What changed in SPAR Group, Inc.'s 2024 10-K compared to 2023?

Across the narrative sections we track, SPAR Group, Inc. (SGRP) added 166 paragraphs, removed 163, and edited 110 between the 2023 and 2024 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+68/−61), Item 1. Business (+44/−52), Item 1A. Risk Factors (+42/−35).

Did SPAR Group, Inc. add new Risk Factors in the 2024 10-K?

Yes — Item 1A Risk Factors shows 42 new/edited paragraphs and 35 removed paragraphs versus the 2023 10-K.

What changed in SPAR Group, Inc.'s MD&A (Item 7) in 2024?

Item 7 Management's Discussion & Analysis shows 68 new/edited paragraphs and 61 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did SPAR Group, Inc.'s Legal Proceedings (Item 3) change in 2024?

Item 3 shows 0 added/edited paragraphs and 2 removed paragraphs — usually indicating new litigation disclosed or settled cases removed.

Where does this SGRP 10-K diff come from?

The source filings are SPAR Group, Inc.'s official 2023 and 2024 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in SPAR Group, Inc.'s 10-K — 2023 vs 2024

Paragraph-level year-over-year comparison of SPAR Group, Inc.'s 2023 and 2024 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 2024 report.

+166 added−163 removedSource: 10-K (2025-05-16) vs 10-K (2024-04-01)

Top changes in SPAR Group, Inc.'s 2024 10-K

166 paragraphs added · 163 removed · 110 edited across 6 sections

Item 7. Management's Discussion & Analysis+68 / −61 · 39 edited
Item 1. Business+44 / −52 · 37 edited
Item 1A. Risk Factors+42 / −35 · 25 edited
Item 5. Market for Registrant's Common Equity+11 / −12 · 8 edited
Item 3. Legal Proceedings+0 / −2

Item 1. Business

Business — how the company describes what it does

37 edited+7 added−15 removed19 unchanged

2023 filing

2024 filing

Biggest changeOur market positioning provides us with an unparalleled window into changes and opportunities in the markets we serve. We carefully measure the results of these tests and look for new services that can have a material impact on our financial and operational performance.

Biggest changeWe carefully measure the results of these tests and look for new services that can have a material impact on our financial and operational performance. Invest in Technology We believe our current SPARView technology provides us with a competitive advantage in the marketplace. Our technology enables us to communicate, plan, track, analyze, and optimize our merchandising and marketing services work.

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. 8 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. 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.

Our unique combination of resource scale, deep expertise, advanced technology and unwavering commitment to excellence, separates us from the competition. Our focus is services. Our team works closely with clients to determine their key objectives to execute globally, focusing on enhancing their sales and profit.

Together, these services work to maintain a coherent and appealing retail environment that enhances product visibility and shopper engagement. 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.

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.

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, 2023 and 2022. 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 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.

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

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

The result of this strategic framework will be top-line growth, expanded margins, more value for clients and higher levels of free cash flow to allow us to invest for more growth. Grow the Core Business The Company is constantly pursuing new core business services while working to earn more business from current clients.

The result of this strategic framework will be top-line growth, expanded margins, more value for clients and higher levels of free cash flow to allow us to invest in future growth. Grow the Core Business The Company is constantly pursuing new core business services while working to earn more business from current clients.

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, 2023 and 2022, and their respective assets as of December 31, 2023 and 2022, is provided in Note 12 to the Company's Consolidated Financial Statements – Segment Information, below.

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.

The Company's competition in all-markets arise from a number of large enterprises. The Company also competes with a large number of relatively small enterprises with specific client, channel or geographic coverage, as well as with the internal marketing and merchandising operations of its existing and prospective clients.

The Company's competition in all markets arises from a number of large enterprises. The Company also competes with a large number of relatively small enterprises with specific client, channel or geographic coverage, as well as with the internal marketing and merchandising operations of its existing and prospective clients.

Our Customers The Company currently represents numerous manufacturers and/or retail clients in a wide range of retail segments and stores worldwide, 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 9 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 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.

Item 1. Business Our Company SPAR Group, Inc., a Delaware corporation ("SGRP" or the "Corporation"), and its subsidiaries (together with SGRP, "SPAR Group" or the "Company"), is a leading global merchandising and brand marketing services company, providing a broad range of sales enhancing services to retailers across most classes of trade and consumer goods manufacturers and distributors around the world.

Item 1. Business Our Company SPAR Group, Inc., a Delaware corporation ("SGRP" or the "Corporation"), and its subsidiaries (together with SGRP, "SPAR Group" or the "Company"), is a leading merchandising and brand marketing services company, providing a broad range of sales enhancing services to retailers across most classes of trade and consumer goods manufacturers and distributors.

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 and Independent Field Administrator respectively providing Field Administrators through December 2022 and 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" 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).

The following table provides details of the structure of our Domestic and International businesses: 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 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 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 2023 and $1.5 million in 2022, respectively.

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 16,491) were supplied to the Company by an independent vendor (the "Independent Field Vendor").

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").

The Company believes that the principal competitive factors within its industry include breadth and quality of client services, cost, development and deployment of technology, the ability to execute specific client priorities rapidly and consistently over a wide geographic area, and the ability to ideate and operate as a business partner delivering value above basic services.

The Company believes that the principal competitive factors within its industry favoring the Company include the breadth and quality of its client services, its competitive costs, the development and deployment of its technology, its ability to execute specific client priorities rapidly and consistently over a wide geographic area, and its ability to conceive of ideas and operate as a business partner delivering value above basic services.

Our Growth Strategy As the need for flexibility and efficiency in merchandising and marketing services continues to increase, both in the United States and internationally, brand owners, consumer goods companies, manufacturers and retailers will continue to rely on third-party providers for these services.

Our Growth Strategy As the need for flexibility and efficiency in merchandising and marketing services continues to increase, brand owners, consumer goods companies, manufacturers, distributors, and retailers will continue to rely on third-party providers for these services.

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 national and international initiatives and develop and administer national and international manufacturer programs.

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.

