with respect to such matter, whether written or oral.

 

11.    Successors and Assigns. This Agreement shall be binding upon the parties hereto, their heirs, legal representatives, successors and assigns. This Agreement shall not be assignable by Employee but shall be assignable by Employer in connection with the sale, transfer or other disposition of its business. Employee further represents and warrants that he/she is the sole and lawful owner of all rights, title and interest in and to all Released Claims as defined herein. Employee further represents and warrants that there has been no assignment or other transfer of any interest in these Released Claims. Employee expressly agrees that he/she shall not assign any of his/her rights or duties under this Agreement without the express written consent of Employer.

 

12.    Governing Law. The parties agree that this Agreement shall be deemed made and entered into in the State of North Carolina and shall be governed and construed under and in accordance with the laws of the State of North Carolina.

 

13.    Venue. The parties acknowledge and agree that Union County, North Carolina shall be the exclusive venue and proper forum in which to adjudicate any case or controversy arising either directly or indirectly under or in connection with this Agreement.

 

14.    Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule, such invalidity, illegality or unenforceability will not affect any other provision, term or condition of this Agreement, but this Agreement will be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained herein.

 

15.    No Reliance. Employee represents that in executing this Agreement Employee does not and has not relied on any representations or statements made by anyone at Employer regarding the subject matter, basis or effect of this Agreement.

 

16.    Review and Revocation Period. Employee acknowledges that Employee was advised to consult with an attorney prior to executing this Agreement and given the opportunity to review this Agreement for twenty-one (21) days. Employee may waive this twenty-one (21) day right and actually accept and sign this Agreement at any time within this twenty-one (21) day period, but Employee is not required to do so by Employer. The Parties agree that changes to this Agreement, whether material or immaterial, do not restart the running of the twenty-one (21) day period. Employee further acknowledges that Employee may revoke this Agreement within seven (7) days following the execution of this Agreement. This Agreement shall not be effective or enforceable until the expiration of the revocation period.

 

No Severance Payment will be made under this agreement until the employee executes this Agreement and the revocation period has expired. In the event of revocation, notice must be sent in writing, by overnight mail, to: 110 East Boulevard, Suite 1600, Charlotte, NC 28203.

 

17.    Knowingly and Voluntarily Entering. Employee represents and warrants to Employer that Employee has been advised and has had the opportunity to seek the advice of independent counsel in connection with this Agreement and the transactions contemplated herein and has obtained such independent advice or waives Employee's right to seek such independent advice. Employee represents and agrees that Employee fully understands this Agreement and is knowingly and voluntarily entering into same.

 

18.    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Signatures Appear on the Following Page]

 

 

EXECUTION COPY

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

SPAR GROUP, INC.

 

 

By:

William Linnane, CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

Execution Copy

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above.

 

SPAR GROUP, INC.

 

By:          

 

William Linnane, CEO

 

 

 

 

 

 

 

ANTONIO CALISTO PATO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 
ex_937942.htm

Exhibit 10.49

 

 

 

SHARE PURCHASE AGREEMENT

 

by and between

 

on one side

 

SPAR INTERNATIONAL LTD. and

SPAR GROUP INTERNATIONAL, INC.

 

as Sellers, and, on the other side,

 

 

JK CONSULTORIA EMPRESARIAL LTDA.

 

 

as Purchaser,

 

 

and, as intervening and consenting parties

 

SGRP BRASIL PARTICIPAÇÕES LTDA.

JONATHAN DAGUES MARTINS

 

and, as guarantors

 

 

SPAR BRASIL SERVIÇOS DE MERCHANDISING E TECNOLOGIA S.A.

SGRP SERVIÇOS LTDA.

SPAR BRASIL SERVIÇOS LTDA.

SPAR BRASIL SERVIÇOS TEMPORÁRIOS LTDA.

PLUS TRADE DO BRASIL PRESTAÇÃO DE SERVIÇOS LTDA.

________________________________

 

March 26, 2024

TABLE OF CONTENTS

 

1.         Definitions and Interpretation         3

1.1.         Defined Terms         3

1.2.         Rules of interpretation         8

 

2.         Transaction         10

2.1.         Purchase and Sale         10

2.2.         Purchase Price         10

2.3.         Taxes and Remittance Costs         10

 

3.         Conditions Precedent         11

3.1.         Parties’ Conditions Precedent         11

3.2.         Sellers’ Conditions Precedent         12

3.3.         Purchaser’s Conditions Precedent         12

3.4.         Waiver of Conditions Precedent         13

3.5.         Cooperation         13

 

4.         Closing         14

4.1.         Closing         14

4.2.         Pre-Closing Acts         14

4.3.         Acts at Closing; Closing Deliverables         15

4.4.         Simultaneous Actions and Further Assurances         16

 

5.         Representations and Warranties         16

5.1.         Representations and Warranties of Sellers         16

5.2.         Representations and Warranties of Purchaser         18

5.3.         Waiver of Certain Representations and Warranties         19

 

6.         Indemnity         20

6.1.         Indemnification         20

6.2.         Limits on Indemnification         21

6.3.         Notice of Loss; Direct Claims; Third Party Claims         22

6.4.         Payment of Indemnifiable Losses         23

6.5.         Tax Effect of Payments         23

6.6.         Sole Remedies         23

6.7.         No Double Recovery         23

6.8.         Survival of Indemnification Obligation         24

 

7.         Additional Obligations and Covenants         24

7.1.         Further Actions; Ordinary Course of Business         24

7.2.         Public Announcements.         26

7.3.         Confidentiality         26

7.4.         Replacement of the Sellers as Representatives Before Governmental Authorities         27

7.5.         Tail         28

7.6.         Non-withhold of Payments         28

7.7.         Financial Reporting         29

7.8.         Use of the “SPAR” Trademarks         29

7.9.         SPAR Website         30

7.10.         Sellers’ Release         30

7.11.         Purchaser, Company and Business Companies’ Release         31

7.12.         Intervening Parties.         31

7.13.         No Shop & Fiduciary Out         32

7.14.         Existing Arbitration         32

7.15.         IP Rights         33

 

8.         Termination         33

8.1.         Grounds for Termination without Cause         33

8.2.         Effect of Termination         34

8.3.         Break-up Fee         34

 

9.         Choice of Law; Dispute Resolution         35

9.1.         Choice of Law         35

9.2.         Dispute Resolution         35

 

10.         Miscellaneous         36

10.1.         Entire Agreement         36

10.2.         Successors and Assignees         37

10.3.         Severability         37

10.4.         Amendments         37

10.5.         Waivers         37

10.6.         Expenses         37

10.7.         Notices         38

10.8.         Counterparts; PDF Signatures         39

 

* * *SHARE PURCHASE AGREEMENT

 

This share purchase agreement (“Agreement”), dated March 26, 2024 (“Execution Date”), is entered into by and between the following parties (“Parties”):

 

on one side, as sellers,

 

 

(i)

SPAR INTERNATIONAL LTD., a company organized and existing under the laws of the Cayman Islands, with its registered office at PO Box 32322, 4th Floor, Century Yard, Elgin Avenue, Cricket, George Town, Cayman Islands, enrolled with the Brazilian Taxpayers’ Registry (CNPJ/ME) under No. 25.351.383/0001-73 (“SPAR International”), hereby represented by its attorney-in-fact, Ms. Maria Alice Nogueira de Sá Pikielny Schmuziger, Brazilian, divorced, business manager, bearer of Identity Card RG No. 18437471-6, SSP/SP, registered with CPF/MF under No. 263.572.288-93, residing in the city of São Paulo, state of São Paulo, with a business address in the same city, at Rua Joaquim Floriano, No. 243, suite 72, Itaim Bibi, ZIP Code 04.534-010;

 

 

(ii)

SPAR GROUP INTERNATIONAL, INC., a company organized and existing under the laws of the State of Nevada, with its registered office at 202 South Minnesota Street, 89703 NV, Carson City, Nevada, United States of America, enrolled with the Brazilian Taxpayers’ Registry (CNPJ/ME) under No. 25.181.567/0001-32 (“SPAR Group” and, together with SPAR International, “Sellers”), hereby represented by its attorney-in-fact, Ms. Maria Alice Nogueira de Sá Pikielny Schmuziger, as qualified above;

 

on the other side, as purchaser,

 

 

(iii)

JK CONSULTORIA EMPRESARIAL LTDA., a Brazilian limited liability company, with its registered office at Rua Cubatão, 320, 5th floor, Vila Mariana, ZIP Code 04.012-911, in the City of São Paulo, State of São Paulo, enrolled with the Brazilian Taxpayers’ Registry (CNPJ/ME) under No. 22.119.968/0001-74, herein represented pursuant to its articles of association (“Purchaser” or “JK Consultoria”). 

 

as intervening and consenting parties,

 

 

(iv)

SGRP BRASIL PARTICIPAÇÕES LTDA., a Brazilian limited liability company with its registered office at Rua Cubatão, 320, 5th floor, Room 3, Vila Mariana, ZIP Code 04.012-911, in the City of São Paulo, State of São Paulo, enrolled with the Brazilian Taxpayers’ Registry (CNPJ/ME) under No. 25.037.586/0001-90, herein represented pursuant to its articles of association (“Company”); and

 

 

(v)

JONATHAN DAGUES MARTINS, Brazilian, single, with more than 18 years old, businessman, residing and domiciled in the City of São Paulo, State of São Paulo, at Rua Arapore, 655, Jardim Guedala, ZIP Code 05608-001, bearer of the identity card RG No. 32 731423 issued by SSP/SP and enrolled with the Brazilian Individual Taxpayers’ Registry (CPF/ME) under No. 300.588.148-25 (“Jonathan”).

 

And, as guarantors,

 

 

(vi)

SPAR BRASIL SERVIÇOS DE MERCHANDISING E TECNOLOGIA S.A., a Brazilian corporation with headquarters in the City of São Paulo, State of São Paulo at Rua Cubatão, 320, 5th floor, Room 01, Vila Mariana, ZIP-code 04.012-911, enrolled with the Brazilian Taxpayers’ Registry (CNPJ/MF) under No. 26.071.622/0001-02 (“SPAR Brasil”);

 

 

(vii)

SGRP SERVIÇOS LTDA., a Brazilian limited liability company with headquarters in the City of São Paulo, State of São Paulo at Rua Cubatão, 320, 5th floor, Room 02, Vila Mariana, zip-code 04012-911, enrolled with the CNPJ/MF under No. 26.520.012/0001-30 (“SGRP Serviços”);

 

 

(viii)

SPAR BRASIL SERVIÇOS LTDA., a Brazilian limited liability company with headquarters in the City of São Paulo, State of São Paulo at Rua Cubatão, No. 320, 5th floor, Vila Mariana, ZIP Code 04.012-911, enrolled with the Brazilian Taxpayers’ Registry (CNPJ/MF) under No. 04.285.644/0001-24 (“SPAR BS”).

 

 

(ix)

SPAR BRASIL SERVIÇOS TEMPORÁRIOS LTDA., a Brazilian limited liability company with headquarters in the City of São Paulo, State of São Paulo at Rua Coronel Xavier de Toledo, No. 114, Centro, ZIP Code 01048-902, enrolled with the Brazilian Taxpayers’ Registry (CNPJ/MF) under No. 02.859.937/0001-42 (“SPAR BST”); and

 

 

(x)

PLUS TRADE DO BRASIL PRESTAÇÃO DE SERVIÇOS LTDA., a Brazilian limited liability company with headquarters in the City of São Paulo, State of São Paulo at Rua Coronel Xavier de Toledo, No. 114, Rooms 211 to 215, Centro, ZIP Code 01.048-902, enrolled with the Brazilian Taxpayers’ Registry (CNPJ/MF) under No. 26.096.401/0001-80 (“Plus Trade” and, together with SPAR Brasil, SPAR BST, SPAR BS, and SGRP Serviços, “Business Companies”).

 

RECITALS

 

 

(i)

Whereas, on the date hereof, the Sellers are the sole holders and lawful owners of 100% (one hundred percent) of the shares representing the capital stock of the Company, fully subscribed and paid-in, free and clear of any Liens (“Shares”), allocated among them as follows:

 

Seller

Shares

%

SPAR International

4,999

99,98

SPAR Group

1

0,02

Total

5,000

100

 

 

(ii)

Whereas, subject to the terms and conditions set forth in this Agreement, especially the fulfillment (or waiver, as the case may be) of the Conditions Precedent (as defined below), Purchaser wishes to acquire the Shares from Sellers, and Sellers wish to sell and transfer the Shares to Purchaser, on the Closing Date (the “Transaction”);

 

 

(iii)

Now, therefore, in consideration of the mutual promises, covenants, and agreements contained herein, which, together with any exhibits and schedules attached hereto, constitute an integral part of this Agreement, the Parties agree as follows.

 

1.    Definitions and Interpretation

 

 

1.1.

Defined Terms

 

 

1.1.1.

For the purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, capitalized terms used in this Agreement and not defined in its preamble or sections shall have the meanings ascribed to them below:

 

“Acquisition Financing” has the meaning ascribed to it in Section 4.2.1.

 

“Acquisition Financing Notice” has the meaning ascribed to it in Section 4.2.2.

 

“Action” means any claim, action, suit, arbitration, inquiry, proceeding or investigation.

 

“Agreement” has the meaning ascribed to it in the Preamble.

 

“Affiliate” (including, with correlative meaning, the term “Affiliated”) means, with respect to any specified Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person, and any fund or investment vehicle, regardless of its nature/purpose, which is administered and or managed by such specified Person; and, also, with respect to any Person that is an individual, a spouse (whether current or former), co-vivant, parent, sibling (by birth or adoption), lineal descendants or ascendants up to the third degree of consanguinity.

 

“Alternate Transaction” has the meaning ascribed to it in Section 7.13.1.

 

“Anti-Corruption Laws” means any applicable Laws relating to anti-bribery, anti-corruption (governmental or commercial), terrorism financing or money laundering, including Laws that prohibit the corrupt payment, offer, promise, or authorization of the payment or transfer of anything of value (including gifts or entertainment), directly or indirectly, to any representative of a foreign Governmental Authority or commercial entity to obtain a business advantage, including the Law No. 12,846/2013, Decree No. 11,129/2022, the ordinances and normative instructions issued by the Controladoria Geral da União – CGU under the terms of the law and decree described above, Decree-Law No. 2,848/1940 (Brazilian Criminal Code), Law No. 9,613/1998 (Brazilian Anti-Money Laundering Law), Law No. 12,683/2012 (Brazilian Anti-Money Laundering Prevention Law), Law No. 8,429/1992 (Brazilian Administrative Improbity Law), Law No. 8,666/1993 and Law No. 14,133/2021 (Brazilian Public Biddings Laws), and Law No. 12,813/2012 (Brazilian Law on Conflict of Interest).

 

“Arbitration Center” has the meaning ascribed to it in the Section 9.2.1.

 

“Arbitration Settlement” has the meaning ascribed to it in Section 4.2.4.

 

“Brazilian Withholding Tax” means the withholding Tax applicable to the capital gain derived by Sellers upon the sale of the Shares pursuant to Federal Law No. 10,833 of December 29, 2003.

 

“Break-up Fee” has the meaning ascribed to it in the Section 8.3.1.

 

“Business Companies” means SPAR Brasil, SPAR BST, SPAR BS, SGRP Serviços, and Plus Trade when jointly referred.

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the city of São Paulo, State of São Paulo, Brazil.

 

“Civil Code” means Law No. 10,406, of January 10, 2002, as amended.

 

“Closing” has the meaning ascribed to it in Section 4.1.1.

 

“Closing Date” has the meaning ascribed to it in Section 4.1.2.

 

“Commercial Registry” means the Commercial Registry of the State of São Paulo (JUCESP – Junta Comercial do Estado de São Paulo).

 

“Company” has the meaning ascribed to it in Preamble.

 

“Conditions Precedent” has the meaning ascribed to it in Section 3.2.1.

 

“Confidential Information” has the meaning ascribed to it in Section 7.3.1.

 

“Control” (including, with correlative meanings, the terms “Controlling”, “Controlled by” and “under common Control with”) means, with respect to the relationship between or among two or more Persons, the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee, personal representative or executor or by contract.

 

“Deducted Expenses” has the meaning ascribed to it in Section 4.2.5.

 

“Execution Date” has the meaning ascribed to it in Preamble.

 

“Existing Arbitration” means the arbitration proceeding No. 06/2024/SEC9, filed before the Centro Arbitral da Câmara de Comercio Brasil-Canadá and any other lawsuits or injunctions related to the Royalties Amount.

 

“Governmental Authority” means any governmental, regulatory, self-regulatory or administrative authority, department, board, agency or commission or any court, tribunal or judicial or arbitral body, of any applicable jurisdiction.

 

“Indemnified Party” has the meaning ascribed to it in Section 6.1.1.

 

“Indemnifying Party” has the meaning ascribed to it in Section 6.1.1.

 

“Interim Period” has the meaning ascribed to it in Section 7.1.3.

 

“JK Consultoria” has the meaning ascribed to it in the Preamble.

 

“Jonathan” has the meaning ascribed to it in the Preamble.

 

“JV Agreement” has the meaning ascribed to it in Section 7.1.5(a).

 

“Law” means applicable law and any statute, ordinance, code or other law, rule, self-regulation rule, regulation, order, decree, technical or other standard, requirement or procedure enacted, adopted, promulgated, applied or followed by any Governmental Authority.

 

“Long Stop Date” has the meaning ascribed to it in Section 8.1.1.

 

“Loss” has the meaning ascribed to it in Section 6.1.1.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, royalties, assignments, restrictions, security interest, right of first refusal or first offer, options, warrants, calls, commitments or other agreements limiting or restricting its transfer, or other encumbrance of any nature whatsoever in respect of such asset.

 

“Material Adverse Effect – Purchaser” means any act, fact, event, or omission, or series of acts, facts, events, or omissions, that cause (i) the filing for self-bankruptcy, judicial or extrajudicial reorganization, liquidation, or dissolution of the Purchaser or its Controller; (ii) the request of the Purchaser’s or its Controller’s bankruptcy that is not dismissed within the legal deadline; (iii) the judicial declaration of the Purchaser’s or its Controller’s bankruptcy; or (iv) an Order against the Purchaser and/or its Controller and/or respective managers – in the case of the Controller and respective managers, provided they act in the name or for the benefit of the Purchaser – as a result of alleged violation of Anti-Corruption Law.

 

“Material Adverse Effect – Sellers” means any act, fact, event, or omission, or series of acts, facts, events, or omissions, that cause (i) the filing for self-bankruptcy, judicial or extrajudicial reorganization, liquidation, or dissolution of the Company; (ii) the request of the Company’s bankruptcy that is not dismissed within the legal deadline; (iii) the judicial declaration of the Company’s bankruptcy; or (iv) an Order against any of the Sellers and/or any of their Controllers and/or respective managers – in the case of Controllers and respective managers, provided they act in the name or for the benefit of the respective Seller – as a result of alleged violation of Anti-Corruption Law.

 

“New Articles of Association” means the amendment to the Company’s articles of association to be executed at Closing, in the form of Exhibit 4.3.1(ii).

 

“Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

 

“Ordinary Course of Business” shall mean the ordinary and usual course of the Company’s business, conducted in a manner consistent with its respective past practices.

 

“Parties” has the meaning ascribed to it in the Preamble.

 

“Parties’ Conditions Precedent” has the meaning ascribed to it in Section 3.1.1.

 

“Permits” means all authorizations, approvals, permits or licenses of any Governmental Authority or an applicable market self-regulatory body with jurisdiction over the Company, required for the conduction of the business of a Person.

 

“Person” means any individual, partnership, firm, corporation, company, limited liability company, voluntary or other association, fund, condominium, trust, joint venture, unincorporated organization or other entity or Governmental Authority.

 

“Plus Trade” has the meaning ascribed to it in the Preamble.

 

“Purchase Price” has the meaning ascribed to it in Section 2.2.1.

 

“Purchaser” has the meaning ascribed to it in the Preamble.

 

“Purchaser’s Conditions Precedent” has the meaning ascribed to it Section 3.3.1.

 

“Purchaser’s Indemnified Persons” has the meaning ascribed to it in Section 6.1.3.

 

“Related Party” has the meaning set forth in the Pronunciamento Técnico CPC 5 do Comitê de Pronunciamentos Contábeis, approved by the Resolution No. 560/08 of CVM.

 

“Remittance Costs” has the meaning ascribed to it in Section 2.3.2.

 

“Representatives” means, with respect to one Person, its officers, managers, directors and employees which have powers to practice the referring act.

 

“Royalties Amount” means the amount of USD 2,012,969.00 (as converted to Brazilian Reais in accordance with the exchange rate informed by the Brazilian Central Bank at the Royalties Resolution Notice date) as per the royalty fee invoice issued by SPAR Group on December 31, 2023.

 

“Royalties Resolution Notice” has the meaning ascribed to it in Section 4.2.4.

 

“SEC” has the meaning ascribed to in Section 3.5.1.

 

“Sellers” has the meaning ascribed to it in the Preamble.

 

“Sellers’ Conditions Precedent” has the meaning ascribed to it in Section 3.2.1.

 

“Sellers’ Indemnified Persons” has the meaning ascribed to it in Section 6.1.2.

 

“SGRP Serviços” has the meaning ascribed to it in the Preamble.

 

“Shares” has the meaning ascribed to it in the Recitals.

 

“SPAR Brasil” has the meaning ascribed to it in the Preamble.

 

“SPAR BS” has the meaning ascribed to it in the Preamble.

 

“SPAR BST” has the meaning ascribed to it in the Preamble.

 

“Survival Period” has the meaning ascribed to it in Section 6.8.1.

 

“Tail” has the meaning ascribed to it in Section 7.5.1.

 

“Tail Period” has the meaning ascribed to it in Section 7.5.2.

 

“Tail Value” has the meaning ascribed to it in Section 7.5.1.

 

“Taxes” means all taxes, charges, fees, contributions, social contributions, labor related contributions, levies or other assessments (including related interest, penalties, fines and additions) imposed by any Governmental Authority of any jurisdiction, whether federal, state, municipal, or another political subdivision thereof.

 

“Third Party” shall mean any party, which is not a Party to this Agreement, including any Governmental Authority.

 

“Third-Party Claim” has the meaning ascribed to it in Section 6.3.2.

 

“Trademarks” has the meaning ascribed to it in Section 7.8.1.

 

“Transaction” has the meaning ascribed to it in the Recitals.

 

 

1.2.

Rules of interpretation

 

 

1.2.1.

The following rules shall apply to the interpretation of this Agreement:

 

 

(i)

References ‘to this Agreement’ refer to this Agreement as a whole, including its exhibits, schedules and amendments thereto.

 

 

(ii)

The words ‘hereof’, ‘herein’, ‘hereby’, ‘hereunder’ and words of similar import, when used in this Agreement, refer to this Agreement as a whole, and not to any particular provision of this Agreement.

