SPAR Group (NASDAQ: SGRP) exits overseas, swings to 2025 loss amid Nasdaq bid-price risk
SPAR Group, Inc. reports 2025 net revenues of $136.1 million, down 16.8% from $163.6 million in 2024, mainly because it exited international operations other than Canada. The company generated $122.1 million in U.S. revenue, up 3.9%, and $14.0 million in Canada revenue, down 2.1%.
SPAR recorded a loss from continuing operations of $24.6 million, compared with a $1.8 million loss in 2024, driven by higher cost of revenues, $32.2 million of SG&A, and $4.8 million in restructuring and severance tied to moving its headquarters to Charlotte and leadership changes. Adjusted EBITDA attributable to SPAR swung to a loss of $8.6 million from positive $5.6 million.
The company now operates only in the U.S. and Canada and focuses on merchandising, remodel, assembly, fulfillment, and analytics services. Two large clients represented about $22.8 million (16.8%) and $14.7 million (10.8%) of 2025 revenue. SPAR remediated prior internal control material weaknesses but warns of risks around a proposed all-cash acquisition by Highwire Capital and a Nasdaq notice over its sub‑$1.00 share price, which could lead to potential delisting if not resolved.
Positive
- None.
Negative
- None.
Insights
Revenue fell sharply and profitability deteriorated as SPAR restructured and exited international markets.
SPAR Group’s 2025 net revenues declined to $136.1 million, a 16.8% drop, primarily because the company sold or exited operations in Mexico, Brazil, South Africa, China, Japan and India in 2024. While U.S. revenue grew 3.9% to $122.1 million, Canada was flat-to-down and the loss of international scale weighed on results.
Profitability weakened significantly. Loss from continuing operations widened to $24.6 million from $1.8 million, with cost of revenues rising to 84.1% of sales and restructuring and severance of $4.8 million linked to the headquarters move and executive changes. Adjusted EBITDA attributable to SPAR turned to a loss of $8.6 million from a $5.6 million profit, reflecting both operational and one‑time pressures.
Leverage and capital-market risks are notable. Interest expense increased to $2.4 million, the company recorded a $4.1 million tax expense with a negative effective rate driven by valuation allowances, and it received a Nasdaq notice in January 2026 for failing the $1.00 minimum bid price. Together with concentrated exposure to two clients providing over 27% of revenue, these factors suggest elevated risk until revenue stabilizes and compliance is regained.
Control remediation and cybersecurity structure improved, but listing and ownership risks remain.
Management reports that material weaknesses in internal controls identified as of December 31, 2024, which caused revenue and consolidation errors, were remediated by year‑end 2025. The company also describes a formal cybersecurity program led by a CTO, overseen by the Audit Committee, and supported by managed services providers, with no material cybersecurity incidents in 2025.
However, governance and capital-structure risks are significant. A proposed all‑cash acquisition by Highwire Capital may affect strategy and operations, yet closing is uncertain and subject to multiple conditions and possible legal proceedings. In parallel, SPAR faces potential Nasdaq delisting if its share price does not recover to at least $1.00 for ten consecutive business days within a 180‑day window starting January 12, 2026. Majority stockholders beneficially own about 46.2% of common shares and related protections under the CIC Agreement expire in January 2027, which could shift governance dynamics.
Key Figures
Key Terms
Adjusted EBITDA financial
strategic review financial
Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") regulatory
valuation allowance financial
Nasdaq Capital Market market
material weaknesses financial
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended |
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
SPAR GROUP, INC.
(Exact name of Registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
|
|
|
| | |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | The |
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 ☐
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 ☐
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.
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)
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 ☐ |
| 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
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 $
The number of shares of the Registrant's Common Stock outstanding as of March 15, 2026, was
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."
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.
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.
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).
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.
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.
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.
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.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
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.
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. |
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
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.
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.
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.
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 | |||
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 | %) | ||||||
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
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.
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 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
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.
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 |
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.