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").

SPAR Group is uniquely able to meet these needs because of our global reach, more than 50-year track record, access to over 25,000 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 service in-country and across geographies.

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.

Our goal is to be the most creative, energizing and effective global services company that drives sales, margins and operating efficiency for our clients. As of December 31, 2023, we operated in eight countries including the United States, Canada, Mexico, Brazil, South Africa, China, Japan and India.

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.

Across all of these countries, we successfully execute programs through our multi-lingual 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 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.

At the same time, we pursue and solicit requests for proposals ("RFPs"), we actively market our services, we participate in industry events and we continuously look for opportunities to grow our business. We believe our history, relationships, expertise, technology and scale are all competitive advantages for us.

Except for SBS and Infotech (they do not need such software licenses because of their co-ownership), each subsidiary and field vendor trademark license and arrangement also licenses the Co-Owned Software to the licensee.

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.

SPAR Group is one of the leading providers of these merchandising and marketing services to companies across the globe. With more than 50 years of history, the Company has established itself as a strategic partner to many of the world’s most exciting product manufacturers and retailers.

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

As a result, we are constantly adapting and innovating. We explore relationships within and across geographies and businesses with solution providers, while simultaneously making investments in our own solutions, with a focus to provide clients with better results, through our broader capability. This will facilitate our ability to offer higher value services over time.

However, we recognize that technology and our opportunity to successfully leverage technology continues to change. As a result, we are constantly adapting and innovating. We explore relationships within and across geographies and businesses with solution providers, while simultaneously making investments in our own solutions, with a focus to provide clients with better results, through our broader capability.

With the acceleration of digital and online retailing, the pressure on the physical store to remain relevant, efficient and compelling has never been higher. In addition, product manufacturers are constantly trying to grab the consumer’s attention and make sure they are everywhere the consumer wants to shop. These are exactly the issues merchandising and marketing services companies solve.

In addition, product manufacturers are constantly trying to grab the consumer’s attention and make sure they are everywhere the consumer wants to shop. These are exactly the issues merchandising and marketing services companies solve.

Historically, retailers staffed their stores to ensure the store was well merchandised and product was properly featured and placed. However, in an effort to control costs and improve margins, most retailers have reduced store payroll and increased their reliance on manufacturers to set up their own products and merchandise the shelves on behalf of the retailer.

However, in an effort to control costs and improve margins, most retailers have reduced store payroll and increased their reliance on distributors to set up their own products and merchandise the shelves on behalf of the retailer. To begin, distributors utilized their own sales representatives to do this work.

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, Fulfilment and Distribution. 7 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.

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 changing retail landscape and need for enhanced digital, e-commerce and fulfillment capability 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.

Foreign subsidiaries employed 209 full-time and part-time employees. The Company's Asia-Pacific Division's field force consisted of approximately 1,660 Field Specialists engaged locally by our foreign subsidiaries in their respective international operations. As of December 31, 2023, the Company's EMEA Division's labor force totaled approximately 5,255 including the services of field personnel and others furnished by independent third parties.

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 objective is to identify and introduce new or complimentary capabilities that we believe the market and our clients need now and in the future. To accomplish this, we pursue business partnerships, look for acquisitions and joint ventures and explore ideas based on market trends and our own unique client experiences.

To accomplish this, we pursue business partnerships, look for acquisitions and joint ventures and explore ideas based on market trends and our own unique client experiences. Our market positioning provides us with an unparalleled window into changes and opportunities in the markets we serve.

Additional marketing services include, but are not limited to, new store sets and remodels, audits, sales assistance, installation and assembly, product demos/sampling, promotion and more. The Company believes that merchandising and marketing services add value to retailers, manufacturers and other businesses by making a product more visible and more available to consumers.

Merchandising services include placing orders, retail shelf maintenance, display setup, reconfiguring products on store shelves and replenishing product inventory. Additional marketing services include, but are not limited to, new store sets and remodels, audits, sales assistance, installation and assembly, product demos/sampling, promotion and more.

Our Industry The merchandising and marketing outsourced services industry plays an important role in the growth and performance of some of the world’s most successful product and retail companies. Merchandising services includes placing orders, retail shelf maintenance, merchandising display setup, reconfiguring products on store shelves and replenishing product inventory.

Our technology adds to these services by providing clients with detailed insight across all aspects of individual stores. Our Industry The merchandising and marketing outsourced services industry plays an important role in the growth and performance of some of the world’s most successful product and retail companies.

To begin, manufacturers utilized their own sales representatives to do this work. Over time, this resulted in competing manufacturer representatives working in the same stores. This often led to the best presentation of merchandise resulting from the last manufacturer representative physically in the store.

Over time, this resulted in competing representatives working in the same stores. This often led to the best presentation of merchandise resulting from the last distributor representative physically in the store. As a result, retailers began looking for third parties who could manage the merchandising process and ensure that the store, in total, was ready for the consumer.

As a result, retailers began looking for third parties who could manage the merchandising process and ensure that the store, in total, was ready for the consumer. The result was the growth of the merchandising and marketing services industry. 5 We believe this industry will continue to grow and is more important today than ever before.

The result was the growth of the merchandising and marketing services industry. We believe this industry will continue to grow and is more important today than ever before. With the acceleration of digital and online retailing, the pressure on the physical store to remain relevant, efficient and compelling has never been higher.

Our objective is to provide technology to field merchandisers, our client partners and our management to make smarter decisions that yield better Company results. 6 Our Business Divisions The Company operates through three divisions: Americas, Asia Pacific (APAC), and Europe, Middle East and Africa (EMEA). The Americas division encompasses the United States, Canada, Mexico, and Brazil.

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.

Removed

Our technology adds to these services by providing clients with detailed insight across all aspects of individual stores. Our commitment to excellence comes from our people and organizational culture. We are passionate about talent and building a culture of ideas and innovation.

Added

The Company believes that merchandising and marketing services add value to retailers, manufacturers and other businesses by making a product more visible and more available to consumers. Historically, retailers staffed their stores to ensure the store was well merchandised and product was properly featured and placed.