 

 

(iii)

When a reference is made in this Agreement to a section, exhibit or schedule, such reference is to a section of, or an exhibit or schedule to, this Agreement.

 

 

(iv)

The table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meanings or interpretation of this Agreement.

 

 

(v)

Whenever the words ‘include’, ‘includes’ or ‘including’ are used in this Agreement, they are deemed to be followed by the words ‘without limitation’.

 

 

(vi)

The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms, as well as to any of its genders.

 

 

(vii)

All terms defined in this Agreement shall have their defined meanings when used in any certificate or other document delivered or made available pursuant hereto, unless otherwise defined therein.

 

 

(viii)

References to any laws and regulations shall be construed as references to such laws and regulations as amended or re-enacted or as their application may be modified from time to time by other provisions (whether before or after the Closing Date).

 

 

(ix)

References to any document (including this Agreement) are references to such document as amended, consolidated, supplemented, novated or replaced from time to time.

 

 

(x)

References to a Person are also to its successors and permitted assignees.

 

 

(xi)

Except if otherwise indicated herein, references to any time or periods shall be considered as references to the number of days lapsed, considering that all time and periods provided herein are counted excluding the date of the event which caused the beginning of the said time or period and including the last day of the time or period in question. All terms and periods established in this Agreement that do not end on a Business Day, shall be automatically extended to the first subsequent Business Day.

 

 

(xii)

The information and disclosures contained herein shall be deemed to be disclosed and incorporated by reference in each other Sellers’ disclosure set forth herein as though fully set forth in such other schedule. In no event shall the listing of items or matters in the section be deemed or interpreted to broaden, or otherwise expand the scope of, the representations and warranties or covenants contained in this Agreement.

 

 

(xiii)

Each of the Parties acknowledges that it has been represented by independent counsel of its choice throughout all negotiations that have preceded the execution of this Agreement and that it has executed the same with consent and upon the advice of said independent counsel. Each Party hereto and its counsel cooperated in the drafting and preparation of this Agreement, and this Agreement shall be deemed the work product of the Parties and may not be construed against any Party by reason of its preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against the party that drafted it is of no application and is hereby expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to put into effect the intentions of the parties hereto and this Agreement.

 

2.    Transaction

 

 

2.1.

Purchase and Sale

 

 

2.1.1.

On the Closing Date, in accordance with the terms and subject to the conditions of this Agreement, including the fulfillment (or waiver, as applicable) of the Conditions Precedent, Purchaser hereby, on an irrevocable and irreversible basis, agrees to purchase and undertakes to receive from Sellers, and Sellers hereby, on an irrevocable and irreversible basis, agree to sell and undertake to transfer, assign, and convey to Purchaser, 100% (one hundred percent), on a fully diluted basis, of the Shares directly held by Sellers on the Closing Date, free and clear of any Liens, along with the respective rights inherent to them. The number of Shares will be automatically adjusted to reflect any issuance or cancellation (as a result of any other capital increase or decrease, redemption or repurchase of shares or otherwise) until Closing, which shall not affect the overall Purchase Price set forth in Section 2.2 and subsequent applicable provisions.

 

 

2.2.

Purchase Price

 

 

2.2.1.

In consideration of the purchase of the Shares, Purchaser shall pay to Sellers a total amount of BRL 58,874,400.00 (fifty-eight million, eight hundred and seventy-four thousand and four hundred Brazilian reais) (“Purchase Price”), in a single installment due on Closing Date, and adjusted pursuant to Section 2.3 and Section 4.2.4. 

 

 

2.2.2.

Except for the adjustments set forth in Section 2.3, Section 4.2.4 and Section 4.2.5, the Purchase Price payable by Purchaser in connection with the Transaction shall not be subject to post-Closing net debt and working capital adjustments.

 

 

2.2.3.

The Purchase Price shall be paid to the Sellers by means of wire transfers of immediately available funds in Brazilian Reais to their respective bank accounts and according to the allocation duly informed (2) Business Days after receiving the Acquisition Financing Notice from Purchaser.

 

 

2.2.4.

Evidence of the deposit by Purchaser of the Purchase Price into the bank accounts of the Sellers, shall serve as a receipt for all legal purposes and effects, and constitute full, general and irrevocable release and discharge granted by the Sellers in favor of the Purchaser, with waiver of all claims that may arise with respect to the amount reflected in the proof of deposit.

 

 

2.3.

Taxes and Remittance Costs

 

 

2.3.1.

The Parties acknowledge and agree that Federal Law No. 10,833 of December 29 and Federal Law No. 9,249 of December 26, 1995, 2003, as amended, requires that Purchaser withholds and pays on behalf of Sellers, as applicable, the amount of the Brazilian Withholding Tax levied on the sale of the Shares by Sellers. In view of the foregoing:

 

 

(i)

Sellers shall deliver to Purchaser within two (2) Business Days after receiving the Acquisition Financing Notice from Purchaser a statement with the amount and related calculation of the applicable Brazilian Withholding Tax at the time of payment of the Purchase Price. Purchaser shall (a) withhold from the Purchase Price the Brazilian Withholding Tax specified in writing by Sellers; (b) declare and make all filings in connection with the Brazilian Withholding Tax in accordance with applicable Tax Law and the procedures established in respect thereof by the applicable Governmental Authority; and (c) pay the amount of so withheld to the applicable Governmental Authority in compliance with the Brazilian Withholding Tax obligation.

 

 

(ii)

The withholding of the Brazilian Withholding Tax indicated by Sellers shall be made on the Closing Date based on the applicable rate and term set forth in applicable Law. Purchaser shall deliver to Sellers reasonably satisfactory written evidence to such Sellers that the amount withheld by Purchaser from the Purchase Price has been declared and paid to the applicable Governmental Authority in compliance with the Brazilian Withholding Tax obligation, including the DARF – Documento de Arrecadação de Receitas Federais forms prepared based on the calculation of the Brazilian Withholding Tax provided by Sellers.

 

 

(iii)

Sellers shall indemnify and hold Purchaser harmless from and against any losses, damages, liabilities, obligations, assessments, payments, costs and expenses, interest, penalties or fines that may be incurred by Purchaser arising from the miscalculation of the Brazilian Withholding Tax or from the assignment of any obligations by any of the Sellers to an Affiliate under Section 10.2.

 

 

2.3.2.

Notwithstanding the foregoing, the Parties hereby agree that any and all banking fees and other remittance expenses in connection with or arising from the payment of any amounts due by Purchaser to Sellers pursuant to this Agreement, shall be borne exclusively by Sellers, and shall be offset from any amounts due by Purchaser to Sellers under this Agreement (“Remittance Costs”), including, but not limited to the IOF Tax (Imposto sobre Operações Financeiras) levied on the conversion of BRL into foreign currency and on the applicable international wire transfers of funds.

 

3.    Conditions Precedent

 

3.1.    Parties’ Conditions Precedent

 

 

3.1.1.

The Closing and the obligation of the Parties to consummate the actions related thereto, as provided for in Section 4.3, are subject to the fulfillment, as per article 125 of the Civil Code, on or prior to Closing, of the following conditions (“Parties’ Conditions Precedent”):

 

 

(i)

Prohibition. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered into any Law or Order that has the effect of prohibiting the consummation of the Transaction.

 

 

3.2.

Sellers’ Conditions Precedent

 

 

3.2.1.

The Closing and the obligation of the Sellers to consummate the actions related thereto, as provided for in Section 4.3, are subject to the fulfillment, as per article 125 of the Civil Code, on or prior to Closing, of the following conditions (“Sellers’ Conditions Precedent”):

 

 

(i)

Record of Royalty Payment Invoice. As officer of SPAR Brasil, Jonathan shall cause the accounting team of SPAR Brasil to record the Royalty Amount on the SPAR Brasil or the Business Companies’ financial books for 2023 as an expense as part of closing the 2023 financials as per the Exhibit 3.2.1 (i) until March 26, 2024, provided that Sellers shall take any and all necessary actions, and sign all documents and forms, required for implementing such condition precedent.

 

 

(ii)

Covenants and Obligations of Purchaser. Purchaser shall have performed and/or complied with all covenants and obligations required by this Agreement to be performed or complied with by it at or prior to the Closing.

 

 

(iii)

Representations of Purchaser. Each of the representations and warranties made by Purchaser in Section 5.2 shall be true and correct in all material aspects as of the date hereof and as of the Closing Date, as though made on and as of each of such dates (except in the case of any representation and warranty that, by its terms, is made as of a date specified therein, which shall be true and correct as of such date).

 

 

(iv)

Material Adverse Effect – Purchaser. A Material Adverse Effect – Purchaser shall not have occurred and is continuing.

 

3.3.    Purchaser’s Conditions Precedent

 

 

3.3.1.

The Closing and the obligation of the Purchaser to consummate the actions related thereto, as provided for in Section 4.3, are subject to the fulfillment, as per article 125 of the Civil Code, on or prior to Closing, of the following conditions (“Purchaser’s Conditions Precedent” and, together with the Parties’ Conditions Precedent and Sellers’ Conditions Precedent, the “Conditions Precedent”):

 

 

(i)

Sufficient Funds. Purchaser should have obtained the Acquisition Financing, or should have obtained any other funds, to pay the Purchase Price and complete the Transaction.

 

 

(ii)

Third Party Consents. The Business Companies shall have obtained the consents listed in Exhibit 3.3.1 (ii), which are necessary for the transfer of the Shares as a result of the Transaction.

 

 

(ii)

Covenants and Obligations of Sellers and Company. Sellers and the Company shall have performed and/or complied, with all covenants and obligations required by this Agreement to be performed or complied with by them at or prior to the Closing.

 

 

(iii)

Representations and Warranties of Sellers. Each of the representations and warranties made by the Sellers in Section 5.1.1 shall be true and correct in all material aspects, in each case as of the date hereof and as of the Closing Date, as though made on and as of each of such dates (except in the case of any representation and warranty that by its terms is made as of a date specified therein, which shall be true and correct as of such date);

 

 

(iv)

Material Adverse Effect – Sellers. A Material Adverse Effect – Sellers shall not have occurred and is continuing.

 

 

3.4.

Waiver of Conditions Precedent

 

 

3.4.1.

To the extent legally possible, (i) Purchaser and Sellers may jointly waive the satisfaction of any of the Parties’ Conditions Precedent, (ii) Purchaser may unilaterally waive the satisfaction of any of the Purchaser’s Conditions Precedent, and (iii) Sellers may unilaterally waive the satisfaction of any of the Sellers’ Conditions Precedent. Waivers of Conditions Precedent must be formalized in writing by the waiving Party(ies). The right of each of the Parties to waive certain Conditions Precedent pursuant to this Section 3.4.1 shall not affect such Party’s right to seek indemnification for Losses incurred pursuant to Section 6.

 

 

3.5.

Cooperation

 

 

3.5.1.

The Parties shall cooperate proactively and in good faith to fulfill all Conditions Precedent, including, without limitation, by providing documents and information whenever requested and/or necessary. Besides, the Purchaser and Jonathan (as officer of SPAR Brasil and according to its duties set forth by Law) agree to cooperate with the Company, the Sellers’ and their controlling shareholders in providing any necessary information requested by the US Securities and Exchange Commission (“SEC”) in relation to the Transaction, provided that such information shall be limited to those required by Law or by SEC.

 

4.    Closing

 

 

4.1.

Closing

 

 

4.1.1.

Subject to the terms and conditions set forth herein, including the fulfillment of the Conditions Precedent (or should they be waived, as provided for herein), the consummation of the obligations set forth in Section 4.3 (“Closing”) shall occur in the city of São Paulo, State of São Paulo, on a place and time to be mutually agreed among the Parties, within five (5) Business Days after the fulfilment or written waiver of the Conditions Precedent set forth in Section 3 are satisfied and/or waived (other than those which can only be satisfied upon Closing).

 

 

4.1.2.

Notwithstanding the above, the Parties may mutually agree to hold the Closing at any other time and/or place. The date on which Closing takes place, the “Closing Date”.

 

 

4.1.3.

The Parties may also request that the Closing be carried out remotely, by signing documents electronically or by granting powers of attorney to sign documents that are exclusively physical.

 

 

4.2.

Pre-Closing Acts

 

 

4.2.1.

Pursuant to Section 3.3.1(i), the Parties acknowledge and agree that Purchaser is negotiating with financial institutions a loan to secure payment of the Purchase Price and, therefore, for implementing the Transaction, subject to the terms and conditions set forth herein (“Acquisition Financing”).

 

 

4.2.2.

In the context of the Acquisition Financing, the Parties hereby acknowledge and agree that Purchaser may, at its sole discretion, request that (i) the Business Companies are party (debtors) or guarantors of the Acquisition Financing; and/or (ii) the Parties implement the acts set forth in Exhibit 4.2.2. Purchaser shall notify Sellers of the execution of a binding loan agreement to implement the Acquisition Financing within (1) Business Day (“Acquistion Financing Notice”), including a letter issued by the financial institution attesting that documents were signed and funds will be released upon Purchaser’s and/or the Business Companies’ request, as the case may be.

 

 

4.2.3.

Upon written request by Purchaser, Sellers hereby agree to take all necessary actions so that the Company approves the steps required for implementing the acts set forth in Exhibit 4.2.2, including, but not limited to corporate resolutions and/or amendments to this Agreement to include one or more of the Business Companies as purchaser of the Shares and/or causing the Business Companies to sign documents relating to the Acquisition Financing as debtors and/or guarantors.

 

 

4.2.4.

In case the Parties are not able to reach a settlement in relation to the Existing Arbitration during the Interim Period (the “Arbitration Settlement”), within three (3) Business Days prior to the Closing Date, Purchaser shall notify Sellers informing the Royalties Amount that shall be paid at Closing (“Royalties Resolution Notice”), in which case (i) SPAR Brasil shall pay SPAR Group as per the royalty fee invoice issued by SPAR Group on November 20, 2023; and (ii) the Purchase Price to be paid by Purchaser to Sellers in connection with the acquisition of the Shares shall be reduced by the Royalties Amount (including any Taxes relating to the Royalties Amount).

 

 

4.2.5.

Within two (2) Business Days prior to the Closing Date, Sellers shall deliver to Purchaser proof of payment of any costs, fees and expenses due by the Company in the context of the Existing Arbitration, including, but not limited to attorney and court fees. If Sellers fail to deliver such proof of payment, the Parties hereby acknowledge and agree that Purchaser is entitled to deduct an amount equivalent to BRL 383,027.12 (three hundred eighty-three thousand twenty-seven Brazilian Reais and twelve cents) to pay for such costs, fees and expenses (“Deducted Expenses”).

 

 

4.3.

Acts at Closing; Closing Deliverables

 

 

4.3.1.

On the Closing Date the following actions shall take place, all of which to be considered effective as if happened simultaneously:

 

 

(i)

Payment of the Purchase Price. Purchaser shall pay the Purchase Price to Sellers, as adjusted pursuant to Section 2.3, Section 4.2.4 and Section 4.2.5.

 

 

(ii)

Transfer of Shares. The Parties shall enter into an amendment to the articles of association of the Company in the form of Exhibit 4.3.1(ii) (the “New Articles of Association”), by means of which the Shares are transferred by Sellers to Purchaser in accordance with the terms set forth herein.

 

 

(iii)

Resignation and Election of Officers. Purchaser shall appoint new executive officers to the Company in replacement of its current officer, which should be addressed in the New Articles of Association. Sellers shall deliver to Purchaser signed originals of the written dismissals or resignation (with full discharge to the Company) of the officers of the Company and SPAR Brasil’s directors appointed by the Sellers in the form of Exhibit 4.3.1(iii), provided that in no event shall the Company or the Purchaser be required to pay any severance or other related amount to any such officers due to or in connection with such dismissals or resignations after the Closing.

 

 

(iv)

Power of Attorney. The Company shall grant a power of attorney with managerial powers to the individuals appointed by the Purchaser in the form of Exhibit 4.3.1 (iv).

 

 

(v)

Corporate Records, Guidelines and Internal Policies. Sellers shall deliver to the Purchaser all corporate and fiscal documents of the Company, as applicable.

 

 

(vi)

Change in Corporate Name. The Company shall change its corporate name to exclude any reference to “SGRP”, which should be addressed in the New Articles of Association, mentioned on Section 4.3.1 (ii).

 

 

(vii)

Closing Memorandum. The Parties shall enter into a Closing memorandum documenting the facts occurred at the Closing and declaring to each other that: (a) the declarations and warranties granted by each of them remain true and correct, under the terms set forth in Sections 5.1 and 5.2; (b) they have complied with all obligations prior to the Closing applicable to them; and (c) the other Conditions Precedent applicable to each of the Parties have been complied with (or waived, if legally permitted).

 

 

4.4.

Simultaneous Actions and Further Assurances

 

 

4.4.1.

All actions required to be taken at Closing shall be deemed to occur simultaneously. No Party hereto shall have any obligation to consummate any of the actions referred to in Section 4.3, unless all such actions shall have been consummated, with due regard to the provisions set forth in such Section, or waived by all the Parties in writing, and, if any Party fails to take any action required to be taken at Closing and such performance is not waived by the other Parties, all actions effectively taken at Closing shall be deemed null and void and each Party shall take such further action as may be reasonably required to undo and unwind any action taken at Closing.

 

 

4.4.2.

The Parties shall execute or cause to be executed, such other instruments of conveyance, assignment and transfer and will take or cause to be taken such other actions to consummate the Closing, provided that such action is in accordance with applicable Laws and/or Orders.

 

5.    Representations and Warranties

 

 

5.1.

Representations and Warranties of Sellers

 

 

5.1.1.

Sellers hereby represent and warrant to Purchaser that each of the following representations and warranties is, as of the date hereof, true and correct:

 

 

(i)

Capacity, Authorization and Binding Obligation. Sellers have all requisite legal power and authority to execute, deliver and perform their obligations under this Agreement, and to consummate the transactions contemplated hereby. The execution, delivery and performance by Sellers of this Agreement, and the consummation by Sellers of the transactions contemplated hereby, has been duly and validly authorized, and no other proceedings on the part of Sellers is necessary to authorize the execution, delivery and performance by Sellers of this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Sellers and, assuming due authorization, execution and delivery by the other Parties hereto, constitutes a valid and binding obligation of Sellers, enforceable against Sellers in accordance with its terms (except as may be limited by Laws of general applicability relating to or affecting the rights of creditors generally).

 

 

(ii)

No Conflict or Violation. The execution, delivery and performance by Sellers of this Agreement, and the consummation by Sellers of the transactions contemplated hereby, (a) do not violate any Law to which the Sellers are subject, (b) do not require a consent or approval (other than those consents and approvals already obtained) under, conflict with, result in a violation or breach of, or constitute a default under any contract to which the Sellers are parties or by which their assets or properties may be bound or affected, and (c) do not violate the corporate documents of Sellers.

 

 

(iii)

Governmental Approval. No notification to, or authorization, consent or approval of any applicable Governmental Authority is required in connection with the execution, delivery and performance of this Agreement by the Sellers.

 

 

(iv)

Ownership of Shares. Sellers are the sole beneficial and record owners of, and have good, valid and marketable title to, all of the Shares, all of which fully paid in, free and clear of all Liens or any other restrictions on transfer. Upon consummation of the Transaction contemplated hereby, the Purchaser will own, directly or indirectly, all of the Shares, free and clear of all Liens. The Sellers are not obligated in relation to any Person according to any contract, commitment, or act to sell, assign, transfer, subscribe, acquire or alienate the Shares. All of the Shares were issued in compliance with applicable Laws, and none were issued in violation of any agreement, arrangement or commitment to which the Company is a party. As of this date, there is no existing instrument convertible into any shares or stock of the Company by Sellers or any Third Party.

 

 

(v)

Brokers’ Fees. No broker, investment banker or financial advisor is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with this Agreement or the transactions contemplated hereby based upon arrangements made by or on behalf of Sellers or the Company.

 

 

(vi)

Legal Proceedings. As of the date hereof, the Sellers have not received any judicial or extrajudicial notice or summon about any Action against the Sellers that would, if adversely determined, impede or otherwise prohibit or make illegal the consummation of the Closing.

 

 

(vii)

Compliance. Sellers and their Representatives are in compliance with the Anti-Corruption Laws and have instituted and maintain adequate policies and procedures to promote and achieve compliance with such laws. Sellers have not been charged with or been subject to investigation for potential violations of Anti-Corruption Laws and there has been no facts or circumstances that may give rise to an investigation in relation to the Sellers or the Transaction.

 

 

(viii)

Holding Activities. The Company is solely a holding entity and does not engage in any operational activities, business transactions, or any form of commercial activity. The Company's primary purpose is the holding of interests in SPAR Brasil and except for the shares in the Business Companies, the Company does not hold any equity interest in another Person. The Company (i) has no employees; (ii) except as included in Exhibit 5.1.1(viii), is not party to any agreement executed after the date in which Jonathan ceased to be an officer of the Company (provided that, at the Closing Date, the Company shall have paid any and all amounts due in connection with the Private Instrument of Assignment of Credit and shall have obtained full release from the counterparties in connection with all of its obligations therein); and (iii) does not generate any revenue from its own operations. Its activities are limited to the ownership and management of its investments, and it does not intend to undertake any operational roles or engage in any business activities other than those directly related to its function as a holding entity.

 

 

(ix)

Knowledge of Facts. The Sellers and the Company are not aware of any facts, circumstances, acts, or situations, nor do they have any reason to believe that they exist or may come to exist, which in any way would impair, prevent, or affect the Transaction and the documents related to it.

 

 

5.2.

Representations and Warranties of Purchaser

 

 

5.2.1.

Purchaser hereby represents and warrants to the Sellers that each of the following representations and warranties is, as of the date hereof (except if reference to an specific date is included), true and correct:

 

 

(i)

Capacity, Authorization and Binding Obligation. Purchaser has all requisite legal power and authority to execute, deliver and perform its obligations under this Agreement, and to consummate the transactions contemplated hereby. The execution, delivery and performance by Purchaser of this Agreement, and the consummation by Purchaser of the transactions contemplated hereby, have been duly and validly authorized, and no other proceedings on the part of Purchaser are necessary to authorize the execution, delivery and performance by Purchaser of this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by Purchaser and, assuming due authorization, execution and delivery by the other Parties hereto, constitutes a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms (except as may be limited by Laws of general applicability relating to or affecting the rights of creditors generally).

 

 

(ii)

No Conflict or Violation. The execution, delivery and performance by Purchaser of this Agreement, and the consummation by Purchaser of the transactions contemplated hereby, (a) do not violate any Law to which Purchaser is subject, (b) do not require a consent or approval under, conflict with, result in a violation or breach of, or constitute a default under, result in the acceleration of, or create in any party the right to accelerate, terminate or cancel any material contract to which Purchaser or any of its Affiliates is a party or by which its assets or properties may be bound or affected, and (c) do not violate the corporate documents of Purchaser.