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 ( | 28 |
| Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024 | 29 |
| 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). |
| 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). |
| 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 |
Departure Agreement between SPAR Group, Inc. and Kori Belzer dated as of August 25, 2025 (incorporated by reference to Exhibit 10.7 to SGRP’s Current Report on Form 8-K, as filed with the SEC on August 29, 2025).
| |
| 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). |
| 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). |
| 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 |
Seventh Modification Agreement entered into as of March 28, 2024, 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 10.69 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on April 1, 2024).
| |
| 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). |
| 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.
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 |
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
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 | $ | $ | ||||
| Cost of revenue | ||||||
| Gross profit | ||||||
| Selling, general and administrative expense | ||||||
| Restructuring costs and severance | ||||||
| Gain on sale of business | ( | ) | ||||
| Depreciation and amortization | ||||||
| Operating (loss) income | ( | ) | ||||
| Interest expense | ||||||
| Other expenses, net | ||||||
| Loss before income tax expense | ( | ) | ( | ) | ||
| Income tax expense | ||||||
| Loss from continuing operations | ( | ) | ( | ) | ||
| Discontinued Operations | ||||||
| Income from discontinued operations | ||||||
| Loss on disposal of business | ( | ) | ||||
| Income tax expense | ( | ) | ||||
| Net loss from discontinued operations | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||
| Net income attributable to non-controlling interest | ( | ) | ||||
| Net loss attributable to SPAR Group, Inc. | $ | ( | ) | $ | ( | ) |
| Basic loss per common share attributable to SPAR Group, Inc. from continuing operations | ( | ) | ( | ) | ||
| Diluted loss per common share attributable to SPAR Group, Inc. from continuing operations | ( | ) | ( | ) | ||
| Basic loss per common share attributable to SPAR Group, Inc. from discontinued operations | ( | ) | ||||
| Diluted loss per common share attributable to SPAR Group, Inc. from discontinued operations | ( | ) | ||||
| Basic loss per common share attributable to SPAR Group, Inc. | ( | ) | ( | ) | ||
| Diluted loss per common share attributable to SPAR Group, Inc. | ( | ) | ( | ) | ||
| Weighted average common shares – basic | ||||||
| Weighted average common shares – diluted | ||||||
| Net loss | $ | ( | ) | $ | ( | ) |
| Other comprehensive loss: | ||||||
| Foreign currency translation adjustments | ( | ) | ||||
| Comprehensive loss | ( | ) | ( | ) | ||
| Comprehensive income attributable to non-controlling interest | ( | ) | ||||
| Comprehensive loss attributable to SPAR Group, Inc. | $ | ( | ) | $ | ( | ) |
See accompanying notes to the Company's consolidated financial statements.
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 | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Deferred income taxes | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Customer incentives and deposits | ||||||||
| Lines of credit and short-term loans | ||||||||
| Current portion of long-term debt | ||||||||
| Current operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, less current portion | ||||||||
| Deferred income taxes | ||||||||
| Long-term debt | ||||||||
| Total Liabilities | $ | $ | ||||||
| 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 | ||||||||
| Treasury stock, at cost 632,485 shares at December 31, 2025 and 1,205,485 Shares at December 31, 2024 | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| (Accumulated deficit)/Retained earnings | ( | ) | ||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
See accompanying notes to the Company's consolidated financial statements.
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 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Share-based compensation |
– | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Conversion of Series B convertible preferred stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Exercise of stock options |
– | – | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Purchase of treasury shares |
( |
) | ( |
) | – | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Sale of international operations |
– | – | – | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Purchase of non-controlling interest |
– | – | – | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income, net of tax |
– | – | – | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Net (loss) income |
– | – | – | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 |
$ | - | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||||
| Share-based compensation |
– | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||
| Sale of treasury shares |
– | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
| Issuance of shares for restricted stock units |
– | |||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax |
– | – | – | |||||||||||||||||||||||||||||||||||||||||
| Net loss |
– | – | – | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 |
$ | $ | - | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||
See accompanying notes to the Company's consolidated financial statements.