Removed

We know that attracting, supporting and encouraging our people to do great things for clients results in excellent work. This great work begets more work and creates an energy and enthusiasm for our people and the Company as a partner. We are proud of our people and their dedication to clients and our company success.

Added

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.

Removed

We are also a results-driven organization that holds itself to a high standard of execution. We believe that our ability to meet or exceed our commitments to clients and the marketplace are part of how we define success. This is true if we are growing our core business, innovating with technology or testing new services. We aspire to be exceptional.

Added

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.

Removed

Invest in Technology We believe our current SPARView technology provides us a competitive advantage in the marketplace and is a core competitive strength. Our technology enables us to communicate, plan, track, analyze and optimize our merchandising and marketing services work. However, we recognize that technology and our opportunity to successfully leverage technology continues to change.

Added

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.

Removed

The APAC division includes Japan, China, Australia, and India. As detailed in Note 10 (Related Party Transactions), the company divested its stake in the Australian joint venture (JV), effective December 31, 2023. The financial results for the full years of 2023 and 2022 incorporate the Australian operations, which will be excluded from the financial results after 2023.

Added

Our Canada business has a regional leadership office in Vaughan, Ontario.

Removed

The EMEA division consists of South Africa. The total business is led and operated from our global headquarters in Auburn Hills, Michigan. Each country also has regional leadership and offices in the respective market. Our approach to the international marketplace has historically been to establish joint ventures.

Added

("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.

Removed

We believe this approach enables us to bring the breadth of our global capabilities and tools while capitalizing on the strength and importance of local executive leadership and resources.

Added

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.

Removed

("RPI") 51 % Jacksonville, Florida Canada SPAR Canada Inc, 100 % Vaughan, Ontario, Canada Mexico SPAR TODOPROMO, SAPI, de CV 51 % Mexico City, Mexico Brazil SPAR Brasil Serviços de Merchandising e Tecnologia S.A. and its subsidiaries 51 % Sao Paulo, Brazil Asia- Pacific Japan SPAR FM Japan, Inc. 100 % Tokyo, Japan India SPAR KROGNOS Marketing Private Limited 51 % New Delhi, India Preceptor Marketing Services Private Limited 51 % New Delhi, India China SPAR (Shanghai) Marketing Management Company Ltd. 51 % Shanghai, China Europe, Middle East, Africa (EMEA) South Africa SGRP Meridian (PTY), Ltd. and its subsidiaries 51 % Durban, South Africa The Company tracks and reports certain financial information separately for the individual countries using the same metrics.

Removed

The primary measurement utilized by management is operating profit, historically the key indicator of long-term growth and profitability, as the Company is focused primarily on reinvesting the operating profits of each of its international subsidiaries back into local markets in an effort to improve its market share and continued expansion efforts.

Removed

Our Labor Force Worldwide, the Company utilized a labor force in 2023 of up to approximately 24,288 people depending on seasonality, including the services of Field Specialists and Field Administrators provided by independent third parties.

Removed

The Company executes and administers its field services in the USA through the services of field merchandising, auditing, assembly and other field personnel (each a "Field Specialist"), substantially all of whom are provided to the Company and engaged by independent third parties and located, scheduled, deployed and administered domestically through the services of local, regional, district and other personnel (each a "Field Administrator").

Removed

Substantially all of its Field Administrators in the USA were in turn employed by other independent third parties through December 2022 and by the Company thereafter. As of December 31, 2023, the Company's labor force in the Americas totaled approximately 17,032 including the services of Field Specialists and Field Administrators furnished by independent third parties.

Removed

The Company employed in Americas a labor force of 462 full-time employees and 79 part-time employees engaged in operations.

Removed

The services of a significant portion of the Field Administrators who supervise the Field Specialists (approximately 60) were provided to the Company in the USA by an independent vendor (the "Independent Field Administrator") through December 2023 and by the Company thereafter. 10 As of December 31, 2023, the Company's Asia-Pacific Division's labor force totaled approximately 2,001 including the services of field personnel and others furnished by independent third parties.

Removed

Foreign subsidiaries employed 713 full-time and part-time employees. The Company's EMEA Division's field force consisted of approximately 4,400 Field Specialists engaged locally by our foreign subsidiaries in their respective international operations.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

25 edited+17 added−10 removed47 unchanged

2023 filing

2024 filing

Biggest changeThe business strategy, client relationships and operating knowledge are critical to the Company’s long-term success. We believe we have attracted and developed the most experienced and proven executive leadership team in the industry. However, we work in a competitive industry where talent is visible and other companies may approach and attract our key executives.

Biggest changeOur business performance is connected to the experience and retention of key executives. The business strategy, client relationships and operating knowledge are critical to the Company’s long-term success. We believe we have attracted and developed the most experienced and proven executive leadership team in the industry.

See Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement”) and our By-Laws, Item 3 -- Legal Proceedings, below, Note 6 to the Company's Consolidated Financial Statements - Commitments and Contingencies, and Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions - (including Change of Control, Voting and Restricted Stock Agreement), below. ● Any announcement, estimate or disclosure by the Company, or any projection or other claim or pronouncement by any of the Company's competitors or any financial analyst, commentator, blogger or other person, respecting: (i) any new service created or improved, significant contract, business acquisition or relationship, or other publicized development by the Company or any of its competitors; or (ii) any change, fluctuation or other development in the Company's actual, estimated or desired affiliates, assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, legal costs, liabilities, liquidity, locations, marketing, operations, prospects, sales, strategies, taxation or other achievement, results or condition or in those of any of the Company's competitors, in each case irrespective of accuracy or validity and whether or not adverse or material. ● The general volatility of stock markets, consumer and investor confidence, and the general state of the economy (which often affect the prices of stock issued by the Corporation and many others without regard to financial results or condition).

Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement”) and our By-Laws, Item 3 -- Legal Proceedings, below, Note 6 to the Company's Consolidated Financial Statements - Commitments and Contingencies, and Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below. ● Any announcement, estimate or disclosure by the Company, or any projection or other claim or pronouncement by any of the Company's competitors or any financial analyst, commentator, blogger or other person, respecting: (i) any new service created or improved, significant contract, business acquisition or relationship, or other publicized development by the Company or any of its competitors; or (ii) any change, fluctuation or other development in the Company's actual, estimated or desired affiliates, assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, legal costs, liabilities, liquidity, locations, marketing, operations, prospects, sales, strategies, taxation or other achievement, results or condition or in those of any of the Company's competitors, in each case irrespective of accuracy or validity and whether or not adverse or material. ● The general volatility of stock markets, consumer and investor confidence, and the general state of the economy (which often affect the prices of stock issued by the Corporation and many others without regard to financial results or condition).

Such revenue decreases could have a material adverse effect on the Company or its performance or condition. 11 We can be adversely affected if governments pass legislation that mandates an increase in wages, changes labor laws or otherwise drives market behavior that negatively impacts the business or operations of SPAR Group or our clients.

Such revenue decreases could have a material adverse effect on the Company or its performance or condition. We can be adversely affected if governments pass legislation that mandates an increase in wages, changes labor laws or otherwise drives market behavior that negatively impacts the business or operations of SPAR Group or our clients.

We continuously review the terms and incentives for our executives to retain them and competitively compensate them to deliver industry leading results on behalf of all shareholders. Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") and our By-Laws. The Company's co-founders, Mr. Robert G.

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.

If such claims are asserted and adversely determined against the Company, then to the extent such claims are not covered by indemnification from the product's seller or manufacturer or by insurance, they could have a material adverse effect on the Company or its performance or condition. 12 We depend upon third-party independent contractors and the services they provide.

If such claims are asserted and adversely determined against the Company, then to the extent such claims are not covered by indemnification from the product's seller or manufacturer or by insurance, they could have a material adverse effect on the Company or its performance or condition. We depend upon third-party independent contractors and the services they provide.

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. 13 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. 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.

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.

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.

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. 14 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. 11 As a small company with stock price volatility, our stock may be de-listed from NASDAQ.

The current political, social and economic conditions, including the impact of terrorism and COVID-19 on consumer and business behavior, make it difficult for the Company, its vendors and its clients to accurately forecast and plan future business activities. Substantially all of the Company's key clients are either retailers, manufacturers or those seeking to do product merchandising at retailers.

The current political, social and economic conditions, including the impact of terrorism on consumer and business behavior, make it difficult for the Company, its vendors and its clients to accurately forecast and plan future business activities. Substantially all of the Company's key clients are either retailers, manufacturers or those seeking to do product merchandising at retailers.

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

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

That amount was calculated using their respective individual beneficial ownership, on December 31, 2023, which includes the amounts they represented in the CIC Agreement and subsequent Form 4 filings, the total outstanding ownership (23,446,444 shares) of the SGRP Common Stock on a non-diluted basis as of December 31, 2023.

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.

The success of the Company's business in the USA is dependent upon the successful execution and administration of its domestic field services through the services of Field Specialists, and a significant portion of them are provided to the Company and are engaged by the Independent Field Vendor and located, scheduled, deployed and administered domestically through the services of Field Administrators (who were provided by an independent vendor through December 2022 and by the Company thereafter).

The success of the Company's business in the USA is dependent upon the successful execution and administration of its domestic field services through the services of field specialists, and a significant portion of them are provided to the Company and are engaged by the Independent Field Vendor and located, scheduled, deployed and administered domestically through the services of field administrators.

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

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

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, 2023, the sale price of SGRP Common Stock fluctuated from $0.70 to $1.40 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, 2024, the sale price of SGRP Common Stock fluctuated from $0.95 to $3.12 per share.

Brown and Mr. William H. Bartels, are significant stockholders ("Significant Stockholders”) and Directors of SGRP and together with certain related parties (collectively, the "Majority Stockholders") beneficially own approximately 62.75% of the SGRP Common Stock and could acquire more.

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.

Accordingly, minimal profitability by the Company, additional one-time charges and changes in the composition and quality of its borrowing base, as well as any failure to maintain sufficient availability or lines of credit from the Company's lenders (which may involve their subjective judgment), could have a material adverse effect on the Company or its performance or condition, whether actual or as planned, intended, anticipated, estimated or otherwise expected. 15 Our business and stock liquidity and market value could be adversely affected if we settle outstanding litigation by making payments or issuing stock.

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.

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.

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 in May 24, 2023. Repurchases by the Corporation could adversely affect the market liquidity of the SGRP Common Stock.

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.

As significant stockholders, the Majority Stockholders can have an impact on the nomination and election of directors and the passage of other shareholder meeting proposals. There is inherent business risk for a joint venture business structure.

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

The timing, size and success of litigation settlement efforts and any associated capital commitments cannot be readily predicted. Future litigation settlements may be financed by issuing shares of the SGRP Common Stock (directly or through convertible securities), cash or a combination thereof.

Future litigation settlements may be financed by issuing shares of the SGRP Common Stock (directly or through convertible securities), cash or a combination thereof.

There also can be no assurance that the other parties in any settlement will abide by the terms or any settlement or any related releases. See Item 3 -- Legal Proceedings, Item 7.

There also can be no assurance that the other parties in any settlement will abide by the terms or any settlement or any related releases. See Item 3 -- Legal Proceedings, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations; Overview, and Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below.

Our business and cash flow can be adversely affected by adverse changes in our client payments, our business performance and broad economic shifts.

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.

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.

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.

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.

You should carefully review and consider the following Risks, but you should not place undue reliance on any of them.

The Company's management is responsible for establishing and maintaining adequate internal controls over its financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act. 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.

The Company's management is responsible for establishing and maintaining adequate internal controls over its financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act. As disclosed in Item 9A of Part II of this report, the Company identified material weaknesses in its internal controls as of December 31, 2024.

Removed

Management's Discussion and Analysis of Financial Condition and Results of Operations; Overview, and Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions (including Change of Control, Voting and Restricted Stock Agreement), below. Our business performance is connected to the experience and retention of key executives.

