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What changed in SPAR Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SPAR Group, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+125 added−147 removedSource: 10-K (2026-03-31) vs 10-K (2025-05-16)

Top changes in SPAR Group, Inc.'s 2025 10-K

125 paragraphs added · 147 removed · 94 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThis category encompasses a broad range of activities tailored to maintain and elevate the retail experience, including: (i) resets and cut-ins, which involve the strategic rearrangement or introduction of products within the retail space to keep the store layout fresh and aligned with current marketing strategies or consumer trends, (ii) price and inventory audits, which ensures that pricing is accurate and inventory levels are properly maintained, providing valuable insights for inventory management and pricing strategies, (iii) stock replenishment and rotation services, which are essential for keeping shelves well-stocked and products fresh, especially for perishable goods, thereby enhancing customer satisfaction and minimizing waste, (iv) out of stock management, which focuses on minimizing the occurrence of stockouts and efficiently addressing them when they happen, thus reducing lost sales opportunities and maintaining customer trust, (v) promotional event setup, which entails the planning and execution of in-store events or displays to highlight specific products or sales promotions, creating an engaging shopping experience, and (vi) display management, which includes the design, setup, and maintenance of product displays to attract customer attention and promote featured items effectively.
Biggest changeThis category encompasses a broad range of activities tailored to maintain and elevate the retail experience, including: (i) resets and cut-ins, which involve the strategic rearrangement or introduction of products within the retail space to keep the store layout fresh and aligned with current marketing strategies or consumer trends; (ii) price and inventory audits, which ensure that pricing is accurate and inventory levels are properly maintained, providing valuable insights for inventory management and pricing strategies; (iii) stock replenishment and rotation services, which are essential for keeping shelves well-stocked and products fresh, especially for perishable goods, thereby enhancing customer satisfaction and minimizing waste; (iv) out of stock management, which focuses on minimizing the occurrence of stockouts and efficiently addressing them when they happen, thus reducing lost sales opportunities and maintaining customer trust; (v) promotional event setup, which entails the planning and execution of in-store events or displays to highlight specific products or sales promotions, creating an engaging shopping experience; (vi) display and shelf services, which focus on the maintenance and arrangement of shelves and displays to ensure products are presented attractively; (vii) planogram maintenance, which ensures that the layout of products on shelves aligns with a strategic plan to optimize retail space and product visibility; (viii) POP (Point of Purchase) installation and management, which involves setting up and managing marketing materials at the point of purchase to capture customer attention and encourage sales; and (ix) display setup and management, which includes the design, assembly, arrangement, and maintenance of product displays to attract customer attention, highlight new products or promotions, and create an engaging shopping environment.
Through these services, Remodel & Retail Transformation aims to keep retail environments dynamic, engaging, and aligned with brand identity and consumer expectations. Assembly and Installation Assembly and Installation services play a crucial role in enhancing the retail and consumer experience by ensuring that products are properly assembled and set up, whether in-store, in the office, or within the consumer's home.
Through these services, Remodel & Retail Transformation aims to keep retail environments dynamic, engaging, and aligned with brand identity and consumer expectations. 6 Assembly and Installation Assembly and Installation services play a crucial role in enhancing the retail and consumer experience by ensuring that products are properly assembled and set up, whether in-store, in the office, or within the consumer's home.
Services include (i) the assembly of merchandise in stores, such as furniture and desks, enabling customers to visualize the final product and making the shopping experience more engaging and efficient; (ii) in-store services, which extend to the maintenance of these products, ensuring they remain in optimal condition for display and use; (iii) office setup/down-sizing services, which cater to businesses undergoing changes in their physical workspace, providing expert assembly and installation support for a seamless transition; (iv) National In-Home Furniture Assembly services, which offer consumers the convenience of having furniture professionally assembled in their homes, eliminating the hassle and time commitment typically associated with DIY assembly; and (v) the assembly and installation of fitness equipment, whether it's in a commercial gym setting or a home fitness space, ensures that equipment is set up safely and correctly, maximizing functionality and user safety.
Services include (i) the assembly of merchandise in stores, such as furniture, desks, bicycles, grills and patio furniture, enabling customers to visualize the final product and making the shopping experience more engaging and efficient; (ii) in-store services, which extend to the maintenance of these products, ensuring they remain in optimal condition for display and use; (iii) office setup/down-sizing services, which cater to businesses undergoing changes in their physical workspace, providing expert assembly and installation support for a seamless transition; (iv) National In-Home Furniture Assembly services, which offer consumers the convenience of having furniture professionally assembled in their homes, eliminating the hassle and time commitment typically associated with DIY assembly; and (v) the assembly and installation of fitness equipment, whether it's in a commercial gym setting or a home fitness space, ensures that equipment is set up safely and correctly, maximizing functionality and user safety.
Our Customers The Company currently represents numerous manufacturers and retail clients in a wide range of retail segments and stores, and its customers (which it refers to as "clients") include the following markets: Retail segments served include: ● Mass Merchandisers ● Grocery ● HBA ● Pharmacies ● Discount ● Dollar ● Convenience ● Cash and Carry ● Home Improvement ● Consumer Electronics ● Automotive ● Office Supply ● Independents 7 Manufacturer segments served include: ● Personal Technology ● Consumer Electronics ● Beverage ● Household Products ● Consumables ● Financial Products ● Automotive Aftermarket It is important to note that we also work across all channels: retail and online.
Our Customers The Company currently represents numerous manufacturers and retail clients in a wide range of retail markets and stores, and its customers (which it refers to as "clients") include the following markets: Retail markets served include: ● Mass Merchandisers ● Grocery ● HBA ● Pharmacies ● Discount ● Dollar ● Convenience ● Cash and Carry ● Home Improvement ● Consumer Electronics ● Automotive ● Office Supply ● Independents Manufacturer markets served include: ● Personal Technology ● Consumer Electronics ● Beverage ● Household Products ● Consumables ● Financial Products ● Automotive Aftermarket It is important to note that we also work across all channels: retail and online.
SPAR Group is uniquely able to meet these needs because of our global reach, more than 50-year track record, access to thousands of merchandisers, breadth of capability, unwavering focus on excellence and deep expertise. We combine great people, an understanding of what is needed and unique technologies, enabling us to offer enhanced services.
SPAR Group is uniquely able to meet these needs because of our North America reach, more than 50-year track record, access to thousands of merchandisers, breadth of capability, unwavering focus on excellence and deep expertise. We combine great people, an understanding of what is needed and unique technologies, enabling us to offer enhanced services.
Our goal is to be the most creative, energizing and effective retail services company that drives sales, margins and operating efficiency for our clients. As of December 31, 2024, we operated in the United States and Canada, having exited Mexico, Brazil, South Africa, China, Japan and India during 2024.
Our goal is to be the most creative, energizing and effective retail services company that drives sales, margins and operating efficiency for our clients. As of December 31, 2025, we operated in the United States ("U.S.") and Canada, having exited Mexico, Brazil, South Africa, China, Japan and India during 2024.
Merchandising and Marketing Merchandising and Marketing services are pivotal in ensuring that retail environments are optimally organized, products are well-presented, and promotions are effectively implemented to drive sales and enhance customer engagement.
Merchandising, Marketing and Category Management Merchandising, Marketing, and Category Management services are pivotal in ensuring that retail environments are optimally organized, products are well-presented, and promotions are effectively implemented to drive sales and enhance customer engagement.
Now focused on the United States and Canada, we successfully execute programs through our robust logistics, reporting and communication technology, which provides clients value through real-time insight on store / product conditions. With more than 50 years of experience, a focus on excellence and industry leadership, we continue to grow our long-term relationships with some of the world's leading businesses.
Now focused on the U.S. and Canada, we successfully execute programs through our robust logistics, reporting and communication technology, which provides clients value through real-time insight on store / product conditions. With more than 50 years of experience, a focus on excellence and industry leadership, we continue to grow our long-term relationships with some of the world's leading businesses.
The Company believes that its current structure favorably addresses these factors and establishes it as a leader in many retailer and manufacturer verticals. The Company also believes it has the ability to execute major initiatives and develop and administer manufacturer and retailer programs throughout the USA and Canada.
The Company believes that its current structure favorably addresses these factors and establishes it as a leader in many retailer and manufacturer verticals. The Company also believes it has the ability to execute major initiatives and develop and administer manufacturer and retailer programs throughout the U.S. and Canada.
Our Services The Company currently provides six (6) principal types of services: Merchandising and Marketing, Category Management and Setup, Remodel and Retail Transformation, Assembly and Installation, Business Analytics and Insights, and Fulfilment and Distribution.
Our Services The Company currently provides five (5) principal types of services: Merchandising, Marketing and Category Management, Remodel and Retail Transformation, Assembly and Installation, Fulfilment and Distribution, and Business Analytics and Insights.
Certain financial information regarding each of the Company's divisions, which includes their respective net revenues and operating income for each of the years ended December 31, 2024 and 2023, and their respective assets as of December 31, 2024 and 2023, is provided in Note 12 to the Company's Consolidated Financial Statements – Segment Information, below.