 

 

(iii)

Governmental Approval. No notification to, or authorization, consent or approval of any applicable Governmental Authority is required in connection with the execution, delivery and performance of this Agreement by Purchaser.

 

 

(iv)

Sufficient Funds. As of the Closing Date, Purchaser shall have sufficient immediately available funds, free and clear from any Liens, to perform its payment obligations under this Agreement.

 

 

(v)

Legal Proceedings. The Purchaser has not received any judicial or extrajudicial notice or summon about any Actions against Purchaser or any of its Affiliates that would, if adversely determined, impede or otherwise prohibit or make illegal the consummation by Purchaser of the transactions contemplated herein.

 

 

(vi)

Compliance. Purchaser and its Representatives are in compliance with the Anti-Corruption Laws and have instituted and maintain adequate policies and procedures to promote and achieve compliance with such laws. Purchaser has not been charged with or been subject to investigation for potential violations of Anti-Corruption Laws and there has been no facts or circumstances that may give rise to an investigation in relation to the Purchaser or the Transaction.

 

 

5.3.

Waiver of Certain Representations and Warranties

 

 

5.3.1.

The Sellers make no other representations or warranties whatsoever related to the Company or the Business Companies (whether respecting its value, business, assets, liabilities or otherwise), and none shall be implied, including in relation to the Business Companies; the Parties hereby absolutely, unconditionally, irrevocably and expressly waive every such representation and warranty in respect of the Business Companies.

 

 

5.3.2.

Except as expressly set forth in this Agreement, the Sellers make no representation or warranty whatsoever in respect of the Shares or otherwise, whether express or implied or by operation of Law, and none shall be implied; and the other Parties hereby absolutely, unconditionally, irrevocably, and expressly waive every such representation and warranty.

 

 

5.3.3.

Except as expressly set forth in this Agreement, the Sellers have not directly or indirectly made or otherwise provided, and the Purchaser and the Company have not received or acted or relied upon, any representation, warranty, promise, assurance or other agreement, understanding or information (whether written, electronic, oral, express, implied or otherwise) from or on behalf of the Sellers, any other Affiliate of the Sellers or any of their respective Representatives, in respect of any of the matters contained in this Agreement.

 

6.    Indemnity

 

6.1.    Indemnification

 

 

6.1.1.

Each Party, and its respective Affiliates and Representatives (each an “Indemnified Party”) shall from and after the Closing be indemnified and held harmless by the other(s) Party(ies) (“Indemnifying Party”) for and against any and all losses, damages, claims, costs and expenses, awards, judgments and penalties (including reasonable attorneys’ and consultants’ fees and expenses) actually suffered or incurred by them (subject to Section 6.2.2) (hereinafter a “Loss”), arising out of or resulting from (i) the breach of any representation or warranty made under this Agreement; or (ii) the breach of any covenant or agreement assumed under this Agreement.

 

 

6.1.2.

In addition to the indemnification provided for in Section 6.1.1, from and after the Closing, the Purchaser and the Company hereby jointly and severally indemnify, and on Sellers’ demand, shall reimburse, defend and hold harmless, the Sellers, their Affiliates and Representatives (each a “Sellers’ Indemnified Persons” or simply “Indemnified Party” when interchangeably with the above) harmless against any and all Losses arising from or in connection with:

 

 

(i)

acts, facts, events, Actions or omissions related to the Company or the Business Companies (or their activities) and originated from a date after the Closing Date;

 

 

(ii)

acts, facts, events, Actions or omissions related to the Business Companies (or their activities) that occurred prior to the Closing Date, regardless of whether or not they are known or unknown, ongoing or pending, disclosed or not disclosed during the negotiation of the Transaction;

 

 

(iii)

acts, facts, events, Actions or omissions related to or deriving from the Existing Arbitration and originated previously or after the Closing Date, including in what relates to the payment of the Royalties Amount and any reversal of its accrual by SPAR Brasil or the Business Companies, as applicable;

 

 

(iv)

acts, facts, events, Actions or omissions related to the Acquisition Financing, including any Losses suffered by the Business Companies as a result of the Acquisition Financing if prior to Closing; and

 

 

(v)

any act or omission by the Purchaser (and its Affiliates), the Company, the Business Companies and/or any of their respective Representatives constituting fraud, negligence, willful misconduct or a violation of applicable Law.

 

 

6.1.3.

In addition to the indemnification provided for in Section 6.1.1, from and after the Closing, the Sellers hereby jointly and severally agree to indemnify, and on Purchaser’s demand, shall reimburse, defend and hold harmless, Purchaser, its Affiliates and Representatives (each a “Purchaser’s Indemnified Persons” or simply “Indemnified Party” when interchangeably with the above) harmless against any and all Losses arising from or in connection with:

 

 

(i)

acts, facts, events, Actions or omissions related to the Company, its Affiliates (other than those of the Business Companies or their activities) or their activities that occurred prior to the Closing Date, even if the consequences of such acts, facts, events, Actions or omissions have occurred after the Closing Date, regardless of whether or not they are known or unknown, ongoing or pending, disclosed or not disclosed during the negotiation of the Transaction;

 

 

(ii)

costs, attorneys’ fees or expenses relating to the Existing Arbitration, which were assumed by the Company and/or its Affiliates prior to the Closing Date (provided that Sellers shall not indemnify for any Deducted Expenses); or

 

 

(iii)

any act or omission by the Sellers, the Company, its Affiliates prior to Closing (other than the Business Companies) and/or any of their respective Representatives constituting fraud, negligence, willful misconduct or a violation of applicable Law.

 

 

6.2.

Limits on Indemnification

 

 

6.2.1.

Locked Box. The Sellers shall not have any liability under this Agreement for any a Losses incurred by the Purchaser, and its respective Affiliates or Representatives, arising out of or resulting from any and all acts, facts, omissions, events and/or circumstances which relate to the Business Companies, or the relevant businesses, which occurred on or before the Closing Date, whether known or unknown, disclosed or not disclosed during the negotiation of the Transaction.

 

 

6.2.2.

No Consequential Damages. None of the Parties shall have any liability under any provision of this Agreement for any punitive, incidental, consequential, special or indirect damages, including moral damages, loss of future profits, revenue or income or loss of business opportunity relating to the breach or alleged breach of this Agreement, regardless of whether such damages were foreseeable, which shall not be considered a Loss for the purposes of this Agreement.

 

 

6.2.3.

Mitigation of Losses. Each Party hereto shall, and shall cause its respective Affiliates and Representatives to, take all reasonable steps to mitigate its Losses upon and after becoming aware of any event that could reasonably be expected to give rise to any Losses, and no Party shall be entitled to any payment, adjustment or indemnification more than once with respect to the same matter.

 

 

6.3.

Notice of Loss; Direct Claims; Third Party Claims

 

 

6.3.1.

Direct Claims. If an Indemnified Party determines a matter has given or could give rise to a right of indemnification under this Section 6, it shall give the Indemnifying Party written notice as per Section 10.7 below, in reasonable detail of such matter, stating the amount of the Loss, if known, and method of calculation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises.

 

 

6.3.2.

Third-Party Claims. If an Indemnified Party receives notice of any Action, audit or assessment against it or any Affiliate or Representative thereof (each, a “Third-Party Claim”), which may give rise to a claim for Loss under this Section 6, within 10 (ten) days of the receipt of such notice (or within such shorter period as may be required to permit the Indemnifying Party to respond to any such claim), the Indemnified Party shall give the Indemnifying Party written notice of such Third-Party Claim as per Section 10.7 below together with copies of all notices and documents served on or received by the Indemnified Party in respect thereof. The Indemnifying Party shall be entitled to assume and control the defense of such Third-Party Claim at its expense and through counsel of its choice if it gives notice of its intention to do so to the Indemnified Party within 10 (ten) days of the receipt of such notice from the Indemnified Party (or within such shorter period as may be required to respond to any such claim). If the Indemnifying Party elects to undertake any such defense against a Third-Party Claim, the Indemnified Party (i) may participate in such defense at its own expense; (ii) shall cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, all witnesses, pertinent records, materials and information in the Indemnified Party’s possession or under its control relating thereto (or in the possession or control of any of its Affiliates or its or their Representatives or legal counsel) as it is reasonably requested by the Indemnifying Party or its counsel; and (iii) shall not pay, or permit to be paid, any part of such Third-Party Claim unless the Indemnifying Party consents in writing to such payment, the Indemnifying Party withdraws from the defense of such Third-Party Claim, or a final judgment from which no appeal may be taken by or on behalf of the Indemnifying Party is entered against the Indemnified Party for such Third-Party Claim. If the Indemnified Party assumes the defense of any such Third-Party Claim and at any time intends to settle such Third-Party Claim prior to a final judgment thereon or to forgo any appeal with respect thereto, then the Indemnified Party shall give the Indemnifying Party prompt written notice thereof and the Indemnifying Party shall have the right to participate in the settlement or assume or reassume the defense of such Third-Party Claim. The Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge any Third-Party Claim without the Indemnifying Party’s prior written consent. The Indemnifying Party shall have the right to settle any Third-Party Claim for which (a) it obtains a full release of the Indemnified Party in respect of such Third-Party Claim and to the extent that the settlement is limited to monetary payments and does not create any kind of obligation or negative precedent to the Indemnified Party; or (b) to which settlement the Indemnified Party consents in writing, such consent not to be unreasonably withheld or delayed.

 

 

6.4.

Payment of Indemnifiable Losses

 

 

6.4.1.

Losses indemnifiable pursuant to this Section 6, if any, shall only become due for all purposes hereof after (i) final determination thereof (whether by mutual agreement of the Parties or pursuant to a final, binding on the Parties and non-appealable Order), or (ii) once a final, binding on the Parties and non-appealable Order is issued on the corresponding Third-Party Claim.

 

 

6.5.

Tax Effect of Payments

 

 

6.5.1.

Any amount to be paid to any Indemnified Party hereunder, pursuant to the terms of this Section 6 shall cause neutral Tax effects to such Indemnified Party, being either grossed-up by taxes or reduced by any tax shielding benefits, if and as applicable.

 

 

6.6.

Sole Remedies

 

 

6.6.1.

Except as otherwise expressly provided for in this Agreement, each of the Parties hereto acknowledges and agrees that (i) the indemnification provisions of Section 6 shall be the sole and exclusive remedies of the Parties for any breach of representation, warranty, covenant or agreement contained herein, and (ii) any and all claims arising out of or in connection with the transactions contemplated by this Agreement must be brought under and in accordance with the terms of this Agreement.

 

 

6.7.

No Double Recovery

 

 

6.7.1.

No indemnification shall be due and payable by a Party more than once to the same Indemnified Person in respect of the same Loss or the same triggering event, even if such Loss shall result from more than one indemnification claim under this Agreement or otherwise. The Parties agree that under no circumstances an indemnity claim for a Loss shall be claimed in more than one time by the same Indemnified Person. For the avoidance of doubt, in case a Loss is claimed and is permitted to be claimed under this Agreement, it shall not be claimed under any other Transaction related document notwithstanding any specific indemnification provision therein.

 

 

6.8.

Survival of Indemnification Obligation

 

 

6.8.1.

Subject to the provisions of this Agreement, the right of each Party to claim for any indemnification due under this Agreement shall remain in full force and effect for a period of five (5) years from the Closing Date (“Survival Period”). For the sake of clarity, with respect to any Third-Party Claim or a Direct Claim brought and informed within the Survival Period, the indemnification obligations hereunder shall remain in full force and effect until the final and unappealable decision of such claim, with the corresponding payment of the indemnification to the Indemnified Party.

 

7.    Additional Obligations and Covenants

 

 

7.1.

Further Actions; Ordinary Course of Business

 

 

7.1.1.

The Parties shall, and shall cause their respective Affiliates to, use commercially reasonable efforts to take, or cause to be taken, all appropriate action, to do or cause to be done all things necessary, proper or advisable under applicable Law, as may be required to carry out the provisions of this Agreement and consummate the Transaction.

 

 

7.1.2.

Each of the Parties shall, and shall cause its Affiliates to, use commercially reasonable efforts to obtain all necessary consents required to be obtained by it from Third Parties in connection with the transactions contemplated by this Agreement. Each of the Parties shall, and shall cause its Affiliates to, provide reasonable assistance to the other Party in obtaining such consents, including (subject to applicable confidentiality restrictions) providing such financial and other information as shall be reasonably requested by such Third Parties. The Parties acknowledge and agree that neither the Sellers nor any of its Affiliates shall have any obligation to pay money or give any guarantee or other consideration in connection with obtaining of such consents or approvals.

 

 

7.1.3.

From the Execution Date until and up to the earlier of the Closing Date or the termination of this Agreement (“Interim Period”), the Company shall, and Sellers shall cause the Company to, be operated strictly in the Ordinary Course of Business, including with respect to all material obligations before any Third Party, and the Company shall, and Sellers shall procure that the Company, abstain from doing any of the following without prior written consent of the Purchaser, except as otherwise required by law or this Agreement:

 

 

(a)

enter into any transaction or assume any obligations with any Third Party or Related Party, except in the Ordinary Course of Business;

 

 

(b)

acquire any business entity by merger or consolidation, purchase of substantial assets or equity interests, or by any other manner, in a single transaction or a series of related transactions, or entering into any type of association or joint venture with Third Parties;

 

 

(c)

grant of any kind of guarantee or security in any amount in favor of any Third Party or Related Party, except when guaranteeing obligations of the Company if required by an Order;

 

 

(d)

merge, spin-off, or carry-out any other business combination involving the Company, or any restructure of their businesses and activities;

 

 

(e)

incur or commit to incur any indebtedness or any capital expenditure;

 

 

(f)

waive or release any material right or claim;

 

 

(g)

issue, sell, pledge or otherwise encumber any share of the Company or issue or create any warrants, obligations, subscriptions, options, convertible securities, or other commitments to issue shares of the Company, except for the documents related to this Transaction;

 

 

(h)

declare and/or pay dividends or interest on capital, or make any payments to Sellers at the level of the Business Companies;

 

 

(i)

unless required by Law, make, change or revoke any material Tax election, adopt or change any method of Tax accounting, file an amended Tax return, enter into any agreement with any Governmental Authority with respect to Taxes, or settle a Tax claim or assessment; and

 

 

(j)

undertake any actions causing to, or leading to a bankruptcy, a reorganization and/or an insolvency.

 

 

7.1.4.

During the Interim Period, the Purchaser authorizes the Company and the Sellers to proceed with the following acts, provided that such acts do not relate or involve any of the Business Companies:

 

 

(a)

proceed with the payment of dividends;

 

 

(b)

proceed with the Company’s capitalization (increase of capital with the issuance of new shares) to capitalize accumulated profits or debts with the Company’s shareholders.

 

 

7.1.5.

During the Interim Period, the Parties agree that an Arbitration Settlement shall only be entered with mutual agreement of all the parties to the Existing Arbitration.

 

 

7.1.6.

During the Interim Period, the Parties and the Company acknowledge and agree that:

 

 

(a)

neither the Company, nor Purchaser shall exercise the put/call option provision set forth in Section 30(b) of the Joint Venture Agreement executed on September 14, 2016, by and among the Company, Purchaser and a third shareholder (“JV Agreement”);

 

 

(b)

the Company shall not remove Jonathan from his position as CEO of the Business Companies and member of the Board of Directors of SPAR Brasil, and Sellers shall take all necessary actions so that the Company does not remove him; and

 

 

(c)

except for Actions for enforcing the terms and conditions of this Agreement, Purchaser, on one side, and Sellers and the Company, on the other side, agree not to initiate any Actions against the other Party, in their capacity of direct or indirect shareholders of SPAR Brasil (and to take all necessary actions to avoid that any director or officer appointed by it initiate an Action).

 

7.2.    Public Announcements.

 

 

7.2.1.

The Parties shall not make, or cause to be made, any press release or public announcement in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media regarding this Agreement or the transactions contemplated hereby without the prior written consent of both Sellers and Purchaser, unless such press release or public announcement is otherwise required by Law or applicable stock exchange regulation, in which case, the Parties shall, to the extent practicable, consult with Sellers and Purchaser as to the timing and contents of any such press release, public announcement or communication. Both Parties agree that all statements about this Agreement and other Party will be positive and supportive.

 

7.3.    Confidentiality

 

 

7.3.1.

The Parties agree that the existence and terms of this Agreement, as well as all documents and information exchanged by the Parties (including in any due diligence or independent investigations conducted by Purchaser, its Affiliates and respective Representatives and advisors) and all negotiations conducted by them in connection with the Transaction (“Confidential Information”) shall be considered confidential and shall not be disclosed to any Third Parties without the prior written consent of Sellers and Purchaser, except (i) if determined by Law or by an Order, as per the reasonable opinion of its legal counsel; (ii) to their respective Affiliates, Representatives or advisors involved in the Transaction, and only for the purposes and within the limits of the accomplishment of the Transaction; and (iii) for purposes of consummating the Conditions Precedent and/or the Transaction.

 

 

7.3.2.

If any Party becomes legally compelled by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar judicial or administrative process to disclose any Confidential Information, such Party shall provide Sellers and Purchaser with prompt prior written notice of such requirement and, to the extent reasonably practicable, cooperate with them to obtain a protective order or similar remedy to cause the Confidential Information not to be disclosed, including interposing all available objections thereto, such as objections based on settlement privilege. If such protective order or other similar remedy is not obtained, the Party shall furnish only that portion of the Confidential Information that has been legally compelled, and shall exercise its reasonable best efforts to obtain assurance that confidential treatment will be accorded to such disclosed Confidential Information.

 

 

7.3.3.

The confidentiality obligation undertaken under this Section 7.3 shall survive for the period of 5 (five) years from the date hereof.

 

 

7.3.4.

Sellers agree and acknowledge that Purchaser may disclose all or part of the terms and conditions of this Agreement to Third Parties in the context of the Acquisition Financing, exclusively for the purposes of implementing the Transaction, and under confidential basis.

 

 

7.3.5.

Purchaser agrees and acknowledges that Sellers and/or their Affiliates may from time to time (i) publicly disclose information that would otherwise be confidential, including (without limitation) the existence and progress of the proposed Transaction, and terms of the proposed sale, and the closing, modification, or abandonment of the proposed Transaction to comply with SEC’s requirements, and (ii) make SEC filings and issue press releases and/or any other public communications related thereto. If any publicly disclosure is to be made before Closing, Sellers agree to inform Purchaser in advance about such disclosure and information that will be publicly available.

 

7.4.    Replacement of the Sellers as Representatives Before Governmental Authorities

 

 

7.4.1.

Within 60 (sixty) days from the Closing Date, Purchaser shall replace the Sellers and its Representatives from any positions they hold representing the Company before Brazilian Governmental Authorities. Without limiting the foregoing, Purchaser and its Affiliates shall indemnify the Sellers for any Losses originated from acts, facts, events, Actions or omissions that occurred after the Closing Date incurred by them as a result of their positions as Representatives of the Company before Governmental Authorities.

 

7.5.    Tail

 

 

7.5.1.

In the event that, subsequent to the Closing of the Transaction, the Purchaser, its Affiliates or any successor or assignee sells the Company or any of the Business Companies to a Third Party at a higher price than the Purchase Price paid to the Sellers, the Purchaser shall be obligated to pay to the Sellers a tail fee, even if the Sellers are not directly involved in the transaction (“Tail”). The Tail fee shall be calculated by the difference between the Purchase Price set forth in this Agreement and the price at which the Company or its Affiliates were subsequently sold to the Third Party (“Tail Value”).

 

 

7.5.2.

This Tail obligation shall be applicable in case the Purchaser, its Affiliates or any successor or assignee enters a binding agreement to sell the Company or any of the Business Companies until December 31, 2024 (“Tail Period”).

 

 

7.5.3.

For the purposes of calculating the amount due to the Sellers, the Tail Value shall include all amounts effectively paid to Purchaser and/or its partners and Affiliates at closing of the sale for a Third Party or thereafter, according to the terms of the relevant binding agreement, and deducted by any Taxes due and costs and expenses incurred by Purchaser and/or its partners and Affiliates in the context of such sale.

 

 

7.5.4.

Without limiting the foregoing, the Parties hereby acknowledge and agree that they are party to a JV Agreement, which Purchaser understands that may grant rights to a Third Party. If, after the Closing Date, any Third Party claims any rights under the JV Agreement to participate in the Transaction, Purchaser shall be the sole responsible to negotiate with such Third Party and the Parties agree that this shall not be interpreted as a trigger to this provision.

 

7.6.    Non-withhold of Payments

 

 

7.6.1.

Except for any payments in connection with the Brazilian Withholding Tax, the Remittance Costs, the Royalties Amount and the Deducted Expenses, the Purchaser and the Company shall not be entitled to withhold the payment of any amount due to Sellers under this Agreement or any other indemnification for any reason whatsoever and irrespective of any claim the Purchaser or the Company and/or their Affiliates may have respecting any claim for any breach or default by, or indemnification from, the Sellers; and the Purchaser and the Company each hereby agree that they will not reduce such amounts or other obligations to Sellers by any setoff, right of recoupment, abatement or other reduction or for any reason whatsoever.

 

 

7.6.2.

The Sellers shall not be entitled to withhold the payment of any amount due to Purchaser under this Agreement or any other indemnification for any reason whatsoever and irrespective of any claim the Sellers and/or their Affiliates may have respecting any claim for any breach or default by, or indemnification from, the Purchaser; and the Sellers each hereby agree that they will not reduce such amounts or other obligations to Purchaser by any setoff, right of recoupment, abatement or other reduction or for any reason whatsoever.

 

 

7.7.

Financial Reporting

 

 

7.7.1.

Purchaser shall cause the Company to support, as needed and for a period of 1 (one) year from the Closing Date, the provision of reports or financial information in relation to the period ended at the Closing to Sellers’ shareholders to facilitate their financial statements or reporting.

 

 

7.8.

Use of the “SPAR” Trademarks

 

 

7.8.1.

Sellers agree that SPAR Brasil and the Business Companies will transition from the “SPAR” trademarks, logos, brands, content (i.e. website), image, trade dress, likeness and/or similar expressions, including, but not limited to, all the trademarks listed in Exhibit 7.8.1 (“Trademarks”) over a 18-month period from the Closing Date, during which SPAR Brasil and the Business Companies are authorized to use the Trademarks in Brazil. No additional amount shall be paid in connection with the use of the Trademarks during such period and the Business Companies shall be granted with all information needed to continue using the Trademarks during such period, exclusively in the territory of Brazil.

 

 

7.8.2.

Parties agree that in case any binding agreement is executed in relation to the sale of equity in the Business Companies to any Third Party (except for Third Parties which are already directly or indirectly shareholders of the Business Companies on this date) any Business Company using the Trademarks as per Section 7.8.1 should cease such use immediately. If Purchaser intends to continue using the Trademarks pursuant to Section 7.8.1 after such transaction, Purchaser shall notify Sellers about such transaction in advance to get Sellers’ approval (not to be unreasonably withheld) to continue using the Trademarks pursuant to Section 7.8.1. If Sellers fail to respond within thirty (30) days from receipt of such notice, Purchaser is entitled to continue using the Trademarks pursuant to Section 7.8.1.

