SPAR Group Q3 2026 revenue falls 19% to $33.5M
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
SPAR Group, Inc. (SGRP) reported third-quarter revenue of $33.544 million, down 19.0% from $41.416 million, and net income of $50,000 versus a net loss of $8.764 million. Lower remodel volume, including reduced hours as certain clients moved work in-house, drove the revenue decline; new client relationships partly offset it. U.S. revenue fell 22.8%, while Canada revenue rose 25.0%.
For the first nine months, revenue was $100.968 million, down 11.5% from $114.087 million, and net loss was $94,000 versus $8.303 million. Adjusted EBITDA was $1.387 million for the quarter versus $90,000, and $4.271 million for nine months versus $2.900 million. Net cash used in operating activities was $7.223 million, compared with $15.962 million. At September 30, 2026, cash was $4.696 million and available credit was approximately $6.7 million; SPAR says operations depend on continued credit access because substantially all receivable collections go to lenders.
SPAR said its disclosure controls and procedures were not effective as of September 30, 2026, due to material weaknesses in internal control over financial reporting. A three-year material services agreement with a national retailer takes effect January 1, 2027, and runs through December 31, 2029.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net income was $50,000, versus an $8.764 million net loss a year earlier.
- Moderate pointNine-month net cash used in operating activities narrowed to $7.223 million from $15.962 million.
- Moderate pointNine-month Adjusted EBITDA increased to $4.271 million from $2.900 million.
Negative
- Major pointDisclosure controls were ineffective at September 30, 2026, due to material weaknesses.
- Moderate pointThird-quarter revenue fell 19.0% to $33.544 million year over year.
- Moderate pointLiquidity depends on credit access; available credit was approximately $6.7 million.
- Minor pointNine-month revenue fell 11.5% to $100.968 million year over year.
Filing Explained
PC Group’s $4 million loan includes three years of below-$0.80 share-price protection that can require cash payments, alongside monthly interest-only payments at 8%.
Form 10-Q is SPAR’s unaudited quarterly report; it says the company had already issued 3,190,569 shares to TRAK in exchange for
Issuing shares increases the share count and reduces existing holders’ percentage ownership absent offsetting changes, so these completed issuances have that dilution effect; SPAR reported 28,398,560 common shares outstanding on
The PC Group financing is a
If SPAR issues common shares or securities convertible into common stock below
Separately, the IT and development services agreement runs through
Key Figures
Key Terms
Adjusted EBITDA financial
borrowing base financial
embedded derivative liability financial
valuation allowance financial
operating lease right-of-use assets financial
material weaknesses in internal control over financial reporting technical
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What revenue did SGRP report for Q3 2026?
Why did SGRP revenue change in the third quarter of 2026?
How much operating cash did SGRP use in the first nine months of 2026?
What did SGRP disclose about its liquidity and credit access?
When does SGRP’s new national retailer services agreement take effect?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM
(Mark One)
OR
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.) |
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| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | OTCQB |
As of November 4, 2026, the Registrant had
SPAR Group, Inc.
Index
| PART I: | FINANCIAL INFORMATION | |
| Item 1 |
Condensed Consolidated Financial Statements (Unaudited) |
|
| Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2026 and 2025 (Unaudited) |
2 |
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| Condensed Consolidated Balance Sheets as of September 30, 2026 (Unaudited) and December 31, 2025 |
3 |
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| Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2026 and 2025 (Unaudited) |
4 |
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| Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025 (Unaudited) |
5 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
6 |
| Item 2 |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
16 |
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| Item 3 |
Quantitative and Qualitative Disclosures about Market Risk |
21 |
| Item 4 |
Controls and Procedures |
21 |
| PART II: | OTHER INFORMATION | |
| Item 1 |
Legal Proceedings |
22 |
| Item 1A |
Risk Factors |
22 |
| Item 2 |
Unregistered Sales of Equity Securities and Use of Proceeds |
23 |
| Item 3 |
Defaults Upon Senior Securities |
23 |
| Item 4 |
Mine Safety Disclosures |
23 |
| Item 5 |
Other Information |
23 |
| Item 6 |
Exhibits |
24 |
| SIGNATURES |
25 | |
| PART I: |
FINANCIAL INFORMATION |
| Item 1. |
Condensed Consolidated Financial Statements (Unaudited) |
SPAR Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expense | ||||||||||||||||
| Restructuring costs and severance | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Interest expense, net | ||||||||||||||||
| Other (income) expense, net | ( | ) | ( | ) | ||||||||||||
| Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
SPAR Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)
| September 30, 2026 | December 31, 2025 | |||||||
| 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, net | ||||||||
| 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 | ||||||||
| Current portion of long-term debt | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Deferred income taxes | ||||||||
| Embedded derivative liability | ||||||||
| Long-term debt, net of current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies – See Note 4 | ||||||||
| Equity | ||||||||
| Common stock, $0.01 par value per share: 47,000,000 shares authorized as of September 30, 2026 and December 31, 2025; 28,398,560 and 24,129,991 shares issued and outstanding as of September 30, 2026 and December 31, 2025 | ||||||||
| Treasury stock, at cost, 554,485 and 632,485 shares as of September 30, 2026 and December 31, 2025 | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Retained deficit | ( | ) | ( | ) | ||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
SPAR Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands)
| Common Stock | Treasury Stock | Additional Paid-In | Accumulated Other Comprehensive | Retained | Total Stockholders' | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Equity | |||||||||||||||||||||||||
| Balance at January 1, 2026 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Issuance of shares for restricted stock units | ||||||||||||||||||||||||||||||||
| Sale of treasury shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-In | Accumulated Other Comprehensive | Retained Earnings | Total Stockholders' | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | (Deficit) | Equity | |||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Share-based compensation expense | - | - | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Issuance of shares for restricted stock units | ||||||||||||||||||||||||||||||||
| Other comprehensive income | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||
| Share-based compensation | - | - | ||||||||||||||||||||||||||||||
| Issuance of shares for restricted stock units | 68 | - | ||||||||||||||||||||||||||||||
| Sale of treasury shares | ( | ) | ||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
SPAR Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Amortization of discount on notes payable | ||||||||
| Bad debt expense, net of recoveries | ||||||||
| Deferred income tax (benefit) expense | ( | ) | ||||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Share-based compensation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Accrued expenses, other current liabilities, due to affiliates and customer incentives and deposits | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment and capitalized software | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Borrowings under line of credit | ||||||||
| Repayments under line of credit | ( | ) | ( | ) | ||||
| Proceeds from the sale of treasury shares | ||||||||
| Proceeds from long term debt | ||||||||
| Payments of long term debt | ( | ) | ||||||
| Payments of notes to seller | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental Disclosures: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | ||||||||
| Significant non-cash transactions: | ||||||||
| Accrued capital expenditures | $ | $ | ||||||
| Common stock issued in exchange for prepaid services | ||||||||
| Net change in right-of-use assets and lease liabilities from new leases and terminations | ( | ) | ||||||
| Prepaid services settled in common stock capitalized to property and equipment | ||||||||
| Purchases of property and equipment included in accrued expenses | ||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
SPAR Group, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
| 1. | Nature of the Business |
SPAR Group, Inc. ("SGRP" or the "Corporation"), and its subsidiaries, collectively referred to as "SPAR Group," the "Company," "We," or "Our," are the leading provider of merchandising and brand marketing services to retailers, consumer goods manufacturers, and distributors in the United States ("U.S.") and Canada.
| 2. | Summary of Significant Accounting Policies |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2025 included in the 2025 Annual Report on Form 10-K that was filed with the SEC on March 31, 2026, the ("2025 Annual Report"). Certain Items in the 2025 Annual Report cross-reference and incorporate by reference indicated parts of the Company's Proxy Statement on Schedule DEF 14A for its 2026 Annual Stockholders Meeting the ("2026 Proxy Statement"), which was filed with the SEC on April 30, 2026.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the included disclosures are adequate, and the accompanying unaudited condensed consolidated financial statements contain all adjustments that are necessary for a fair statement of the Company’s consolidated financial position as of September 30, 2026, consolidated results of operations and comprehensive income (loss) for the three and nine months ended September 30, 2026 and 2025, and consolidated cash flows for the nine months ended September 30, 2026 and 2025. Such adjustments are of a normal and recurring nature. The consolidated results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the consolidated results of operations that may be expected for the year ending December 31, 2026.