Certain financial information regarding each of the Company's segments, which includes their respective net revenues, and cost of revenue for each of the years ended December 31, 2025 and 2024, and their respective assets as of December 31, 2025 and 2024, is provided in Note 12 to the Company's Consolidated Financial Statements – Segment Information, below.
In the Company's Americas Division, the Company's merchandising, audit, assembly and other services for its clients are performed by field specialists, and the services of a significant portion of them (approximately 2,446) were supplied to the Company by an independent vendor (the "Independent Field Vendor").
In the Company's merchandising, audit, assembly and other services for its clients are performed by field specialists, and the services of a significant portion of them, approximately 2,779 in U.S. and 522 in Canada, were supplied to the Company by an independent vendor (the "Independent Field Vendor").
Certain of the Company's "SPAR" trademarks (the "Licensed Marks") are licensed: (i) for use by affiliated companies in the United States, royalty free, and in perpetuity pursuant to license agreements that commenced in 1999; (ii) for use by its wholly-owned subsidiaries worldwide royalty free and in perpetuity pursuant to informal license arrangements; (iii) for use by joint venture subsidiaries in their respective jurisdictions pursuant to license agreements for limited terms (executed contemporaneously with their respective joint venture agreements); and (iv) for use by the Independent Field Vendor providing field specialists to the Company domestically in the United States for limited terms and modest royalties pursuant to license agreements with (each as defined below).
Certain of the Company's "SPAR" and related trademarks (the " Licensed Marks ") are used: (i) by affiliated companies in the United States, royalty free, and in perpetuity pursuant to license agreements that commenced in 1999; (ii) by the Company’s wholly-owned subsidiaries worldwide royalty free and in perpetuity pursuant to informal license arrangements; (iii) by certain of the Company’s former joint venture subsidiaries in their respective jurisdictions pursuant to license or use agreements for limited terms (executed contemporaneously with the sale of the Company’s joint venture interests in its former joint venture subsidiaries); and (iv) by the Independent Field Vendor providing field specialists to the Company domestically in the United States for limited terms and modest royalties pursuant to a license agreement linked to their field specialist service agreement with the Company.
The following table provides details of the structure of our Domestic and International businesses as of December 31, 2024: Primary Territory Entity Name SGRP Percentage Ownership Principal Office Location Americas United States of America SPAR Marketing Force, Inc. 100 % Auburn Hills, Michigan SPAR Assembly and Installation, Inc. 100 % Auburn Hills, Michigan Resource Plus of North Florida, Inc.
The following table provides details of the structure of our businesses as of December 31, 2025: Primary Territory Entity Name SGRP Percentage Ownership Principal Office Location United States of America SPAR Marketing Force, Inc. 100% Charlotte, North Carolina SPAR Assembly and Installation, Inc. 100% Charlotte, North Carolina Resource Plus of North Florida, Inc.
("RPI") 100 % Auburn Hills, Michigan Canada SPAR Canada Inc, 100 % Vaughan, Ontario, Canada The Company tracks and reports certain financial information separately for the individual countries using the same metrics. The primary measurement utilized by management is operating profit, historically the key indicator of long-term growth and profitability.
("RPI") 100% Charlotte, North Carolina Canada SPAR Canada Inc, 100% Vaughan, Ontario, Canada The Company tracks and reports certain financial information separately for the individual countries using the same metrics. The primary measurement utilized by management is operating segment gross margin, historically the key indicator of long-term growth and profitability.
Overall, Assembly and Installation services address a vital need in the post-purchase experience, ensuring products are fully functional and ready for use, thereby enhancing customer satisfaction and loyalty. Business Analytics and Insights Business Analytics and Insights services provide a critical foundation for informed decision-making and strategic planning in retail and merchandising environments.
Overall, Assembly and Installation services address a vital need in the post-purchase experience, ensuring products are fully functional and ready for use, thereby enhancing customer satisfaction and loyalty.
This will facilitate our ability to offer higher value services over time. Our objective is to provide technology to field merchandisers, our client partners and our management to make smarter decisions that yield better customer and Company results.
This will facilitate our ability to offer higher value services over time. Our objective is to provide technology to field merchandisers, our client partners and our management to make smarter decisions that yield better customer and Company results. Our Business Segments In 2024, the Company operated through three segments: Americas, Asia Pacific ("APAC"), and Europe, Middle East and Africa ("EMEA").
Together, these Fulfillment & Distribution services play an essential role in optimizing our customers' supply chain, enhancing their customers' satisfaction, and maintaining seamless operations from warehouse to consumer.
Together, these Fulfillment & Distribution services play an essential role in optimizing our customers' supply chain, enhancing their customers' satisfaction, and maintaining seamless operations from warehouse to consumer. Business Analytics and Insights Business Analytics and Insights services provide a critical foundation for informed decision-making and strategic planning in retail and merchandising environments.
Together, these services work to maintain a coherent and appealing retail environment that enhances product visibility and shopper engagement. 6 Remodel and Retail Transformation Remodel & Retail Transformation encompasses a range of strategic services designed to update and revitalize retail environments, ensuring they meet contemporary shopping expectations and trends.
Remodel and Retail Transformation Remodel & Retail Transformation encompasses a range of strategic services designed to update and revitalize retail environments, ensuring they meet contemporary shopping expectations and trends.
The changing retail landscape and need for enhanced digital, e-commerce, and fulfillment capability along with the opportunities arising from the emergence of Artificial Intelligence ("AI"), deep learning, and computer vision shapes our thinking. Our objective is to identify and introduce new or complimentary capabilities that we believe the market and our clients need now and in the future.
We believe our history, relationships, expertise, technology and scale are all competitive advantages for us. 5 Introduce or Acquire New Services The changing retail landscape and need for enhanced digital, e-commerce, and fulfillment capability along with the opportunities arising from the emergence of Artificial Intelligence ("AI"), deep learning, and computer vision shapes our thinking.
We believe our history, relationships, expertise, technology and scale are all competitive advantages for us. 5 Introduce or Acquire New Services The Company believes in testing new ideas and services and applying its considerable existing expertise in new ways to increase revenues and expand client relationships.
The Company believes in testing new ideas and services and applying its considerable existing expertise in new ways to increase revenues and expand client relationships. Our objective is to identify and introduce new or complimentary capabilities that we believe the market and our clients need now and in the future.
In many cases, our clients cross over geographical boundaries and we provide services to support their business around the world. The Company did not have any clients that represented 10% or more of the Company's net revenue for the years ended December 31, 2024 and 2023. Trademarks and Technology Licensing The Company has numerous registered trademarks.
In many cases, our clients cross over geographical boundaries and we provide services to support their business around the world. The Company had two clients that represented 10% or more of the Company's revenue for the year ended December 31, 2025 (Client 1, 16.8%, or approximately $22.8 million and Client 2, 10.8%, or approximately $14.7 million).
Our Labor Force As of December 31, 2024, the Company's labor force totaled approximately 3,425 including the services of field specialists and field administrators furnished by independent third parties. The Company employed in Americas a labor force of 249 full-time employees and 730 part-time employees engaged in operations.
Our Labor Force As of December 31, 2025, the Company's labor force totaled approximately 4,522 including the services of field specialists and field administrators furnished by independent third parties.
Our Business Divisions In 2023 and 2024, the Company operated through three divisions: Americas, Asia Pacific (APAC), and Europe, Middle East and Africa (EMEA). The Americas division encompassed the United States, Canada, Mexico, and Brazil. The APAC division included Japan, China, Australia, and India. The EMEA division consisted of South Africa.
The Americas segment encompassed the U.S., Canada, Mexico, and Brazil in 2024. The APAC segment included Japan, China, Australia, and India. The EMEA segment consisted of South Africa. As part of the strategic review of our businesses, the Company has exited all its international operations except Canada. As a result, the Company operated in U.S. and Canada in 2025.
Together, these Merchandising & Marketing services are crucial for retail success, ensuring products are visible, accessible, and appealing to customers. Category Management and Setup Category Management and Setup is a comprehensive suite of services aimed at optimizing retail space and product presentation for enhanced customer experience and sales performance.
Together, these services are crucial for retail success, ensuring products are visible, accessible, and appealing to customers while maintaining a coherent and engaging retail environment that drives shopper engagement and sales performance.
Removed
As part of the strategic review of our businesses, the Company has exited all its international joint ventures. The financial results for the full years of 2024 and 2023 incorporate the results of these operations for the time periods that those joint ventures were held. The total business is led and operated from our global headquarters in Auburn Hills, Michigan.
Added
The financial results for the full year of 2025 incorporated the results of these two segments and the financial results for the full year of 2024 incorporated the results of the U.S., Canada and All Other which included APAC, EMEA, and Mexico. The total business is led and operated from our headquarters in Charlotte, North Carolina.
Removed
This service category includes a variety of tasks such as (i) category and product resets, which involve reorganizing and refreshing product arrangements and categories in-store to maintain relevance and appeal; (ii) planogram maintenance, which ensures that the layout of products on shelves aligns with a strategic plan to optimize retail space and product visibility; (iii) display and shelf services, which focuses on the maintenance and arrangement of shelves and displays to ensure products are presented attractively; (iv) POP (Point of Purchase) installation and management, which involves setting up and managing marketing materials at the point of purchase to capture customer attention and encourage sales; and (v) display setup, which includes the assembly and arrangement of product displays to highlight new products or promotions, creating an engaging shopping environment.