 

 

7.8.3.

Upon expiration of the 18-month period as foreseen in Section 7.8.1. above or in the event of the sale of equity in the Business Companies as foreseen in Section 7.8.2. above, Business Companies shall (i) promptly return to Sellers all tangible media and copies thereof embodying the Trademarks and/or any intellectual property of the Sellers or of their corporate group in any way granted or licensed to Company; (ii) delete all copies of the Trademarks and said intellectual property on Company systems or otherwise stored digitally; (iii) remove and immediately cease using the Trademarks from its name, tradenames and social media and other internet listings; (iv) remove and immediately cease using the Trademarks in any new e-mail, letter, invoice, contract or other document or communication generated after such termination (including new version thereof).

 

 

7.8.4.

Company and Purchaser shall promote the transfer of ownership, by Toweb Brasil LTDA EPP to the entity indicated by the Sellers, of the domain sparbrasil.com.br and/or any other domain name bearing the Trademarks, provided that, upon expiration of the 18-month period set forth in Section 7.8.3, at the sole discretion of Sellers, Sellers must decide to either (i) grant that for three (3) years after such date, the domain names shall automatically redirect any user to a new website address informed by Purchaser to Seller; or (ii) transfer the domain sparbrasil.com.br to Purchaser or to one of the Business Companies at the Purchaser’s discretion.

 

 

7.8.5.

Sellers agree to provide on a non-fee basis the @sparinc email system for up to 90 days from Closing to allow use and conversion of files and contacts to a new email domain. If, upon prior written request from Purchaser and mutually agreed to by the Sellers, such term is to be extended, the Parties agree to negotiate customary commercial terms for the period of the extension.

 

 

7.8.6.

Immediately after the Closing Date, and for a period of 24 months from Closing, Sellers shall take all necessary actions to ensure that all messages sent to e-mail addresses of the commercial team and/or to generic e-mail addresses (e.g., comercial@sparinc.com) are redirected or forwarded to the Persons listed in Exhibit 7.8.6.

 

 

7.9.

SPAR Website

 

 

7.9.1.

Purchaser and Jonathan hereby agree that in thirty (30) days counted from the Closing, they should include a message in the Business Companies’ website (https://sparbrasil.com.br/ and any other website mentioning the “SPAR Group”) informing all customers and clients that the Business Companies are no longer part of the SPAR Group. Purchaser and/or Jonathan shall submit such message to Sellers’ analysis within twenty (20) days counted from the date of the Closing, and Sellers have to approve the content (not to be unreasonably withheld) of such message or suggest adjustments within five (5) days counted from the date they receive it from Purchaser and/or Jonathan.

 

 

7.10.

Sellers’ Release

 

 

7.10.1.

As of the Closing Date, the Purchaser, the Company and the Business Companies and their Affiliates (each a “Releasor”), agree not to sue and fully release and discharge each and every Seller Released Person (as defined below), with respect to and from any and all Losses, Liens, liabilities, covenants or claims, of whatever kind or nature in Law, equity or otherwise, whether now known or unknown, and whether or not concealed or hidden, all of which the Releasors now own, hold, will hold or have at any time owned or held against, provided that nothing in this Section 7.10.1 will be deemed to constitute a release by the Releasors of any of their rights or benefits under this Agreement. In furtherance of the foregoing, the Releasors hereby waive any and all rights and benefits conferred upon them by the provisions of Law and consent this release will be given full force and effect according to its terms and provisions, including those related to unknown, unsuspected or unmatured claims, demands and causes of action, if any, as those relating to any other claims, demands and causes of action hereinabove specified, but only to the extent such section is applicable to releases as this. “Sellers’ Released Person” means each Seller, its Affiliates (other than the Company), and their respective Representatives.

 

 

7.11.

Purchaser, Company and Business Companies’ Release

 

 

7.11.1.

As of the Closing Date, Sellers, on behalf of themselves and their Affiliates, agree not to sue and fully release and discharge the Purchaser, the Company, the Business Companies and their Representatives, with respect to and from any and all Losses, Liens, liabilities, covenants or claims, of whatever kind or nature in Law, equity or otherwise, whether now known or unknown, and whether or not concealed or hidden, all of which the Sellers now own, hold, will hold or have at any time owned or held against (including, but not limited to royalty fees similar to the Royalties Amount, if the Parties are not able to reach a settlement in relation to the Existing Arbitration during the Interim Period, except for the provided on Section 6.1.2(iii)), provided that nothing in this Section 7.11.1 will be deemed to constitute a release by the Sellers of any of their rights or benefits under this Agreement. In furtherance of the foregoing, Sellers hereby waive, on behalf of themselves and their Affiliates, any and all rights and benefits conferred upon them by the provisions of Law and consent this release will be given full force and effect according to its terms and provisions, including those related to unknown, unsuspected or unmatured claims, demands and causes of action, if any, as those relating to any other claims, demands and causes of action hereinabove specified, but only to the extent such section is applicable to releases as this.

 

 

7.12.

Intervening Parties.

 

 

7.12.1.

The Business Companies execute this Agreement as joint and several guarantors of Purchaser’s obligations, including the obligation to pay the Purchase Price. Parties agree for all purposes that, in case of Purchaser’s default under this Agreement, Sellers may enforce any rights under this Agreement against any of the Business Companies, to their sole discretion, and provided that Sellers comply with their obligation to implement the acts of the Closing.

 

 

7.12.2.

Jonathan hereby acknowledges, accepts and agrees to implement the acts set forth in Section 3.2.1(i), Section 3.5.1., Section 7.9, Section 7.13.3, and Section 7.14.3. Except for these acts, the Parties hereby acknowledge and agree, irrevocably and irreversibly, that Jonathan is not bound by any other terms and conditions of this Agreement and shall not be liable for any other obligation or liability set forth in this Agreement.

 

 

7.13.

No Shop & Fiduciary Out

 

 

7.13.1.

During the period from the Interim Period, none of the Parties shall and shall cause their Affiliates not to, directly or indirectly, approve, authorize, encourage, initiate, solicit, or engage in discussions or negotiations with, or provide any information to, any Person other than the other Party and their Affiliates concerning any transaction, or a series of related transactions, similar to the Transaction or that could in any way affect the Transaction contemplated herein (“Alternate Transaction”).

 

 

7.13.2.

Notwithstanding the provisions of Section 7.13.1, the relevant Party shall send a notice to the other Party as soon as practicable if any Person makes any proposal, offer, inquiry to, or contact with respect to an Alternate Transaction and shall describe in reasonable detail the identity of any such Person and, the substance and material terms of any such contact and the material terms of any such proposal.

 

 

7.13.3.

Jonathan and the Purchaser hereby represent and warrant they are not in contact with any potential buyer for the Company or the Business Companies and that they are not currently negotiating any Alternate Transaction, except in the context of a stock option plan to be implemented at the Business Companies’ level after the Closing.

 

 

7.14.

Existing Arbitration

 

 

7.14.1.

Parties agree that, after Closing, Purchaser shall be authorized to enter an Arbitration Settlement in relation to the Existing Arbitration, to the effect that such Arbitration Settlement effectively terminates the Existing Arbitration, as long as such Arbitration Settlement does not include any provision that:

 

 

(a)

challenges or reverses any accrual by SPAR Brasil of the Royalties Amount;

 

 

(b)

requires the Sellers or their Affiliates for any reason to pay any amount or assume, incur or accept any obligation of any kind to the Purchaser, the Company, the Business Companies, or any of their Affiliates or Representatives, or to any other Person;

 

 

(c)

exposes the Sellers or their Affiliates to any tax, legal or contractual challenge;

 

 

(d)

requires or cause the Sellers or their Affiliates to repudiate or abandon any of its positions;

 

 

(e)

requires or causes the Purchaser, the Company or the Business Companies to repudiate or abandon any of the positions of the SGRP Companies.

 

 

7.14.2.

Being the requirements listed in Section 7.14.1 above complied with, Sellers shall take all necessary acts necessary to effect the Arbitration Settlement upon request of Purchaser.

 

 

7.14.3.

While Parties do not enter an Arbitration Settlement, the Purchaser, the Business Companies and Jonathan shall fully align with and support the positions of the Sellers and their Affiliates now and hereafter taken in the Existing Arbitration, including (without limitation) each of those stated in the submissions presented by Sellers and the Company until this date. In this context, Purchaser and Jonathan shall take all reasonable and necessary steps to avoid or oppose, as applicable, any challenges or requests to reverse any accrual by SPAR Brasil of the Royalties Amount.

 

 

7.15.

IP Rights

 

 

7.15.1.

Parties agree that the Business Companies retain their rights to all “know how” developed by them and their own capabilities.

 

8.    Termination

 

 

8.1.

Grounds for Termination without Cause

 

 

8.1.1.

The Parties acknowledge that this Agreement is irrevocable and definitive and may only be terminated by the Parties prior to the Closing as follows:

 

 

(i)

by mutual written agreement of the Parties;

 

 

(ii)

until March 31, 2024, unilaterally by the Sellers in case the Royalty Amount is not recorded on SPAR Brasil or any of the Business Companies’ financial books for 2023 as part of closing the 2023 financials;

 

 

(iii)

by either Party in the event that any Governmental Authority shall have issued an Order or taken any other action which is in effect and has the effect of making the Transaction contemplated by this Agreement illegal, provided that such Order or other action shall have become final and unappealable; or

 

 

(iv)

unilaterally by the Sellers or Purchaser, at their own discretion, if the Closing shall not have been consummated on or before six (6) months from the Execution Date (“Long Stop Date”). The right to terminate this Agreement under this Section 8.1.1(iv) shall not be available to any Party whose breach of representation, warranty, obligation or agreement has been the cause of, or shall have resulted in, the failure of the Closing to occur on or before the Long Stop Date or the aforementioned extended period.

 

 

8.1.2.

The Party desiring to terminate this Agreement shall give prior notice of such termination to the other Party.

 

 

8.2.

Effect of Termination

 

 

8.2.1.

In the event of termination of this Agreement as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no liability on the part of any Party except that (i) Section 7.2 (Public Announcements), Section 7.3 (Confidentiality), this Section 8 (Termination), Section 9 (Choice of Law and Dispute Resolution) and Section 10 (Miscellaneous) shall survive any termination; and (ii) nothing herein shall relieve any Party from liability for any intentional breach of this Agreement occurring prior to such termination.

 

 

8.3.

Break-up Fee

 

 

8.3.1.

In the event of termination of this Agreement as provided in Section 8.1 as a result of willful misconduct (dolo) or gross negligence (culpa) by decision of the non-defaulting Party, the Party that caused the termination shall pay the other Party a compensatory penalty in an amount in Brazilian Reais equivalent to USD 1,000,000.00 (one million dollars) (“Break-up Fee”). Such defaulting Party shall not be liable for any other payment, including Losses, in addition to the penalty established in this Section. The Break-up Fee shall not reduce or be construed as a waiver of the right of the non-defaulting Party to require the enforcement of this Agreement according to its terms and conditions.

 

 

8.3.2.

In case Parties are not able to Close the Transaction because Purchaser and/or Jonathan fail to comply with Sellers’ Condition Precedent provided on Section 3.2.1(i), Purchaser shall reimburse Sellers for all costs incurred in attorneys’ fees in the negotiation of the Transaction up to the total amount of two hundred thousand Brazilian Reais (BRL 200,000).

 

 

8.3.3.

The Parties and the intervening parties hereby agree that, in the event of termination of this Agreement as provided in Section 8.1, (i) any and all costs, expenses or Taxes due, or payments made, in connection with the Royalty Amount shall be exclusively borne by the Company and Sellers; and (ii) Purchaser is hereby authorized and entitled to withhold the payment of any amount due to Sellers after termination of this Agreement for any reason whatsoever to set off any payments made in connection with item (i) of this Section 8.3.3.

 

 

8.3.4.

The Parties hereby acknowledge and agree that (i) the Condition Precedent set forth in Section 3.2.1(i) was negotiated in the context of the Transaction, and was included in the Agreement as an inducement for the Parties to enter into a transaction; and (ii) in no event, the commitment included in Section 3.2.1(i) means that Purchaser and/or the Business Companies recognize and/or agree that any amount is due to the Company, Sellers and/or their Affiliates in connection with the Royalty Amount and/or any royalty fee invoice issued (or that may be issued) by SPAR Group.

 

 

8.3.5.

In the event of termination of this Agreement as provided in Section 8.1, the Parties reserve their right to dispute any payments in connection with the Royalty Amount, including in the context of the Existing Arbitration and/or obtaining preliminary injunctions to protect their rights.

 

 

8.3.6.

In the event of termination of this Agreement as provided in Section 8.1 due to Sellers’ willful misconduct (dolo) or gross negligence (culpa), Sellers hereby jointly and severally agree to indemnify, and on Jonathan’s demand, shall reimburse, defend and hold harmless, Jonathan harmless against any and all Losses arising from or in connection with the actions taken by Jonathan (as officer of SPAR Brasil) for fulfillment of the Condition Precedent set forth in Section 3.2.1(i). The validity and effectiveness of this obligation is conditioned on Jonathan’s fulfillment of the obligations provided on Section 7.14.3.

 

9.    Choice of Law; Dispute Resolution

 

 

9.1.

Choice of Law

 

 

9.1.1.

This Agreement shall be governed by and construed in accordance with the Laws of Brazil.

 

 

9.2.

Dispute Resolution

 

 

9.2.1.

Submission to Arbitration. Any dispute among the Parties in relation to this Agreement that cannot be amicably resolved by the Parties within thirty 30 (thirty) days shall be submitted to arbitration, in accordance with Law No. 9,307 of 1996, by the Centro Arbitral da Câmara de Comercio Brasil-Canadá (the “Arbitration Center”), which is hereby elected to conduct the arbitration procedure. The arbitration shall be conducted in São Paulo-SP and shall follow the rules of the Arbitration Center then in effect.

 

 

9.2.2.

Summary Arbitration Procedure. ln cases where the matter in dispute does not exceed BRL 400,000.00 (four hundred thousand Brazilian reais), the arbitration decision shall be granted by only 1 (one) arbitrator appointed by mutual agreement of the parties within 7 (seven) days from the notice from the Arbitration Center. ln the event the parties are unable to appoint the arbitrator within such term, the President of the Arbitration Center will make the appointment. The arbitrator shall be fluent in Portuguese and English and the arbitration procedure shall be conducted in Portuguese. The parties hereby agree that the arbitrator shall necessarily be experienced in mergers and acquisitions transactions as a requirement for his or her appointment.

 

 

9.2.3.

Ordinary Arbitration Procedure. ln cases where the matter in dispute exceeds BRL 400,000.00 (four hundred thousand Brazilian reais), the arbitration decision shall be granted by 3 (three) arbitrators. Each party shall appoint one arbitrator and such appointed arbitrators shall select the third arbitrator, who shall act as the President of the arbitration panel. Such appointments shall be made within the terms and in accordance with the rules of the Arbitration Center and any arbitrator not appointed or not appointed within such terms will be appointed by the President of the Arbitration Center. Each of the arbitrators shall be fluent in Portuguese and English and the arbitration procedure shall be conducted in Portuguese. The parties hereby agree that each of the arbitrators shall necessarily be experienced in mergers and acquis1tions transactions as a requirement for his or her appointment.

 

 

9.2.4.

Costs of the Arbitration. All costs and expenses of the arbitration procedure, including the arbitrators' fees, will be paid by the non-prevailing party. In the event the arbitration award benefits both parties, such costs and expenses will be paid in the proportion determined in such award.

 

 

9.2.5.

Exclusive Remedy. Except for Injunctive or Other Provisional Relief. The dispute resolution procedures specified in this Section 9 shall be the sole and exclusive procedures for the resolution of disputes between the parties arising out of or relating to this Agreement; provided, however, that either party may seek preliminary injunctions or other provisional judicial relief that may be necessary in the case of absolute and urgent necessity, or for the compulsory installation of the arbitration procedure. ln such cases, the injunction or relief shall be sought exclusively in the State Courts of the District of São Paulo, State of São Paulo, Bra1il, with express waiver of any other, no matter how privileged. Even in instances where a provisional judicial relief has been obtained, the merits of the matter in dispute will always be decided through the arbitration procedure.

 

 

9.2.6.

Parties in Arbitration. For purposes of this Section 9, in all cases there will be only 2 (two) parties to any arbitration. ln cases where more than 2 (two) parties are involved in the procedure, each party shall join one or more of the other parties, as determined by their common interests, for purposes of appointing arbitrators and conducting the arbitration procedure.

 

10.    Miscellaneous

 

 

10.1.

Entire Agreement

 

 

10.1.1.

This Agreement is irrevocable and definitive and constitute the entire agreement between the Parties pertaining to the subject matter hereof and supersede all other agreements, understandings, negotiations and discussions of the Parties, whether oral or written.

 

 

10.2.

Successors and Assignees

 

 

10.2.1.

This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assignees of the Parties hereto. Except with respect to Section 6 of this Agreement, which shall inure to the benefit of each Indemnified Parties, all of whom are intended as express Third-Party beneficiaries hereof, no other Person not party to this Agreement shall be entitled to the benefits of this Agreement. Except pursuant to Section 4.2.3, the Parties may not assign or transfer any of its rights, obligations or interest hereunder without the prior written consent of Purchaser and Seller. Sellers are hereby authorized to assign the right to receive the Purchase Price under the terms of this Agreement to any Affiliate company, including SPAR Group Inc.

 

 

10.3.

Severability

 

 

10.3.1.

If any term or other provision of this Agreement is held invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible.

 

 

10.4.

Amendments

 

 

10.4.1.

This Agreement may be amended, modified or supplemented only by a written mutual agreement executed by the Parties.

 

 

10.5.

Waivers

 

 

10.5.1.

The rights and remedies of the Parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege shall preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power, or privilege.

 

 

10.6.

Expenses

 

 

10.6.1.

All costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the Party incurring such costs and expenses, provided that fees and disbursements of counsel, financial advisors and accountants engaged by the Company prior to the Closing Date shall be settled by Sellers prior to the Closing Date.

 

 

10.7.

Notices

 

 

10.7.1.

Any notices, requests, demands, or other communications to be given or made under this Agreement shall be in writing, and may be delivered by hand, e-mail, registered mail, courier service or registrar office to the recipient’s address specified in the preamble of this Agreement (or to such other address as such Party notifies in advance to the other Party from time to time) and will be effective upon receipt (unless such date is not a Business Day, in which case the date will be postponed to the first subsequent Business Day). Any changes to the addresses for notification set out hereunder must be sent to all Parties, failing which the non-receipt of such change shall exempt the notifying Party from sending to the new address.

 

For the Purchaser:

JK Consultoria Empresarial Ltda.

Address: Rua Cubatão, 320, 5th floor, Vila Mariana

São Paulo, SP, ZIP Code 04.012-911

E-mails: jdagues@sparbrasil.com

 

With copy to:

Machado, Meyer, Sendacz e Opice Advogados

Address: Av. Brigadeiro Faria Lima, 3200, 5th floor, Itaim Bibi

São Paulo, SP, ZIP Code 01.453-050

E-mails: ppinto@machadomeyer.com.br

rbatah@machadomeyer.com.br

 

For the Sellers:

SPAR INTERNATIONAL LTD.

SPAR GROUP INTERNATIONAL, INC.

Address: PO Box 32322, 4th Floor, Century Yard, Elgin Avenue, Cricket

George Town, Cayman Islands

E-mails: mmatacunas@sparinc.com

staff@pikielny.com.br

 

With copy to:

Souto Correa Advogados

Address: Av. Presidente Juscelino Kubitschek, 2041, Tower D

São Paulo, SP, ZIP Code 04.543-011

E-mails: rodrigo.tellechea@soutocorrea.com.br

isabelle.bueno@soutocorrea.com.br

 

(being understood that receipt of the notification by such recipient is for information purposes only, and should not be considered for notification purposes)

 

10.8.

Counterparts; PDF Signatures

 

 

10.8.1.

For all legal purposes, the Parties and the intervening and consenting party hereby acknowledge and agree that this Agreement and all related Exhibits and Schedules are electronically executed via the DocuSign platform, with or without the use of a digital certificate issued according to the Brazilian Public Key Infrastructure (ICP-Brasil), under the terms of the Brazilian MP No. 2200-2/2001: (a) is valid and effective among the Parties, faithfully representing all the rights and obligations agreed upon among them; (b) has evidential and probative value, as it is able to preserve the integrity of its content and is suitable to prove the authorship of the signatures of the signatory parties, who hereby renounce any right to claim otherwise and assume the burden of proof to prove otherwise; (c) is an extrajudicial enforceable title for all legal purposes and the provisions and obligations set forth herein are eligible for specific performance pursuant to articles 497 and 815 and thereon of the Code of Civil Procedure; (d) will be considered, for all purposes and effects, the date indicated herein, even if one or more Parties carry out the electronic signature at a later date; and (e) the place of signature is the City of São Paulo, Brazil, regardless of whether the digital and electronic signature is completed in a different place by one or more Parties. The Parties hereby waive the need of physical signatures and therefore any copy or reproduction of this Agreement and all related Exhibits and Schedules shall be considered as original pursuant to the applicable Law.

 

In witness whereof, the Parties, acting through their respective duly authorized representatives, have signed this Agreement, on the date first hereinabove written.

 

São Paulo, SP, March 26, 2024

 

[The remain of this page has been intentionally left blank. Signature pages follow.]

 

(signature page of the Share Purchase Agreement entered into on March 26, 2024)

 

Sellers:

 

 

SPAR International LTD.

By: Maria Alice Pikielny Schmuziger

SPAR Group International, INC.

By: Maria Alice Pikielny Schmuziger

 

 

Purchaser:

 

 

JK Consultoria Empresarial Ltda.

By: Jonathan Dagues Martins

 

 

Intervening parties:

 

 

SGRP Brasil Participações Ltda.

By: Maria Alice Pikielny Schmuziger

Jonathan Dagues Martins

 

 

Guarantors:

 

 

SPAR BRASIL SERVIÇOS DE MERCHANDISING E TECNOLOGIA S.A.

By: Jonathan Dagues Martins

SGRP SERVIÇOS LTDA.

By: Jonathan Dagues Martins

 

SPAR BRASIL SERVIÇOS LTDA.

By: Jonathan Dagues Martins

SPAR BRASIL SERVIÇOS TEMPORÁRIOS LTDA.

By: Jonathan Dagues Martins

 

 
 

 

 

(signature page of the Share Purchase Agreement entered into on March 26, 2024)

 

 

 

PLUS TRADE DO BRASIL PRESTAÇÃO DE SERVIÇOS LTDA.