Principles of Consolidation
The Company consolidates its wholly owned subsidiaries, and all significant intercompany transactions have been eliminated in the unaudited condensed consolidated financial statements.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with 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 of America ("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, and as a result, the Company had one reportable segment. Segment information for the three and nine months ended September 30, 2025 has been recast to reflect this reportable segment structure.
Deferred Taxes
The Company records deferred tax assets to the extent the Company believes these assets will more likely than not be realized. Management evaluates the realizability of deferred tax assets at each reporting date, considering all available positive and negative evidence, both objective and subjective. In performing this assessment, the Company considers, among other factors:
| ● | Historical operating results and cumulative pre-tax income or loss; |
| ● | The expected timing, amount, and character of future taxable income; |
| ● | The reversal pattern of existing taxable and deductible temporary differences; |
| ● | Tax-planning strategies that may be implemented, if any; and |
| ● | The duration of and limitations on carryforward periods for net operating losses and other attributes. |
Based on the evaluation of positive and negative evidence, the Company determined that it is more likely than not that its deferred tax assets will not be realized as of December 31, 2025. Accordingly, a valuation allowance of $
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 is evaluating the impact that adoption will have on the Company's consolidated financial statements and related disclosures.
Supplemental Balance Sheet Information
Accounts receivable, net consists of the following:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| Accounts Receivable, Net: | ||||||||
| Trade | $ | $ | ||||||
| Unbilled | ||||||||
| Non-trade | ||||||||
| Gross accounts receivable | ||||||||
| Less: allowance for credit losses | ||||||||
| Total accounts receivable, net | $ | $ | ||||||
Property and equipment, net consists of the following:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| Property and Equipment, Net: | ||||||||
| Equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Leasehold improvements | ||||||||
| Capitalized internal use software costs | ||||||||
| Capitalized software in development | ||||||||
| Gross property and equipment | ||||||||
| Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Intangible assets, net consists of the following:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| Intangible Assets, Net: | ||||||||
| Trade names | $ | $ | ||||||
| Patents | ||||||||
| Gross intangible assets | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intangible assets, net | $ | $ | ||||||
The remaining amortization for each of the following years succeeding December 31, 2026 is summarized as follows:
| (in thousands) | Amount | |||
| Year | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
Accrued expenses and other current liabilities consists of the following:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| Accrued Expenses and Other Current Liabilities: | ||||||||
| Taxes payable | $ | $ | ||||||
| Accrued salaries and wages | ||||||||
| Accrued third party labor | ||||||||
| Other | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
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 Company's lines of credit approximates the carrying value reflected on the condensed consolidated balance sheets, due to their short-term nature.
The fair value of the long-term portion of the PC Group Unsecured Loan is determined using a Monte Carlo simulation model due to the complex nature of the conversion and price protection provisions contained in the financing agreement. This model utilizes multiple simulated paths of the Company's stock price over the expected term of the instrument and incorporates assumptions for stock price volatility, risk-free interest rates, expected term, and other contractual features. The model calculates the probability-weighted present value of expected future cash flows under a large number of simulated scenarios. The resulting fair value estimate reflects the average outcome of these simulations and represents management's estimate of the amount that would be received or paid in an orderly transaction between market participants at the measurement date. As such, this liability, which was determined to be effective as of April 2026, based on the issuance of common shares, is classified within Level 3 of the fair value hierarchy. Changes in the fair value of this liability will be recognized in earnings in the period in which they occur.
Restructuring Costs and Severance
Restructuring costs and severance 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 to Charlotte, NC. For the three months ended September 30, 2026 and 2025, the Company recognized expense of $
| 3. | 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 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 "Eighth Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to 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)
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 of the NM Borrowers and imposes limits on all of the NM Loan Parties on non-ordinary course payments and transactions, incurring or guaranteeing indebtedness, capital expenditures and certain other investments. The NM Loan Parties were in compliance with such covenants as of September 30, 2026. 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.
Summary of the Company’s Lines of Credit:
| September 30, 2026 | December 31, 2025 | |||||||||||||||
| (dollars in thousands) | Interest Rate | Balance | Interest Rate | Balance | ||||||||||||
| Lines of Credit: | ||||||||||||||||
| United States | | $ | | $ | ||||||||||||
| Canada | | | ||||||||||||||
| Total lines of credit | $ | $ | ||||||||||||||
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 $
PC Group - Unsecured Loan Agreement, Services 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: $ |
In connection with the Loan, the Company issued
The Equity Consideration also includes an equity price protection provision pursuant to which, if the Company issues or sells shares of its common stock, securities convertible into common stock, at a price per share below the deemed value of $0.80 per share during the 36-month term, the Company will pay PC Group, an amount in cash equal to the difference in value within 30 days of such issuance. Any cash settlement amounts paid during the term of the Loan will adjust the final loan payment due at maturity, such that the aggregate amount owed under the arrangement remains at $4.0 million.
The Company evaluated the equity price protection provision and determined that it meets the criteria to be accounted for as an embedded derivative liability. Accordingly, the fair value of the embedded derivative was bifurcated from the debt instrument and is recognized as a derivative liability on the Company's condensed consolidated balance sheets. The derivative liability is remeasured at fair value at each reporting date, with changes in fair value recognized in earnings. Refer to Note 12 – Fair Value Measurements for additional information regarding the valuation of the embedded derivative liability.
On March 29, 2026, the Company and TRAK entered into an amendment that certain Services Agreement dated March 13, 2026 (the “Agreement”) entered into and between the Company and TRAK. Under the terms of the Agreement, the Company agreed to provide certain services to the Company related to (i) data analytics and internal reporting of the Company’s merchandising services that support consumer brands and retailers; (ii) out-of-stocks verification and remediation; (iii) scanned based trading merchandising; (iv) merchandising route optimization; (v) IT and technical optimization; and (v) consulting and training (together, the “Services”) for a one-year term beginning March 13, 2026, with an aggregate contract value of $
Under the terms of the Amendment, TRAK had the option to elect to receive payment for the Services in cash, shares of common stock of the Company, or a combination thereof. Any issuance of common stock pursuant to the Amendment was valued based upon the volume weighted average price (“VWAP”) of common stock for the five trading days immediately preceding the applicable issuance date.