Added
In 2024 the Company had one client whose revenue represented more than 10% of the revenue (10.5%, or approximately $17.3 million). 7 Trademarks and Technology Licensing The Company has numerous registered trademarks.
Removed
Portions of the Company's proprietary scheduling, tracking, coordination, reporting and expense software (the "Co-Owned Software") currently included in the Company's technology are co-owned by the Company, SPAR Business Services, Inc. ("SBS") and SPAR InfoTech, Inc. ("Infotech"), pursuant to a 1999 agreement.
Added
The Company employed in the U.S. a labor force of 190 full-time employees and 975 part-time employees engaged in operations and in Canada a labor force of 55 full-time employees and 1 part-time employee.
Removed
The Company's global technology systems (including the Co-Owned Software) were maintained and further developed and improved by the Company at its own expense at a cost of $1.0 million in 2024 and $1.0 million in 2023, respectively.
Removed
Except for SBS and Infotech if they choose to use the Co-Owned Software on their own equipment (they do not need such software licenses because of their co-ownership), each subsidiary and field vendor trademark license and arrangement also licenses the Company's global technology systems (including portions of the Co-Owned Software) pursuant to their trademark license and arrangement.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf the remedial measures are insufficient to address the material weakness or if additional material weaknesses or significant deficiencies in the internal controls are discovered or occur in the future, the consolidated financial statements may contain material misstatements and the Company could be required to restate its financial results, which could materially and adversely affect the Company's business and results of operations or financial condition, restrict its ability to access the capital markets, require the Company to expend significant resources to correct the weaknesses or deficiencies, subject it to fines, lawsuits, penalties, judgements or other legal expenses, harm its reputation, create delays or the inability to meet future SEC reporting obligations or otherwise cause a decline in investor confidence.
Biggest changeAccordingly, if the remedial measures are insufficient to address the material weaknesses or if additional material weaknesses or significant deficiencies in the internal controls are discovered or occur in the future, the consolidated financial statements may contain material misstatements and the Company could be required to restate its financial results, which could materially and adversely affect the Company's business and results of operations or financial condition, restrict its ability to access the capital markets, require the Company to expend significant resources to correct the weaknesses or deficiencies, subject it to fines, lawsuits, penalties, judgements or other legal expenses, harm its reputation, create delays or the inability to meet future SEC reporting obligations or otherwise cause a decline in investor confidence. 10 Our business is dependent on client payments, business performance and broad economic shifts, and we may be at risk of liquidity constraints and not satisfying all of our credit facility covenants.
To the extent that systems experience increased demands on current capacity and for additional capacity from (among other things) an increase in the numbers of users, frequency or duration of use, bandwidth requirements of software, applications and users (including the increasing demand from the Company's clients for data-intensive as-serviced pictures from the field specialists), or cyberattacks, there can be no assurance that the Company's technological systems and third-party software, hardware and telecommunication providers will continue to be able to support the demands placed on them by such increased demand or negative events. 10 The Company relies on third-party vendors to provide its telecommunication network access and other services used in its business, and the Company has no control over such third-party providers.
To the extent that systems experience increased demands on current capacity and for additional capacity from (among other things) an increase in the numbers of users, frequency or duration of use, bandwidth requirements of software, applications and users (including the increasing demand from the Company's clients for data-intensive as-serviced pictures from the field specialists), or cyberattacks, there can be no assurance that the Company's technological systems and third-party software, hardware and telecommunication providers will continue to be able to support the demands placed on them by such increased demand or negative events. 9 The Company relies on third-party vendors to provide its telecommunication network access and other services used in its business, and the Company has no control over such third-party providers.
There can be no assurance that this outsourcing will continue, as companies may elect to perform such services internally. 9 In addition, retailers with physical store locations are facing increasing consolidation and competition from eCommerce/virtual stores.
There can be no assurance that this outsourcing will continue, as companies may elect to perform such services internally. In addition, retailers with physical store locations are facing increasing consolidation and competition from eCommerce/virtual stores.
See Security Ownership of Certain Beneficial Owners and Management, in Part III below, Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, and Note 10 to the Company's Consolidated Financial Statements- Related Party Transactions, below.
See Security Ownership of Certain Beneficial Owners and Management, in Part III below, Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, and Item 13. Certain Relationships and Related Transactions, and Director Independence, and Note 10 to the Company's Consolidated Financial Statements- Related Party Transactions, below.
This material weaknesses resulted in errors in revenue, expense, accrual accounts and prepaid accounts reconciliation at year end as well as a material error in the calculation over the sale of international components and the deconsolidation of one subsidiary.
These material weaknesses resulted in errors in revenue, expense, accrual accounts and prepaid accounts reconciliation at year end as well as a material error in the calculation and presentation of the sale of international components and the deconsolidation of one subsidiary.
That amount was calculated using their respective individual beneficial ownership, on December 31, 2024, which includes the amounts they represented in the CIC Agreement and subsequent Form 4 filings, the total outstanding ownership (23,449,701 shares) of the SGRP Common Stock on a non-diluted basis as of December 31, 2024.
That amount was calculated using their respective individual beneficial ownership, on December 31, 2025, which includes the amounts they represented in the CIC Agreement and subsequent Form 4 filings, the total outstanding ownership (24,129,991 shares) of the SGRP Common Stock on a non-diluted basis as of December 31, 2025.
Our stock is subject to volatility and general market risk. The market price of SGRP Common Stock has historically experienced and may continue to experience significant volatility. During the year ended December 31, 2024, the sale price of SGRP Common Stock fluctuated from $0.95 to $3.12 per share.
Our stock is subject to volatility and general market risk. The market price of SGRP Common Stock has historically experienced and may continue to experience significant volatility. During the year ended December 31, 2025, the sale price of SGRP Common Stock fluctuated from $0.768 to $2.04 per share.
In addition, the volatility in the market price of SGRP Common Stock could lead to class action securities litigation that could in turn impose substantial costs on the Company, divert management's attention and resources from the day-to-day operations of the Company's business and harm the Corporation's stock price, the Company or its performance or condition. 11 As a small company with stock price volatility, our stock may be de-listed from NASDAQ.
In addition, the volatility in the market price of SGRP Common Stock could lead to class action securities litigation that could in turn impose substantial costs on the Company, divert management's attention and resources from the day-to-day operations of the Company's business and harm the Corporation's stock price, the Company or its performance or condition.
Brown and Mr. William H. Bartels, are significant stockholders ("Significant Stockholders”) and Mr. Bartels is a Director of SGRP and together with certain related parties (collectively, the "Majority Stockholders") beneficially own approximately 46.6% of the SGRP Common Stock and could acquire more.
Bartels, are significant stockholders ("Significant Stockholders”) and together with certain related parties (collectively, the "Majority Stockholders") beneficially own approximately 46.2% of the SGRP Common Stock and could acquire more.
All forward-looking statements and other information attributable to the Company or persons acting on its behalf are expressly subject to and qualified by all such Risks. 8 Those Risks reflect our expectations, views and assumptions only as of the date of this Annual Report, and the Company does not intend, assume any obligation, or promise to publicly update or revise any such Risk or information (in whole or in part), whether as a result of new information, new or worsening Risks or uncertainties, changed circumstances, future events, recognition, or otherwise.
Those Risks reflect our expectations, views and assumptions only as of the date of this Annual Report, and the Company does not intend, assume any obligation, or promise to publicly update or revise any such Risk or information (in whole or in part), whether as a result of new information, new or worsening Risks or uncertainties, changed circumstances, future events, recognition, or otherwise.
There can be no assurance that the Corporation will be able to comply in the future with Nasdaq's Board Independence Rule, Audit Committee Composition Rule, Bid Price Rule or other Nasdaq continued listing requirements.
As a small company with stock price volatility, our stock may be de-listed from NASDAQ. There can be no assurance that the Corporation will be able to comply in the future with Nasdaq's Board Independence Rule, Audit Committee Composition Rule, Bid Price Rule or other Nasdaq continued listing requirements.
In addition, the Company is subject to revenue or profit uncertainties resulting from factors such as unprofitable client work and the failure of clients to pay. These revenue fluctuations could materially and adversely affect the Company or its performance or condition, whether actual or as planned, intended, anticipated, estimated or otherwise expected.
In addition, the Company is subject to revenue or profit uncertainties resulting from factors such as unprofitable client work and the failure of clients to pay.
Our business could be adversely affected if retailers and manufacturers elect to perform merchandising and marketing services with their own resources or if they have less stores that need our services.
These revenue fluctuations could materially and adversely affect the Company or its performance or condition, whether actual or as planned, intended, anticipated, estimated or otherwise expected. 8 Our business could be adversely affected if retailers and manufacturers elect to perform merchandising and marketing services with their own resources or if they have less stores that need our services.
Our business is dependent on client payments, business performance and broad economic shifts, and we may be at risk of liquidity constraints and not satisfying all of our credit facility covenants. Our business and cash flow can be adversely affected by adverse changes in our client payments, our business performance and broad economic shifts.