By: Jonathan Dagues Martins

 

 

Witnesses:

 

 

Name: Ana Beatriz Andrade dos Santos

Name: Antonio Calisto

 

 
ex_937943.htm

Exhibit 10.57

 

 

 

 

PROMISSORY NOTE

(this “Note”)

 

 

 

$2,750,000.00

 

 

 

April 18, 2024

 

 

 

FOR VALUE RECEIVED, SPAR Marketing Force, Inc., a Nevada corporation (“Maker”), promises to pay to the order of Richard Justus, a Florida resident, or his successors and assigns (“Payee”), the principal sum of Two Million Seven Hundred Fifty Thousand and No/100 Dollars ($2,750,000.00) (the “Principal Amount”), plus interest on the unpaid principal balance, from the date of advance hereunder until paid in full, at the interest rate set forth below.

 

 

1.

Definitions.

 

 

a.

“Maturity Date” shall mean June 30, 2029.

 
 

b.

“Payment Date” shall mean the corresponding date to each payment set forth in the chart below

 
 

c.    

"SPA" shall mean that certain Securities Purchase Agreement, dated as of April 18, 2024, by and between Maker and Payee.

 

 

 

2.

Interest Rate. The per annum interest rate payable on this Note shall at all times be equal to a per annum interest rate of 4.3%.

 

 

 

3.

Payments. The payments under this Note shall be made as follows:

 

 

a.

From the date hereof and continuing through and until June 30, 2029, Maker shall pay Payee the following amounts plus the applicable interest for such year:

 

Date Amount
Six (6) months following the Closing Date of the SPA $250,000
June 30, 2025 $500,000
June 30, 2026 $500,000
June 30, 2027 $500,000
June 30, 2028 $500,000
June 30, 2029 $500,000

 

 

 

b.

On the Maturity Date, the entire unpaid Principal Amount, together with all accrued and unpaid interest thereon and all other sums payable hereunder, shall mature and be due and payable in full to Payee.

 

 

c.

Interest shall be calculated based upon a 360-day year.

 

 

d.

All payments of principal and interest and any other charges due hereunder shall be payable to Payee through any recognized means designated by Payee, including, without limitation, electronic transfer and/or debit.

 

 

 

4.

Prepayment. This Note may be prepaid at any time without penalty. Each partial prepayment shall be applied in the order set forth in Section 7.

 

 

 

5.

Late Charges. The Maker agrees to pay a late charge equal to five percent (5%) of each installment due that is not paid within five (5) days of the date on which it is due.

 

 

 

6.

Collection Costs. Maker agrees to pay all costs, including reasonable attorneys’ fees, whether suit be brought or not, including any such costs incurred on appeal from the decision of any trial court, if an Event of Default occurs or payment of the amounts due hereunder are not paid on the Maturity Date and Holder is required to employ counsel to collect this Note.

 

 

 

7.

Application of Payments. All payments (including prepayments) hereunder shall be applied first to the Payee’s cost and expenses associated with the collection of any amounts due hereunder, if any, then to fees authorized hereunder, then to interest, and then to the principal amount outstanding.

 

 

 

8.

Default. In the event that (i) this Note or any installment of principal or interest due hereunder shall not be paid when due; (ii) any other default be made under this Note or the SPA, which default shall not be cured within ten (10) days after Maker is given written notice thereof; (iii) the undersigned or a corporate parent thereof (A) shall enter into an assignment for the benefit of creditors, (B) shall file a voluntary petition in bankruptcy, or be adjudicated as bankrupt or insolvent, (C) shall file a petition or answer seeking any arrangement, composition, readjustment, dissolution or similar relief under any present or future statute, law or regulation, (D) shall file any answer admitting, or fail to deny, the material allegations of any petition filed against him for any such relief, (E) shall seek or consent to, or acquiesce in, the appointment of any trustee or receiver for himself or any substantial part of his property, (F) should an involuntary bankruptcy be filed against the Maker that is not dismissed within fifteen (15) business days of the filing thereof; or (iv) any material adverse change (as determined by the Payee in the reasonable exercise of its discretion) occurs with respect to the management, business, or operations of the Maker (each of the foregoing, an “Event of Default”), the Payee may, at his option, declare all amounts due under this Note (including, without limitation, all accrued unpaid interest and principal) to be immediately due and payable in full, whereupon (1) the Note shall immediately mature and become due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by Maker, and (2) interest shall thereafter accrue on the principal amount outstanding at the highest rate allowable under applicable law.

 

 

 

9.

Waiver; No Release; Remedies Cumulative. Presentment, demand, notice of dishonor, notice of protest and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. No release of any person liable for the indebtedness evidenced hereby, and no release of any security for the indebtedness evidenced by this Note, or any portion thereof, and no extension, alteration, amendment, subordination or waiver of any provision of this Note shall release, discharge, modify, change or affect the liability of Maker or any other person now or hereafter liable under this Note. The remedies provided to Payee in this Note shall be cumulative and concurrent, and shall be in addition to every other right or remedy now or hereafter provided by law or equity.

 

 

 

10.

Legal Rate of Interest. This Note is subject to the express condition that at no time shall Maker be obligated or required to pay interest on the Principal Amount at a rate in excess of the maximum rate which Maker is permitted by law to contract or agree to pay. If by the terms of this Note, Maker at any time is required or obligated to pay interest on the Principal Amount at a rate in excess of such maximum rate, then the rate of interest hereunder shall be deemed to be reduced immediately and automatically to such maximum rate, interest payable hereunder shall be computed at such maximum rate and any prior interest payment made in excess of such maximum rate shall be immediately and automatically applied to, and shall be deemed to have been payment made in reduction of, the Principal Amount.

 

 

 

11.

Captions. The captions and headings set forth in this Note are for convenience purposes only and shall not limit, define or otherwise have any effect on the interpretation of the agreements and understandings set forth herein.

 

 

 

12.

Relationship of Parties. Payee shall in no event be construed for any purpose to be a partner, joint venturer or associate of Maker, or of any lessee, operator, concessionaire or licensee of Maker, in the conduct of its business.

 

 

 

13.

Modification. This Note may not be modified, amended, discharged or waived orally, but only by an agreement in writing signed by the party against whom such modification, amendment, discharge or waiver is sought to be enforced.

 

 

 

14.

Severability. If any provision of this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

 

 

15.

Governing Law, Jurisdiction and Venue. This Note and the rights hereunder shall be interpreted and enforced in accordance with and governed by the laws of the State of Florida, other than its laws respecting the choice of law. The parties each hereby submit to jurisdiction in Florida for the enforcement of this Note and hereby waive any and all personal rights under the laws of Florida to object to jurisdiction within the state for purposes of litigation to enforce this Note. The parties consent to exclusive jurisdiction and venue in the courts having jurisdiction over Duval County, Florida in connection with any action, suit, or other proceeding arising from, relating to, or in any way connected with this Note. Each party agrees that it will not assert in any such action, suit, or proceeding that it is not personally subject to the jurisdiction of such court, that the action, suit, or proceeding is brought in an inconvenient forum, and/or that the venue of the action, suit, or proceeding is improper.

 

 

 

17.

Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND MAKER WISHES 3 APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), MAKER DESIRES THAT ANY DISPUTES ARISING FROM THIS NOTE BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, MAKER HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN MAKER AND PAYEE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS NOTE.

 

 

 

18.

Remedies Cumulative. The remedies of the Payee as provided herein shall be cumulative and concurrent, and may be pursued singly, successively or together, at the sole discretion of the Payee and may be exercised as often as occasion therefor shall arise. No act of omission or commission of the Payee, including specifically any failure to exercise any right, remedy or recourse, shall be effective, unless set forth in a written document executed by the Payee, and then only to the extent specifically recited therein.

 

 

 

19.

Time. It is hereby agreed that time is of the essence of this Note.

 

 

 

[Signature page follows]

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to be executed as of the date and year first above written.

 

 

 

MAKER:

 

 

 

SPAR MARKETING FORCE, INC.

 

 

 

By: /s/ Michale Matacunas

Name: Michael Matacunas

Title: President

 

 

 

[Signature Page to Promissory Note]

 

 

 

 

 

 

 
ex_937944.htm

Exhibit 10.58

 

 

SECURITIES PLEDGE AND ESCROW AGREEMENT

 

 

 

EFFECTIVE DATE:  April 18, 2024

 

 

PLEDGOR: SPAR Marketing Group, Inc., a Nevada corporation

 

 

SECURED PARTY: Richard Justus

 

 

ESCROW AGENT: Fisher, Tousey, Leas & Ball, P.A.,

a Florida professional service corporation

 

 

PROMISSORY NOTE: That certain Secured Promissory Note of even date herewith made by Pledgor in favor of Secured Party, in the principal amount of

$2,750,000.00 (the “Note”).

 

 

A.

On the Effective Date, Pledgor purchased forty-nine percent (49%) of the common stock of Resource Plus of North Florida, Inc., a Florida corporation (“RP”), forty-nine percent (49%) of the common stock of Mobex of North Florida, Inc., a Florida corporation (“Mobex”), and forty-nine percent (49%) of the membership interest in Leasex, LLC, a Florida limited liability company (“Leasex”, and collectively, with RP and Mobex, the “Corporation”), from Secured Party pursuant to a Securities Purchase Agreement by and between Pledgor and Secured Party dated April 18, 2024. The securities in the foregoing Corporation being sold by Seller to the Buyer that are the subject of this Pledge are referred to as the “Securities.”

 

B.

As a condition to selling the Securities to Pledgor, the Secured Party required the Pledgor to grant a security interest in forty-four percent (44%) of the Securities, respectively in each of RP, Mobex and Leasex, and the Pledgor agreed to pledge all of the Securities as security for the Note pursuant to the terms set forth below (the “Pledge”). SPAR Group, Inc., a Delaware corporation, that is the sole shareholder of the Pledgor, executed a Guaranty for the benefit of Secured Party in conjunction with the purchase of the Pledged Securities (the “Guaranty”).

 

C. The Securities to be pledged hereunder are represented by the respective stock certificates and assignment instruments described on Exhibit A.

 

 

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

 

1.

Pledge of Pledged Securities.

 

 

(a)

In consideration of the premises and as an inducement to Secured Party to sell the Securities to Pledgor, Pledgor does hereby grant a security interest in and assign, transfer, set over and pledge to Secured Party the Pledged Securities (together with all stock dividends or other similar distributions thereon and all shares, obligations or securities into which the Pledged Securities may be changed or which may be issued in lieu thereof, and together with any other securities which hereafter may be pledged hereunder, which are herein collectively included within the term “Pledged Securities”).

 

 

(b)

This Pledge is made as security for (i) the repayment, according to its terms, of the full amount of the Note, and (ii) any other liability or liabilities of the Pledgor arising under the Note or this Pledge. The Escrow Agent hereby agrees to act as depository and escrow agent with respect to the Pledged Securities.

 

2.

Possession and Use of Pledged Securities; Covenants of Pledgor.

 

 

(a)

The Pledged Securities shall be delivered to the Escrow Agent, endorsed in bearer form or accompanied by good and sufficient powers of attorney. Escrow Agent shall be entitled to receive all amounts paid in cash or other property as a liquidating distribution on account of the Pledged Securities. All distributions received by Escrow Agent in accordance herewith shall become subject to all of the provisions hereof.

 

 

(b)

As long as the Pledged Securities are subject to this Pledge, Pledgor warrants that Pledgor shall not cause the Corporation to sell any of their assets outside of the ordinary course of business for which the Corporation receives fair market value.

 

 

(c)

Pledgor warrants and covenants that no financing statement covering any of the Pledged Securities or any proceeds of such Pledged Securities is on file in any public office, including, but not limited to, the office of the Secretary of State of the State of Florida (or any designated independent contractor of such office). At the request of the Secured Party and to the extent required or permitted by applicable law, Pledgor will join in executing one or more financing statements, in a form satisfactory to Secured Party, and pay the cost of filing such statement or statements wherever filing is deemed necessary or appropriate by the Secured Party.

 

 

(d)

So long as this Pledge has not been terminated as provided hereafter, Pledgor:

 

 

(i)

will not transfer, or attempt to transfer, any of the Pledged Securities, and will not grant option rights to acquire any of the Pledged Securities.

 

 

(ii)

will, on demand of the Secured Party:

 

 

(A)

furnish further assurance of title, execute any written agreement or do any other acts necessary to effectuate the purposes and provisions of this Pledge, and

 

 

(B)

execute any instrument or statement required by law or otherwise in order to perfect, continue or terminate the security interest of the Secured Party in the Pledged Securities and pay all costs of filing in connection therewith.

 

3.

Events of Default and Remedies. If any one or more of the following events (each an “Event of Default”) shall occur and be continuing:

 

 

(a)

any breach or default under the Note executed by the Pledgor in favor of the Secured Party;

 

 

(b)

the breach or default of any of the representations, warranties, covenants or agreements of the Pledgor under this Pledge that continues for fifteen (15) days after the Secured Party gives written notice to Pledgor;

 

 

(c)

the subjection of the Pledged Securities to levy of execution or other judicial process in connection with collection of a debt owed by Pledgor;

 

 

(d)

any direct or indirect sale or transfer of all or any part of an interest in the Pledged Securities, whether voluntary or involuntary;

 

 

(e)

a sale of all or substantially all of the assets of the Corporation;

 

 

(f)

a default by Pledgor under any other agreement between the Secured Party and the Pledgor or any other event of default under this Pledge following written notice and failure to timely cure as therein provided;

 

 

(g)

any event that results in the acceleration of the maturity of the indebtedness of the Pledgor to others under any indenture, agreement, or undertaking including, without limitation, any mortgage; or

 

 

(h)

the Pledgor’s insolvency, the appointment of a receiver for any part of the Pledgor or the assets of the Pledgor, any assignment for the benefit of creditors, or the commencement of any proceeding under any bankruptcy or insolvency law by or against the Pledgor;
 

then,

in any such event, Secured Party may, at Secured Party’s option, declare the Note and this Pledge in default, and give written notice of such Event of Default to Escrow Agent under Section 4, to obtain the release of the Pledged Securities from this Pledge.

 

4.

Distribution and/or Disbursement. The Escrow Agent shall hold the Pledged Securities pending distribution and/or disbursement, and shall distribute and/or disburse such Pledged Securities only upon the happening of one or more of the following conditions subject to the requirements set forth herein:

 

 

(a)

Receipt by Escrow Agent of written notice from Secured Party that an Event of Default under Section 3 has occurred and verification of such facts set forth in the written notice. Promptly upon receipt, the Escrow Agent shall send a copy of the notice to Pledgor. Unless Pledgor disputes that an Event of Default has occurred, in writing, within thirty (30) days of its receipt of the notice from Escrow Agent, or the Escrow Agent independently is aware of information that causes it to believe that an Event of Default has not occurred, the Secured Party may declare all amounts due under the Note and this Pledge (collectively, the “Obligations”) to be due and payable in full, whereupon the Obligations shall immediately mature and become due and payable in full without presentment, demand, protest or notice, all of which are hereby waived. Upon acceleration, the Escrow Agent shall immediately release the Pledged Securities, other than cash that shall be applied to the Obligations, to Secured Party, which may thereafter exercise all remedies available to him under the Florida Uniform Commercial Code.

 

 

(b)

Receipt by Escrow Agent of written notice from Pledgor that the Obligations have been paid and/or satisfied in full and that Pledgor is entitled to the return of the Pledged Securities. Promptly upon receipt, the Escrow Agent shall send a copy of the written notice to Secured Party. Unless Secured Party disputes, in writing, Pledgor’s entitlement to such distribution and/or disbursement within thirty (30) days of receipt of the written notice from Escrow Agent, or the Escrow Agent is independently aware of information that causes it to believe that such distribution and/or disbursement is unjustified, the Escrow Agent shall distribute and/or disburse the Pledged Securities to Pledgor promptly upon the expiration of such thirty (30) day period.

 

 

(c)

In the event Pledgor disputes that an Event of Default has occurred, in writing, within thirty (30) days of receipt of the notice from Escrow Agent under Section 4(a), or in the event Secured Party disputes, in writing, Pledgor’s entitlement to the distribution and/or disbursement, within thirty (30) days of receipt of the notice from Escrow Agent under Section 4(b), or if Escrow Agent is independently aware of information that causes it to believe that an Event of Default has not occurred, or that such distribution and/or disbursement is unjustified, as applicable, it shall continue to hold the Pledged Securities pending either receipt of further instructions signed by both Secured Party and Pledgor, or the issuance of a non-appealable final order rendered by a court of competent jurisdiction determining the rights of the parties hereunder.

 

 

(d)

Receipt by Escrow Agent of a written document signed by Pledgor and Secured Party and specifically requesting and instructing the Escrow Agent to distribute and/or disburse the Pledged Securities. In such event, the Escrow Agent shall distribute and/or disburse the Pledged Securities according to the instructions contained in such written notification.

 

5.

Nature of Duties; Liability. The duties of the Escrow Agent hereunder are purely ministerial in nature. The Escrow Agent shall not be liable for any error of judgment, fact or law, or any act done or omitted to be done, except for its own willful misconduct or gross negligence or that of its officers, employees or agents. The Escrow Agent shall make no distribution or disbursement of the Pledged Securities except according to Section 4 above. The Escrow Agent may act upon any instructions or advice believed by it to be genuine and it may assume that any person purporting to give advice or instruction hereunder, believed by it to be duly authorized, has been authorized to do so. The Escrow Agent shall not be liable for any actions taken or omitted upon the reasonable interpretation of any advice, instruction, or document furnished to it. The Escrow Agent may decline to act and shall not be liable for such failure to act if in doubt as to its duties hereunder. The Escrow Agent may assume, without verification, the genuineness of any signatures on any writings that are regular on their face. In the event the Escrow Agent shall incur any liability, damage, or expense, including reasonable attorneys’ fees of attorneys of its own choosing, incurred without gross negligence or willful misconduct on the part of Escrow Agent, arising out of or resulting from any claim that it has improperly distributed and/or disbursed the Pledged Securities from escrow, or otherwise arising out of or in connection with carrying out its duties hereunder, Pledgor and Secured Party shall, jointly and severally, indemnify and hold it harmless therefrom. The Escrow Agent may consult with counsel of its own choice and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.

 

6.

Termination of Escrow. In the event the Pledged Securities placed in escrow pursuant to this Pledge have not been distributed prior to the date that is one (1) year following the date that the last payment under the Note is due, the Escrow Agent may, in its sole discretion, continue to hold the Pledged Securities that are the subject of this Pledge until the parties mutually agree to the distribution and/or disbursement thereof, or until a judgment of a court of competent jurisdiction shall determine the rights of the parties thereto, or it may, at its sole discretion, file an action in interpleader to resolve the rights of the parties thereto. The Escrow Agent shall be indemnified for all costs, including reasonable attorneys’ fees of attorneys of its own choosing, in connection with the aforesaid interpleader action, and shall be fully protected in suspending all or part of its activities under this Pledge until a final judgment in the interpleader action is received.

 

7.

Interpleader. If the parties shall be in disagreement about the interpretation of this Pledge, or about their rights and obligations hereunder, or the propriety of any action contemplated by the Escrow Agent hereunder, the Escrow Agent may, at its discretion, file an action in interpleader to resolve such disagreement. Escrow Agent shall be indemnified, jointly and severally, by Pledgor and Secured Party for all costs, including reasonable attorneys’ fees of attorneys of its own choosing, in connection with the aforesaid interpleader action, and shall be fully protected in suspending all or a part of its activities under this Pledge until a final judgment in the interpleader action is received.

 

8.

Designation of Holder of Pledged Securities. Notwithstanding any other provision herein to the contrary, Secured Party hereby designates Escrow Agent to hold the Pledged Securities on Secured Party’s behalf, in order to perfect Secured Party’s security interest in the Pledged Securities; nothing herein, including, but not limited to, Pledgor’s joining herein, shall be deemed to negate Escrow Agent’s status as such designated person during the term of this Pledge; and Secured Party acknowledges having provided to Escrow Agent a copy of this Pledge relating to the Pledged Securities as they exist on the date hereof.

 

9.

Beneficial Ownership and Voting Rights. Pledgor shall remain the beneficial owner of the Pledged Securities for all purposes, except as otherwise provided in this Pledge. So long as no Event of Default or other default exists hereunder, Pledgor shall be entitled to exercise all voting rights in connection with the Pledged Securities; provided, however, (a) voting rights shall not be exercised to permit a liquidation of the Corporation, the sale of substantially all of the assets of the Corporation, or any other event in violation of the covenants in Section 3, and (b) during the pendency of an Event of Default, Secured Party shall be entitled to exercise all voting rights in connection with the Pledged Securities.

 

10.

Resignation. The Escrow Agent may resign at any time upon giving the other parties hereto thirty (30) days notice to that effect. In such event, the successor Escrow Agent shall be such person, firm or corporation as shall be mutually selected by the Secured Party and the Pledgor. It is understood and agreed that the Escrow Agent’s resignation shall not be effective until a successor Escrow Agent agrees to act hereunder; provided, however, that in the event no successor Escrow Agent is appointed and acting hereunder within thirty (30) days of such notice, the Escrow Agent may pay and deliver the Pledged Securities into a court of competent jurisdiction.

 

11.

Miscellaneous Provisions.

 

 

(a)

Amendments. This Pledge may be modified, amended, altered, or changed solely upon the mutual consent of the parties hereto, evidenced by a written instrument duly executed by the parties hereto.

 

 

(b)

Attorneys’ Fees. In the event any party institutes a legal proceeding to enforce its rights hereunder and/or in regard to the Pledge or the Pledged Securities, the legal fees and all costs of the proceeding shall be paid by the non-prevailing party to the prevailing party, whether in arbitration, at trial, or on appeal.

 

 

(c)

Assignment. Secured Party has the right to assign this Pledge, or any of the rights or benefits hereof, without the consent of Pledgor.

 

 

(d)

Captions and Headings. Titles, captions, and headings contained in this Pledge are inserted only as a matter of convenience and for reference and in no way define, limit, extend, or describe the scope of this Pledge or the intent of any provision hereof. All references to “Section” or “Sections” refer to the corresponding Section or Sections of this Pledge.

 

 

(e)

Construction. Whenever the context may require, any pronoun used in this Pledge shall include the corresponding masculine, feminine or neuter forms. Whenever the context may require, the singular form of any noun, pronoun, and verb shall include the plural form; the plural form of any noun, pronoun, and verb shall include the singular form.

 

 

(f)

Counterparts. This Pledge may be executed in one or more counterparts and all such counterparts shall together constitute this Pledge and shall be binding on all the parties notwithstanding that all of the parties are not signatories to the original or the same counterpart. The parties also hereby agree that, for purposes of the execution of this Pledge, facsimile and .PDF signatures shall constitute original signatures.

 

 

(g)

Cross Default. This Pledge shall be in default in the event of a default under the Note or this Pledge.

 

 

(h)

Entire Agreement. This Pledge, collectively with the Note, constitutes the entire agreement among the parties with respect to the subject matter described herein and replaces and supersedes all prior and contemporaneous agreements by and among the parties with respect to the subject matter hereof. Any prior understandings or representations preceding the date of this Pledge will not be binding on any party.