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 | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Loss on property, plant and equipment disposal | ||||||||
| Amortization of operating lease assets | ||||||||
| Amortization of debt issuance cost | ||||||||
| Provision for expected credit losses | ||||||||
| Deferred income tax expense (benefit) | ( | ) | ||||||
| Share based compensation | ||||||||
| Gain on disposal of business | ( | ) | ||||||
| Changes in operating assets and liabilities, net of business disposals: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Accrued expenses, other current liabilities and customer incentives and deposits | ( | ) | ||||||
| Net cash used in continuing operations | ( | ) | ( | ) | ||||
| Net cash used in discontinued operations | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of international operations, net of cash transferred | ||||||||
| Purchases of property and equipment and internal use software | ( | ) | ( | ) | ||||
| Net cash (used in) provided by investing activities of continuing operations | ( | ) | ||||||
| Net cash provided by investing activities of discontinued operations | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Borrowings under lines of credit | ||||||||
| Repayments under lines of credit | ( | ) | ( | ) | ||||
| Payment of notes to seller | ( | ) | ( | ) | ||||
| Proceeds from the sale of treasury shares | ||||||||
| Repurchase of common stock | ( | ) | ||||||
| Payments to acquire noncontrolling interests | ( | ) | ||||||
| Proceeds from long-term debt | ||||||||
| Net cash provided by (used in) financing activities of continuing operations | ( | ) | ||||||
| Net cash used in financing activities of discontinued operations | ( | ) | ||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect of foreign exchange rate changes on cash | ( | ) | ||||||
| Net (decrease)/increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of year | ||||||||
| Cash and cash equivalents at end of year | $ | $ | ||||||
| Supplemental disclosure of cash flows information | ||||||||
| Interest paid | $ | $ | ||||||
| Noncash investment in internal use software, included in accounts payable | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Promissory notes issued to Resource Plus non-controlling interest | $ | $ | ||||||
See accompanying notes to the Company's consolidated financial statements.
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
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,
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.
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
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.
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 $
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 $
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.
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 | $ | |||
| Cost of revenues | ||||
| Gross Profit | ||||
| Selling, general, and administrative expenses | ||||
| Loss on disposal of business | ||||
| Depreciation and amortization | ||||
| Income from operations before tax | ||||
| Income tax expense | ||||
| Interest expense | ||||
| Loss from discontinued operations, net of tax | $ | ( | ) | |
| December 31, | ||||||||
| Accounts receivable, net, consists of the following: | 2025 | 2024 | ||||||
| (in thousands) | ||||||||
| Trade | $ | $ | ||||||
| Unbilled | ||||||||
| Non-trade | ||||||||
| Gross accounts receivable | ||||||||
| Less allowance for credit losses | ( | ) | ||||||
| Accounts Receivable, net | $ | $ | ||||||
| December 31, | ||||||||
| Activity in allowance for credit losses | 2025 | 2024 | ||||||
| (in thousands) | ||||||||
| Beginning balance in allowance for credit losses | $ | $ | ||||||
| Current provision for expected credit losses | ||||||||
| Allowances associated with businesses sold | ( | ) | ||||||
| Write-offs charged against the allowance | ( | ) | ( | ) | ||||
| Ending balance in allowance for credit losses | $ | $ | ||||||
| December 31, | ||||||||
| Property and equipment consist of the following: | 2025 | 2024 | ||||||
| (in thousands) | ||||||||
| Equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Leasehold improvements | ||||||||
| Capitalized internal use software costs | ||||||||
| Capitalized software in development | ||||||||
| Less accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense (including amortization of internal use software and intangible assets as described below) was $
| Goodwill consist of the following: | U.S. | All Other | Total | |||||||||
| (in thousands) | ||||||||||||
| Balance at January 1, 2024 | ||||||||||||
| Aggregate goodwill acquired | $ | $ | $ | |||||||||
| Sale of business | ( | ) | ( | ) | ||||||||
| Balance at December 31, 2024 | ||||||||||||
| Balance at December 31, 2025 | $ | $ | $ |
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 | $ | $ | ||||||
| Patents | ||||||||
| Gross intangible assets | ||||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
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 $
The annual amortization for each of the following years succeeding December 31, 2025 is summarized as follows (in thousands):
| (in thousands) | ||||
| Year | Amount | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
| December 31, | ||||||||
| Accrued expenses and other current liabilities: | 2025 | 2024 | ||||||
| (in thousands) | ||||||||