Our business and cash flow can be adversely affected by adverse changes in our client payments, our business performance and broad economic shifts.
We continuously review the terms and incentives for our executives to retain them and competitively compensate them to deliver industry leading results on behalf of all shareholders. 12 Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") and our By-Laws. The Company's co-founders, Mr. Robert G.
Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") and our By-Laws. The Company's co-founders, Mr. Robert G. Brown and Mr. William H.
However, we work in a competitive industry where talent is visible and other companies may approach and attract our key executives.
However, we work in a competitive industry where talent is visible, and other companies may approach and attract our key executives. We continuously review the terms and incentives for our executives to retain them and competitively compensate them to deliver industry leading results on behalf of all shareholders.
We will be responsible for these costs in the event the Merger is not successful, which could adversely affect our liquidity and financial results. The markets we operate in are cyclical and subject to the effects of economic downturns. The markets in which the Company operates are cyclical and subject to the effects of economic downturns.
The markets we operate in are cyclical and subject to the effects of economic downturns. The markets in which the Company operates are cyclical and subject to the effects of economic downturns.
You should carefully review and consider the following Risks, but you should not place undue reliance on any of them.
You should carefully review and consider the following Risks, but you should not place undue reliance on any of them. All forward-looking statements and other information attributable to the Company or persons acting on its behalf are expressly subject to and qualified by all such Risks.
Removed
Our potential going private transaction poses various risks As previously announced, on August 30, 2024, the Corporation entered into an Agreement and Plan of Merger (the "Merger Agreement"), with Highwire Capital, LLC, a Texas limited liability company ("Highwire"), and Highwire Merger Co.
Added
The Company devoted significant resources to the remediation efforts to address the identified material weaknesses and prevent additional material weaknesses from occurring.
Removed
I, Inc., a Delaware corporation and a wholly owned subsidiary of Highwire ("Merger Sub"), pursuant to which Highwire, in a cash merger and the closing of the transaction (the " Proposed Acquisition"), will acquire all of the stock of the Corporation for $2.50 per fully diluted share in cash, representing an aggregate purchase price of $58,000,000 (subject to certain adjustments).
Added
The Company concluded that, as of December 31, 2025, the previously identified material weaknesses had been remediated following the completion of the remediation plan, however it cannot be assured that the measures we have taken will be sufficient to avoid potential future material weaknesses.
Removed
The Proposed Acquisition involves various Risks, including (without limitation): the uncertainty of the closing of the Proposed Acquisition within the anticipated time period, or at all, due to any reason, including any failure to satisfy the conditions to the consummation of the Proposed Acquisition or to complete any necessary financing arrangements; the risk that the Proposed Acquisition disrupts our current plans and operations or diverts management's attention from its ongoing business; the impact of the news of the Proposed Acquisition or developments in it; the nature, cost and outcome of any legal proceedings related to the Proposed Acquisition; the impact of the Corporation's continued strategic review process, or any resulting action or inaction, should the Proposed Acquisition not occur.
Added
Our leadership transition in 2025 may result in operational disruptions or changes in our strategic direction. During the fiscal year ended December 31, 2025, the Company appointed a new Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). These transitions involve changes in management style and strategic priorities that could result in operational disruptions if not managed effectively.
Removed
While the Company and Highwire are working to complete the Proposed Acquisition, either party may terminate the Merger Agreement if the Merger is not completed by May 30, 2025.
Added
Although the CIC Agreement currently requires arbitration and prohibits the Majority Stockholders from using written stockholder consents, calling for special stockholder meetings, commencing certain litigation, and taking other specified actions, the CIC Agreement expires in January 2027.
Removed
The buyer may not be able to consummate the Proposed Acquisition pursuant to the Merger Agreement, and failure to complete the Proposed Acquisition could negatively impact our stock price and our business, financial condition and results of operations.
Removed
As previously announced, on August 30, 2024, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Highwire Capital, LLC, a Texas limited liability company ("Highwire") and Highwire Merger Co.
Removed
I, Inc., a Delaware corporation and a wholly owned subsidiary of Highwire ("Merger Sub"), pursuant to which Highwire will acquire the Company in a cash merger, with Merger Sub merging with and into the Company (the “Proposed Acquisition”).
Removed
While the Company and Highwire are working to complete the Proposed Acquisition, either party may terminate the Merger Agreement if the Merger is not completed by May 30, 2025. If the Proposed Acquisition is not consummated, the price of SGRP Common Stock may decline and our business, financial condition and results of operations may be impacted.
Removed
In addition, we have incurred substantial costs planning and negotiating the Merger Agreement. These costs include, but are not limited to, costs associated with employing and retaining third-party advisors who performed the financial, auditing, and legal services required before we were able to enter into the Merger Agreement and which will continue as we seek to complete the Merger.
Removed
The Corporation had in place a 2022 Stock Repurchase Program (as defined and described in Item 5 - Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, below), which ended on May 24, 2023 and a 2024 Stock Repurchase Program, under which 1,000,000 shares were repurchased on May 3, 2024.
Removed
Repurchases by the Corporation could adversely affect the market liquidity of the SGRP Common Stock.
Removed
Due to the material weaknesses in the Company's internal control over financial reporting, the Company also concluded that its disclosure controls and procedures were not effective as of December 31, 2024.
Removed
Our inability to remediate the material weaknesses, our discovery of additional weaknesses, and our ability to achieve and maintain effective disclosure controls and procedures and internal control over financial reporting could affect our ability to ensure timely and reliable financial reports, and weaken investor confidence in our financial reporting.
Removed
The Company is actively engaged in developing a remediation plan designed to address the material weaknesses, but cannot be certain as to when its remediation plans will be fully completed.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company relocated its corporate headquarters from New York to its existing operations office in Auburn Hills, Michigan, in September of 2020. The Company also maintains its data processing center in Southfield, Michigan and its warehouse in Auburn Hills, Michigan, under an extended operating lease expiring October 31, 2025.
Biggest changeThe Company relocated its corporate headquarters from Auburn Hills, Michigan to its existing operations office in Charlotte, North Carolina, in November of 2025.
The following is a list of the headquarter locations for the Company and its domestic and international subsidiaries: DOMESTIC : Auburn Hills, Michigan (Corporate Headquarters) Southfield, Michigan (Data Center) Jacksonville, Florida (Resource Plus) INTERNATIONAL : Vaughan, Ontario, Canada
The following is a list of the headquarter locations for the Company subsidiaries: Charlotte, North Carolina (Corporate Headquarters, Resource Plus) Southfield, Michigan (Data Center) Vaughan, Ontario, Canada
Added
The Company also maintains its data processing center in Southfield, Michigan and its warehouse in Auburn Hills, Michigan, which was exited in January 2026 and entered a new arrangement in January of 2026 for an outsourced warehouse in Fort Lauderdale, Florida.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn the opinion of Company's management, resolution of these matters is not anticipated to have a material adverse effect on the Company or its estimated or desired affiliates, assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, legal costs, liabilities, liquidity, locations, marketing, operations, prospects, sales, strategies, taxation or other achievement, results or condition.
Biggest changeIn the opinion of Company management, resolution of these matters is not anticipated to have a material adverse effect on the Company or its estimated or desired affiliates, assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, legal costs, liabilities, liquidity, locations, marketing, operations, prospects, sales, strategies, taxation or other achievement, results or condition.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket Information SGRP's Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP". As of December 31, 2024, there were approximately 3,498 stockholders of record. Dividends The Corporation has never declared or paid any cash dividends on its Common Stock and does not currently anticipate paying cash dividends on its Common Stock in the foreseeable future.
Biggest changeMarket Information SGRP's Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP". As of December 31, 2025, there were approximately 148 stockholders of record, which includes DTC (on behalf of all street holders).
SGRP's Certificate of Incorporation also authorizes it to issue 3,000,000 shares of preferred stock with a par value of $0.01 per share (the "SGRP Preferred Stock"), which may have such preferences and priorities over the SGRP Common Stock and other rights, powers and privileges as SGRP's Board of Directors may establish in its discretion from time to time.
SGRP's Certificate of Incorporation also authorizes it to issue 3,000,000 shares of preferred stock with a par value of $0.01 per share (the "SGRP Preferred Stock"), which may have such preferences and priorities over the SGRP Common Stock and other rights, powers and privileges as Board of Directors of SGRP (the "Board") may establish in its discretion from time to time.
Pursuant to the 2024 Stock Repurchase Program, on May 3, 2024, SGRP's Board and its Audit Committee approved SGRP's Repurchase Agreement with William H. Bartels for SGRP's private repurchase of 1,000,000 shares of SGRP's Common Stock from William H.
Pursuant to the 2024 Stock Repurchase Program, on May 3, 2024, the Board and its Audit Committee approved SGRP's Repurchase Agreement with William H. Bartels for SGRP's private repurchase of 1,000,000 shares of SGRP's Common Stock from William H.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's Capital Stock Generally SGRP's Certificate of Incorporation authorizes it to issue 47,000,000 shares of SGRP Common Stock ("SGRP Shares") with a par value of $0.01 per share, which all have the same voting, dividend and liquidation rights.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's Capital Stock Generally SGRP's Certificate of Incorporation authorizes it to issue 47,000,000 shares of SGRP Common Stock ("SGRP Shares"), each with a par value of $0.01 per share, and which all have the same voting, dividend and liquidation rights.