On May 29, 2026, TRAK elected to receive payment of the outstanding balance owed to TRAK under the Amendment in shares of common stock, resulting in the issuance by the Company to the TRAK of
Effective June 1, 2026, the Company and TRAK entered into a further IT & Development Services Agreement for a term beginning on June 1, 2026 through May 31, 2027 (“IT Agreement”). The consideration to be paid to TRAK by the Company under the terms of the IT Agreement is $
As a result of the issuance of common stock to TRAK under the terms of the Amendment, together with shares of common stock issued to TRAK in connection with the Loan, and acquired by TRAK in separate transactions, TRAK is the beneficial owner of approximately
Summary of the Company’s Unsecured Debt:
| September 30, 2026 | December 31, 2025 | |||||||||||||||
| (dollars in thousands) | Interest Rate | Balance | Interest Rate | Balance | ||||||||||||
| Unsecured Debt: | ||||||||||||||||
| USA - PC Group Unsecured Loan | | $ | - | $ | ||||||||||||
| USA - Resource Plus Seller Notes | | | ||||||||||||||
| Total unsecured debt | ||||||||||||||||
| Less: unamortized discount | ||||||||||||||||
| USA - PC Group Unsecured Loan | ( | ) | ||||||||||||||
| USA - Resource Plus Seller Notes | ( | ) | ||||||||||||||
| Total discount | ( | ) | ( | ) | ||||||||||||
| Less: current portion of long-term debt | ||||||||||||||||
| USA - Resource Plus Seller Notes | ( | ) | ( | ) | ||||||||||||
| Total long-term debt, net of current portion | $ | $ | ||||||||||||||
Summary of Unused Company Credit and Other Debt Facilities:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| Unused Availability: | ||||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| Total Unused Availability | $ | $ | ||||||
| 4. | Commitments and Contingencies |
Legal Matters
From time to time, the Company is involved in legal proceedings, claims, investigations and other matters arising in the ordinary course of business. The outcome of these matters is inherently uncertain, and the Company cannot predict with certainty the ultimate resolution of any such matter or the timing thereof. The Company records an accrual for a loss contingency when it determines that a loss is probable and the amount of the loss can be reasonably estimated. For matters where a loss is reasonably possible but not probable, or is probable but not reasonably estimable, no accrual is made, but the Company discloses the nature of the contingency and, where feasible, an estimate of the possible loss or range of loss. The Company reviews these matters at least quarterly and adjusts its accruals and disclosures as additional information becomes available. Although the results of litigation cannot be predicted with certainty, other than as described below, the Company does not believe that the ultimate resolution of any pending matter will have a material adverse effect on its business, financial condition, results of operations or cash flows. However, an unfavorable resolution of one or more of these matters could materially affect the Company’s results of operations or cash flows for a particular period. The following describes the material pending legal proceedings to which the Company is a party.
On June 5, 2026, a purported shareholder derivative action was filed against certain of the Company's current and former directors and officers, naming the Company as a nominal defendant, in the Delaware Court of Chancery (the "Court") on behalf of the Company (“Complaint”). The Complaint was filed by Robert G. Brown, who purports to be a shareholder of the Company (“Brown”). Brown subsequently filed an amended Complaint on July 24, 2026 ("Amended Compliant"). The Amended Complaint asserts claims against certain current and former directors and officers of the Company, and generally alleges breach of fiduciary duty, unjust enrichment, and requests for declaratory and equitable relief relating to allegedly void or voidable Board actions. The Company filed a Motion to Dismiss on September 15, 2026. In response, on October 16, 2026, Brown filed a Second Amended Complaint in which Brown adds a new breach of fiduciary duty claim concerning events that took place between July and September 2026 and provides additional details to bolster the allegations in the First Amended Complaint.
Separately, on July 30, 2026, Brown filed an arbitration action against the Company (the “Arbitration”), seeking to enforce a Settlement Agreement and Release dated as of May 1, 2026 (“Settlement Agreement”), which resolved a prior arbitration between Brown and the Company. As part of that settlement, the Company agreed to cooperate with Brown’s effort to convert certain shares held by Spar Business Services, Inc. to book-entry form and to facilitate the registration of such shares. The Company has refused to approve such transfer, asserting that Brown breached and repudiated both the Change-in-Control Agreement, dated January 28, 2022 (“CIC Agreement”), and the Settlement Agreement by filing the Complaint, which releases the Company from any further obligations under the Settlement Agreement. Brown seeks an order compelling the Company to specifically perform its obligations under the Settlement Agreement and awarding Brown damages for the Company’s alleged failure to do so.
On August 7, 2026, the Company moved the Court for an order dismissing the Amended Complaint, and filed a brief in support of its motion to dismiss on September 15, 2026. On October 16, 2026, Brown amended his complaint again (the “Second Amended Complaint”) in lieu of responding to the Company’s motion to dismiss. The Second Amended Complaint asserts the same allegations as the prior complaints but includes allegations connected to the removal of James Brown, Sr. and Panagiotis Lazaretos from the Board of Directors. The Company has filed a motion to dismiss the Second Amended Complaint, the grounds for which shall be further set forth in a briefing to be completed on a schedule agreeable to counsel and ordered by the Court.
The Company also filed its answer to Brown’s demand for Arbitration, asserted affirmative defenses and requested judgment in the Company’s favor on all counts related to Brown’s demand for Arbitration. The Company also asserted certain counterclaims, including for damages related to, among other counterclaims, (i) for breach of the CIC Agreement and the Settlement Agreement; (ii) breach of the implied covenant of good faith and fair dealing; and (iii) disgorgement of short-swing profits under Section 16(b) of the Securities and Exchange Act of 1934, as amended (“Exchange Act”). The Company also seeks declarations that the Brown has repudiated the Settlement Agreement and the CIC Agreement. In its answer, the Company requests damages for, among other damages, (u) Brown’s breaches of the CIC Agreement and the Settlement Agreement; (v) restitution of all amounts paid to Brown under the Settlement Agreement; (w) all costs and expenses in defending both Complaint and the Arbitration; (x) all consequential and incidental damages proximately caused by Brown’s breaches of the CIC Agreement and Settlement Agreement; (y) specific performance of Brown’s obligations under the CIC Agreement and the Settlement Agreement; and (z) disgorgement of all short-swing profits realized by Brown as required under the Exchange Act.
The Company believes there is no merit to the allegations asserted by Brown and intends to vigorously defend the actions, and vigorously pursue its counterclaims in Arbitration. Because these matters are in their preliminary stages, the Company is unable to predict their outcome or estimate a range of any reasonably possible loss or recovery, if any, and no assurance can be given that these matters will not have a material adverse effect on the Company's business, financial condition, or results of operations.
In addition to the Brown litigation, there are various pending employment related lawsuits and vendor contract disputes. The outcome of any such legal proceedings, regardless of the merits, is inherently uncertain. In addition, litigation and related matters are costly and may divert the attention of the Company's management and other resources that would otherwise be engaged in other activities. If the Company was unable to prevail in any such legal proceedings, the Company's business, results of operations, liquidity, and financial condition could be adversely affected.
| 5. | Common Stock |
As of September 30, 2026, the Company’s certificate of incorporation authorized the Company to issue
| 6. | Preferred Stock |
The Company’s certificate of incorporation authorizes it to issue
On January 25, 2022, the Company filed the Certificate of Designations of the Series B Preferred with the State of Delaware, designating
| 7. | Share-Based Compensation |
Stock Options
For the three months ended September 30, 2026 and 2025, the Company recognized
Restricted Stock Units
For the three months ended September 30, 2026 and 2025, the Company recognized share-based compensation expense related to restricted stock units of $
2026 Plan
On March 20, 2026, the Board of Directors (the "Board") and the Compensation Committee (the "Compensation Committee") approved the SPAR Group, Inc. 2026 Stock Compensation Plan (the “2026 Plan”). The Company’s stockholders approved the 2026 Plan at the annual meeting held on June 11, 2026, its effective date. The 2026 Plan supersedes and replaces the Company’s prior stock compensation plans (the “Prior Plans”). No new awards may be granted under the Prior Plans after the effective date. Awards outstanding under the Prior Plans remain governed by their original terms. On September 8, 2026, the Company filed a registration statement on Form S-8 registering
The 2026 Plan provides for the grant of nonqualified stock options ("'NQSOs") and restricted stock units (“RSUs”) to directors, officers, employees and consultants of the Company and its subsidiaries. A maximum of
All outstanding awards vest in full upon certain change-in-control events defined in the 2026 Plan. Unvested awards are generally forfeited when service terminates, subject to the 2026 Plan’s provisions for retirement, death or disability. During the three months ended September 30, 2026, the Company granted
Compensation expense for 2026 Plan awards was not material for the three and nine months ended September 30, 2026. The related income tax benefit was also not material. As of September 30, 2026, total unrecognized compensation cost for nonvested RSUs granted under the 2026 Plan was $
Phantom Stock Awards
The Company from time to time has awarded to its executives deferred compensation in the form of Phantom Stock Units ("PSUs"), which correspond to an equal number of shares of the Company’s Common Stock ("SGRP Shares"). The number of PSUs received equals the dollar value of the incentive award divided by the per share market price of SGRP shares on the date of award. Each PSU represents the right of the grantee to receive cash payments based on the fair market value of SGRP Shares at the time of vesting, but not to receive SGRP Shares themselves. The number of the Grantee's PSUs will be automatically adjusted to reflect the specified events respecting the SGRP Shares as provided in the applicable Phantom Stock Agreement. The PSUs do not possess the rights of common stockholders of the Company, including any voting or dividend rights, and cannot be exercised or traded for SGRP Shares. Due to the cash settlement feature, the PSUs are classified as liabilities in accrued expenses and other current liabilities and other long-term liabilities in the condensed consolidated balance sheets.