| Taxes payable | $ | $ | ||||||
| Accrued salaries and wages | ||||||||
| Accrued third party labor | ||||||||
| Other | ||||||||
| Accrued expenses and other current liabilities | $ | $ | ||||||
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 $
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 $
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 $
To evidence the increase in the US Revolving Credit Facility, SMF executed and delivered to NM a $
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 (
As of December 31, 2025, the aggregate interest rate was
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. $
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 | % | % | ||||||||||||||
| Total | $ | $ | ||||||||||||||
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 | ||||||||
| Total Unused Availability | $ | $ | ||||||
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) | % | % | ||||||||||||||
| USA - Resource Plus Seller Notes (Long-term) | % | % | ||||||||||||||
| $ | $ | |||||||||||||||
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 | $ | ( | ) | $ | ||||
| Foreign | ( | ) | ||||||
| Total: | $ | ( | ) | $ | ( | ) | ||
The income tax expense from continuing operations is summarized as follows (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Current tax expense: | ||||||||
| Federal | $ | $ | ||||||
| Foreign | ||||||||
| State and local | ( | ) | ||||||
| Total current tax expense | ||||||||
| Deferred tax expense (benefit): | ||||||||
| Federal | ( | ) | ||||||
| Foreign | ( | ) | ||||||
| State and local | ( | ) | ||||||
| Total deferred tax expense (benefit) | ( | ) | ||||||
| Total income tax expense: | ||||||||
| Federal | ( | ) | ||||||
| Foreign | ||||||||
| State and local | ||||||||
| Total income tax expense | $ | $ | ||||||
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 | $ | ( | ) | % | ||||
| State and local income taxes, net of federal income tax effect (1) | ( | %) | ||||||
| Foreign Tax Effects: | ||||||||
| Foreign tax rate differential | ( | %) | ||||||
| Effect of cross-border tax laws | ( | %) | ||||||
| Tax credits | % | |||||||
| Changes in valuation allowance | ( | %) | ||||||
| Nontaxable or nondeductible items: | ||||||||
| Executive compensation disallowed under Section 162(m) | ( | %) | ||||||
| Other permanent differences | ( | %) | ||||||
| Other adjustments: | ||||||||
| Return to provision | ( | %) | ||||||
| Other | ( | ) | % | |||||
| Effective Tax Rate: | $ | ( | %) | |||||
| (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. | ||||||||
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 | $ | ( | ) | % | ||||
| State income taxes, net of federal benefit | ( | %) | ||||||
| Permanent differences | ( | ) | % | |||||
| Section 162(m) adjustment | ( | %) | ||||||
| Return to provision adjustment | ( | ) | % | |||||
| Foreign tax rate differential | ( | ) | % | |||||
| GILTI tax | ( | %) | ||||||
| Sale of foreign entities | ( | ) | % | |||||
| Transaction costs | ( | %) | ||||||
| Withholding tax | ( | %) | ||||||
| Subpart F Income | ( | %) | ||||||
| Foreign tax credit | ( | ) | % | |||||
| Foreign disregarded income | ( | %) | ||||||
| Change in valuation allowance | ( | ) | % | |||||
| Discontinued operations SG&A allocation | ( | ) | % | |||||
| Other | ( | %) | ||||||
| Net expense | $ | ( | %) | |||||
| Components of income taxes paid, net of refunds consist of the following (in thousands): | Year Ended December 31, | |||
| 2025 | ||||
| Federal | $ | |||
| State | ||||
| Indiana | ||||
| Mississippi | ||||
| New Jersey | ||||
| North Carolina | ||||
| Pennsylvania | ||||
| Texas | ||||
| Other U.S. States | ||||
| Foreign | ||||
| Total | $ | |||
| Deferred taxes from continuing operations consist of the following (in thousands): | December 31, | |||||||
| 2025 | 2024 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Federal research and development credit | ||||||||
| Foreign withholding tax | ||||||||
| Accrued payroll | ||||||||
| Transaction costs | ||||||||
| Allowance for credit losses and other receivable | ||||||||
| Share-based compensation expense | ||||||||
| Business interest limitation | ||||||||
| Operating lease liability | ||||||||
| Capitalized software development costs | ||||||||
| Other | ||||||||
| Total deferred tax assets, gross | ||||||||
| Valuation allowance | ( | ) | ||||||
| Total deferred tax assets | ||||||||
| Deferred tax liabilities: | ||||||||
| Goodwill & intangible assets of subsidiaries | ||||||||
| Allowance for credit losses and other receivable | ||||||||
| Right to use asset | ||||||||
| Capitalized software development costs | ||||||||
| Depreciation | ||||||||
| Total deferred tax liabilities | ||||||||
| Net deferred income taxes | $ | ( | ) | $ | ||||
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 $
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 $
| (in thousands): | 2025 | 2024 | ||||||
| Valuation allowance, beginning of year | $ | $ | ||||||
| Income tax expense: | ||||||||
| Decrease/(increase) in valuation allowance | ( | ) | ||||||
| Valuation allowance, end of year | $ | ( | ) | $ | ||||
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 | $ | $ | ||||||
| Additions based on tax positions related to the current year | ||||||||
| Ending balance | $ | $ | ||||||
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 $
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.