Added

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.

Removed

The Company's growth strategy for the international markets has been to join forces with local investors having merchandising service expertise, and combine their knowledge of the local market with the Company's proprietary software and expertise in the merchandising business through joint venture business structure.

Added

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).

Removed

Currently, of the 8 countries the Company is conducting businesses in, 5 are under a joint venture business structure (Brazil, South Africa, Mexico, China, and India). The Company also has begun to use the model in the United States in recent years and formed or acquired two joint ventures, National Merchandising Services, LLC (NMS), and Resource Plus Inc. (RPI), domestically.

Added

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.

Removed

On December 22, 2023, entered into an agreement with National Retail Remodel Services (the buyer) to sell its 51 percent interest in National Merchandising Services (NMS).

Added

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.

Removed

See Note 10 to the Company's Consolidated Financial Statements Related Party Transactions The Company owns 51% of these joint ventures in all cases; the principal of our local minority investors generally is the Chief Executive Officer, and each joint venture is governed by a Board comprised of directors from both parties.

Added

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

SGRP designates half of the directors for the local boards of its joint venture subsidiaries (other than Brazil where it is 60%), and significant actions require local board agreement. All joint ventures are also governed under the Company’s policies and guidelines. The Company believes its relationship with the joint venture partners are strong.

Added

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

However, there can be no assurance that the Company can successfully manage through inherent business risk due to significant misalignment of business objectives. Any cancellation, nonperformance or material changes of the joint venture could have a material adverse effect of the Company. 16 We have inherent risks operating international businesses. The Company operates in 8 countries around the world.

Added

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

There can be no assurances that the respective business environments will remain favorable.

Added

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 the future, the Company's International operations and sales may be affected by the following risks, which may adversely affect United States companies doing business in foreign countries: ● Political and economic risks, including terrorist attacks and political instability; ● Various forms of protectionist trade legislation that currently exist or have been proposed; ● Expenses associated with customizing services and technology; ● Local laws and business practices that favor local competition; ● Dependence on local vendors and potential for undisclosed related party transactions; ● Multiple conflicting and changing governmental laws, regulations and enforcement; ● Potentially adverse tax and employment law consequences; ● Local accounting principles, practices and procedures; ● Local legal principles, practices and procedures, local contract review and negotiation, and limited familiarity with contract issues (excessive warranties, extra-territoriality, sweeping intellectual property claims and the like); ● Limited familiarity or an unwillingness to comply with, or wrongly believing the inapplicability of, generally accepted accounting principles in the USA ("GAAP"), applicable corporate controls and policies of the Company (including its ethics code), or applicable law in the USA (including Nasdaq rules, securities laws, anti-terrorism law, Sarbanes Oxley and the Foreign Corrupt Practices Act) by Local Investors; ● Foreign currency exchange rate fluctuations and limits on the export of funds; ● Substantial communication barriers, including those arising from language, culture, custom and time zones; and ● Supervisory challenges arising from local board deadlocks, agreements, distance, physical absences and such communication barriers.

Added

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

If any developments should occur with respect to any of those international risks and materially and adversely affect the Company's applicable international subsidiary, such developments could have a material adverse effect on the Company or its performance or condition.

Added

Repurchases by the Corporation could adversely affect the market liquidity of the SGRP Common Stock.

Added

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.

Added

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.

Added

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.

Added

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.

Added

If 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.

Added

Our business and stock liquidity and market value could be adversely affected if we settle outstanding litigation by making payments or issuing stock. The timing, size and success of litigation settlement efforts and any associated capital commitments cannot be readily predicted.

Added

However, we work in a competitive industry where talent is visible and other companies may approach and attract our key executives.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed3 unchanged

2023 filing

2024 filing

Biggest changeThe 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 Tokyo, Japan Durban, South Africa New Delhi, India Sao Paulo, Brazil Mexico City, Mexico Shanghai, China

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

0 edited+0 added−2 removed2 unchanged

2023 filing

2024 filing

Removed

All previous open and potential claims between the Significant Stockholders and the Company have been released mutually upon execution of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement"), as of January 28, 2022. See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below.

Removed

The matters resolved in the CIC Agreement included all previous claims of the Majority Stockholders that the Company was somehow liable for claims and judgments by or against them or their respective companies, as well as all legal bills and other expense and amounts.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+3 added−4 removed12 unchanged

2023 filing

2024 filing

Biggest changeSGRP Common Stock Issuances During 2023, the Corporation issued 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.

Biggest changeThere 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.

Those repurchases were made subject to cash availability and general market and other conditions. Through December 31, 2023, 151,156 shares of SGRP Common Stock were repurchased under the 2022 program and became Treasury Shares.

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.

Subsequent to filing the Certificate of Elimination, on January 25, 2022, the Corporation filed a "Certificate of Designation of Series "B" Preferred Stock of SPAR Group, Inc.” (the "Preferred Designation") with the Secretary of State of Delaware, which designation had been approved by the Board on January 25, 2022.

The Corporation filed a "Certificate of Designation of Series "B" Preferred Stock of SPAR Group, Inc.” (the "Preferred Designation") with the Secretary of State of Delaware, which designation had been approved by the Board on January 25, 2022.

Market Information SGRP's Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP". As of December 31, 2023, there were approximately 2,360 stockholders of record. 20 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.

Market 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.

SGRP Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP." On December 31, 2023, there were 23,446,444 shares of SGRP Common Stock outstanding in the aggregate (which does not include Treasury Shares), and there were 7,075,069 shares (or approximately 30%) 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, 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).

No dividends are payable on the Series B Preferred Stock. The Company historically has retained earnings to finance its operations and fund future growth of the business.

The Company historically has retained earnings to finance its operations and fund future growth of the business.

See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions (including Change of Control, Voting and Restricted Stock Agreement), below.

See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below.

See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions Domestic Related Party Services (including Change of Control, Voting and Restricted Stock Agreement), below.

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.