The Company recognized
| 8. | Related Party Transactions |
PC Group Unsecured Loan Agreement and Share Grant
The Company is a party to a Loan and Services Agreement with PC Group, Inc. and TRAK, a significant shareholder of the Company. For further details regarding the Loan and Services Agreement, see Note 3 - Debt and Note 12 - Fair Value Measurements.
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 provided for monthly payments of $
Other Related Party Transactions and Arrangements
On April 18, 2024, the Company entered into a Securities Purchase Agreement to buy from Mr. Richard Justus the remaining minority joint venture interests of Resource Plus and its sister companies, Mobex of North Florida, Inc., and Leasex, LLC. Based on the terms set in the original joint venture agreement, the Company will pay a total of $
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 three and nine months ended September 30, 2025 was $
| 9. | Segment Information |
The Company has two reportable segments: (i) U.S. and (ii) Canada. These reportable segments, which also form the Company's operating 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 profit. The CODM uses gross profit 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.
| Three Months Ended September 30, 2026 | ||||||||||||
| (in thousands) | US | Canada | Total | |||||||||
| Net revenue | $ | $ | $ | |||||||||
| Cost of revenue | ||||||||||||
| Segment gross profit | ||||||||||||
| Reconciling items: | ||||||||||||
| Selling, general and administrative expense | ||||||||||||
| Restructuring costs and severance | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Interest expense, net | ||||||||||||
| Other income, net | ( | ) | ||||||||||
| Loss before income tax expense | $ | ( | ) | |||||||||
| Three Months Ended September 30, 2025 | ||||||||||||
| (in thousands) | US | Canada | Total | |||||||||
| Net revenue | $ | $ | $ | |||||||||
| Cost of revenue | ||||||||||||
| Segment gross profit | ||||||||||||
| Reconciling items: | ||||||||||||
| Selling, general and administrative expense | ||||||||||||
| Restructuring costs and severance | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Interest expense, net | ||||||||||||
| Other expense, net | ||||||||||||
| Loss before income tax expense | $ | ( | ) | |||||||||
| Nine Months Ended September 30, 2026 | ||||||||||||
| (in thousands) | US | Canada | Total | |||||||||
| Net revenue | $ | $ | $ | |||||||||
| Cost of revenue | ||||||||||||
| Segment gross profit | ||||||||||||
| Reconciling items: | ||||||||||||
| Selling, general and administrative expense | ||||||||||||
| Restructuring costs and severance | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Interest expense, net | ||||||||||||
| Other income, net | ( | ) | ||||||||||
| Loss before income tax expense | $ | ( | ) | |||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||
| (in thousands) | US | Canada | Total | |||||||||
| Net revenue | $ | $ | $ | |||||||||
| Cost of revenue | ||||||||||||
| Segment gross profit | ||||||||||||
| Reconciling items: | ||||||||||||
| Selling, general and administrative expense | ||||||||||||
| Restructuring costs and severance | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Interest expense, net | ||||||||||||
| Other expense, net | ||||||||||||
| Loss before income tax expense | $ | ( | ) | |||||||||
Total assets of the Company as of the periods presented were:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| Assets: | ||||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| Total assets | $ | $ | ||||||
Geographic Data
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Net Revenue: | ||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||
| Canada | ||||||||||||||||
| Total net revenue | $ | $ | $ | $ | ||||||||||||
| 10. | 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:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Lease Expense: | ||||||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||||||
| Short-term lease expense | ||||||||||||||||
| Total lease expense | $ | $ | $ | $ | ||||||||||||
The following includes supplemental information for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Supplemental Cash Flow Information: | ||||||||||||||||
| Operating cash flows used from operating leases | $ | $ | $ | $ | ||||||||||||
| Operating lease assets obtained in exchange for lease obligations | ||||||||||||||||
Balance sheet information related to leases consisted of the following as of the periods presented:
| (in thousands) | September 30, 2026 | December 31, 2025 | ||||||
| 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 September 30, 2026:
| (in thousands) | Amount | |||
| Fiscal Year: | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | ||||
| Less: imputed interest | ( | ) | ||
| Present value of net future minimum lease payments | $ | |||
| 11. | Earnings Per Share |
The following table sets forth the computations of basic and diluted net income (loss) per share:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (in thousands except per share) | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Denominator: | ||||||||||||||||
| Weighted-average basic shares outstanding | ||||||||||||||||
| Effect of dilutive share-based awards | ||||||||||||||||
| Weighted-average dilutive shares outstanding | ||||||||||||||||
| Basic earnings (loss) per share | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Diluted earnings (loss) per share | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
The Company excluded
| 12. | Fair Value Measurements |
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. |
Recurring Fair Value Measurements
The Company’s financial liabilities that were accounted for at fair value on a recurring basis as of September 30, 2026 and December 31, 2025, by level within the fair value hierarchy as follows:
| September 30, 2026 | ||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Liabilities: | ||||||||||||||||
| Embedded derivative | $ | $ | $ | $ | ||||||||||||
| Total liability | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | ||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Liabilities: | ||||||||||||||||
| Embedded derivative | $ | $ | $ | $ | ||||||||||||
| Total liability | $ | $ | $ | $ | ||||||||||||
Summary of Level 3 Input Changes
A summary of changes to those fair value measures using Level 3 inputs was as follows:
| (in thousands) | Embedded Derivative Liabilities | |||
| Balance at December 31, 2025 | $ | |||
| Initial recognition | ||||
| Change in fair value recognized in earnings | ||||
| Balance at September 30, 2026 | $ | |||
Significant Assumptions
The valuation methodology and key assumptions used to measure the fair value the embedded derivative are as follows:
| Level 3 | ||||
| Monte Carlo: | ||||
| Closing Stock Price | $ | |||
| Equivalent term (years) | ||||
| Expected volatility | % | |||
| Risk-free rate | % | |||
| 13. | Subsequent Events |
On November 2, 2026, the Company entered into a three-year material services agreement with a national retailer for in-store merchandising, store remodel and temporary labor services (the “Agreement”). The Agreement takes effect January 1, 2027, and runs through December 31, 2029, and is expected to have a positive impact on the Company's future operations.