See The Company's Capital Stock Generally, in Item 5 above, and Note 11 to the Company's Consolidated Financial Statements – Share Based Compensation, below.
See The Company's Capital Stock Generally, in Item 5 above, and Note 11 to the Company's Consolidated Financial Statements – Share Based Compensation, below. 13
On January 28, 2022, pursuant to the CIC Agreement, the Company issued to the Majority Stockholders 2,000,000 restricted shares of Series B Preferred Stock, which have all vested and automatically converted into 3,000,000 SGRP Shares pursuant to the 1:1.5 conversion ratio set forth in the Preferred Designation and the CIC Agreement.
On January 28, 2022, pursuant to the CIC Agreement, SGRP issued to the Majority Stockholders 2,000,000 restricted shares of Series B Preferred Stock, which have all vested and automatically converted into 3,000,000 SGRP Shares pursuant to the 1:1.5 conversion ratio set forth in the Preferred Designation and the CIC Agreement. The CIC Agreement expires on January 28, 2027.
Any payment of future dividends will be at the discretion of the Board of Directors of the Corporation and will depend upon, among other things, the Company's earnings, financial condition, capital requirements, cash flow, level of indebtedness, contractual restrictions in respect to the payment of dividends and other factors that the Corporation Board of Directors deems relevant.
Any payment of future dividends will be at the discretion of the Board and will depend upon, among other things, the Corporation's earnings, financial condition, capital requirements, cash flow, level of indebtedness, contractual restrictions in respect to the payment of dividends and other factors that the Board deems relevant.
On March 28, 2024, the Board approved SGRP's repurchase of up to 2,500,000 of SGRP's Shares of Common Stock ("SGRP Shares") under the 2024 Stock Repurchase Program (the "2024 Stock Repurchase Program"), which repurchases would be made from time to time over a one-year period in the open market and through privately-negotiated transactions, subject to cash availability and general market and other conditions.
Stock Repurchase Program On March 28, 2024, the Board approved SGRP's repurchase of up to 2,500,000 SGRP's Shares under the 2024 Stock Repurchase Program (the "2024 Stock Repurchase Program"), under which repurchases were made from time to time over a one-year period in the open market and through privately-negotiated transactions, subject to cash availability and general market and other conditions.
The Company historically has retained earnings to finance its operations and fund future growth of the business.
The Corporation historically has retained earnings to finance its operations and fund future growth of the business.
Bartels, dated and effective as of April 30, 2024, at a purchase price of $1.80 per share (the Nasdaq closing price on April 29, 2024). Upon their repurchase those shares became Treasury Shares. Mr. Bartels is a Director and significant stockholder of SGRP, is one of the founders of the Company, and is an affiliate and related party of SGRP.
Bartels, dated and effective as of April 30, 2024, at a purchase price of $1.80 per share (the Nasdaq closing price on April 29, 2024). Upon their repurchase those shares became Treasury Shares. Mr. Bartels was a Director at the time of such repurchase. Mr.
SGRP Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP." On December 31, 2024, there were 23,449,701 shares of SGRP Common Stock outstanding in the aggregate (which does not include Treasury Shares), and there were 12,199,788 shares (or approximately 52%) of SGRP Common Stock beneficially owned by non-affiliates of the Company in the aggregate on a non-diluted basis (i.e., SGRP's public float).
SGRP Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP." On December 31, 2025, there were 24,129,991 SGRP Shares outstanding in the aggregate (which does not include those held as Treasury Shares ), and there were approximately 11,708,769 SGRP Shares (or approximately 49%) beneficially owned by non-affiliates of SGRP in the aggregate on a non-diluted basis (i.e., SGRP's public float).
There were no other share repurchases to date under the 2024 Stock Repurchase Program, which expired on March 28, 2025. 15 SGRP Common Stock Issuances During 2024 and 2023, the Corporation issued respectively 1,208,742 and 387,306 SGRP Shares (including Treasury Shares and new shares of SGRP Common Stock) in support of its requirement to satisfy the conversion of vested and surrendered Series B Preferred Stock (see above), benefit awards and stock purchase plans, including employee Restricted Stock Units that vested and settled with stock, and the exercise of vested employee stock options.
SGRP Common Stock Issuances During 2024 the Corporation issued 1,208,742 SGRP Shares (including Treasury Shares and new shares of SGRP Common Stock) in support of its requirement to satisfy the conversion of vested and surrendered Series B Preferred Stock (see above), benefit awards and stock purchase plans, including employee Restricted Stock Units that vested and settled with stock, and the exercise of vested employee stock options.
See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below. All of the company's preferred stock issued under this plan have been converted into common stock as of December 31, 2024.
See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below. All of the Preferred Stock issued under the CIC Agreement have been converted into SGRP Shares as of December 31, 2024, and there are no shares of Preferred Stock currently outstanding.
Removed
Stock Repurchase Program On May 24, 2022, the Board of Directors of SGRP (the "Board"), authorized SGRP to repurchase up to 500,000 shares of its SGRP Shares pursuant to the 2022 Stock Repurchase Program (the "2022 Stock Repurchase Program"), which repurchases were made from time to time over the one-year period that ended May 24, 2023 in the open market and through privately-negotiated transactions.
Added
The Corporation estimates that there are currently a total of 1,600 holders of SGRP Shares, which includes the aggregate of those held of record and those held in street name through DTC. SGRP is currently under a Nasdaq notice respecting a potential delisting of the SGRP Shares that was received on January 12, 2026 (see below).
Removed
Those repurchases were made subject to cash availability and general market and other conditions. Through December 31, 2024, 151,156 shares of SGRP Common Stock were repurchased under the 2022 program and became Treasury Shares.
Added
Failure to Maintain the Minimum Bid Price under Nasdaq Rules and Potential Delisting On January 12, 2026, SGRP received a notification letter from Nasdaq that SGRP's common stock failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by the Listing Rules of Nasdaq.
Added
The Company has been given a compliance period of 180 calendar days in which to regain compliance.
Added
Specifically, if at any time during this 180 day period the closing bid price of SGRP’s Shares security is at least $1 for a minimum of ten consecutive business days, Nasdaq will provide SGRP written confirmation of compliance and this matter will be closed by Nasdaq.
Added
See Item 1A - Risk Factors - As a small company with stock price volatility, our stock may be delisted from Nasdaq . Dividends The Corporation has never declared or paid any cash dividends on the SGRP Shares and does not currently anticipate paying cash dividends on SGRP Shares in the foreseeable future.
Added
Bartels also is a significant stockholder of SGRP, one of the founders of SGRP, and is an affiliate and related party of SGRP. There were no other share repurchases to date under the 2024 Stock Repurchase Program, which expired on March 28, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following is a reconciliation of our net income to Adjusted EBITDA for the periods presented: Year Ended December 31, (in thousands) 2024 2023 Consolidated Net Income (Loss) $ (2,687 ) $ 4,776 Depreciation and amortization 1,616 2,001 Interest expense 2,222 1,919 Income tax expense 1,218 2,357 Other expense 171 346 Subtotal of Adjustments to Consolidated Net Income 5,227 6,623 Consolidated EBITDA $ 2,540 $ 11,399 Review of Strategic Alternatives 5,221 544 (Gain)/Loss on sale of businesses (1,348 ) 408 Restructuring costs - 28 Legal costs / Settlements - non-recurring 100 289 Share-based compensation 137 297 Consolidated Adjusted EBITDA $ 6,650 $ 12,965 Adjusted EBITDA attributable to non-controlling interest (1,034 ) (3,022 ) Adjusted EBITDA attributable to SPAR Group, Inc. 5,616 9,943 Results of Operations The following table sets forth selected financial data for the years indicated (dollars in millions): Year Ended December 31, 2024 % 2023 % Net revenues $ 196.8 100 % $ 262.7 100 % Related Party - Cost of revenues - - 5.2 2.0 Cost of revenues 158.3 80.4 202.1 76.9 Selling, general and administrative expense 37.3 19.0 43.7 16.6 (Gain) / Loss on sale of business (1.3 ) (0.7 ) 0.4 0.2 Depreciation and amortization 1.6 0.8 2.0 0.8 Interest expense 2.2 1.1 1.9 0.7 Other expense, net 0.2 0.1 0.3 0.1 Income (loss) before income taxes (1.5 ) (0.8 ) 7.1 2.7 Income tax expense 1.2 0.6 2.4 0.9 Net income (loss) (2.7 ) (1.4 ) 4.8 1.8 Net (income) attributable to non-controlling interest (0.5 ) (0.3 ) (0.9 ) (0.3 ) Net income (loss) attributable to SPAR Group, Inc. $ (3.2 ) (1.6 )% $ 3.9 1.5 % 17 Results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Biggest changeThe following is a reconciliation of our net income to Adjusted EBITDA for the periods presented: Year Ended December 31, (in thousands) 2025 2024 Loss from continuing operations $ (24,626 ) $ (1,806 ) Depreciation and amortization 1,634 1,553 Interest expense 2,415 2,191 Income tax expense 4,073 144 EBITDA of discontinued operations - 1,475 Subtotal of adjustments to loss from continuing operations 8,122 5,363 Consolidated EBITDA $ (16,504 ) $ 3,557 Review of strategic alternatives 525 5,221 Gain on sale of businesses - (2,536 ) Restructuring costs and severance 4,765 - Legal costs / settlements - non-recurring 1,277 100 Share-based compensation 140 137 Other one-time expense 1,235 171 Consolidated Adjusted EBITDA $ (8,562 ) $ 6,650 Adjusted EBITDA attributable to non-controlling interest - (1,034 ) Adjusted EBITDA attributable to SPAR Group, Inc. $ (8,562 ) $ 5,616 14 Results of Operations The following table sets forth selected financial data for the years indicated (dollars in millions): Year Ended December 31, 2025 % 2024 % Net revenues $ 136.1 100.0 % $ 163.6 100.0 % Cost of revenues 114.4 84.1 130.0 79.5 Selling, general and administrative expense 32.2 23.7 33.9 20.7 Restructuring costs and severance 4.8 3.5 - - Gain on sale of business - - (2.5 ) (1.5 ) Depreciation and amortization 1.6 1.2 1.5 0.9 Interest expense 2.4 1.8 2.2 1.3 Other expense, net 1.3 1.0 0.2 0.1 Loss from continuing operations before income tax expense (20.6 ) (15.1 ) (1.7 ) (1.0 ) Income tax expense 4.0 2.9 0.1 0.1 Net loss from continuing operations (24.6 ) (18.1 ) (1.8 ) (1.1 ) Net loss from discontinued operations - - (0.9 ) (0.6 ) Net loss (24.6 ) (18.1 ) (2.7 ) (1.7 ) Net income attributable to non-controlling interest - - (0.5 ) (0.3 ) Net loss attributable to SPAR Group, Inc. $ (24.6 ) (18.1 %) $ (3.2 ) (2.0 %) Results of operations for the year ended December 31, 2025, compared to the year ended December 31, 2024.