Removed

On January 25, 2022, the Corporation filed a Certificate of Elimination for its "Certificate of Designation of Series "A" Preferred Stock of SPAR Group, Inc.” (the "Certificate of Elimination"). Pursuant to the Certificate of Elimination, the previous Series A Preferred Stock designation was cancelled and withdrawn.

Added

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.

Removed

As a result, all 3,000,000 shares the previously authorized Series A Preferred Stock were returned to the Corporation’s authorized "blank check" preferred stock. There were no shares of Series A Preferred Stock outstanding at the time of the cancellation.

Added

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.

Removed

During the year ended December 31, 2023, all of the remaining 854,753 shares of Series B convertible preferred stock vested and automatically became convertible into 1,282,129 shares of the Corporation’s common stock of which 307,129 shares of the Corporation’s Common Stock were issued prior to December 31, 2023.

Added

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.

Removed

However, that share total does not include the 975,000 shares of SGRP Common Stock that were in the process of being issued and the remaining shares of Series B Preferred Stock were in the process of being returned and cancelled on December 31, 2023.

Item 7. Management's Discussion & Analysis

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

39 edited+29 added−22 removed28 unchanged

2023 filing

2024 filing

Biggest changeThe following is a reconciliation of our net income to Adjusted EBITDA for the periods presented: Year Ended December 31, (in thousands) 2023 2022 Consolidated Net Income $ 4,776 $ 2,126 Depreciation and amortization 2,001 2,033 Interest expense 1,919 965 Income tax expense 2,357 2,777 Other (income), loss 346 (482) Subtotal of Adjustments to Consolidated Net Income 6,623 5,294 Consolidated EBITDA $ 11,399 $ 7,420 Costs and other relating to CIC - (32) Review of Strategic Alternatives 544 540 Goodwill impairment - 2,458 Loss on sale of businesses 408 - Restructuring costs 28 - Legal costs / Settlements - non-recurring 289 - Share Based Compensation 297 - Board of Directors incremental compensation - 394 Consolidated Adjusted EBITDA $ 12,965 $ 10,780 Adjusted EBITDA attributable to non-controlling interest (3,022) (4,637) Adjusted EBITDA attributable to SPAR Group, Inc. 9,943 6,143 23 Results of Operations The following table sets forth selected financial data for the years indicated (dollars in millions): Year Ended December 31, 2023 % 2022 % Net revenues $ 262.7 100% $ 261.3 100% Related Party - Cost of revenues 5.2 2.0 $ 8.8 3.4 Cost of revenues 202.1 76.9 201.5 77.1 Selling, general and administrative expense 43.7 16.6 41.1 15.8 Impairment of Goodwill - - 2.5 1.0 Loss on sale of business 0.4 0.2 - - Depreciation and amortization 2.0 0.8 2.0 0.8 Interest expense 1.9 0.7 1.0 0.4 Other expense (income), net 0.3 0.1 (0.5) (0.2) Income before income taxes 7.1 2.7 4.9 1.9 Income tax expense 2.4 0.9 2.8 1.1 Net income 4.8 1.8 2.1 0.8 Net income attributable to non-controlling interest (0.9) (0.3) (2.9) (1.1) Net income attributable to SPAR Group, Inc. $ 3.9 1.5% $ (0.7) (0.3)% Results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022.

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.

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 US 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.

If the carrying amount of the reporting unit exceeds its fair value, then an impairment loss is recognized in an amount equal to the excess, up to the value of the goodwill. 26 Revenue Recognition The Company generates its revenues by providing merchandising services to its clients.

If the carrying amount of the reporting unit exceeds its fair value, then an impairment loss is recognized in an amount equal to the excess, up to the value of the goodwill. Revenue Recognition The Company generates its revenues by providing merchandising services to its clients.

These various domestic and international credit facilities require compliance with their respective financial covenants. For the year ended December 31, 2023, 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 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.

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 78.9% of net revenue for the year ended December 31, 2023 compared to 80.5% of net revenues for the year ended December 31, 2022.

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.

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 $1.5 million and $1.6 million at December 31, 2023, and 2022, respectively.

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.

Depreciation and Amortization Depreciation and amortization expense was approximately $2.0 million and $2.0 million for the years ended December 31, 2023 and 2022, respectively Interest Expense The Company's interest expense was $1.9 million and $1.0 million for the years ended December 31, 2023 and 2022, 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.

Cash Flows for the Years Ended December 31, 2023 and 2022 Net cash provided by operating activities was $6.8 million for the year ended December 31, 2023 and net cash used in operating activities was $5.0 million for the year ended December 31, 2022.

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.

Net income attributable to non-controlling interest Net income attributable to noncontrolling interest was $0.9 million and $2.9 million for the years ended December 31, 2023 and 2022, respectively.

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.

Bad debt expense was $0.3 million and $1.3 million for the years ended December 31, 2023 and 2022, respectively. Internal Use Software The Company capitalizes certain costs associated with its internally developed software.

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.

The Company’s goal is to be the most creative, energizing and effective global services company that drives sales, margins and operating efficiency for our clients. As of December 31, 2023, the Company operated in eight countries: the United States, Canada, 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, 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.

Overview of Our Business SPAR Group is a leading global merchandising and brand marketing services company, providing a broad range of sales enhancing services to retailers across most classes of trade and consumer goods manufacturers and distributors around the world.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview of Our Business SPAR Group is a leading merchandising and brand marketing services company, providing a broad range of sales enhancing services to retailers across most classes of trade and consumer goods manufacturers and distributors around the world.

Adjusted EBITDA is defined as net (loss) income before (i) depreciation and amortization of long-lived assets, (ii) interest expense (iii) income tax expense, (iv) Board of Directors incremental compensation expense, (v) restructuring, (vi) impairment, (vii) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations, (viii) and special items as determined by management.

Adjusted EBITDA is defined as net (loss) income before (i) depreciation and amortization of long-lived assets, (ii) interest expense (iii) income tax expense, (iv) restructuring expenses, (v) impairment, (vi) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations, (vii) special items as determined by management, and (viii) review of strategic alternatives, which includes primarily legal, consulting, and investment bank fees.