On November 4, 2026, the Company and North Mill Capital, LLC, d/b/a Business Credit (“Lender”) entered into a consent and waiver agreement pursuant to which NM agreed to consent to and waive any alleged default under the Loan and Security Agreement dated as of April 10, 2019, by and among the Borrowers, the Guarantors party thereto, and Lender, as amended, modified, supplemented, substituted, extended or renewed from time to time (the “Loan Agreement”). See Note 3. The alleged default results from the entry into a Securities Purchase Agreement entered into on April 18, 2024, and the obligation to pay Mr. Richard Justus $
SPAR Group, Inc. and Subsidiaries
| Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
Forward-Looking Statements
This Quarterly Report on Form 10-Q (this "Quarterly 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 (SGRP together with its subsidiaries may be referred to as "SPAR Group" or the "Company"). There also are forward-looking statements contained in: (a) SGRP's 2025 Annual Report on Form 10-K for the year ended December 31, 2025 the ("2025 Annual Report"), which was filed with the Securities and Exchange Commission the ("SEC") on March 31, 2026; (b) the Company’s Proxy Statement on Schedule DEF 14A for its 2026 Annual Stockholders Meeting, the ("2026 Proxy Statement"), which was filed with the SEC on April 30, 2026; and (c) 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 Quarterly Report, the 2025 Annual Report, and the 2026 Proxy Statement, each a "SEC Report"). "Forward-looking statements" are defined in Section 27A of the Securities Act of 1933, as amended the ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended the ("Exchange Act"), and other applicable federal and state securities laws, rules and regulations, as amended (together with the Securities Act and Exchange Act, the "Securities Laws").
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’s in this Quarterly Report and the Annual Report may include (without limitation): risks, uncertainties, cautions, circumstances and other factors ("Risks"). Those Risks include (without limitation): the Company's continued ability to access its credit facilities; the costs and effects of changing the Company's principal independent registered accounting firm; potential or continued revenue growth, gross margin expansion, and continued favorable shift in service mix from remodeling toward merchandising services; continued and new long-standing relationships with retailers, distributors and makers of consumer goods; successful results from merchandising partnerships and relationships with other companies; borrowing, repaying or guarantying the Company's recent unsecured loans or paying interest thereon; the departure in 2025 of various of the Company’s executives previously reported and the agreements made with them; the impact of the Company's strategic review process or any resulting action or inaction; the impact of selling certain of the Company's subsidiaries; the impact of adding new directors or new finance team members; the potential negative effects of any stock repurchase and/or payment; the Company's cash flow or financial condition; plans, intentions, expectations, guidance or other information respecting the pursuit or achievement of the Company's corporate objectives; and or any resulting impact on revenues, earnings, cash or financial condition resulting from our related to any such Risk. The Company's forward-looking statements also include (without limitation) statements made (as applicable) in this Quarterly Report and in the 2025 Annual Report in "Business", "Risk Factors", "Cybersecurity", "Legal Proceedings", "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities", "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Controls and Procedures", "Directors, Executive Officers and Corporate Governance", "Executive Compensation", "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters", and "Certain Relationships and Related Transactions, and Director Independence".
You should carefully review and consider the Company’s forward-looking statements (including all Risks and other cautions and uncertainties) and other information made, contained, noted or referenced in or incorporated by reference into this Quarterly Report, but you should not place undue reliance on any of them. The results, actions, levels of activity, performance, achievements or condition of the Company (including its assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, indebtedness, legal costs, liabilities, liquidity, locations, marketing, operations, performance, prospects, sales, strategies, taxation, vendors, or other achievement, results, risks, trends or condition) and other events and circumstances planned, intended, anticipated, estimated or otherwise expected by the Company (collectively, "Expectations"), and our forward-looking statements (including all Risks) and other information reflect the Company’s current views about future events and circumstances. Although the Company believes those Expectations and views are reasonable, the results, actions, levels of activity, performance, achievements or condition of the Company or other events and circumstances may differ materially from our Expectations and views, and they cannot be assured or guaranteed by the Company, since they are subject to Risks and other assumptions, changes in circumstances and unpredictable events (many of which are beyond the Company’s control). In addition, new Risks arise from time to time, and it is impossible for the Company to predict these matters or how they may arise or affect the Company. Accordingly, the Company cannot assure you that its Expectations will be achieved in whole or in part, that it has identified all potential Risks, or that it can successfully avoid or mitigate such Risks in whole or in part, any of which could be significant and materially adverse to the Company and the value of your investment in the Company’s common stock.
These forward-looking statements reflect the Company’s Expectations, views, Risks and assumptions only as of the date hereof, and the Company does not intend, assume any obligation, or promise to publicly update or revise any forward-looking statements (including any Risks or Expectations) or other information (in whole or in part), whether as a result of new information, new or worsening Risks or uncertainties, changed circumstances, future events, recognition, or otherwise.
SPAR Group, Inc. and Subsidiaries
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, distributors, and retailers in the United States ("U.S.") and Canada. The Company’s goal is to be the most creative, energizing and effective retail services company that drives sales, margins and operating efficiency for clients.
As of September 30, 2026, the Company operated in the U.S. and Canada.
With more than 50 years of experience and a diverse network of merchandising associates, 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 associates 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 income (loss) 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:
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Adjusted EBITDA does not reflect our cash expenditure or future requirements for capital expenditures or contractual commitments; |
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Adjusted EBITDA does not reflect changes in our cash requirements for our working capital needs; |
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Adjusted EBITDA does not reflect the interest expense and the cash requirements necessary to service interest or principal payments on our debt; |
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Adjusted EBITDA does not reflect cash requirements for replacement of assets that are being depreciated and amortized; |
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Adjusted EBITDA does not reflect non-cash compensation, which is a key element of our overall long-term compensation; |
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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 |
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Other companies in our industry may calculate Adjusted EBITDA differently than we do. |
The following is a reconciliation of our net income (loss) to Adjusted EBITDA for the periods presented:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| (in thousands) |
2026 |
2025 |
2026 |
2025 |
||||||||||||
| Net income (loss) |
$ | 50 | $ | (8,764 | ) | $ | (94 | ) | $ | (8,303 | ) | |||||
| Add back: |
||||||||||||||||
| Depreciation and amortization |
423 | 404 | 1,266 | 1,185 | ||||||||||||
| Interest expense, net |
686 | 663 | 1,827 | 1,721 | ||||||||||||
| Provision for income taxes |
(292 | ) | 1,719 | (152 | ) | 1,953 | ||||||||||
| Subtotal of add backs to net income (loss) |
817 | 2,786 | 2,941 | 4,859 | ||||||||||||
| EBITDA |
$ | 867 | $ | (5,978 | ) | $ | 2,847 | $ | (3,444 | ) | ||||||
| Adjustments: |
||||||||||||||||
| Share based compensation |
- | 84 | - | 138 | ||||||||||||
| Restructuring costs and severance |
67 | 4,018 | 312 | 4,018 | ||||||||||||
| Other one time (income)/expense |
(74 | ) | 1,966 | 266 | 2,188 | |||||||||||
| Legal costs/settlements - non-recurring |
527 | - | 846 | - | ||||||||||||
| Total adjustments |
520 | 6,068 | 1,424 | 6,344 | ||||||||||||
| - | - | - | - | |||||||||||||
| Adjusted EBITDA |
$ | 1,387 | $ | 90 | $ | 4,271 | $ | 2,900 | ||||||||
RESULTS OF OPERATIONS
The following table sets forth selected financial data and data as a percentage of net revenues for the periods indicated:
For the three months ended September 30, 2026, compared to the three months ended September 30, 2025
| Three Months Ended September 30, |
||||||||||||||||
| (dollars in thousands) |
2026 | 2025 | $ Change | % Change | ||||||||||||
| Net revenue |
$ | 33,544 | $ | 41,416 | $ | (7,872 | ) | (19.0 | %) | |||||||
| Cost of revenue |
27,215 | 33,726 | (6,511 | ) | (19.3 | %) | ||||||||||
| Gross profit |
6,329 | 7,690 | (1,361 | ) | (17.7 | %) | ||||||||||
| Operating expenses: |
||||||||||||||||
| Selling, general and administrative expense |
5,607 | 9,187 | (3,580 | ) | (39.0 | %) | ||||||||||
| Restructuring costs and severance |
67 | 4,018 | (3,951 | ) | NM | |||||||||||
| Depreciation and amortization |
423 | 404 | 19 | 4.7 | % | |||||||||||
| Total operating expenses |
6,097 | 13,609 | (7,512 | ) | (55.2 | %) | ||||||||||
| Operating income (loss) |
232 | (5,919 | ) | 6,151 | (103.9 | %) | ||||||||||
| Interest expense, net |
686 | 663 | 23 | 3.5 | % | |||||||||||
| Other (income) expense, net |
(212 | ) | 463 | (675 | ) | (145.8 | %) | |||||||||
| Loss before income tax expense |
(242 | ) | (7,045 | ) | 6,803 | NM | ||||||||||
| Provision for income taxes |
(292 | ) | 1,719 | (2,011 | ) | (117.0 | %) | |||||||||
| Net income (loss) |
$ | 50 | $ | (8,764 | ) | $ | 8,814 | NM | ||||||||
| Percent of net revenue: |
||||||||||||||||
| Gross profit |
18.9 | % | 18.6 | % | ||||||||||||
| Selling, general and administrative expense |
16.7 | % | 22.2 | % | ||||||||||||
| Restructuring costs and severance |
0.2 |
% | 9.7 |
% | ||||||||||||
| Depreciation and amortization |
1.3 | % | 1.0 | % | ||||||||||||
| Total operating expenses |
18.2 |
% | 32.9 |
% | ||||||||||||
Net Revenue
Net revenue for three months ended, September 30, 2026 were $33.5 million, compared to $41.4 million for the three months ended September 30, 2025, a decrease of $7.9 million, or 19.0%. Net revenue decreased during the quarter primarily due to lower volume within the remodel business, which reflect reduced hourly volumes as certain clients transition to work in-house. These declines were partially offset by revenue generated from new client relationships established during the quarter in both remodel and merchandising.