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
On March 28, 2024, the Board approved SGRP's repurchase of up to
8. Preferred Stock
The Corporation’s certificate of incorporation authorizes it to issue
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
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-
In January 2022,
During the year ended December 31, 2022,
During the year ended December 31, 2023, all of the remaining
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 $
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 $
On December 22, 2023, the Company entered into an agreement with National Retail Remodel Services (the "Buyer") to sell its
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) | $ | $ | ||||||
| Office lease expenses (RJ Holdings) (1) | ||||||||
| Consulting and administrative services (RJ Holdings) (1) | ||||||||
| Other (1) | ||||||||
| Total services provided by affiliates | $ | $ | ||||||
(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 $
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
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 $
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 $
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
The closing conditions under that agreement were satisfied in all material respects by March 31, 2024. and on April 29, 2024 the Company received
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
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
Agreement to sell SPAR's 100% ownership interest in SPAR Japan
On July 23, 2024, the Company entered into an agreement to sell its
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
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
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 | $ | $ | ||||||||||||||
| Granted | – | – | – | – | ||||||||||||
| Exercised / cancelled | ( | ) | – | |||||||||||||
| Forfeited or expired | ( | ) | – | – | – | |||||||||||
| Outstanding at December 31, 2024 | $ | $ | ||||||||||||||
| Granted | – | – | – | – | ||||||||||||
| Exercised / cancelled | – | – | ||||||||||||||
| Forfeited or expired | ( | ) | – | – | ||||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at December 31, 2025 | $ | $ | ||||||||||||||
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
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 | $ | $ | ||||||||||||||
| Granted | – | – | – | – | ||||||||||||
| Exercised/cancelled | ( | ) | – | |||||||||||||
| Forfeited or expired | ( | ) | – | – | – | |||||||||||
| Outstanding at December 31, 2024 | $ | $ | ||||||||||||||
| Granted | – | – | – | – | ||||||||||||
| Exercised | – | |||||||||||||||
| Forfeited or expired | – | – | – | |||||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at December 31, 2025 | $ | $ | ||||||||||||||
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
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 | $ | $ | - | |||||||||||||
| Granted | – | – | – | – | ||||||||||||
| Exercised/cancelled | (22,500 | ) | 1.55 | – | 17 | |||||||||||
| Forfeited or expired | ( | ) | – | – | – | |||||||||||
| Outstanding at December 31, 2024 | $ | $ | 44 | |||||||||||||
| Granted | – | – | – | – | ||||||||||||
| Exercised | – | |||||||||||||||
| Forfeited or expired | ( | ) | 1.55 | – | – | |||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at December 31, 2025 | $ | $ | ||||||||||||||
The Company recognized $
As of December 31, 2025, there was
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 | $ | $ | - | |||||||||||||
| Granted | - | - | - | - | ||||||||||||
| Exercised/cancelled | - | - | - | - | ||||||||||||
| Forfeited or expired | - | - | - | - | ||||||||||||
| Outstanding at December 31, 2024 | $ | $ | 25 | |||||||||||||
| Granted | - | - | - | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Forfeited or expired | - | - | - | - | ||||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||
| Exercisable at December 31, 2025 | $ | $ | ||||||||||||||
The Company recognized $
As of December 31, 2025, there was no unrecognized share-based compensation expense related to stock options granted under the CEO Inducement Plan.
