# EDGAR Filing Document

**Accession Number:** 0001004989
**File Stem:** 0001437749-25-022876
**Filing Date:** 2025-7
**Character Count:** 441238
**Document Hash:** 82844d75bd8f467e26b8d222eda1e895
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-25-022876.hdr.sgml**: 20250717

**ACCESSION NUMBER**: 0001437749-25-022876

**CONFORMED SUBMISSION TYPE**: 10-K/A

**PUBLIC DOCUMENT COUNT**: 106

**CONFORMED PERIOD OF REPORT**: 20241231

**FILED AS OF DATE**: 20250717

**DATE AS OF CHANGE**: 20250717

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SPAR Group, Inc.
- **CENTRAL INDEX KEY:** 0001004989
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-BUSINESS SERVICES, NEC [7389]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 330684451
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K/A
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-27408
- **FILM NUMBER:** 251128852

**BUSINESS ADDRESS:**
- **STREET 1:** 1910 OPDYKE COURT
- **CITY:** AUBURN HILLS
- **STATE:** MI
- **ZIP:** 48326
- **BUSINESS PHONE:** 2483647727

**MAIL ADDRESS:**
- **STREET 1:** 1910 OPDYKE COURT
- **CITY:** AUBURN HILLS
- **STATE:** MI
- **ZIP:** 48326

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SPAR GROUP INC
- **DATE OF NAME CHANGE:** 19990713

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PIA MERCHANDISING SERVICES INC
- **DATE OF NAME CHANGE:** 19951220

?xml version='1.0' encoding='ASCII'? sgrp20241231d_10ka.htm

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

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**FORM 10-K/A**

**AMENDMENT No.1**

**(Mark One)** 

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2024

OR

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

Commission file number 0-27408

SPAR GROUP, INC.

(Exact name of Registrant as specified in its charter)

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| | |
|:---|:---|
| Delaware | 33-0684451 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 1910 Opdyke Court, Auburn Hills, Michigan | 48326 |
| (Address of principal executive offices) | (Zip Code) |

---

Registrant's telephone number, including area code: (248) 364-7727

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

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| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $.01 per share | SGRP | The NASDAQ Stock Market LLC |

---

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

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

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

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

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

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

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Large Accelerated Filer ☐ | Accelerated Filer ☐ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Accelerated Filer ☒ | Smaller reporting company ☒ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Emerging Growth Company ☐ |  |

---

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

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

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

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

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

The aggregate market value of the Common Stock of the Registrant held by non-affiliates of the Registrant on December 31, 2024, based on the closing price of the Common Stock of $1.94 per share as reported by the Nasdaq Capital Market on such date, was approximately $25,013,045.

The number of shares of the Registrant's Common Stock outstanding as of March 15, 2025, was 23,449,701 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Definitive Proxy Statement on Schedule 14A for the registrant's 2025 Annual Meeting of Stockholders, are incorporated by reference into Part III of this Form 10-K/A, and various Exhibits are incorporated by reference into Part IV of this Form 10-K/A.

**EXPLANATORY NOTE**

SPAR Group, Inc. (the "Company") is filing this Amendment No. 1 on Form 10-K/A (this "Form 10-K/A") to amend and restate certain items in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, originally filed with the Securities and Exchange Commission (the "SEC") on May 16, 2025 (the "Original Form 10-K"). This Form 10-K/A includes audited restated consolidated financial statements as of December 31, 2023 and for the fiscal years ended December 31, 2024 and December 31, 2023, as well as unaudited restated condensed consolidated financial information as of June 30, 2024 and September 30, 2024 and for the three and six months ended June 30, 2024 and 2023 and the three and nine months ended September 30, 2024 and 2023 (collectively, the "Non-Reliance Periods").

As previously disclosed in the Current Report on Form 8-K filed with the SEC on May 15, 2025, in connection with our year-end financial statement close and preparation of the Original Form 10-K, misstatements were identified in our previously filed unaudited condensed consolidated financial statements for the quarterly and year-to-date periods ended June 30, 2024 and September 30, 2024 (collectively, the "Initial Non-Reliance Periods"), included in the Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended June 30, 2024 and September 30, 2024, respectively. The determination to restate was made upon the recommendation of the audit committee (the "Audit Committee") of our Board of Directors after consultation with our independent auditors and management team. The unaudited condensed consolidated financial statements for the Initial Non-Reliance Periods were restated in the Company's Original Form 10-K.

Subsequent to filing the Company's Original Form 10-K, and as previously disclosed in the Current Report on Form 8-K Filed with the SEC on July 16, 2025, the Company identified misstatements in the Non-Reliance Periods. The determination to restate was made upon the recommendation of the audit committee (the "Audit Committee") of our Board of Directors after consultation with our independent auditors and management team. The Company is filing this Form 10-K/A to restate its previously issued financial statements for the Non-Reliance Periods. All material restatement information will be included in this Form 10-K/A, and the Company does not intend to separately amend other filings that it has previously filed with the SEC. Accordingly, investors and other readers should rely only on the financial information and other disclosures regarding the Non-Reliance Periods in this Form 10-K/A and in any other future filings with the SEC (as applicable) and should not rely on any previously issued or filed reports, press releases, corporate presentations or similar communications relating to the Non-Reliance Periods.