U.S. net revenue totaled $29.5 million and $38.2 million for the three months ended September 30, 2026 and 2025, respectively. The decrease of $8.7 million or 22.8% was driven by decreases during the quarter primarily due to lower volume within the remodel business, which reflect reduced hourly volumes as certain clients transition to work in-house. These declines were partially offset by revenue generated from new client relationships established during the quarter in both remodel and merchandising.
Canada net revenue totaled $4.0 million and $3.2 million for the three months ended September 30, 2026 and 2025, respectively. The increase of $0.8 million or 25.0% was driven by the specialized resources business which increased primarily due to expanded scope of work for a large client.
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 81.2% of net revenue for the three months ended September 30, 2026 compared to 81.4% of net revenue for the three months ended September 30, 2025.
Cost of revenue for the three months ended September 30, 2026 were $27.2 million, compared to $33.7 million for the three months ended September 30, 2025. The decrease was in line with the reduction of revenue and driven by the mix of services in the U.S. partially offset by a reduction in field management expense.
U.S. cost of revenue totaled $24.0 million and $31.1 million for the three months ended September 30, 2026 and 2025, respectively. The decrease of $7.1 million was in line with the reduction of revenue and driven by the mix of services in the U.S. partially offset by a reduction in field management expense.
Canada cost of revenue totaled $3.2 million and $2.6 million for the three months ended September 30, 2026 and 2025, respectively. The increase of $0.6 million during the quarter was driven by the specialized resources business which increased primarily due to expanded scope of work for a large client.
Selling, General and Administrative Expense ("SG&A")
SG&A includes the Company's corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expense. SG&A expense was approximately $5.6 million, or 16.7% of net revenue, and approximately $9.2 million, or 22.2% of net revenue for the three months ended September 30, 2026 and 2025, respectively. The decrease in SG&A was primarily due to cost savings measures implemented during the quarter.
U.S. SG&A expense totaled $4.6 million and $8.6 million for the three months ended September 30, 2026 and 2025, respectively. The decrease of $4.0 million was primarily driven by lower compensation costs and lower consulting expense.
Canada SG&A expense totaled $1.0 million and $0.6 million for the three months ended September 30, 2026 and 2025, respectively. The increase was primarily attributable to changes in the allocation of expense between the U.S. and Canadian operations.
Restructuring Costs and Severance
Restructuring costs and severance primarily consist of expense related to the reorganization of the Company's executive team, workforce cost reduction initiatives, and the relocation of the Company's headquarters to Charlotte, NC. For the three months ended September 30, 2026 and 2025, the Company recognized $0.07 million and $4.0 million, respectively, which included severance and other costs associated with these initiatives.
Depreciation and Amortization
For the three months ended September 30, 2026 and 2025, depreciation and amortization was approximately $0.4 million and $0.4 million, respectively.
Interest Expense, Net
For the three months ended September 30, 2026 and 2025, interest expense, net was approximately $0.7 million and $0.7 million, respectively.
Other (Income) Expense, Net
For the three months ended September 30, 2026 and 2025, other (income) expense, net was immaterial.
Provision for Income Taxes
For the three months ended September 30, 2026 income tax benefit was $0.3 million, with an effective rate of 120.7%, compared to expense of $1.7 million with an effective rate of (24.4%) for the three months ended September 30, 2025.
For the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025
| Nine Months Ended September 30, |
|||||||||||
| (dollars in thousands) |
2026 | 2025 | $ Change | % Change | |||||||
| Net revenue |
$ | 100,968 | $ | 114,087 | $ | (13,119 | ) | (11.5 | %) | ||
| Cost of revenue |
79,418 | 90,059 | (10,641 | ) | (11.8 | %) | |||||
| Gross profit |
21,550 | 24,028 | (2,478 | ) | (10.3 | %) | |||||
| Operating expenses: |
|||||||||||
| Selling, general and administrative expense |
18,573 | 22,994 | (4,421 | ) | (19.2 | %) | |||||
| Restructuring costs and severance |
312 | 4,018 | (3,706 | ) | NM | ||||||
| Depreciation and amortization |
1,266 | 1,185 | 81 | 6.8 | % | ||||||
| Total operating expenses |
20,151 | 28,197 | (8,046 | ) | (28.5 | %) | |||||
| Operating income (loss) |
1,399 | (4,169 | ) | 5,568 | (133.6 | %) | |||||
| Interest expense, net |
1,827 | 1,721 | 106 | 6.2 | % | ||||||
| Other (income) expense, net |
(182 | ) | 460 | (642 | ) | NM | |||||
| Loss before tax expense |
(246 | ) | (6,350 | ) | 6,104 | NM | |||||
| Provision for income taxes |
(152 | ) | 1,953 | (2,105 | ) | (107.8 | %) | ||||
| Net loss |
$ | (94 | ) | $ | (8,303 | ) | $ | 8,209 | NM | ||
| Percent of net revenue: |
|||||||||||
| Gross profit |
21.3 | % | 21.1 | % | |||||||
| Selling, general and administrative expense |
18.4 | % | 20.2 | % | |||||||
| Restructuring costs and severance |
0.3 | % | 3.5 | % | |||||||
| Depreciation and amortization |
1.3 | % | 1.0 | % | |||||||
| Total operating expenses |
20.0 | % | 24.7 | % | |||||||
Net Revenue
Net revenue for nine months ended September 30, 2026 were $101.0 million, compared to $114.1 million for the nine months ended September 30, 2025, a decrease of $13.1 million, or 11.5%. Net revenue decreased primarily due to lower volume within the remodel business, reflecting changes in client project activity and reduced hourly volumes as certain clients transitioned to work in-house. These declines were partially offset by revenue generated from new client relationships established during the year in both remodel and merchandising businesses.
U.S. net revenue totaled $89.3 million and $104.3 million for the nine months ended September 30, 2026 and 2025, respectively. The decrease of $15.0 million or 14.4% was primarily driven due to lower volume within the remodel business, reflecting changes in client project activity and reduced hourly volumes as certain clients transitioned to work in-house. These declines were partially offset by revenue generated from new client relationships established during the year in both remodel and merchandising.