 

 

(i)

Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Pledge and the documents referred to in this Pledge.

 

 

(j)

Governing Law. This Pledge shall be governed by and construed in accordance with the laws of the State of Florida, without regard to its rules governing choice of law or conflicts or laws.

 

 

(k)

Interpretation. All of the parties have contributed substantially and materially to the preparation of this Pledge; consequently, this Pledge will not be construed more strictly against one party than against any other merely by virtue of the fact that it may have been prepared by legal counsel to one of the parties.

 

 

(l)

Legal Counsel. The parties acknowledge that Fisher, Tousey, Leas & Ball, P.A. (“Legal Counsel”) is legal counsel to the Secured Party, that Legal Counsel prepared this Pledge on behalf of and in the course of its representation of the Secured Party, and that the parties have been advised that (i) a conflict of interest may exist between their interests, and (ii) they have the right to seek the advice of separate legal and tax counsel. Each party hereto (i) acknowledges that Legal Counsel represents the Secured Party in this matter, (ii) acknowledges it has had an opportunity to consult with legal counsel of its choice, and (iii) waives any conflict of interest as may exist in the representation of the Secured Party by Legal Counsel. The parties agree that in the event of a dispute between the parties, Legal Counsel may represent the Secured Party.

 

 

(m)

Notices. All notices and other communications to parties called for herein or given in connection herewith shall be in writing and shall be sufficiently given if given via hand delivery, or mailed via certified mail, return receipt requested, postage prepaid, to such parties address as set forth below, unless an alternate address is furnished in writing by such party to the other parties.

 

 

If to the Secured Party:

 

Richard Justus

9636 Heckscher Drive

Jacksonville, Florida 32226

 

 

With a copy to:

 

Fisher, Tousey, Leas & Ball, P.A.

Attention: Marvin C. Kloeppel, Esquire

501 Riverside Avenue, Suite 700

Jacksonville, Florida 32202

 

 

If to Pledgor:

 

SPAR Marketing Force, Inc. 1910 Opdyke Court

Auburn Hill, Michigan 48326

 

 

With a copy to:

 

Bodman Law

Attention: Carrie Leahy, Esquire

201 South Division Street, Suite 400

Ann Arbor, Michigan 48104

 

 

Notices will be deemed complete and given upon (a) the date such notice is given if notice is given by hand delivery, (b) the date that is two (2) business days after the date of mailing if notice is deposited into the U.S. Mail, postage prepaid, and (c) the date such notice is received if notice is sent via telegram, facsimile, or overnight express delivery service that can certify actual delivery.

 

 

(n)

Rights and Remedies Cumulative. The rights and remedies provided in this Pledge are cumulative; the use of any one right or remedy shall not preclude or waive any other right or remedy.

 

 

(o)

Schedules and Exhibits. In the event of any inconsistency between the statements in the body of this Pledge and those in the Schedules and Exhibits (other than an exception expressly set forth as such in the Schedules and Exhibits with respect to a specifically identified representation or warranty), the statements in the body of this Pledge will control. The Schedules and Exhibits attached hereto shall be incorporated in this Pledge by reference hereto as if fully set forth herein.

 

 

(p)

Severability. If any provision in this Pledge is held to be invalid, illegal, or unenforceable in any respect or the application of any provision is held to be invalid, illegal, or unenforceable as to any person, fact, circumstance or situation, such invalidity, illegality, or unenforceability shall not affect the remainder of such provision, any other provision hereof, or any permitted application. This Pledge shall be construed so as to be valid, legal, binding and enforceable to the fullest extent permitted by law, and as if this Pledge had never contained any such invalid, illegal, or unenforceable provision.

 

 

(q)

Successors. Except as otherwise provided herein, all provisions of this Pledge shall be binding upon, inure to the benefit of, and be enforceable by and against the respective heirs, executors, administrators, personal representatives, successors and assigns of the parties hereto.

 

 

(r)

Survival of Representations, Warranties, and Covenants. The covenants, representations, warranties and other written statements set forth in this Pledge or any separate instrument pursuant to which the parties subscribe to this Pledge shall survive the execution and delivery hereof and thereof. Each of such covenants, representations, warranties and other written statements shall be deemed to be independent and material and to have been relied upon by the party to whom made.

 

 

(s)

Time. If any date described in this Pledge falls on a Saturday, Sunday or national holiday that date shall be automatically extended to the next day that is not a Saturday, Sunday or national holiday. Time shall be of the essence with regards to the performance of each and every provision of this Pledge.

 

 

(t)

Venue and Jurisdiction. The parties consent to exclusive jurisdiction and venue in the courts having jurisdiction over Duval County, Florida in connection with any action, suit, or other proceeding arising from, relating to, or in any way connected with this Pledge or the Pledged Securities. Each party agrees that it will not assert in any such action, suit, or proceeding that it is not personally subject to the jurisdiction of such court, that the action, suit, or proceeding is brought in an inconvenient forum, and/or that the venue of the action, suit, or proceeding is improper.

 

 

(u)

Waiver. The failure to insist upon strict performance of a covenant hereunder or of any obligation hereunder, irrespective of the length of time for which such failure continues, shall not be a waiver of such right to demand strict compliance in the future. No consent or waiver, express or implied, to or of any breach or default in the performance of any obligation hereunder, shall constitute a consent or waiver to or of any other breach or default in the performance of the same or any other obligation.

 

 

(v)

WAIVER OF JURY TRIAL. EACH PARTY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AFTER OPPORTUNITY FOR CONSULTATION WITH INDEPENDENT COUNSEL, WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING ARISING FROM OR BASED UPON ANY LITIGATION OR OTHER PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR OBLIGATIONS ARISING FROM THIS PLEDGE OR ANY COURSE OF DEALING, COURSE OF CONDUCT, STATEMENT (VERBAL OR WRITTEN) OR ACTION OF THE PARTIES IN CONNECTION WITH THIS PLEDGE. EACH PARTY AGREES THAT:

 

 

(i)

IT SHALL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED.

 

 

(ii)

THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE SUBJECT TO NO EXCEPTIONS.

 

 

(iii)

NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

 

 

(iv)

THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THE FINANCING SECURED BY THE PLEDGE.

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Pledge effective as of the day and year first above written.

 

 

 

PLEDGOR:

 

 

SPAR Marketing Force, Inc.,

a Nevada corporation

 

 

 

By: /s/ Michael Matacunas        

Name: Michael Matacunas

Title: President

 

 

 

SECURED PARTY:

 

Richard L. Justus

 

ESCROW AGENT:

 

Fisher, Tousey, Leas & Ball, P.A.,

a Florida professional service corporation

 

 

 

By:                   

Marvin C. Kloeppel, Vice President

 

 

 

IN WITNESS WHEREOF, the parties have executed this Pledge effective as of the day and year first above written.

 

 

 

PLEDGOR:

 

SPAR Marketing Force, Inc.,

a Nevada corporation

 

By:         

Name: Mike Matacunas

Title: President

 

 

 

SECURED PARTY:

 

/s/ Richard L. Justus

Richard L. Justus

 

 

ESCROW AGENT:

 

Fisher, Tousey, Leas & Ball, P.A.,

a Florida professional service corporation

 

 

 

By:                   

Marvin C. Kloeppel, Vice President

 

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Pledge effective as of the day and year first above written.

 

PLEDGOR:

 

 

SPAR MARKETING FORCE, INC.,

a Nevada corporation

 

By:         

Name:                   

Title:                  

 

 

SECURED PARTY:

 

 

 

Richard L. Justus

 

 

ESCROW AGENT:

FISHER, TOUSEY, LEAS & BALL, P.A.,

a Florida professional service corporation

 

 

 

By:   /s/ Trevor Ross      

 

Trevor Ross, President

 

 

 

 

 

EXHIBIT A

 

 

 

1. Resource Plus of North Florida, Inc.

 

Stock Certificate # 8 for 49 shares of the common stock of Resource Plus of North Florida, Inc. issued to SPAR Marketing Force, Inc.

 

 

 

2. Mobex of North Florida, Inc.

 

Stock Certificate # 4 for 980 shares of the common stock of Mobex of North Florida, Inc. issued to SPAR Marketing Force, Inc.

 

 

 

3. Leasex, LLC

 

49% of the uncertificated membership interests of Leasex, LLC, a Florida limited liability company issued to SPAR Marketing Force, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
ex_937945.htm

Exhibit 10.59

 

 

GUARANTY

 

THIS GUARANTY (this “Guaranty”) is effective as of April 18, 2024, and is made by SPAR GROUP, INC., a Delaware corporation, on behalf of itself and its heirs, successors, representatives, and assigns (“Guarantor”), for the benefit of RICHARD JUSTUS, and his heirs, successors, representatives, and assigns (“Beneficiary”).

 

RECITALS

 

A.    On the effective date of this Guaranty, the Beneficiary sold all of his equity in the business entities described on Exhibit A to SPAR MARKETING FORCE, INC., a Nevada corporation (“Debtor”), for cash and the Debtor’s Secured Promissory Note in the aggregate principal amount of TWO MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS and NO/100 ($2,750,000.00), evidenced by a secured promissory note from the Debtor to the Beneficiary (the “Secured Promissory Note”).

 

B.    The Guarantor is the parent company of the Debtor; consequently, the Guarantor will receive a direct benefit from the financing provided by the Beneficiary.

 

 

C.    To induce the Beneficiary to finance the purchase by the Debtor, the Guarantor has agreed to guaranty the payment of the total principal and interest due by the Debtor and the performance of all of the Debtor’s non-monetary obligations to the Beneficiary under the Secured Promissory Note (“Obligations”).

 

D.    The Debtor has executed a Securities Pledge and Escrow Agreement to grant a security interest lien in the securities purchased from Beneficiary; that agreement, together with the Secured Promissory Note and this Guaranty, are collectively hereafter called the “Loan Documents.”

 

NOW THEREFORE, in consideration of the foregoing, which the Guarantor hereby acknowledges to be true and good and sufficient consideration for this Guaranty, the Guarantor agrees as follows:

 

1.

The Guaranty. The Guarantor hereby unconditionally and irrevocably guarantees to the Beneficiary, for his benefit and for the benefit of his successors, endorsees, transferees and assigns, the full and punctual payment when due (whether at stated maturity, by acceleration or otherwise) all of the Obligations. Accordingly, if the Debtor fails to pay any Obligation when due in accordance with its terms (whether at stated maturity, by acceleration or otherwise), the Guarantor shall, on demand of the Beneficiary, immediately pay the Beneficiary the entire amount of such Obligations. If the Debtor shall at any time fail to make any payment required to be made under the Loan Documents as and when the same shall become due and payable, the Guarantor shall immediately make such payments or cause such payments to be made. The Guarantor waives all notices of any kind in connection with their obligations under this Guaranty.

 

2.

Nature and Duration of Guaranty. This is a general and continuing guaranty. The Guarantor hereby expressly waives notice from Beneficiary of Beneficiary’s reliance upon or acceptance of this Guaranty. The liability of the Guarantor under this Guaranty shall be joint and several with the liability of any other guarantor or guarantors of the Obligations of the Debtor guaranteed hereby. This Guaranty shall extend to all of the Obligations and shall remain in full force and effect until the Obligations are paid in full. The Guarantor agrees that if at any time all or any part of any payment made by such Guarantor hereunder previously applied by Beneficiary to the balance of the Obligations is or must be returned by or recovered from Beneficiary by reason of the insolvency of the Debtor or the pendency of proceedings instituted by or against the Debtor under the Federal Bankruptcy Code or any similar law, this Guaranty shall continue in effect or, if previously terminated, shall be reinstated, and the Obligations shall be deemed to have continued in existence as if such prior application had not been made. The Guarantor agrees to indemnify, save and hold Beneficiary harmless from and against any required return by or recovery from Beneficiary of any such payments as a result of being deemed preferential or fraudulent as to any creditor, trustee, debtor in possession or other party under applicable bankruptcy law.

 

3.

Guaranty of Costs. The Guarantor absolutely and unconditionally guarantees the prompt and full payment of all costs and expenses of whatever nature or kind, including without limitation, attorneys’ fees, incurred by Beneficiary in enforcing the provisions of this Guaranty and in collecting the Obligations guaranteed hereunder, whether or not legal action is brought against the Debtor, the Guarantor or any of them, and including expenses and attorneys’ fees for any appeal of any action brought by Beneficiary against the Debtor, the Guarantor or any of them.

 

4.

Guaranty Unconditional. This is a guaranty of payment and not of collection, and the obligations of the Guarantor hereunder are unconditional and absolute except as specifically provided herein and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (i) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Debtor with respect to any Obligation, by operation of law or otherwise; (ii) any modification or amendment or supplement to any document evidencing any Obligation; (iii) any release, non-perfection or invalidity of any direct or indirect security for any Obligation or any release of any other guarantor of any Obligation; (iv) any change in the existence, structure or ownership of the Debtor, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Debtor or its assets or any resulting disallowance, release or discharge of all or any portion of any Obligation; (v) the existence of any claim, set-off or other right which any guarantors may have at any time against the Debtor, any Beneficiary or any other corporation or person, whether in connection herewith or any unrelated transaction; provided, however, that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (vi) any invalidity or unenforceability of any Obligation, or any provision of applicable law or regulation purporting to prohibit the payment by the Debtor of any Obligation; (vii) any failure by Beneficiary (A) to file or enforce a claim against the Debtor or its estate (in a bankruptcy or other proceeding), (B) to give notice of the existence, creation or incurring by the Debtor of any new or additional indebtedness or obligation under or with respect to any Obligation, (C) to commence any action against the Debtor, (D) to disclose to the Guarantor any facts that the Beneficiary may now or hereafter know with regard to the Debtor, or (E) to proceed with due diligence in the collection, protection or realization upon any collateral securing any Obligation; (viii) any other act or omission to act or delay of any kind by the Debtor, the Beneficiary, or any other person; or (ix) any other circumstance whatsoever that might, but for the provisions of this clause, constitute a legal or equitable discharge of any of the Guarantor’s obligations hereunder.

 

5.

Consideration. The Guarantor represents, warrants and acknowledges that the Guarantor has received good, valuable and sufficient consideration for the making of this Guaranty and expressly agrees that recourse may be had against such Guarantor’s properties for all obligations hereunder, and further agree that any and all of such Guarantor’s properties shall be subject to execution for any judgment rendered against such Guarantor on this Guaranty by a court of competent jurisdiction. Debtor shall pay the Guarantor a fee each year on the anniversary of the effective date hereof for providing this Guaranty equal to one half of one percent (0.50%) of the outstanding amount of the Obligations.

 

6.

Waiver of Right of Subrogation. The Guarantor shall not assert any right to which the Guarantor has or may become entitled, whether by subrogation, contribution or otherwise, against the Debtor or any of the Debtor’s properties, or against any other guarantors of the Obligations, by reason of the performance by the Guarantor of his or her Obligations under this Guaranty, and the Guarantor shall have no right of subrogation to the rights of Beneficiary against the Debtor or any other guarantors, except after (i) payment in full of all of the Obligations (including costs and expenses) which may be or become payable in respect of or under the Loan Documents, and (ii) the expiration of any applicable period of time within which payments (received from the Debtor or from liquidation of any collateral given by the Debtor) may be recovered by or on behalf of a trustee or debtor in possession in proceedings for relief under the Federal Bankruptcy Code or similar insolvency law.

 

7.

Subordination of Claims. All obligations of the Debtor to the Guarantor, whether now existing or hereafter arising, are hereby made subordinate and inferior to the Obligations of the Debtor to Beneficiary under the Loan Documents; should any payment of any such obligation be collected, enforced and received by the Guarantor while any Loan Document (including this Guaranty) is in default or under circumstances which create, or which are reasonably likely to create, an event of default thereunder, then, in such event, such payment or payments shall be received by the Guarantor as trustee for Beneficiary and paid over to Beneficiary on account of the Obligations of the Debtor.

 

8.

No Duties of Beneficiary. Beneficiary shall have no duty to the Guarantor to monitor the actions or condition of the Debtor. It is the intention of the parties that Beneficiary may rely completely on this Guaranty for repayment of the Obligations arising under the Loan Documents, whether or not the Debtor is creditworthy and whether or not it would be prudent to make such loans and advances to or on behalf of the Debtor or to permit the same to remain outstanding. Beneficiary shall have no duty to the Guarantor to see to the payment and performance by the Debtor of the Debtor’s obligations or duties under the Loan Documents.

 

9.

Independent Obligations. The Obligations of the Guarantor hereunder shall be joint and several with, and shall be independent of, the Obligations of the Debtor and any other guarantors. A separate action or actions may be brought and maintained against the Guarantor whether or not an action is brought against the Debtor or any such additional guarantor. Beneficiary may proceed directly against the Guarantor without first pursuing recourse against any collateral held for the Obligations guarantied hereby.

 

10.

Representation and Warranties. The Guarantor represents and warrants to the Beneficiary that: (a) the financing provided by Beneficiary to the Debtor will confer direct, full, fair and equivalent benefits on such Guarantor; (b) such Guarantor is neither insolvent nor will be rendered insolvent by the execution of this Guaranty; and (c) there is no litigation, claim or proceeding pending or threatened against such Guarantor that, if determined adversely, would have a material adverse effect on the financial condition of such Guarantor.

 

11.

Events of Default. The following shall be “Events of Default” under this Guaranty:

 

 

(a)

The failure of the Guarantor to abide by or perform any of the covenants on the part of such Guarantor contained herein (including the covenant to pay the Obligations upon default by the Debtor).

 

 

(b)

The entry of any monetary judgment or the assessment and/or filing of any tax lien against the Guarantor that is not satisfied, superseded or transferred to bond or other security within thirty (30) days of such event or the issuance of any writ of garnishment or attachment against any property of, debts due, or rights of such Guarantor.

 

 

(c)

The filing by the Guarantor of a voluntary petition in bankruptcy, or the commencement by the Guarantor of a voluntary case under any present or future federal bankruptcy law or any similar federal or state law, or the consent by the Guarantor to the appointment of or taking possession by a receiver, trustee, liquidator, custodian or other similar official, of the Guarantor or of all or any substantial portion of the Guarantor’s assets, or the making by the Guarantor of any assignment for the benefit of creditors, or the failure of the Guarantor generally to pay the Guarantor’s debts as such become due, or the entry of a decree or order for relief by a court having jurisdiction in the premises in respect of the Guarantor in an involuntary case under any present or future federal bankruptcy law or any similar federal or state law, or appointment of a receiver, trustee, liquidator, custodian or other similar official, of such Guarantor or of all or any substantial portion of the Guarantor’s assets.

 

 

(d)

Should any warranty or representation made or furnished to Beneficiary by or on behalf of the Guarantor, in connection with this Guaranty or to induce Beneficiary to extend credit or otherwise deal with the Debtor, prove to have been false in any material respect when made or furnished.

 

12.

Remedies. If an Event of Default shall occur, Beneficiary shall be entitled to exercise all remedies available against the Guarantor at law or in equity, including, but not limited to, the recovery of all sums guaranteed hereunder, recovery of damages for the breach hereof, or specific enforcement of this Guaranty, and to recover from the Guarantor all costs and expenses of exercising such remedies hereunder, including reasonable attorneys’ fees and actual costs, whether or not the exercise of such remedies involves litigation, and whether incurred in trial or appellate proceedings.

 

13.

Waiver of Exemptions. The Guarantor waives to the fullest extent allowed by law any and all exemptions afforded by law to such Guarantor.

 

14.

Miscellaneous Provisions.

 

 

(a)

Amendments. Except as otherwise provided herein, this Guaranty may be modified, amended, altered, or changed solely upon the unanimous written consent of the Guarantor and Beneficiary.

 

 

(b)

Attorneys’ Fees. In the event any party institutes a legal proceeding to enforce its rights hereunder, the legal fees and all costs of the proceeding shall be paid by the non-prevailing party to the prevailing party, whether in arbitration, at trial, or on appeal.

 

 

(c)

Captions and Headings. Titles, captions, and headings contained in this Guaranty are inserted only as a matter of convenience and for reference and in no way define, limit, extend, or describe the scope of this Guaranty or the intent of any provision hereof.

 

 

(d)

Construction. Whenever the context may require, any pronoun used in this Guaranty shall include the corresponding masculine, feminine or neuter forms. Whenever the context may require, the singular form of any noun, pronoun, and verb shall include the plural form; the plural form of any noun, pronoun, and verb shall include the singular form.

 

 

(e)

Counterparts. This Guaranty may be executed in two (2) or more counterparts, all of which shall be considered one and the same Guaranty, and shall become effective when one counterpart has been signed by each party and delivered to the other parties hereto. The parties also hereby agree that, for purposes of the execution of this Guaranty, facsimile and .pdf signatures shall constitute original signatures.

 

 

(f)

Cross Default. This Guaranty shall be in default in the event of a default under any of the Loan Documents.

 

 

(g)

Effectiveness. This Guaranty shall become effective when executed by the Guarantor regardless of whether actually received by the Beneficiary.

 

 

(h)

Entire Agreement. This Guaranty, collectively with the other Loan Documents, constitutes the entire agreement among the parties with respect to the subject matter described herein and replaces and supersedes all prior and contemporaneous agreements by and among the parties with respect to the subject matter hereof. Any prior understandings or representations preceding the date of this Guaranty will not be binding on any party.

 

 

(i)

Further Assurances. Each party agrees to execute such other documents and instruments as are necessary to comply with any applicable law, rule, or regulation.

 

 

(j)

Governing Law. This Guaranty shall be governed by and construed in accordance with the laws of the State of Florida, without regard to its rules governing choice of law or conflicts or laws.

 

 

(k)

Interpretation. The Guarantor and Beneficiary have contributed substantially and materially to the preparation of this Guaranty; consequently, this Guaranty will not be construed more strictly against one than against any other merely by virtue of the fact that it may have been prepared by legal counsel to Beneficiary.

 

 

(l)

Legal Counsel. The parties acknowledge that Fisher, Tousey, Leas & Ball, P.A., a Florida professional service corporation (“Legal Counsel”), is legal counsel to Beneficiary, that Legal Counsel prepared this Guaranty on behalf of and in the course of its representation of the Beneficiary. The Guarantor (i) acknowledge that Legal Counsel represents Beneficiary in this matter, and (ii) acknowledge they have had an opportunity to consult with legal and tax counsel of the Guarantor’s choice. The parties agree that in the event of a dispute between the Beneficiary and the Guarantor, Legal Counsel may continue to represent the Beneficiary. The Guarantor acknowledges that no attorney-client relationship exists between the Guarantor and Legal Counsel.