Other Expense (Income), Net Other expense, net was $0.3 million versus income of $0.5 million for the years ended December 31, 2023 and 2022, respectively. 25 Income Tax Expense The Company had income tax expense of $2.4 million with an effective tax rate of 33.0% and $2.8 million with an effective rate of 56.6%, for the years ended December 31, 2023 and 2022, respectively.

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.

The Company’s business is led and operated from its global headquarters in Auburn Hills, Michigan, with local leadership and offices in each country. 22 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 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").

Our Consolidated EBITDA was approximately $11.4 million and $7.4 million for the years ended December 31, 2023 and 2022, respectively.

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.

Selling, general and administrative expenses were approximately $43.7 million, or 16.7% of net revenue, and approximately $41.1 million, or 15.8% of net revenue for the years ended December 31, 2023 and 2022, respectively.

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.

These initiatives range from launching new products and setting up promotional displays to assembling fixtures and ensuring consistent stock availability, thus facilitating efficient reordering processes. Furthermore, we extend our expertise to sales enhancement and customer service improvement.

With a focus on merchandising and brand marketing, our specialists deploy a variety of programs aimed at maximizing product sell-through to consumers. These initiatives range from launching new products and setting up promotional displays to assembling fixtures and ensuring consistent stock availability, thus facilitating efficient reordering processes. Furthermore, we extend our expertise to sales enhancement and customer service improvement.

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.

Recent Accounting Pronouncements See the sections titled "Summary of Significant Accounting Policies—Recent 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. 27 Liquidity and Capital Resources Funding Requirements Management believes that based upon the continuation of the Company's existing credit facilities, projected results of operations, vendor payment requirements and other financing available to the Company (including amounts due to affiliates), sources of cash availability should be manageable and sufficient to support ongoing operations over the next year.

Liquidity and Capital Resources Funding Requirements Management believes that based upon the continuation of the Company's existing credit facilities, projected results of operations, vendor payment requirements and other financing available to the Company (including amounts due to affiliates), sources of cash availability should be manageable and sufficient to support ongoing operations over the next year.

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).

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 decrease in cost of 1.1% was primarily the result of the service mix during the quarter and our ability to manage gross margins. 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 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.

Net cash used in financing activities for the year ended December 31, 2023 was approximately $3.0 million compared to $3.5 million provided in 2022 . The year-over-year decrease in net cash provided by financing activities during 2023 was primarily due to repayment of lines of credit.

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.

For the year ended December 31, 2023, our effective income tax rate of 33.0% varied from the U.S. federal statutory rate of 21% primarily as a result of foreign rate differential, sale of membership interest disposition of National Merchandising Services, LLC and permanent differences.

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.

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.

For the year ended December 31, 2023, the company experienced a net increase in cash and cash equivalents amounting to approximately $1.4 million. This positive change reflects foreign exchange rate fluctuations, which contributed a decrease of $0.2 million.

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.

The EMEA net revenues totaled $34.6 million and $36.7 million for the years ended December 31, 2023 and 2022, respectively. The decrease of $2.1 million or 5.8% is driven by unfavorable foreign exchange rates in South Africa, when compared to 2022 rates. South Africa local currency net revenues increased 5% in 2023 compared to 2022.

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.

The Americas selling, general and administrative expenses totaled $32.2 million and $28.4 million for the years ended December 31, 2023 and 2022, respectively.

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.

The EMEA selling, general and administrative expenses totaled $5.0 million and $5.3 million for the years ended December 31, 2023 and 2022, respectively. SG&A for EMEA was flat compared to 2022.

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.

Across all of these countries, the Company executes programs through its multi-lingual logistics, reporting and communication technology, which provides clients value through real-time insight on store/product conditions. With more than 50 years of experience and a diverse network of merchandising specialists around the world, the Company continues to grow its relationships with some of the world’s leading businesses.

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

The Company capitalized approximately $1.0 million and $1.5 million of costs related to software developed for internal use in 2023 and 2022, respectively, and recognized approximately $1.3 million of amortization of capitalized software for the years ended December 31, 2023 and 2022.

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.

Our team collaborates closely with clients to identify their primary goals, ensuring the execution of strategies that boost sales and profit margins. With a focus on merchandising and brand marketing, our specialists deploy a variety of programs aimed at maximizing product sell-through to consumers.

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 year-over-year increase in net cash provided by operating activities was primarily due to improved working capital management. Net cash used in investing activities for the years ended December 31, 2023 and 2022 , was $2.3 million and $1.8 million, respectively. The net cash used in investing activities was primarily attributable to capitalization of internal use software.

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 .

This improvement in cost of 2.6% was partially due to operating fully in China compared to the slow recovery from the zero-tolerance policy in 2022, which inflated cost of revenue ratios in 2022. The EMEA cost of revenue as a percent of net revenue was 76.3% and 77.4% for the years ended December 31, 2023 and 2022, respectively.

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.

The Americas net revenues totaled $203.7 million and $198.6 million for the years ended December 31, 2023 and 2022, respectively.

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.

The decrease in cost of 1.6% was the result of 2.5% lower costs in our owned U.S. business and U.S. joint ventures and 1.4% lower cost in Brazil, partially offset by a 230-basis point increase in costs in Mexico.

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.

Selling, general and administrative expenses for the year-ended December 31, 2023 includes expenses of approximately $0.5 million related to our consideration of strategic alternatives and higher salary and benefits cost, partially offset by lower bad debt expense as 2022 reflected the impending bankruptcy of a larger client.

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.

We delivered a (159)-basis point improvement in gross margins against the global pressure of recruiting and wages. 24 The Americas cost of revenue as a percent of net revenue was 79.8% and 81.5% for the years ended December 31, 2023 and 2022, 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.

Net Revenues Net revenues for the year ended December 31, 2023, were $262.7 million compared to $261.3 million for the year ended December 31, 2022, an increase of $1.4 million or 1%.

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.