Canada net revenue totaled $11.7 million and $9.8 million for the nine months ended September 30, 2026 and 2025, respectively. The increase of $1.9 million or 19.4% was driven by the specialized resources business which increased primarily due to expanded scope of work for a large client.
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 78.6% of net revenue for the nine months ended September 30, 2026 compared to 79.0% of net revenue for the nine months ended September 30, 2025.
Cost of revenue for the nine months ended September 30, 2026 were $79.4 million, compared to $90.1 million for the nine months ended September 30, 2025. The decrease was in line with the reduction of revenue and driven by the mix of services in the U.S. partially offset by a reduction in field management expense.
U.S. cost of revenue totaled $70.4 million and $82.9 million for the nine months ended September 30, 2026 and 2025, respectively. The decrease of $12.5 million was in line with the reduction of revenue and driven by the mix of services in the U.S. partially offset by a reduction in field management expense.
Canada cost of revenue totaled $9.0 million and $7.2 million for the nine months ended September 30, 2026 and 2025, respectively. The increase of $1.8 million during the quarter was primarily driven by the specialized resources business which expanded the scope of work for a large client, carrying a lower margin profile.
Selling, General and Administrative Expense
SG&A includes the Company's corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expense. SG&A expense was approximately $18.6 million, or 18.4% of net revenue, and approximately $23.0 million, or 20.2% of net revenue for the nine months ended September 30, 2026 and 2025, respectively. The decrease in SG&A was primarily due to cost savings measures implemented during the year.
U.S. SG&A expense totaled $16.5 million and $20.7 million for the nine months ended September 30, 2026 and 2025, respectively. The decrease was primarily driven by cost savings measures implemented during the year which included lower compensation costs and lower consulting expense.
Canada SG&A expense totaled $2.1 million and $2.3 million for the nine months ended September 30, 2026 and 2025, respectively. The decrease was driven by lower compensation costs which was offset with changes in the allocation of expense between the U.S. and Canadian operations.
Restructuring Costs and Severance
Restructuring costs and severance primarily consist of expense related to the reorganization of the Company's executive team, workforce cost reduction initiatives, and the relocation of the Company's headquarters to Charlotte, NC. For the nine months ended September 30, 2026 and 2025, the Company recognized expense of $0.3 million and $4.0 million, respectively, which included severance and other costs associated with these initiatives.
Depreciation and Amortization
For the nine months ended September 30, 2026 and 2025, depreciation and amortization was approximately $1.3 million and $1.2 million, respectively.
Interest Expense, Net
For the nine months ended September 30, 2026 and 2025, interest expense, net was approximately $1.8 million and $1.7 million, respectively.
Other (Income) Expense, Net
For the nine months ended September 30, 2026 and 2025, other (income) expense, net was immaterial.
Provision for Income Taxes
For the nine months ended September 30, 2026 income tax benefit was $0.2 million with an effective rate of 61.8%, compared to expense of $2.0 million with an effective rate of (30.8%) for the nine months ended September 30, 2025.
Critical Accounting Estimates
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and related notes thereto. However, we believe we have used reasonable estimates and assumptions in preparing the unaudited condensed consolidated financial statements. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.
The significant accounting policies and estimates used in preparation of the unaudited condensed consolidated financial statements are described in the Critical Accounting Estimates section of the MD&A in the 2025 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 31, 2026.
Liquidity and Capital Resources
Funding Requirements
Our principal sources of liquidity at September 30, 2026, consisted of approximately $4.7 million of cash, approximately $35.8 million of accounts receivable and approximately $6.7 million available under our credit facilities. However, under the terms of our credit facilities, substantially all collections of our accounts receivable are remitted directly to our lenders, which limits our ability to use those collections to fund our operations. As a result, the Company’s ability to fund its operations is dependent on its continued ability to access funds under its credit facilities.
Cash from operations could be affected by various risks and uncertainties, including, but not limited to risks detailed in the section titled "Risk Factors" included elsewhere in our 2025 Annual Report and included in this Quarterly Report. The Company believes that conditioned on the Company's continued ability to access its existing credit facilities (for which the Company closed on a two year extension from its lender in October 2025), projected results of operations, vendor payment requirements and other potential financing that may be available to the Company, sources of available cash should be manageable and sufficient to support ongoing working capital and capital expenditure requirements over the next 12 months; however, no assurances can be given. The Company’s material cash requirements over this period consist principally of scheduled principal and interest payments under the Company's existing loan agreements, including its credit facilities and amounts due to PC Group, and working capital needs. However, and delay in the collection of receivables due from any of the Company's major clients, a significant reduction in business from such clients, a negative economic downturn, or any restrictions on the availability of cash from the Company's existing credit facilities, will have an adverse effect on the Company's business, cash resources, and ongoing ability to fund operations, and such effect may be material.
The Company is a party to various domestic and international credit facilities. These various domestic and international credit facilities require compliance with their respective financial covenants. See Note 3 to the Company's unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Cash Flows for the nine months ended September 30, 2026 and 2025
Net cash used in operating activities was $7.2 million compared to $16.0 million used in operating activities for the nine months ended September 30, 2026 and 2025, respectively. The change was primarily due to the decrease in accounts receivable which correlates to the decrease in revenue period over period and improved collection of outstanding customer balances and the increase of accrued expenses for payroll at the end of the period, offset by the decrease in accounts payable.
Net cash used in investing activities was approximately $1.2 million compared to $1.5 million used in investing activities for the nine months ended September 30, 2026 and 2025, respectively.
Net cash provided by financing activities was approximately $9.9 million compared to $7.5 million provided by financing activities for the nine months ended September 30, 2026 and 2025, respectively. This was principally due to proceeds received from PC Group under the terms of an unsecured promissory note in the principal amount of $4.0 million, which was offset by the paydown of amounts due to Mr. Justus in the amount of $1.35 million and changes in borrowings under the Company’s line of credit.
Reflecting the impact of foreign exchange rate changes on the activity above resulted in a decrease in cash and cash equivalents for the nine months ended September 30, 2026 and 2025 of approximately $22 thousand and increase of $13 thousand, respectively.
| Item 3. |
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 4. |
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 Quarterly Report on Form 10-Q and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to material weaknesses in internal control over financial reporting, described below.
Changes in Internal Controls Over Financial Reporting
There were no changes in the Company's internal controls over financial reporting that occurred during the three months ended September 30, 2026, that materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.
SPAR Group, Inc. and Subsidiaries
PART II: OTHER INFORMATION
| Item 1. |
Legal Proceedings |
From time to time, the Company is involved in legal proceedings, claims, investigations and other matters arising in the ordinary course of business. The outcome of these matters is inherently uncertain, and the Company cannot predict with certainty the ultimate resolution of any such matter or the timing thereof. The Company records an accrual for a loss contingency when it determines that a loss is probable and the amount of the loss can be reasonably estimated. For matters where a loss is reasonably possible but not probable, or is probable but not reasonably estimable, no accrual is made, but the Company discloses the nature of the contingency and, where feasible, an estimate of the possible loss or range of loss. The Company reviews these matters at least quarterly and adjusts its accruals and disclosures as additional information becomes available. Although the results of litigation cannot be predicted with certainty, other than as described below, the Company does not believe that the ultimate resolution of any pending matter will have a material adverse effect on its business, financial condition, results of operations or cash flows. However, an unfavorable resolution of one or more of these matters could materially affect the Company’s results of operations or cash flows for a particular period. The following describes the material pending legal proceedings to which the Company is a party.