 

 

(m)

Notices. All notices, requests, demands and other communications which are required or may be given under this Guaranty shall be in writing and shall be deemed to have been duly given (i) when received if personally delivered; (ii) the day after being sent, if sent for next day delivery to a domestic address by a recognized overnight service (e.g. Federal Express); and (iii) five (5) days after being sent, if sent by certified or registered mail, return receipt requested. In each case notice shall be sent as follows:

 

 

If to the Beneficiary:         Richard Justus

9636 Heckscher Drive

Jacksonville, Florida 32226

 

With a copy to:         Fisher, Tousey, Leas & Ball, P.A. Attention: Marvin C. Kloeppel, Esquire 501 Riverside Avenue, Suite 700

Jacksonville, Florida 32202

 

If to the Guarantor:         SPAR Group, Inc.

333 Westchester Avenue South Building, Suite 204 White Plains, New York 10604

 

With a copy to:         Bodman Law

Attention: Carrie Leahy, Esquire 201 South Division Street, Suite 400 Ann Arbor, Michigan 48104

 

or to such other address as such party shall have specified by notice in writing to the other parties.

 

 

(n)

Rights and Remedies Cumulative. Each right, power and remedy of the Beneficiary as provided for in this Guaranty or now or hereafter existing under applicable laws or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power or remedy provided for in this Guaranty or now or hereafter existing under applicable laws or otherwise, and the exercise or beginning of the exercise by the Beneficiary of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by the Beneficiary of any or all such other rights, powers or remedies.

 

 

(o)

Severability. If any provision in this Guaranty is held to be invalid, illegal, or unenforceable in any respect or the application of any provision is held to be invalid, illegal, or unenforceable as to any person, fact, circumstance or situation, such invalidity, illegality, or unenforceability shall not affect the remainder of such provision, any other provision hereof, or any permitted application. This Guaranty shall be construed so as to be valid, legal, binding and enforceable to the fullest extent permitted by law, and as if this Guaranty had never contained any such invalid, illegal, or unenforceable provision.

 

 

(p)

Successors. Except as otherwise provided herein, all provisions of this Guaranty shall be binding upon, inure to the benefit of, and be enforceable by and against the respective heirs, executors, administrators, personal representatives, successors and assigns of the parties hereto.

 

 

(q)

Survival of Representations, Warranties, and Covenants. The covenants, representations, warranties and other written statements set forth in this Guaranty or any separate instrument pursuant to which the parties subscribe to this Guaranty shall survive the execution and delivery hereof and thereof. Each of such covenants, representations, warranties and other written statements shall be deemed to be independent and material and to have been relied upon by the party to whom made.

 

 

(r)

Time. If any date described in this Guaranty falls on a Saturday, Sunday or national holiday that date shall be automatically extended to the next day that is not a Saturday, Sunday or national holiday. Time shall be of the essence with regards to the performance of each and every provision of this Guaranty.

 

 

 

(s)

Venue and Jurisdiction. The Guarantor consents to exclusive jurisdiction and venue in the courts having jurisdiction over Duval County, Florida in connection with any action, suit, or other proceeding arising from, relating to, or in any way connected with this Guaranty. The Guarantor agrees that they will not assert in any such action, suit, or proceeding that they are not personally subject to the jurisdiction of such court, that the action, suit, or proceeding is brought in an inconvenient forum, and/or that the venue of the action, suit, or proceeding is improper.

 

 

(t)

Waiver. The failure to insist upon strict performance of a covenant hereunder or of any obligation hereunder, irrespective of the length of time for which such failure continues, shall not be a waiver of such right to demand strict compliance in the future. No consent or waiver, express or implied, to or of any breach or default in the performance of any obligation hereunder, shall constitute a consent or waiver to or of any other breach or default in the performance of the same or any other obligation.

 

 

(u)

WAIVER OF JURY TRIAL. GUARANTOR KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AFTER OPPORTUNITY FOR CONSULTATION WITH INDEPENDENT COUNSEL, WAIVES GUARANTOR’S RIGHT TO TRIAL BY JURY IN ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING ARISING FROM OR BASED UPON ANY LITIGATION OR OTHER PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR OBLIGATIONS ARISING FROM THIS GUARANTY OR ANY COURSE OF DEALING, COURSE OF CONDUCT, STATEMENT (VERBAL OR WRITTEN) OR ACTION IN CONNECTION WITH THIS GUARANTY. GUARANTOR AGREE THAT:

 

 

(i)

GUARANTOR SHALL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED.

 

 

(ii)

THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY NEGOTIATED BY SUCH GUARANTOR AND BENEFICIARY AND SHALL BE SUBJECT TO NO EXCEPTIONS.

 

 

(iii)

NEITHER GUARANTOR NOR BENEFICIARY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS GUARANTY (INCLUDING THIS SECTION) WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

 

 

 

Remainder of Page Intentionally Blank – Signature Page Follows

 

 

 

 

 

IN WITNESS WHEREOF, the Guarantor have duly executed and delivered this Guaranty as of the day and year first written above.

 

GUARANTOR:

 

SPAR GROUP, INC.,

a Delaware corporation

 

 

 

By:         /s/ Michael Matacunas

Name: Michael Matacunas

Title: President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

[Signature Page to Guaranty – Richard L. Justus]

 

EXHIBIT A NUMBER OF SHARES SOLD

 

Number of Shares/Percentage Sold

Company

All of Beneficiary’s shares of common stock

Resource Plus of North Florida, Inc.

All of Beneficiary’s shares of common stock

Mobex of North Florida, Inc.

All of Beneficiary’s membership interest

Leasex, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

         10

 
ex_937946.htm

Exhibit 10.60

 

 

 

 

 

 

https://cdn.kscope.io/83f6ac8134569bddda2ebd1c64a9345d-ex_937946img001.jpg

 

 

 

April 26, 2024

 

SPAR Marketing Force, Inc. SPAR Canada Company 333 Westchester Avenue South Building, Suite 204

 

White Plains, New York 10604 Attn:         Chief Financial Officer

 

Re: NORTH MILL CAPITAL LLC, a Delaware limited liability company (Lender), SPAR MARKETING FORCE, INC., a Nevada corporation (US Borrower), SPAR CANADA COMPANY, an unlimited company organized under the laws of Nova Scotia (Canadian Borrower), and each of SPAR GROUP, INC., a Delaware corporation, SPAR ACQUISITION, INC., a Nevada corporation, SPAR CANADA, INC., a Nevada corporation, SPAR TRADEMARKS, INC., a Nevada corporation, and SPAR ASSEMBLY & INSTALLATION, INC., a Nevada corporation (each as a Guarantor) (as amended, modified, supplemented, substituted, extended or renewed from time to time, the "Loan Agreement")

 

Ladies and Gentlemen:

 

We refer you to the above Loan Agreement. Capitalized terms used in this letter agreement, but not defined herein, shall have the same meanings ascribed to such terms in the Loan Agreement.

 

Pursuant to Section 7.1(b)(ii) of the Loan Agreement, US Borrower is forbidden to incur any indebtedness without Lender's prior written consent, other than as otherwise permitted in the Loan Agreement.

 

Lender understands that US Borrower will be purchasing the 49% interest in the shares and membership interest of each of Resource Plus of North Florida, Inc., Mobex of North Florida, Inc. and Leasex, LLC from Richard Justice, the current owner. Upon completion of this acquisition, US Borrower will own 100% of those three entities. The purchase price for the acquisition of these shares is $3 million dollars payable over five years as follows: $250,000 at closing, $250,000 on the date that is 6 months from the closing date, and $500,000 on each June 30 thereafter. The terms of acquisition are set forth in the securities purchase agreement, promissory note, securities pledge and escrow agreement and guaranty a attached hereto as Exhibit A (collectively, the “Purchase Agreement”).

 

By their signature below, the undersigned represent to Lender that i) Exhibit A is a true and accurate copy of the Purchase Agreement, and ii) reaffirms to Lender that all of their respective obligations under the Loan Agreement remain outstanding without defense, offset or counterclaim or claim of any kind.

 

Based on the foregoing confirmation, Lender consents to US Borrower executing the Purchase Agreement and incurring the indebtedness associated thereto and waives any default caused by Borrower executing the Purchase Agreement and incurring such indebtedness and the granting of a lien on the shares acquired under the Purchase Agreement.

 

Further, in consideration of our approval Borrower shall, contemporaneous with the execution hereof, pay to Lender an approval fee of Five Thousand Dollars ($5,000), plus the legal fees charged by our in-house counsel for the preparation of this letter agreement.

 

This letter agreement shall be considered a supplement to, and part of, the Loan Agreement. Capitalized terms not defined herein shall have the same meaning ascribed to such terms in the Loan Agreement. This letter agreement shall not constitute a waiver of any Event of Default, if any so exists. Except as herein set forth the Loan Agreement shall remain in full force and effect.

 

 

 

 

NORTH MILL CAPITAL LLC

 

By:                   Name: Beatriz Hernandez

Title:         Executive Vice President

 

Agreed to:

 

 

 

 

SPAR MARKETING FORCE, INC., a Nevada corporation, as US Borrower

 

 

By:                   Name: Michael Matacunas

Title:         CEO

 

 

 

 

 

SPAR CANADA COMPANY, an unlimited company organized under the laws of Nova Scotia, as Canadian Borrower

 

By:                   Name: Michael Matacunas

Title:         CEO

 

 

 

 

 

SPAR GROUP, INC., a Delaware corporation, as a Guarantor

 

 

 

By:                   Name: Michael Matacunas

Title:         CEO

 

 

 

 

SPAR ACQUISITION, INC., a Nevada corporation, as a Guarantor

 

 

By:                   Name: Michael Matacunas

Title:         CEO [Signatures continued on next page]

 

 

 

 

SPAR CANADA, INC., a Nevada corporation, as a Guarantor

 

 

By:                   Name: Michael Matacunas

Title:         CEO

 

 

 

 

SPAR TRADEMARKS, INC., a Nevada corporation, as a Guarantor

 

 

By:                   Name: Michael Matacunas

Title:         CEO

 

SPAR ASSEMBLY & INSTALLATION, INC., a

Nevada corporation, as a Guarantor

 

 

 

 

 

 

By:                   Name: Michael Matacunas

Title:         CEO

 

Exhibit A Purchase Agreement

 
ex_938191.htm

Exhibit 10.61

 

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is effective as of April 18, 2024 (the “Closing Date”) by and between SPAR Marketing Force, Inc., a Nevada corporation (“Buyer”) and Richard Justus (“Seller”).

 

WHEREAS, Seller owns (i) forty-nine percent (49%) of the common stock in Resource Plus of North Florida, Inc., a Florida corporation (“RP”), (ii) forty-nine percent (49%) of the common stock in Mobex of North Florida, Inc., a Florida corporation (“Mobex”), and (iii) forty-nine percent (49%) of the membership interests in Leasex, LLC, a Florida limited liability company (“Leasex” and collectively, with RP and Mobex, the “Acquired Companies” and each individually, an “Acquired Company”); and

 

WHEREAS, Seller desires to sell, and Buyer desires to purchase, (i) all of the common stock of RP owned by Seller, being 49 shares, (ii) all of the common stock of Mobex owned by Seller, being 980 shares, and (iii) all of the membership interests of Leasex owned by Seller, being 49% of the membership interests (collectively, the “Acquired Securities”) as set forth below.

 

NOW, THEREFORE, the parties, intending to be legally bound and in consideration of the premises and mutual promises herein contained, agree as follows:

 

 

1.

Purchase Price. Buyer shall pay Seller an aggregate purchase price of Three Million and No/100 Dollars ($3,000,000.00) for the Acquired Securities, which shall be paid as follows:

 

 

a.

Within five (5) business days of the Closing Date, the Buyer will remit Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) in readily available funds via wire transfer pursuant to the wire instructions provided prior to the date hereof.

 

 

b.

The remaining Two Million Seven Hundred Fifty Thousand and No/100 Dollars ($2,750,000.00) shall be paid pursuant to the terms of the Secured Promissory Note attached hereto as EXHIBIT A (the “Note”).

 

 

2.

Termination of Shareholders Agreements and Operating Agreement.

 

 

a.

The parties agree that the Shareholders Agreement of RP dated January 1, 2018 (the “RP Shareholders’ Agreement”) shall hereby be terminated and of no further force and effect as it applies to Seller, provided, however, that Section 5.04 (Confidentiality) shall continue to apply to Seller for a period of three (3) years after the Closing Date.

 

 

b.

The parties agree that the Shareholders Agreement of Mobex dated January 1, 2018 (“Mobex Shareholders’ Agreement”) shall hereby be terminated and of no further force and effect as it applies to Seller, provided, however, that Section 5.04 (Confidentiality) shall continue to apply to Seller for a period of three (3) years after the Closing Date.

 

 

c.

The parties agree that the Operating Agreement of Leasex dated January 1, 2017, as amended (the “Operating Agreement”), shall hereby be terminated and of no further force and effect as it applies to Seller.

 

 

3.

Closing Deliveries. At closing:

 

 

a.

Seller will deliver to Buyer:

 

 

(i)

A Stock Power in the form attached as Exhibit B for the Acquired Securities in RP and Mobex;

 

 

(ii)

A settlement statement; and

 

 

(iii)

Such other documents as may be required by this Agreement or reasonably must be requested by Buyer and that are not inconsistent with the provisions of this Agreement.

 

 

b.

Buyer will deliver to Seller:

 

 

(i)

The Note;

 

 

(ii)

A Securities Pledge and Escrow Agreement in the form attached as

Exhibit C;

 

 

(iii)

A Guaranty in the form attached as Exhibit D;

 

 

(iv)

A settlement statement; and

 

 

(v)

Such other documents as may be required by this Agreement or reasonably must be requested by Buyer and that are not inconsistent with the provisions of this Agreement.

 

 

4.

Seller’s Representations and Warranties. Seller represents and warrants to Buyer that:

 

 

a.

Seller has full power and authority to enter into this Agreement and any agreements and instruments contemplated herein (collectively, the “Transaction Documents”), to carry out the obligations hereunder and thereunder and to consummate the transactions hereby and thereby. Seller has duly authorized the execution, delivery and performance of the Transaction Documents.

 

 

b.

Seller is the record and beneficial owner and holder of the Acquired Securities, and the Acquired Securities are free and clear of any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership except for the restrictions in the RP Shareholders’ Agreement, the Mobex Shareholders’ Agreement and the Operating Agreement. All of the Acquired Securities have been duly authorized and validly issued in compliance with all legal requirements and are fully paid and non-assessable and owned by Seller free and clear of any encumbrances.

 

 

c.

In connection with the Transaction Documents and any other certificate or statement made to Buyer by or on behalf Seller in connection with the transactions contemplated hereby, Seller has not made any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made.

 

 

d.

The execution, delivery, and performance by Seller of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with or result in a violation or breach of any provision of any Law applicable to Seller.

 

 

e.

To Seller’s Knowledge, the Acquired Companies have no material liabilities of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for liabilities reflected or reserved against on the most recent calendar month balance sheet of the Acquired Companies (“Balance Sheet”) provided to the Buyer. Since the date of the last Balance Sheet, the Acquired Companies have conducted their business in the ordinary course of business. Except for the 2023 federal income taxes and related tax returns for the Acquired Companies, which the Acquired Companies have been granted an extension of time to file by the IRS, the Acquired Companies have withheld and paid all applicable taxes and filed all applicable tax returns. “Seller’s Knowledge” shall mean Seller’s actual knowledge after due inquiry.

 

 

5.

Buyer’s Representations and Warranties. Buyer represents and warrants to Seller that:

 

 

a.

Buyer has full power and authority to enter into the Transaction Documents, to carry out the obligations hereunder and thereunder and to consummate the transactions hereby and thereby. Buyer has duly authorized the execution, delivery, and performance of the Transaction Documents.

 

 

b.

In connection with the Transaction Documents and any other certificate or statement made to Seller by or on behalf of Buyer in connection with the transactions contemplated hereby, Buyer has not made any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made.

 

 

c.

The execution, delivery, and performance by Buyer of the Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (1) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws, or other organizational documents of the Acquired Companies, and (2) conflict with or result in a violation or breach of any provision of any Law applicable to Buyer or the Acquired Companies.

 

 

d.

Buyer is not now insolvent, and Buyer will not be rendered insolvent immediately following the Closing after giving effect to all of the transactions contemplated by this Agreement. As used in this Section 5.d, “Insolvent” means that the sum of the debts and other liabilities of a Person exceed the present fair saleable value of such Person’s assets.

 

 

6.

Resignation of Seller. Seller hereby resigns from all positions he holds with the Acquired Companies and/or their affiliates, whether as an officer, director or otherwise, and Seller is not entitled to any payments, benefits, severance or other compensation under any Employment Agreement or other similar agreement with the Acquired Companies.

 

 

7.

Mutual Release. In consideration of Buyer's purchase of the Acquired Securities, and notwithstanding anything to the contrary in this Agreement, both parties, on behalf of themselves and their agents, representatives, successors and assigns, hereby unconditionally and irrevocably release and forever discharge the other party , and each of its past and present stockholders, affiliates, directors, officers, employees, attorneys, agents, servants, representatives, successors and assigns of and from any and all past and present claims, demands, obligations, suits, damages, liabilities, actions, or causes of action, at law or in equity, known or unknown, whether arising by statute, law or otherwise, of any kind or nature whatsoever, that in any manner relate to any matter of any nature whatsoever related to the Acquired Companies and the business conducted by Acquired Companies and their subsidiaries and affiliates, including with respect to Seller, any sums due under any employment agreement or similar arrangement with any Acquired Company. However, such released claims do not include any of party's rights, powers, interests and claims arising under this Agreement.

 

 

8.

Seller is Sophisticated Investor. Seller acknowledges and agrees that: (a) he is a sophisticated, experienced investor and, as such, he has made his own due diligence analysis, investment and credit analysis and decision to sell the Acquired Securities to Buyer, and that he is responsible for making his own evaluation of any information about the Acquired Companies that he may have received either directly or indirectly from the Acquired Companies and/or Buyer; (b) the Acquired Companies and/or Buyer and /or any employee, officer, director, or other representative of Buyer have and will continue to develop or obtain material otherwise important non-public information ("Non-Public Information"), such Non-Public Information has not been given or made available to Seller, and Seller is selling the Acquired Securities irrespective of the existence of, without regard to, and without receiving any Non-Public Information, whether or not material; and (c) neither Buyer nor any employee, officer, or director of Buyer (x) has made or given or makes or gives any representation, warranty or undertaking of any kind, express or implied, as to, or accepts or assumes any responsibility or liability of any kind for, (i) the delivery, accuracy, reliability, adequacy, completeness or reasonableness of any information about the Acquired Companies (including Non-Public Information) whether or not known to Seller, or (ii) any interpretations or assumptions by Seller based upon any information about the Acquired Companies, or (y) shall be under any obligation whatsoever to advise Seller or any other person respecting the existence of or any change in any information about the Acquired Companies (including Non-Public Information), whether additional or otherwise, to provide any access thereto, or to review, make public, update or correct any inaccuracy in any information about the Acquired Companies.

 

 

9.

Buyer is Sophisticated Investor. Buyer acknowledges that, except for the matters that are expressly covered by the provisions of this Agreement, Buyer is relying on its own investigation and analysis in entering into this Agreement and consummating the transactions contemplated hereby. Buyer acknowledges that, except as expressly set forth in this Agreement, it is consummating the transactions without any representation, warranty or assurance, express or implied, at law or in equity, by Seller or any of the Seller's respective advisors. With respect to any projection or forecast delivered by or on behalf of Seller to Buyer, Buyer acknowledges that (x) there are uncertainties inherent in attempting to make such projections and forecasts, (y) the accuracy and correctness of such projections and forecasts may be affected by information which may become available through discovery or otherwise after the date of such projections and forecasts and (z) it is familiar with each of the foregoing. Notwithstanding the foregoing, nothing contained in this Section 9 will be construed to limit claims based on fraud or intentional misstatements.

 

 

10.

Miscellaneous.

 

 

a.

Amendment and Modification. No change, modification, or waiver of any provision of this Agreement shall be valid or binding unless it is in writing dated after the date hereof and signed by the parties intended to be bound. No waiver of any breach, term, or condition of this Agreement by either party shall constitute a subsequent waiver of the same or any other breach, term or condition or a continuing waiver after demand for strict compliance.

 

 

 

b.

Counterparts. This Agreement or any amendment or waiver hereto may be executed in any number of counterparts, which may be delivered physically or electronically, all such counterparts shall be deemed to constitute one and the same instrument, and each of the executed counterparts shall be deemed an original hereof.

 

 

c.

Entire Agreement. This Agreement contains the entire agreement and understanding of the parties with respect to the subject matter hereof, and all prior agreements and understandings of the parties with respect to such subject matter are her by superseded. However, this Agreement shall not be subject to or modify or affect any of the Other Agreements.

 

 

d.

Fees and Expenses. Each party shall bear its own fees and expenses in connection with this Agreement.

 

 

e.

Limitations of Liability. Notwithstanding any other provision of this Agreement or any agreement executed in connection herewith to the contrary, in no event will any party or any of its affiliates be liable for any special, incidental, indirect, exemplary, punitive or consequential damages or lost profits in connection with any claim, loss, damage or injury arising out of the conduct of such party pursuant to this Agreement, regardless of whether the nonperforming party was advised of the possibility of such damages.

 

 

f.

Further Assurances. Each of the parties to this Agreement in good faith will use his or its reasonable best efforts to, and shall with reasonable diligence, take all action and to do all things necessary in order to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, executing and delivering or otherwise providing such further endorsements, documents, instruments or information required by any party as reasonably necessary or desirable to effect the purpose and intent of this Agreement and to carry out its provisions.

 

 

g.

Successors; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors in interest, and their respective permitted assigns. No party to this Agreement may assign or transfer any right or obligation under this Agreement without the prior written consent of the other party to this Agreement; provided that this Agreement is subject to an automatic collateral assignment to Buyer’s lender under its existing security interests.

 

 

h.

Governing Law; Venue. This Agreement and the rights of the parties hereunder shall be interpreted and enforced in accordance with and governed by the laws of the State of New York, other than its laws respecting the choice of law. The parties each hereby submit to jurisdiction in Florida for the enforcement of this Agreement and hereby waive any and all personal rights under the laws of Florida to object to jurisdiction within the state for purposes of litigation to enforce this Agreement. The parties consent to exclusive jurisdiction and venue in the courts having jurisdiction over Duval County, Florida in connection with any action, suit, or other proceeding arising from, relating to, or in any way connected with this Agreement. Each party agrees that it will not assert in any such action, suit, or proceeding that it is not personally subject to the jurisdiction of such court, that the action, suit, or proceeding is brought in an inconvenient forum, and/or that the venue of the action, suit, or proceeding is improper.

 

 

i.

Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

 

j.

Public Announcements. Any public announcement or similar publicity with respect to this Agreement or the transactions contemplated hereby will be issued, if at all, at such time an in such manner as Buyer determines.

 

SIGNATURES ON THE FOLLOWING PAGE

 

 

 

 

 

The parties have duly signed this Agreement as of the date set forth above:

 

Seller

 

 

 

By:           Richard Justus

 

 

Spar Marketing Force, Inc.