Removed

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements This Annual Report on Form 10-K (this " Annual Report ") contains "forward-looking statements" within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, made by, or respecting, SPAR Group, Inc.

Added

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.

Removed

(" SGRP " or the "Corporation") and its subsidiaries (together with SGRP, " SPAR " , the " SPAR Group " or the " Company ").

Added

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.

Removed

"Forward-looking statements" are defined in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the " Exchange Act "), and other applicable federal and state securities laws, rules and regulations, as amended (together with the Securities Act and Exchange Act, the " Securities Laws ").

Added

These events collectively created an unusually challenging financial reporting environment for 2024.

Removed

Readers can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Words such as "may," "will," "expect," "intend," "believe," "estimate," "anticipate," "continue," "plan," "project," or the negative of these terms or other similar expressions also identify forward-looking statements.

Added

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%.

Removed

Forward-looking statements made by the Company in this Annual Report may include (without limitation) statements regarding: risks, uncertainties, cautions, circumstances and other factors (" Risks "); the potential continuing negative effects of the COVID-19 pandemic on the Company's business; the Company's potential non-compliance with applicable Nasdaq director independence; bid price or other rules; the Company's cash flow or financial condition; and plans, intentions, expectations, guidance or other information respecting the pursuit or achievement of the Company's corporate objectives.

Added

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.

Removed

The Company's forward-looking statements also include (without limitation) those made in this Annual Report in "Business," "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Directors, Executive Officers and Corporate Governance," "Executive Compensation," "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters," and "Certain Relationships and Related Transactions, and Director Independence." 21 You should carefully review and consider the Company's forward-looking statements (including all risk factors and other cautions and uncertainties) and other information made, contained or noted in or incorporated by reference into this Quarterly Report, the Annual Report, the Proxy Statement, the First Special Meeting Proxy/Information Statement and the First Special Meeting Report and the other applicable SEC Reports, but you should not place undue reliance on any of them.

Added

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.

Removed

The results, actions, levels of activity, performance, achievements or condition of the Company (including its affiliates, assets, business, clients, capital, cash flow, credit, expenses, financial condition, income, liabilities, liquidity, locations, marketing, operations, performance, prospects, sales, strategies, taxation or other achievement, results, risks, trends or condition) and other events and circumstances planned, intended, anticipated, estimated or otherwise expected by the Company (collectively, " Expectations "), and our forward-looking statements (including all Risks) and other information reflect the Company's current views about future events and circumstances.

Added

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.

Removed

Although the Company believes those Expectations and views are reasonable, the results, actions, levels of activity, performance, achievements or condition of the Company or other events and circumstances may differ materially from our Expectations and views, and they cannot be assured or guaranteed by the Company, since they are subject to Risks and other assumptions, changes in circumstances and unpredictable events (many of which are beyond the Company's control).

Added

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.

Removed

In addition, new Risks arise from time to time, and it is impossible for the Company to predict these matters or how they may arise or affect the Company.

Added

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 .

Removed

Accordingly, the Company cannot assure you that its Expectations will be achieved in whole or in part, that it has identified all potential Risks, or that it can successfully avoid or mitigate such Risks in whole or in part, any of which could be significant and materially adverse to the Company and the value of your investment in the Company's Common Stock.

Added

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.

Removed

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

Added

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.

Removed

The combination of resource scale, deep expertise, advanced technology and unwavering commitment to excellence, separates the Company from the competition. The Company is dedicated to delivering a spectrum of specialized services tailored to enhance retail operations and profitability across the globe.

Added

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.

Removed

This increase in revenue was primarily driven by stronger performance in the Americas, particularly Canada, Brazil and US SPAR owned business, partially offset by lower performance at Asia Pacific and EMEA and US Joint Ventures. Foreign Currency rates were also a negative headwind in 2023.

Added

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).

Removed

The increase of $5.1 million or 2.6% is the result of 51% growth in the Canadian business, 10% growth in our Brazil joint venture revenue and 3% growth in our US SPAR owned business, partially offset by a 37% and 43% drop in our US Joint Ventures, Resource Plus and NMS respectively.

Added

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.

Removed

These results reflect growth in our core merchandising services business offset by delays in retail remodel projects to later in the year or early next year by our clients. Core merchandising had a strong growth in the US SPAR owned business, in Brazil and in Canada.

Added

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

The Asia-Pacific net revenues totaled $24.5 million and $26.0 million for the years ended December 31, 2023 and 2022, respectively. The decrease of $1.5 million or 5.9% is primarily the result of negative foreign exchange rate movement as well as other extraneous conditions.

Added

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

These results were achieved through our persistent emphasis on contract pricing, stabilization of market wages, enhancement of our higher-margin service offerings, and diminution of travel expenditures associated with remodel projects. The Asia-Pacific cost of revenue as a percent of net revenue was 74.7% and 77.3% for the years ended December 31, 2023 and 2022, respectively.

Added

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

The increase of $3.7 million, or 13.1% is primarily the result of consulting and legal charges associated with the review of strategic alternatives, higher compensation related expenses, and the annualization of our investment in recruiting and moving our technology to the cloud.

Added

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

The Asia-Pacific selling, general and administrative expenses totaled $6.5 million and $7.4 million for the years ended December 31, 2023 and 2022, respectively. The decrease of $0.9 million, or 12.0% is primarily attributable to reduction in China and Japan's SG&A's expenses as we carefully manage these businesses in response to the broader economic trends.

Added

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

The America interest expense was $1.4 million and $0.7 million for the years ended December 31, 2023 and 2022, respectively. The increase was a result of higher interest rates. The Asia-Pacific interest expense of $0.1 for the year ended December 31, 2023 versus $0.0 for the year ended December 31, 2022.

Added

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

The EMEA incurred interest expense of $0.4 million versus $0.3 million for the years ended December 31, 2023 and 2022, respectively.

… 10 more changes not shown on this page.

Top changes in SPAR Group, Inc.'s 2024 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 3. Legal Proceedings

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other SGRP 10-K year-over-year comparisons