SPAR Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. Share Based Compensation (continued)
| Weighted- | ||||||||
| Average | ||||||||
| Grant Date | ||||||||
| Fair Value | ||||||||
| Shares | per Share | |||||||
| Unvested at January 1, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Unvested at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Unvested at December 31, 2025 | $ | |||||||
During the years ended December 31, 2025 and 2024, the Company recognized approximately $
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
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 | $ | $ | $ | |||||||||
| Cost of revenue | ||||||||||||
| Segment gross profit | ||||||||||||
| Reconciling items (income) expense: | ||||||||||||
| Selling, general, and administrative expense | $ | |||||||||||
| Restructuring costs and severance | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Interest expense | ||||||||||||
| Other expenses, net | ||||||||||||
| Loss before income tax expense | $ | ( | ) | |||||||||
| Year Ended December 31, 2024 | ||||||||||||
| (in thousands) | US | Canada | Total | |||||||||
| Net revenues | $ | $ | $ | |||||||||
| Other net revenues (a) | ||||||||||||
| Consolidated net revenues | ||||||||||||
| Cost of revenue | ||||||||||||
| Segment gross profit | ||||||||||||
| Reconciling items (income) expense: | ||||||||||||
| Other cost of revenue (a) | $ | |||||||||||
| Selling, general, and administrative expense | ||||||||||||
| Gain on sale of business | ( | ) | ||||||||||
| Depreciation and amortization | ||||||||||||
| Interest expense | ||||||||||||
| Other expenses, net | ||||||||||||
| Loss before income tax expense | $ | ( | ) | |||||||||
| (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. | ||||||||||||
| December 31, | ||||||||
| (in thousands) | 2025 | 2024 | ||||||
| Assets: | ||||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| Total assets | $ | $ | ||||||
Geographic Data
| Year Ended December 31, | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| (in thousands) | % of consolidated net revenue | % of consolidated net revenue | ||||||||||||||
| Net revenue: | ||||||||||||||||
| United States | $ | % | $ | % | ||||||||||||
| Canada | % | % | ||||||||||||||
| South Africa | % | |||||||||||||||
| Mexico | % | |||||||||||||||
| China | % | |||||||||||||||
| Japan | % | |||||||||||||||
| India | % | |||||||||||||||
| Total net revenue | $ | % | $ | % | ||||||||||||
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. | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Shares used in basic net loss per share calculation | ||||||||
| Effect of diluted securities: | ||||||||
| Stock options and unvested restricted shares | ||||||||
| Shares used in diluted net loss per share calculations | ||||||||
| 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
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 | |||||||||
| 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 | $ | $ | ||||||
| Right-of-use assets obtained in exchange for lease obligations | ||||||||
| Operating leases | $ | $ | ||||||
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 | $ | $ | ||||||
| Liabilities: | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Non-current portion of operating lease liabilities | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Weighted average remaining lease term - operating leases (in years) | ||||||||
| Weighted average discount rate - operating leases | % | % | ||||||
The following table summarizes the maturities of lease liabilities as of December 31, 2025 (in thousands):
| For the Year Ended December 31, | Amount | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total future operating lease liability | $ | |||
| Less: present value discount | ( | ) | ||
| Present value of operating lease liabilities | $ | |||
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 $
The Loan provides for a staggered funding schedule as follows:
| ● | Initial Drawdown: $ |
| ● | Additional Drawdown: The remaining $ |
In connection with the Loan, the Company granted PC Group
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.
FAQ
How did SPAR Group (SGRP) perform financially in 2025?
What drove SPAR Group’s revenue decline in the 2025 10-K?
What is SPAR Group’s profitability and Adjusted EBITDA for 2025?
Which major risks does SPAR Group highlight in its 2025 10-K?
What Nasdaq listing issue does SPAR Group (SGRP) face?
How concentrated is SPAR Group’s customer base according to the 2025 10-K?
What restructuring actions affected SPAR Group’s 2025 results?