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 to supplement U.S.
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.
The Company recognizes revenues for its contracts based on the contractually-specified rate-per-driver metric(s) utilizing the right-to-invoice practical expedient because the Company has a right to consideration for merchandising services completed to date. All of the Company’s contracts have a duration of one year or less and over 90% of the Company’s contracts are completed in less than 30 days.
The Company recognizes revenues for its contracts based on the contractually specified rate-per-driver metric(s) utilizing the right-to-invoice practical expedient because the Company has a right to consideration for merchandising services completed to date. Most of the Company’s contracts have a duration of one year or less and over 90% of the Company’s contracts are completed in less than 30 days.
The Company is dedicated to delivering a spectrum of specialized services tailored to enhance retail operations and profitability across the globe. Our team collaborates closely with clients to identify their primary goals, ensuring the execution of strategies that boost sales and profit margins.
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.
EBITDA and Adjusted EBITDA 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 ("US GAAP").
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").
GAAP measures of performance in the evaluation of the effectiveness of our business strategies and to make budgeting decisions. 16 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 US GAAP.
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.
The Company uses a variety of methodologies to determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions hypothetical marketplace participants would use. Goodwill is subject to annual impairment tests and interim impairment tests if impairment indicators are present. The Company performs the annual impairment test during the third quarter each year.
The Company uses a variety of methodologies to determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions hypothetical marketplace participants would use. Goodwill is subject to annual impairment tests and interim impairment tests if impairment indicators are present. The Company performs the annual impairment test on October 31 each year.
Net income attributable to non-controlling interest Net income attributable to noncontrolling interest was $ 0.5 million and $ 0.9 million for the years ended December 31, 2024 and 2023, respectively.
Net Income Attributable to Non-Controlling Interest Net income attributable to noncontrolling interest was $0.0 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively.
Credit loss expense was $0.1 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively. Internal Use Software The Company capitalizes certain costs associated with its internally developed software.
Credit loss expense was $0.1 million and $0.4 million for the years ended December 31, 2025 and 2024, respectively. Internal Use Software The Company capitalizes certain costs associated with its internally developed software.
This metric is a supplemental measure of our operating performance that is neither required by, nor presented in accordance with, US GAAP.
This metric is a supplemental measure of our operating performance that is neither required by, nor presented in accordance with, U.S. GAAP.
These various domestic and international credit facilities require compliance with their respective financial covenants. For the year ended December 31, 2024, the Company was in compliance with all financial covenants under these arrangements. See Note 4 to the Company's Consolidated Financial Statements, Debt, included elsewhere in this Annual Report on Form 10-K.
These credit facilities require compliance with their respective financial covenants. For the year ended December 31, 2025, the Company was in compliance with all financial covenants under these arrangements. See Note 4 to the Company's Consolidated Financial Statements, Debt, included elsewhere in this Annual Report on Form 10-K.
However, delays in collection of receivables due from any of the Company's major clients, a significant reduction in business from such clients, or a negative economic downturn could have a material adverse effect on the Company's business, cash resources and ongoing ability to fund operations. The Company is a party to various domestic and international credit facilities.
However, delays in collection of receivables due from any of the Company's major clients, a significant reduction in business from such clients, or a negative economic downturn could have a material adverse effect on the Company's business, cash resources and ongoing ability to fund operations. The Company is a party to both U.S. and Canada credit facilities.
The Company’s goal is to be the most creative, energizing and effective retail services company that drives sales, margins and operating efficiency for our clients. As of December 31, 2024, the Company operated in the United States and Canada. During 2024, the company strategically exited joint ventures in Mexico, Brazil, South Africa, China, Japan and India.
The Company’s goal is to be the most creative, energizing and effective retail services company that drives sales, margins and operating efficiency for our clients. As of December 31, 2025, the Company operated in the U.S. and Canada. During 2024, the Company strategically exited international operations in Mexico, Brazil, South Africa, China, Japan and India.
Net cash provided by investing activities for the year ended December 31, 2024 was $ 9.9 million, compared to cash used in investing activities of $ (2.3) million for the year ended December 31, 2023.
Net cash used in investing activities was $1.1 million for the year ended December 31, 2025 compared to cash provided by investing activities of $9.9 million for the year ended December 31, 2024.
Cost of Revenues The Company's cost of revenues consists of its in-store labor and field management wages, related benefits, travel and other direct labor-related expenses and was 80.5% of net revenue for the year ended December 31, 2024 compared to 78.9% of net revenues for the year ended December 31, 2023.
Cost of Revenue The Company's cost of revenue consists of its in-store labor and field management wages, related benefits, travel and other direct labor-related expenses and was 84.1% of net revenue for the year ended December 31, 2025 compared to 79.5% of net revenues for the year ended December 31, 2024.
The Company provides for probable uncollectible amounts through a charge to earnings and a credit to bad debt allowance based in part on management’s assessment of the current status of individual accounts. Based on management’s assessment, the Company established an allowance for credit losses of $0.4 million and $1.5 million at December 31, 2024 and 2023, respectively.
The Company provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance for credit losses based in part on management’s assessment of the current status of individual accounts. 16 Based on management’s assessment, the Company established an allowance for credit losses of $0.0 million and $0.4 million as of December 31, 2025 and 2024, respectively.
The decline in margin in 2024 was driven by significant growth in revenue from the remodel business, which is lower margin than the traditional merchandising business. The Americas cost of revenue as a percent of net revenue was 80.2% and 79.8% for the years ended December 31, 2024 and 2023, respectively.
The decline in margin in 2025 was driven by significant growth in revenue from the remodel business, which is lower margin than the traditional merchandising business. U.S. cost of revenue as a percent of net revenue was 85.6% and 79.5% for the years ended December 31, 2025 and 2024, respectively.
Cash Flows for the Years Ended December 31, 2024 and 2023 Net cash used in operating activities was $ (0.7) million for the year ended December 31, 2024 and net cash provided by operating activities was $ 6.8 million for the year ended December 31, 2023.
Cash Flows for the Years Ended December 31, 2025 and 2024 Net cash used in operating activities was $18.4 million for the year ended December 31, 2025 and net cash used in operating activities was $0.7 million for the year ended December 31, 2024.
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 global headquarters in Auburn Hills, Michigan, with local leadership and offices in each country.
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.
Net Revenues Consolidated net revenues for the year ended December 31, 2024, were $ 196.8 million compared to $ 262.7 million for the year ended December 31, 2023, a decrease of $ 65.9 million or 25.1%. This decrease in revenue was primarily driven by the sale of all international joint ventures during various times throughout the year.
Net Revenues Consolidated net revenues for the year ended December 31, 2025, were $136.1 million compared to $163.6 million for the year ended December 31, 2024, a decrease of $27.5 million or 16.8%. This decrease in revenue was primarily driven by the sale of all international operations, except Canada, during various times throughout 2024.
Other Expense, Net Other expense, net was $ 0.2 and $ 0.3 million for the years ended December 31, 2024 and 2023, respectively. 18 Income Tax Expense The Company had income tax expense of $ 1.2 million, with an effective tax rate of -82.9%, and $ 2.4 million, with an effective rate of 33.0%, for the years ended December 31, 2024 and 2023, respectively.