 

 

By:                    Mike Matacunas

Its:         President

 

 

The parties have duly signed this Agreement as of the date set forth above:

 

Seller

 

 

 

By:           Richard Justus

 

 

Spar Marketing Force, Inc.

 

 

By:                    Michael Matacunas

Its:         President

 
ex_938302.htm

Exhibit 10.78

 

 

AMENDED AND RESTATED UNSECURED PROMISSORY NOTE

 

$4,000,000

 

This Amended and Restated Senior Unsecured Promissory Note (this "Note") amends, restates and replaces, in its entirety, that certain Senior Unsecured Promissory Note dated March 13, 2026, effective as of March 17, 2026 (the “Effective Date”).

 

 

Lender

 

PC Group, Inc.

5282 South Commerce Dr., Suite D292 Murray, Utah 84107

Attn: John Merrill, CFO

 

Borrower

SPAR Marketing Force, Inc. 110 East Boulevard, Suite 1600

Charlotte, NC 28203

Attn: William Linnane, President & CEO

 

Borrower is a subsidiary of SPAR Group, Inc., a publicly traded company.

 

FOR VALUE RECEIVED, SPAR Marketing Force, Inc., (“Borrower”) promises to pay to the order of PC Group, Inc. (“Lender”), the principal sum of Four Million Dollars ($4,000,000), or such lesser amount as is advanced and outstanding hereunder (the “Loan Amount”), on March 16, 2029 (the “Maturity Date”), together with interest thereon as provided in Section 2 of this Note and as adjusted pursuant to the terms of Section 15 of this Note.

 

 

1.

Loan Advances

 

The loan shall be funded in two tranches. The Initial Advance of $3,000,000 shall be made on or before March 17, 2026, with a Second Advance of $1,000,000 available for Borrower to draw on or after July 17, 2026. Borrower may draw the second tranche only once.

 

 

2.

Interest

 

Interest shall accrue on the outstanding Loan Amount at a rate of Eight Percent (8.0%) per annum, calculated on a 365-day year basis.

 

 

3.

Payment Terms

 

Borrower shall make monthly interest-only payments beginning April 17, 2026 ,and each month thereafter, on the then outstanding Loan Amount.

 

 

4.

Maturity

 

The loan shall mature thirty-six (36) months from the Effective Date (the “Term”), on March 16, 2029 (the “Maturity Date”).

 

On the Maturity Date Borrower shall pay all outstanding principal together with accrued but unpaid interest and any other amounts due under this Note.

 

 

5.

Prepayment

 

Borrower may prepay this Note at any time without penalty. Lender shall have no early call rights prior to maturity.

 

 

6.

Equity Consideration

 

As additional consideration for the loan, Borrower shall cause SPAR Group, Inc. to issue to Lender One Million (1,000,000) shares of common stock, par value $0.01 per share (“Common Stock”) at a deemed value of $0.80 per share, in a private placement and such shares will be subject to Rule 144.

 

Such shares shall be issued within thirty (30) days after execution of this Note.

 

Borrower represents that the shares shall be duly authorized, validly issued, fully paid and non-assessable and free of liens or restrictions other than applicable securities laws.

 

 

7.

Events of Default

 

The following shall constitute an Event of Default:

 

 

1.

Failure to make any payment when due.
 

2.

Bankruptcy or insolvency of Borrower.
 

3.

Breach of any material covenant or representation in this Note.
 

4.

Failure to deliver the equity consideration described above.

 

 

 

8.

Default Interest

 

Upon an Event of Default, interest shall accrue at the rate of Twelve Percent (12%) per annum.

 

 

9.

Remedies

 

Upon the occurrence of an Event of Default, Lender may declare all amounts immediately due and payable and pursue any remedies available at law or equity.

 

 

10.

Wire Instructions

 

Loan proceeds shall be wired to:

 

Beneficiary Account Name

SPAR Group Inc

 

Routing Number

 

Account Number

 

Bank

 

SWIFT

 

 

11.

Governing Law

 

This Note shall be governed by the laws of the State of Utah, and venue for any dispute shall be Salt Lake County, Utah.

 

 

12.

Parent Company Guaranty

 

SPAR Group, Inc. ("Guarantor") hereby irrevocably and unconditionally guarantees the full and prompt payment and performance of all obligations of Borrower under this Note.

 

This guaranty is a continuing, absolute, and unconditional guaranty of payment, and Lender shall not be required to exhaust remedies against Borrower prior to enforcing this guaranty.

 

Guarantor waives notice of acceptance, demand, diligence, and presentment, and agrees that its obligations shall remain in effect until all amounts under this Note have been fully paid.

 

 

 13.

Information Rights

 

So long as any amounts remain outstanding under this Note, Borrower and Guarantor shall provide Lender with copies of all reports and filings made with the U.S. Securities and Exchange Commission, including Forms 10-K, 10-Q, and 8-K, promptly after such filings become publicly available.

 

Borrower shall also promptly notify Lender of any Event of Default, material litigation, or any merger, acquisition, or change of control involving Borrower or Guarantor.

 

 

14.

Attorneys’ Fees and Enforcement

 

Borrower and Guarantor agree to reimburse Lender for all reasonable attorneys’ fees, court costs, and enforcement expenses incurred in protecting or enforcing Lender’s rights under this Note, including amounts incurred in litigation, bankruptcy, or collection proceedings.

 

Such amounts shall be added to the obligations under this Note and shall accrue interest at the Default Interest Rate until paid.

 

 

15.

Equity Price Protection

 

If, during the Term, SPAR Group, Inc. issues or sells any shares of its Common Stock at a price per share below $0.80 per share or equity securities convertible into Common Stock with an exercise price for the purchase of Common Stock at a price per share below $0.80 (each, a "Dilutive Issuance"), Borrower shall pay Lender, in cash, an amount equal to (i) 1,000,000 multiplied by (ii) the difference between $0.80 and the price per share of such Dilutive Issuance, less any prior cash amounts paid by Borrower to Lender pursuant to this Section 15 (the “Anti-Dilution True-Up Payments”), within 30 days of such Dilutive Issuance.

 

At each anniversary of the Effective Date (“Anniversary Date”), including the Maturity Date, if the trading value of the Common Stock is less than $0.80 per share, Borrower shall pay Lender, in cash, the difference between $800,000 and the then-current trading value of the Common Stock, less any prior cash amounts paid by Borrower to Lender pursuant to this Section 15 (the “Anniversary True-Up Payments” and, together with the Anti-Dilution True-Up Payments, the “Cash True-Up Payments”). All Cash True-Up Payments made by Borrower to Lender shall be credited against the outstanding Loan Amount upon receipt by Lender of each such Cash True-Up Payment.

 

On the Maturity Date, assuming compliance with this Section 15, $800,000, less the total amount of all Cash True-Up Payments made by Borrower pursuant to this Section 15, shall be credited against the outstanding Loan Amount. In no event will Borrower or SPAR Group, Inc. be required to pay cash or deliver shares of Common Stock exceeding an aggregate value of $800,000 pursuant to this Section 15.

 

For illustrative purposes only, if, during the Term, SPAR Group, Inc. issues shares of Common Stock at $0.60 per share and on the second Anniversary Date the Common Stock trades at $0.50 per share, then Borrower will make an Anti-Dilution True-Up Payment of $200,000 and an Anniversary True-Up Payment of $100,000, equaling a total of $300,000 in Cash True-Up Payments. Assuming that on the Maturity Date (i) the trading value of the Common Stock is $1.00 per share and (ii) no other Cash True-Up Payments have been made prior to the Maturity Date, a credit of $500,000 will be applied against the outstanding Loan Amount ($800,000 minus $300,000 in Cash True-Up Payments made prior to the Maturity Date), representing $800,000 in total value delivered to Lender though the issuance of equity consideration and payment of Cash True-Up Payments.

 

 

IN WITNESS WHEREOF, each of the undersigned has caused this Note to be duly

 

executed by its officers, thereunto duly authorized as of the Effective Date.

 

 

LENDER

PC Group, Inc.

 

By:           John Merrill, CFO

 

Date:          

 

 

 

BORROWER

 

SPAR Marketing Force, Inc.

 

By:           William Linnane, President & CEO

 

Date:          

GUARANTOR

 

SPAR Group, Inc.

 

By:           Name:                    Title:                   

Date:          

 
ex_895282.htm

Exhibit 21.1

 

 

 

 

SPAR Group, Inc.
List of Subsidiaries at December 31 2025

 

Owned Subsidiaries

        

State or Country of Incorporation

SPAR Acquisition, Inc.

     100 %

Nevada

SPAR Assembly & Installation, Inc. (f/k/a SPAR National Assembly Services, Inc.)

     100 %

Nevada

SPAR Canada Company

     100 %

Nova Scotia, Canada

SPAR Canada, Inc.

     100 %

Nevada
SPAR Field Administration, Inc.     100 % Nevada

SPAR Group International, Inc.

     100 %

Nevada

SPAR, Inc.

     100 %

Nevada

SPAR International Ltd.

     100 %

Cayman Islands

SPAR Marketing Force, Inc.

     100 %

Nevada
SPAR Merchandising & Assembly, Inc.     100 % Nevada

SPAR Trademarks, Inc.

     100 %

Nevada
SPAR China Ltd.     100 % China
SPAR NMS Holding, Inc. (inactive)     100 %

Nevada
NMS Retail Services, ULC (inactive)     100 % Nova Scotia, Canada

Resource Plus of North Florida, Inc. (RPI")

     100 %

Florida

BDA Resources, LLC 1

     70 %

Florida

Leasex, LLC. (Operated by and with RPI)

     100 %

Florida

Mobex of North Florida, Inc. (Operated by and with RPI)

     100 %

Florida
SPAR Merchandising Romania, LTD (dissolved effective March 2025)     100 % Romania

 

1 RPI owns a 70% interest in BDA Resource, LLC, a Florida limited liability company.

 

 
 

 

 

SPAR Group, Inc.
List of Former Subsidiaries included in the Company's Financial Statements for the Periods Owned by the Company

 

 

Formerly Owned Subsidiaries 

      

State or Country of Incorporation 

National Merchandising Services, LLC2

   51 %

Nevada

SGRP Meridian Proprietary Limited ("Meridian")3

   51 %

South Africa

CMR-Meridian Proprietary Limited4

   51 %

South Africa
Bordax Retail Services (Pty) Ltd 4   51 % South Africa
Bordax Retail Services Gauteng (Pty) Ltd 4   51 % South Africa

SPARFACTS Australia (Pty), Ltd.5

   51 %

Australia

SPAR (Shanghai) Marketing Management Company Ltd.6

   51 %

China

Unilink7A

   51 %

China

SPAR DSI Human Resource Company7B

   38.5 %

China

SPAR TODOPROMO, SAPI, de CV8

   51 %

Mexico

SPAR NDS Tanitim Ve Danismanlik A.S. 9

   51 %

Turkey

SPAR KROGNOS Marketing Private Limited 10

   51 %

India

Preceptor Marketing Services Private Limited 10

   51 %

India

SGRP Brasil Participações Ltda. ("Brazil Holdings")11A

   100 %

Brazil

SPAR Brasil Serviços de Merchandising e Tecnologia S.A. ("SPAR Brazil")11B

   51 %

Brazil

SPAR Brasil Serviços Ltda. (f/k/a New Momentum Ltda.)11C

   51 %

Brazil

SPAR Brasil Serviços Temporários Ltda. (f/k/a New Momentum Serviços Temporários Ltda.)11C 

   51 %

Brazil
Plus Trade Do Brasil Prestacao De Servicos Ltda12   51 % Brazil
SPAR Brasil Servicos Ltda 12   51 % Brazil
SGRP Servicos Ltda12   51 % Brazil

SPAR FM Japan, Inc.13

   100 %

Japan

 

2 The Company sold its 51% interest in this joint venture effective December 31, 2023.

3 The Company sold its 51% interest in this joint venture effective March 31, 2024

4 Owned by and being sold with Meridian.

6 The Company sold its 51% interest in this joint venture effective December 31, 2023.

7 The Company sold its 51% interest in this joint venture effective April 8, 2024

7A Owned by and being sold with SPAR (Shanghai) Marketing Management Company Ltd.

7B Inactive and being liquidated.  It is 75.5% Owned by and being sold with SPAR (Shanghai) Marketing Management Company Ltd.

8 The Company sold its 51% interest in this joint venture effective December 19, 2024

9 The Company assigned its 51% interest in this joint venture effective August 13, 2024

10 The Company sold its 51% interest in this joint venture effective August 31, 2024

11A The Company sold 100% interest in SGRP Brasil Participações Ltda. effective June 2024

11B Brazil Holdings owns 51% of SPAR Brasil Serviços de Merchandising e Tecnologia S.A. ("SPAR Brazil"), and Brazil Holdings will continue to own those interests after the Brazil Holdings Sale.

11C Brazil Holdings effectively owns slightly more than 51% of this subsidiary since SPAR Brazil owns 99% and Brazil  Holdings owns 1% of the equity in this subsidiary, and SPAR Brazil and Brazil Holdings will continue to own those equity interests after the Brazil Holdings Sale.

12 The Company believes SPAR Brazil owned and will continue to own those interest after the Brazil Holdings Sale

13 The Company sold its 51% interest in this joint venture effective August 30, 2024.

 

 

 
ex_895283.htm

Exhibit 23.1

 

 

 

Consent of Independent Registered Public Accounting Firm

 

 

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-152706, 333-189964, 333-228185 and 333-254991) of SPAR Group, Inc. of which our report dated March 31, 2026, relating to the consolidated financial statements, which appears in this Annual Report on Form 10-K for the year ended December, 31, 2025.

 

/s/ BDO USA, P.C.

  

Troy, Michigan

March 31, 2026

 

 
ex_895284.htm

Exhibit 31.1

 

 

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, William Linnane, certify that:

 

1.     I have reviewed this annual report on Form 10-K for the year ended December 31, 2025, of SPAR Group, Inc.;

 

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.     The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.     The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

   

Date: March 31, 2026

/s/ William Linnane

  

William Linnane, President and Chief Executive Officer

 

 
ex_895285.htm

Exhibit 31.2

 

 

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Steven Hennen, certify that:

 

1.     I have reviewed this annual report on Form 10-K for the year ended December 31, 2025 of SPAR Group, Inc.;

 

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.     The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5.     The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date:  March 31, 2026

/s/ Steven Hennen

  

Steven Hennen, Chief Financial Officer,
Treasurer and Secretary

 

 
ex_895286.htm

Exhibit 32.1

 

 

 

Certification of Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the annual report on Form 10-K for the year ended December 31, 2025 (this "Report"), of SPAR Group, Inc. (the "Registrant"), the undersigned hereby certifies that, to his knowledge:

 

1.            The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

 

2.            The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

 

 

/s/ William Linnane

  

 

 

William Linnane

  

 

 

President and Chief Executive Officer

  

 

 

 

  

 

 

 March 31, 2026  

 

 

 

A signed original of this written statement required by Section 906 has been provided to SPAR Group, Inc. and will be retained by SPAR Group, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
ex_895287.htm

Exhibit 32.2

 

 

 

Certification of Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the annual report on Form 10-K for the year ended December 31, 2025 (this "Report"), of SPAR Group, Inc. (the "Registrant"), the undersigned hereby certifies that, to her knowledge:

 

1.            The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

 

2.            The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

 

 

/s/ Steven Hennen

  

 

 

 Steven Hennen  

 

 

Chief Financial Officer, Treasurer and Secretary

  

 

 

 

  

 

 

March 31, 2026

  

 

 

A signed original of this written statement required by Section 906 has been provided to SPAR Group, Inc. and will be retained by SPAR Group, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 
ex_895288.htm

Exhibit 97.

 

 

 

 

 

SPAR Group, Inc.

Compensation Recovery Policy

 

 

1.

Purpose.  The purpose of this Compensation Recovery Policy (this "Policy") is to describe the circumstances under which SPAR Group, Inc. ("SGRP" or the "Corporation", and together with its subsidiaries, the "Company") is required to recover certain compensation paid to certain employees.  Any references in compensation plans, agreements, equity awards or other policies to the Company's "recoupment", "clawback" or similarly-named policy shall be deemed to refer to this Policy with respect to Incentive-Based Compensation Received on or after the Effective Date.

 

 

2.

Mandatory Recovery of Compensation. In the event that the Corporation is required to prepare an Accounting Restatement, the Corporation shall recover reasonably promptly the amount of Erroneously Awarded Compensation.

 

 

3.

Definitions.  For purposes of this Policy, the following terms, when capitalized, shall have the meanings set forth below:

 

 

a.

"Accounting Restatement" shall mean any accounting restatement required by applicable U.S. accounting principles due to material noncompliance by the Corporation with any financial reporting requirement under the securities laws, including correction of an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.  Subject to the requirements of applicable listing standards, for clarity, Accounting Restatement does not include: (a) any proforma presentation reflecting any acquisition, disposition, merger or other transaction (however material); or (b) any other recasting of the Company's financial statements not correcting such a material noncompliance.

 

 

b.

"Covered Officer" shall mean the Company's president; principal financial officer; principal accounting officer (or if there is no such accounting officer, the controller); any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance); any other officer who performs a significant policy-making function; or any other person who performs similar significant policy-making functions for the Company.  

 

 

c.

"Effective Date" shall mean October 2, 2023.

 

 

d.

"Erroneously Awarded Compensation" shall mean the excess of (i) the amount of Incentive-Based Compensation Received by a person (A) after beginning service as a Covered Officer, (B) who served as a Covered Officer at any time during the performance period for that Incentive-Based Compensation, (C) while the Company has a class of securities listed on a national securities exchange or a national securities association and (D) during the Recovery Period; over (ii) the Recalculated Compensation. For the avoidance of doubt, a person who served as a Covered Officer during the periods set forth in clauses (A) and (B) of the preceding sentence shall continue to be subject to this Policy even after such person's service as a Covered Officer has ended.

 

 

e.

"Incentive-Based Compensation" shall mean any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a financial reporting measure.  A financial reporting measure is a measure that is determined and presented in accordance with the accounting principles used in preparing the Company's financial statements, and any measures that are derived wholly or in part from such measures, regardless of whether such measure is presented within the financial statements or included in a filing with the Securities and Exchange Commission.  Each of stock price and total shareholder return is a financial reporting measure.  For the avoidance of doubt, incentive-based compensation subject to this Policy does not include stock options, restricted stock, restricted stock units, phantom stock, or similar equity-based awards for which the grant is not contingent upon achieving any financial reporting measure performance goal and vesting is contingent solely upon completion of a specified employment period and/or attaining one or more non-financial reporting measures.

 

 

f.

"Recalculated Compensation" shall mean the amount of Incentive-Based Compensation that otherwise would have been Received had it been determined based on the restated amounts in the Accounting Restatement, computed without regard to any taxes paid. For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of the Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement, the amount of the Recalculated Compensation must be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return, as the case may be, on the compensation Received.  The Corporation must maintain documentation of the determination of that reasonable estimate and provide such documentation to the national securities exchange or association on which its securities are listed.

 

 

g.

Incentive-Based Compensation is deemed "Received" in theCorporation's fiscal period during which the financial reporting measure specified in the award of such Incentive-Based Compensation is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that period.

 

 
 

 

 

h.

"Recovery Period" shall mean the three completed fiscal years of the Corporation immediately preceding the date the Corporation is required to prepare an Accounting Restatement; provided that the Recovery Period shall not begin before the Effective Date.  For purposes of determining the Recovery Period, the Corporation is considered to be "required to prepare an Accounting Restatement" on the earlier to occur of: (i) the date the Corporation's Super Independent Directors (as defined in the Corporation's Amended and Restated By-Laws as in effect on the Effective Date) (collectively, acting by majority vote, the "Super Independent Directors") conclude, or reasonably should have concluded, that the Corporation is required to prepare an Accounting Restatement, or (ii) the date a court, regulator, or other legally authorized body directs the Corporation to prepare an Accounting Restatement; provided that application and pursuit of recovery under this Policy would occur only after such conclusion or order is final and non-appealable .  If the Corporation changes its fiscal year, then the transition period within or immediately following such three completed fiscal years also shall be included in the Recovery Period, provided that if the transition period between the last day of the Corporation's prior fiscal year end and the first day of its new fiscal year comprises a period of nine to 12 months, then such transition period shall instead be deemed one of the three completed fiscal years and shall not extend the length of the Recovery Period.  

 

 

4.

Exceptions.  Notwithstanding anything to the contrary in this Policy, recovery of Erroneously Awarded Compensation will not be required to the extent the Corporation's committee of independent directors responsible for executive compensation decisions (or a majority of the independent directors on the Corporation's board of directors in the absence of such a committee) has made a determination that such recovery would be impracticable and one of the following conditions have been satisfied:

 

 

a.

The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered; provided that, before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation that was Incentive-Based Compensation based on the expense of enforcement, the Company must make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover, and provide that documentation to the national securities exchange or association on which its securities are listed.

 

 

b.

Recovery would violate home country law where, with respect to Incentive-Based Compensation, that law was adopted prior to November 28, 2022; provided that, before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation that was Incentive-Based Compensation based on violation of home country law, the Corporation must obtain an opinion of home country counsel, acceptable to the national securities exchange or association on which its securities are listed, that recovery would result in such a violation, and must provide such opinion to the exchange or association.

 

 

c.

Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Corporation, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.

 

 

5.

Manner of Recovery.  In addition to any other actions permitted by law or contract, the Corporation may take any or all of the following actions to recover any Erroneously Awarded Compensation: (a) require the Covered Officer to repay such amount; (b) offset such amount from any other compensation owed by the Corporation or any of its affiliates to the Covered Officer, regardless of whether the contract or other documentation governing such other compensation specifically permits or specifically prohibits such offsets; and (c) subject to Section 4(c), to the extent the Erroneously Awarded Compensation was deferred into a plan of deferred compensation, whether or not qualified, forfeit such amount (as well as the earnings on such amounts) from the Covered Officer's balance in such plan, regardless of whether the plan specifically permits or specifically prohibits such forfeiture.  If the Erroneously Awarded Compensation consists of shares of the Corporation's common stock, and the Covered Officer still owns such shares, then the Corporation may satisfy its recovery obligations by requiring the Covered Officer to transfer such shares back to the Corporation.  

 

 

6.

Other.  

 

 

a.

This Policy shall be administered and interpreted, and may be amended from time to time, by the Super Independent Directors, and the determinations of the Super Independent Directors shall be binding on all Covered Officers.

 

 

b.

The Corporation shall not indemnify any Covered Officer against the loss of Erroneously Awarded Compensation.

 

 

c.

The Corporation shall file all disclosures with respect to this Policy in accordance with the requirements of the Federal securities laws, including disclosure required by the Securities and Exchange Commission filings.  

 

 

d.

Any right to recovery under this Policy shall be in addition to, and not in lieu of, any other rights of recovery that may be available to the Corporation, provided that all recovery shall not exceed the amount of the Erroneously Awarded Compensation.