On June 5, 2026, a purported shareholder derivative action was filed against certain of the Company's current and former directors and officers, naming the Company as a nominal defendant, in the Delaware Court of Chancery (the "Court") on behalf of the Company (“Complaint”). The Complaint was filed by Robert G. Brown, who purports to be a shareholder of the Company (“Brown”). Brown subsequently filed an amended Complaint on July 24, 2026 ("Amended Compliant"). The Amended Complaint asserts claims against certain current and former directors and officers of the Company, and generally alleges breach of fiduciary duty, unjust enrichment, and requests for declaratory and equitable relief relating to allegedly void or voidable Board actions. The Company filed a Motion to Dismiss on September 15, 2026. In response, on October 16, 2026, Brown filed a Second Amended Complaint in which Brown adds a new breach of fiduciary duty claim concerning events that took place between July and September 2026 and provides additional details to bolster the allegations in the First Amended Complaint.
Separately, on July 30, 2026, Brown filed an arbitration action against the Company (the “Arbitration”), seeking to enforce a Settlement Agreement and Release dated as of May 1, 2026 (“Settlement Agreement”), which resolved a prior arbitration between Brown and the Company. As part of that settlement, the Company agreed to cooperate with Brown’s effort to convert certain shares held by Spar Business Services, Inc. to book-entry form and to facilitate the registration of such shares. The Company has refused to approve such transfer, asserting that Brown breached and repudiated both the Change-in-Control Agreement, dated January 28, 2022 (“CIC Agreement”), and the Settlement Agreement by filing the Complaint, which releases the Company from any further obligations under the Settlement Agreement. Brown seeks an order compelling the Company to specifically perform its obligations under the Settlement Agreement and awarding Brown damages for the Company’s alleged failure to do so.
On August 7, 2026, the Company moved the Court for an order dismissing the Amended Complaint, and filed a brief in support of its motion to dismiss on September 15, 2026. On October 16, 2026, Brown amended his complaint again (the “Second Amended Complaint”) in lieu of responding to the Company’s motion to dismiss. The Second Amended Complaint asserts the same allegations as the prior complaints but includes allegations connected to the removal of James Brown, Sr. and Panagiotis Lazaretos from the Board of Directors. The Company has filed a motion to dismiss the Second Amended Complaint, the grounds for which shall be further set forth in a briefing to be completed on a schedule agreeable to counsel and ordered by the Court.
The Company also filed its answer to Brown’s demand for Arbitration, asserted affirmative defenses and requested judgment in the Company’s favor on all counts related to Brown’s demand for Arbitration. The Company also asserted certain counterclaims, including for damages related to, among other counterclaims, (i) for breach of the CIC Agreement and the Settlement Agreement; (ii) breach of the implied covenant of good faith and fair dealing; and (iii) disgorgement of short-swing profits under Section 16(b) of the Securities and Exchange Act of 1934, as amended (“Exchange Act”). The Company also seeks declarations that the Brown has repudiated the Settlement Agreement and the CIC Agreement. In its answer, the Company requests damages for, among other damages, (u) Brown’s breaches of the CIC Agreement and the Settlement Agreement; (v) restitution of all amounts paid to Brown under the Settlement Agreement; (w) all costs and expenses in defending both Complaint and the Arbitration; (x) all consequential and incidental damages proximately caused by Brown’s breaches of the CIC Agreement and Settlement Agreement; (y) specific performance of Brown’s obligations under the CIC Agreement and the Settlement Agreement; and (z) disgorgement of all short-swing profits realized by Brown as required under the Exchange Act.
The Company believes there is no merit to the allegations asserted by Brown and intends to vigorously defend the actions, and vigorously pursue its counterclaims in Arbitration. Because these matters are in their preliminary stages, the Company is unable to predict their outcome or estimate a range of any reasonably possible loss or recovery, if any, and no assurance can be given that these matters will not have a material adverse effect on the Company's business, financial condition, or results of operations.
In addition to the Brown litigation, there are various pending employment related lawsuits and vendor contract disputes. The outcome of any such legal proceedings, regardless of the merits, is inherently uncertain. In addition, litigation and related matters are costly and may divert the attention of the Company's management and other resources that would otherwise be engaged in other activities. If the Company was unable to prevail in any such legal proceedings, the Company's business, results of operations, liquidity, and financial condition could be adversely affected.
| Item 1A. |
Risk Factors |
There have been no material changes to the risk factors disclosed under Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, except as set forth below. The risk factor described below should be read in conjunction with the risk factors and other information disclosed in our Annual Report on Form 10-K, which are incorporated herein by reference.
Our credit facility requires that substantially all of our accounts receivable collections be paid directly to our lender, which restricts our access to cash generated by our operations and could adversely affect our liquidity.
Under the terms of our credit facility, substantially all collections of our accounts receivable are deposited into accounts controlled by our lender and applied to reduce our outstanding borrowings. As a result, we generally do not have direct access to the cash our operations generate. To fund working capital, payroll, payments to vendors, capital expenditures and other obligations, we must rely on our continued ability to reborrow under the facility. Our ability to reborrow depends on, among other things, the amount available under our borrowing base, which our lender may reduce in its discretion through eligibility criteria, reserves or other adjustments. It also depends on our continued compliance with the covenants and other conditions of the facility. If availability under the facility is reduced, if we fail to satisfy the conditions to borrowing, or if an event of default occurs, our lender could restrict or stop further advances while continuing to apply our collections to the outstanding balance. In that event, we would not have sufficient cash to meet our obligations as they come due, and we may be unable to obtain alternative financing on acceptable terms, or at all. Any of these events would have a material adverse effect on our business, financial condition, results of operations and liquidity, and such effect would be material.
We are subject to a shareholder derivative lawsuit that could result in substantial costs and a diversion of management's attention and resources.
During the fiscal quarter covered by this Quarterly Report, a purported shareholder derivative action was filed against certain of our current and former directors and officers, naming the Company as a nominal defendant, alleging breach of fiduciary duty, unjust enrichment, and requests for declaratory and equitable relief relating to allegedly void or voidable Board actions. For additional information regarding this matter, see Part II, Item 1, "Legal Proceedings" and Note 4 -Commitments and Contingencies, to the condensed consolidated financial statements included in this Quarterly Report. We intend to defend the action vigorously, but litigation of this nature is inherently uncertain, and we cannot predict its outcome at this stage. Regardless of the outcome, the litigation could result in substantial costs to us, including costs associated with indemnification obligations to current and former directors and officers, and could divert the attention and resources of our management and board of directors from the operation of our business. Derivative litigation of this kind may also lead to reputational harm, increased scrutiny of our corporate governance practices and public disclosures, and volatility in the trading price of our common stock. In addition, our directors' and officers' liability insurance may not be sufficient to cover the costs of defending or resolving this matter, and any amounts we are required to pay in excess of available insurance coverage, or any adverse outcome not covered by insurance, could have a material adverse effect on our business, financial condition, and results of operations. Even if we are ultimately successful in defending against this lawsuit, the process of doing so may be costly and time-consuming and may adversely affect our reputation and relationships with customers, shareholders, employees, and other stakeholders.
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
None
| Item 3. |
Defaults upon Senior Securities |
Not applicable.
| Item 4. |
Mine Safety Disclosures |
Not applicable.
| Item 5. | Other Information |
Not applicable.
SPAR Group, Inc. and Subsidiaries
| Item 6. |
Exhibits |
| 31.1 |
Certification of the CEO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed herewith. |
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| 31.2 |
Certification of the CFO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed herewith. |
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| 32.1 |
Certification of the CEO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as filed herewith. |
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| 32.2 |
Certification of the CFO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as filed herewith. |
| 101.INS |
Inline XBRL Instance Document - the instance document does not appear in the interactive Inline XBRL document. |
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| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
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| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
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| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
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| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
SPAR Group, Inc. and Subsidiaries
SIGNATURES
Pursuant to the requirements 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.
| Date: November 13, 2026 |
SPAR Group, Inc., Registrant |
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By:
/s/ Steven Hennen
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Steven Hennen |