Income Tax Expense The Company had income tax expense of $4.1 million, with an effective tax rate of (19.8%) , and $0.1 million, with an effective rate of (8.7%) for the years ended December 31, 2025 and 2024 , respectively.
Depreciation and Amortization Depreciation and amortization expense was approximately $ 1.6 million and $ 2.0 million for the years ended December 31, 2024 and 2023, respectively. Interest Expense The Company's interest expense was $ 2.2 million and $ 1.9 million for the years ended December 31, 2024 and 2023, respectively.
Interest Expense The Company's interest expense was $2.4 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively. Other Expenses, Net Other expenses, net was $1.2 and $0.2 million for the years ended December 31, 2025 and 2024, respectively.
For the year ended December 31, 2024, our effective income tax rate of -82.9% varied from the U.S. federal statutory rate of 21% primarily as a result of foreign rate differential, the sale of foreign entities primarily as a result of the sale of the Brazilian JV qualifying as a gain in Brazil and subject to foreign withholding tax but being characterized as a loss under US GAAP, and permanent differences.
For the year ended December 31, 2024, our effective income tax rate varied from the U.S. federal statutory rate of 21.0% primarily as a result of Brazilian withholding taxes, foreign disregarded income, and permanent differences.
The Company capitalized approximately $1.0 million and $1.0 million of costs related to software developed for internal use for the years ended December 31, 2024 and 2023, respectively, and recognized approximately $1.4 million and $1.3 million of amortization of capitalized software for the years ended December 31, 2024 and 2023 Recent Accounting Pronouncements See the sections titled "Summary of Significant Accounting Policies— Recently Adopted Accounting Pronouncements” and "—Recently issued accounting pronouncements not yet adopted” in Note 2 to the Company's Consolidated Financial Statements, Summary of Significant Accounting Policies, included elsewhere in this Annual Report on Form 10‑K.
See Note 5, Income Taxes in the Notes to Consolidated Financial Statements for additional information." Recent Accounting Pronouncements See the sections titled "Summary of Significant Accounting Policies— Recently Adopted Accounting Pronouncements” and "—Recently issued accounting pronouncements not yet adopted” in Note 2 to the Company's Consolidated Financial Statements, Summary of Significant Accounting Policies, included elsewhere in this Annual Report on Form 10‑K.
Our Consolidated Net Income (loss) was approximately ($2.7) million and $4.8 million for the years ended December 31, 2024, and December 31, 2023. Our Consolidated EBITDA was approximately $2.5 million and $11.4 million for the years ended December 31, 2024 and 2023 respectively.
Our loss from continuing operations was approximately $24.6 million and $1.8 million for the years ended December 31, 2025, and December 31, 2024. Our Consolidated EBITDA loss was approximately $16.5 million and income of $3.6 million for the years ended December 31, 2025 and 2024 respectively.
For the year ended December 31, 2024, the Company experienced a net increase in cash and cash equivalents amounting to approximately $ 7.5 million, net of the impact of foreign exchange rate fluctuations of $(0.1) . The overall increase in cash was driven by proceeds from the sale of international joint ventures as well as improved working capital management.
For the year ended December 31, 2025, the Company experienced a net decrease in cash and cash equivalents amounting to approximately $15.0 million, net of the impact of foreign exchange rate fluctuations of $0.0 million.
If, at the outset of an arrangement, the Company determines that a contract with enforceable rights and obligations does not exist, revenues are deferred until all criteria for an enforceable contract are met. 19 The Company’s merchandising services are provided over time, generally on a daily, weekly, or monthly basis, and transaction price is based on the contractually-specified rate-per-driver metric (i.e., rate per hour, rate per store visit, or rate per unit stocked).
The Company’s merchandising services are provided over time, generally on a daily, weekly, or monthly basis, and transaction price is based on the contractually-specified rate-per-driver metric (i.e., rate per hour, rate per store visit, or rate per item assembled, or rate by task).
Selling, General and Administrative Expenses Selling, general and administrative expenses of the Company include its corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expenses.
Selling, General and Administrative Expense Selling, general and administrative expense ("SG&A") for the Company include its corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expenses. SG&A expenses were approximately $32.2 million, or 23.7% of net revenue, and approximately $33.9 million, or 20.7% of net revenue for the years ended December 31, 2025 and 2024, respectively.
Performance obligations in the Company’s contracts represent distinct or separate services that we provide to the Company’s customers; generally, the Company’s contracts have a single performance obligation.
Performance obligations in the Company’s contracts represent distinct or separate services that we provide to the Company’s customers; generally, the Company’s contracts have a single performance obligation. If, at the outset of an arrangement, the Company determines that a contract with enforceable rights and obligations does not exist, revenues are deferred until all criteria for an enforceable contract are met.
The net cash provided by investing activities was primarily attributable to the sale of international joint ventures, net of transaction costs. 20 Net cash used in financing activities for the year ended December 31, 2024 was approximately $ (1.7) million compared to $ (3.0) million used in financing activities in 2023 .
Net cash provided by financing activities was $4.5 million for the year ended December 31, 2025 compared to cash used in financing activities of $1.7 million for the year ended December 31, 2024 . The year-over-year increase in cash from financing activities was driven by borrowings under the line of credits and sale of treasury shares.
The EMEA net revenues totaled $ 8.3 million and $ 34.6 million for the years ended December 31, 2024 and 2023, respectively, a decrease of $ 26.3 million or 76.1%. The decline in revenues is due to the exit of our South African joint venture in 2024.
Canada net revenues totaled $14.0 million and $14.3 million for the years ended December 31, 2025 and 2024, respectively, a decrease of $0.3 million or 2.1% . All Other net revenues totaled $31.8 million for the year ended December 31, 2024. The Company exited all international operations, except Canada, in 2024.
Selling, general and administrative expenses for the year-ended December 31, 2024 includes expenses of approximately $5.5 million related to our consideration of strategic alternatives, costs to execute sale of joint ventures, and transaction costs associated with the proposed merger with Highwire capital.
SG&A expenses for the year-ended December 31, 2025 includes expenses of approximately $2.0 million related to strategic initiatives, legal costs, expenses incurred to resolve prior year restatements, and shareholder matters. For the year-ended December 31, 2024, includes expenses of approximately $5.5 million related to costs to execute sales of international operations and transaction costs associated with strategic initiatives. U.S.
As of December 31, 2024, the Company has exited all business in Asia-Pacific. The EMEA cost of revenue as a percent of net revenue was 84.6% and 76.3% for the years ended December 31, 2024 and 2023, respectively.
This increase in cost of 2.1% was the result of increased merchandising business with a large client which has a lower profit margin. All Other cost of revenue as a percent of net revenues was 84.2% for the year ended December 31, 2024. The Company exited all international operations, except Canada in 2024.
The increase in cost of 0.4% was the result of higher costs in our owned U.S. business related to the high proportion of revenue growth in the remodel business. These higher costs were partially offset by a partial year impact of the exit of Mexico and Brazil, which are traditionally lower margin businesses than those in the U.S. and Canada.
The increase in cost of 6.1% was the result of higher costs in our U.S. business related to the high proportion of revenue growth in the remodel business. The Canada cost of revenue as a percent of net revenue was 70.9% and 68.8% for the years ended December 31, 2025 and 2024 , respectively.
The decline in revenues associated with the sale of Brazil were partially offset by 11% revenue growth in the United States and 15% revenue growth in Canada. The Asia-Pacific net revenues totaled $ 11.3 million and $ 24.5 million for the years ended December 31, 2024 and 2023, respectively, a decrease of $ 13.2 million or 53.9%.
U.S. net revenues totaled $122.1 million and $117.5 million for the years ended December 31, 2025 and 2024, respectively. The increase of $4.6 million or 3.9% is driven by continued growth in the U.S. market.
Removed
Delayed Filing In fiscal year 2024, the Company navigated an exceptionally complex set of transactions and operational changes. During the year, the Company divested six foreign joint ventures and acquired the remaining 49% ownership interest in another joint venture, significantly reshaping its corporate and consolidation structure.
Added
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.
Removed
The Company also implemented a new enterprise resource planning (ERP) system, running it in parallel during the fourth quarter to transition from legacy financial systems. In addition, preparations for an anticipated acquisition of Highwire late in the year necessitated a delay in completing the year-end financial close and postponed the start of the annual audit.
Added
"EBITDA" is defined as net income before (i) depreciation and amortization, (ii) interest expense, net, and (iii) income tax expense.
Removed
These events collectively created an unusually challenging financial reporting environment for 2024.
Added
SG&A expenses totaled $29.5 million and $25.2 million for the years ended December 31, 2025 and 2024 , respectively. The increase in expense of 17.1% was the result of strategic initiatives, legal costs, expenses incurred to resolve prior year restatements, and shareholder matters.
Removed
The Americas net revenues totaled $ 177.2 million and $ 203.7 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $ 26.5 million or 13.0% is the result of the sale of our Brazilian joint venture during the second quarter.
Added
Canada SG&A expenses totaled $2.7 million and $2.7 million for the years ended December 31, 2025 and 2024, respectively. All Other SG&A expenses totaled $6.0 million for the year ended December 31, 2024. The Company exited all international operations, except Canada in 2024.
Removed
The decline in revenues at Asia-Pacific is due to the exit of all joint ventures in the region in 2024, compared to a full year of revenues in the prior year.
Added
Restructuring Costs and Severance Restructuring costs and severance for the Company include costs related to relocating its corporate headquarters from Auburn Hills, Michigan to its existing operations office in Charlotte, North Carolina, in November of 2025 and the severance of certain Executives during this move.
Removed
The Asia-Pacific cost of revenue as a percent of net revenue was 80.7% and 74.7% for the years ended December 31, 2024 and 2023, respectively. Margins declined in Asia-Pacific due to lower margins in China and the full year impact of the sale of Australia, which had high margins in 2023.
Added
Restructuring costs and severance were approximately $4.8 million and $0.0 million for the year ended December 31, 2025 and 2024, respectively. 15 Depreciation and Amortization Depreciation and amortization expense was approximately $1.6 million and $1.5 million for the years ended December 31, 2025 and 2024, respectively.
Removed
This decrease in gross margin is due to (i) additional variable expenses in the cost of sales, (ii) government imposed wage increases (8.5%) ahead of inflation (5.3%) at a time when the economy is under pressure which forced margin reduction in contract renegotiations. The Company exited the EMEA region in the first quarter of 2024.
Added
For the year ended December 31, 2025 , our effective income tax rate varied from the U.S. federal statutory rate of 21.0% primarily as a result of the valuation allowance, executive compensation disallowed pursuant to Section 162(m), adjustments in tax credits, foreign rate differential and other permanent differences.
Removed
Selling, general and administrative expenses were approximately $ 37.3 million, or 18.9% of net revenue, and approximately $ 43.7 million, or 16.6% of net revenue for the years ended December 31, 2024 and 2023, respectively.
Added
The Company capitalized approximately $2.4 million and $1.0 million of costs related to software developed for internal use for the years ended December 31, 2025 and 2024, respectively, and recognized approximately $1.4 million and $1.4 million of amortization of capitalized software for the years ended December 31, 2025 and 2024 Income Taxes The Company records deferred tax assets to the extent the Company believes these assets will more likely than not be realized.
Removed
Absent these costs, which are not on-going in nature, Selling, general and administrative expenses were 16.5% of net revenue in 2024. The Americas selling, general and administrative expenses totaled $ 33.0 million and $ 32.2 million for the years ended December 31, 2024 and 2023, respectively.
Added
In making such determinations, the Company considers all available evidence, including future reversals of existing deferred tax liabilities, projected future taxable income, feasible and prudent tax planning strategies, and recent financial operating results. If the Company determines that it will not be able to realize deferred income tax assets in the future, a valuation allowance is recorded.
Removed
Costs were essentially flat to prior year as the impact of the sale of Brazil was offset by higher costs associated with the evaluation of strategic alternatives. The Asia-Pacific selling, general and administrative expenses totaled $ 3.1 million and $ 6.5 million for the years ended December 31, 2024 and 2023, respectively.
Added
If sufficient positive evidence arises in the future indicating that all or a portion of the deferred tax assets meet the more likely than not standard for realization, the valuation allowance would be reduced accordingly in the period that such a conclusion is reached.
Removed
The decrease of $ 3.4 million, or 52.2% is primarily attributable to the exit of international joint ventures by the end of the third quarter of 2024. The EMEA selling, general and administrative expenses totaled $ 1.1 million and $ 5.0 million for the years ended December 31, 2024 and 2023, respectively. EMEA was exited in second quarter of 2024.
Added
Valuation allowances of $7.6 million and $0.0 million at December 31, 2025 and 2024, respectively, related principally to deferred tax assets for net operating losses ("NOLs"), disallowed interest expense and tax credits that are uncertain as to realizability.
Removed
The America interest expense was $ 2.1 million and $ 1.4 million for the years ended December 31, 2024 and 2023, respectively. The increase was due to h igher debt balances resulting from, among other factors, the legal obligation to have balance sheet cash of no less than $14.2 million at the closing date of the Highwire merger .
Added
An income tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on its technical merits.
Removed
The year-over-year decrease in net cash provided by operating activities was primarily due to the sale of Brazil & South Africa, which both generated strong operating cash flows in 2023. This impact was partially offset by improved working capital management in the US.
Added
The unrecognized tax reserves at December 31, 2025 and 2024 were $0.16 million and $0.11 million respectively, excluding accrued interest and penalties. The Company has historically calculated its quarterly tax provision based on its best estimate of the full year tax rate applicable to the quarter.
Removed
The year-over-year decrease in cash from financing activities was driven by payment of notes to the sellers of Resource Plus, the purchase of treasury stock, and distributions to non-controlling investors.
Added
The Company did not significantly change the methodology for calculating income tax expenses, deferred tax assets and liabilities and reserves for uncertain tax positions for the years presented.
Removed
Brazil Joint Venture Sale and Non-GAAP EPS Impact Economic Substance of the Transaction In June 2024, SPAR Group completed the sale of its 51% ownership stake in its Brazilian joint venture. The total consideration was $10.7 million, consisting of $9.7 million in cash received by SPAR and $1.0 million withheld for Brazilian tax purposes.
Added
The year-over-year increase in net cash used by operating activities was mainly driven by lower operating income and unfavorable changes in working capital, largely due to the timing of customer collections, partially offset by favorable timing of payments to suppliers.
Removed
SPAR’s carrying value for its investment in the Brazilian joint venture was roughly $4.8 million before the sale. Based on these figures, the transaction generated an economic pre-tax gain of approximately $5.9 million (i.e. the excess of the $10.7 million proceeds over the $4.8 million carrying value).
Added
The net use of cash for investing activities was primarily attributable to the costs associated with software developed for internal use, implementation of a new enterprise resource planning system, and expenditures related to outfitting the new corporate headquarters.
Removed
To facilitate this purchase, the buyer largely financed the payment at the joint venture level, rather than using entirely new funds. The funding was achieved through two components: ● a new $7.5 million loan incurred by the Brazilian joint venture in March 2024, and ● $3.5 million paid by the minority (49%) joint venture partner.
Added
The year-over-year decrease in cash and cash equivalents was due to lower operating income and unfavorable changes in working capital, largely due to the timing of customer collections, the costs associated with software developed for internal use, expenditures related to outfitting the new corporate headquarters, offset by favorable timing of payments to suppliers.
Removed
As a result, the joint venture obtained the necessary $10.7 million to complete the acquisition of SPAR’s shares. SPAR received the $9.7 million in cash proceeds (net of Brazilian withholding tax) before deconsolidating the Brazilian entity from its financial statements. U.S. GAAP Accounting Treatment and Impact Under U.S.
Removed
GAAP, the accounting result of this sale differed from the economics described above. When SPAR deconsolidated its Brazilian joint venture upon sale, it removed all the joint venture’s assets and liabilities from the consolidated balance sheet.
Removed
As a consequence of the mechanics of the joint venture financing, namely the payment originating from the joint venture qualifying as a capital distribution (instead of consideration for sale) SPAR was required to reclassify approximately $7.5 million into the income statement as part of the gain/loss calculation. This non-cash reclassification effectively reduced the gain on the sale by $7.5 million.
Removed
Consequently, instead of recording the $5.9 million gain that the transaction economically produced, SPAR’s financial statements reflect a $1.6 million loss on the sale of the Brazilian joint venture under GAAP. In other words, the $5.9 million economic gain was offset by this $7.5 million accounting adjustment, yielding a net loss in the reported results.
Removed
It is important to note that this $1.6 million loss is purely a technical accounting/consolidation outcome and not reflective of the underlying economics of the transaction. The loss resulted from the required equity reclassification entry, rather than any actual operational or cash loss on the sale.
Removed
Had the economic substance been reflected in our accounting (i.e. had we been able to record the approximately $5.9 million true gain on the sale instead of a loss), our pre-tax income for 2024 would have been higher by about $7.5 million. After applying taxes, this difference would have significantly increased our net income and earnings per share.
Removed
For perspective, earnings per share (EPS) would have been materially higher if the $5.9 million gain were included - on such a basis, EPS for 2024 would have been $0.19 per share compared to the reported GAAP result of ($0.13).
Removed
This adjusted EPS measure adds back the after-tax impact of the reduction of the economic gain on the sale by $7.5 million (approximately $0.32 per share) to our GAAP EPS. This adjustment would have turned our reported net loss for the year into a net profit, underscoring the positive economic impact of the Brazil joint venture sale.
Removed
In summary, while our official results are reported in accordance with U.S. GAAP (and thus include the $1.6 million accounting loss on the Brazil sale), we believe it is helpful to provide investors with the economic context of this transaction.
Removed
Excluding the technical accounting adjustment, the sale of our Brazilian joint venture was a highly accretive disposition that added substantial economic value. The adjusted gain and related EPS impact discussed above are supplemental, non-GAAP figures provided to illustrate the true economic outcome.
Removed
Management emphasizes that the GAAP financial statements remain the authoritative source of our results, but the additional context is intended to clarify that the GAAP loss on the sale was driven by accounting requirements rather than an economic loss.

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