**Background of Restatement**

On May 14, 2025, the management and the Audit Committee of the Company, in consultation with BDO USA, P.C. ("BDO"), the Company's independent registered public accounting firm, determined that the Company's Initial Non-Reliance Periods, should no longer be relied upon. As previously disclosed, on June 3, 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. SPAR's carrying value for its investment in the Brazilian joint venture was approximately $4.8 million before the sale. Based on these figures, the transaction generated an economic benefit of approximately $5.9 million (i.e. the excess of the $10.7 million proceeds over the $4.8 million carrying value). 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

● an amount of $3.5 million paid by the minority (49%) joint venture partner.

When doing its year-end financial statement close and preparation for the Original Form 10-K, the Company concluded that under GAAP the payment originating from the joint venture qualified as a capital distribution (instead of consideration for sale) and that the appropriate treatment would be to reclassify approximately $7.5 million into the income statement as part of the gain/loss calculation. Management and the Audit Committee have determined that these errors in the unaudited condensed consolidated financial statements required a restatement of the Initial Non-Reliance Periods.

Subsequent to filing the Company's Original form 10-K, the Company determined that the sale of its Brazilian joint venture in June 2024 represented a strategic shift in the Company's operations that will have a significant impact to the financial statements. The Company also identified presentation errors in Note 13, Segment Information, for certain information within the segment disclosures. As such, the Company is restating the Non-Reliance Periods to reflect the Brazilian joint venture as discontinued operations and correct the presentation of the December 31, 2024 segment disclosures. This amendment includes audited restated consolidated financial information for the fiscal years ended December 31, 2024 and 2023, as well as unaudited restated quarterly financial information for the interim quarterly periods.

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**Items Amended in this Form 10-K/A**

This Form 10-K/A presents the Original Form 10-K, amended and restated in its entirety, with modifications as necessary to reflect the aforementioned restatement. The following items have been amended to reflect the restatement:

● Part I, Item 1A. Risk Factors

● Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

● Part II, Item 8. Financial Statements and Supplementary Data

● Part II, Item 9A. Controls and Procedures

In addition, in accordance with applicable SEC rules, this Form 10-K/A includes new certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 from our principal executive officer and our principal financial officer dated as of the filing date of this Form 10-K/A.

Except as described above, this Form 10-K/A does not amend, update or change any other items or disclosures in the Original Form 10-K and does not purport to reflect any information or events subsequent to the filing of the Original Form 10-K. As such, this Form 10-K/A speaks only as of the date the Original Form 10-K was filed, and we have not undertaken herein to amend, supplement or update any information contained in the Original Form 10-K to give effect to any subsequent events. Among other things, forward-looking statements made in the Original Form 10-K have not been revised to reflect events, results or developments that occurred or facts that became known to us after the date of the filing of the Form 10-K. Accordingly, this Form 10-K/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Form 10-K, including any amendments to those filings.

The restatements are more fully described in Note 3, "Restatement of Previously Issued Consolidated Financial Statements" and Note 17, "Restatement of Quarterly Financial Information (Unaudited)" of the notes to the consolidated financial statements included herein.

**Compensation Recovery Policy**

The Company established a policy regarding the recoupment of certain performance-based compensation payments ("Compensation Recovery Policy"), which became effective as of October 2, 2023. As indicated above, the Company concluded that the Prior Period Financial Statements for the Non-Reliance Periods required the Restatement. The Compensation Committee of the Company determined that no performance-based compensation (or the vesting of such compensation) within the prior three years was based upon the achievement of financial results, as reported in a Form 10-Q, Form 10-K or other report filed with the Securities and Exchange Commission, and therefore had no obligation, pursuant to the Company's Compensation Recovery Policy, to recover erroneously paid or awarded compensation.

**Internal Control Considerations**

In connection with the restatement of the Non-Reliance Period, management concluded its disclosure and controls procedures and the effectiveness of our internal controls over financial reporting as of December 31, 2024 remained ineffective due to the material weaknesses described in Part II, Item 9A, "Controls and Procedures". Management is taking steps to remediate the material weaknesses in our internal control over financial reporting, as described in Part II, Item 9A, "Controls and Procedures."

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SPAR GROUP, INC.

ANNUAL REPORT ON FORM 10-K/A

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| | | |
|:---|:---|:---|
| INDEX | INDEX | INDEX |
| PART I | PART I | PART I |
|  |  | Page  |
| Item 1 | [Business](#item1) | [6](#item1) |
| Item 1A | [Risk Factors](#item1a) | [9](#item1a) |
| Item 1B | [Unresolved Staff Comments](#item1b) | [14](#item1b) |
| Item 1C | [Cybersecurity](#Item1C) | [14](#Item1C) |
| Item 2 | [Properties](#item2) | [15](#item2) |
| Item 3 | [Legal Proceedings](#item3) | [15](#item3) |
| Item 4 | [Mine Safety Disclosures](#item4) | [15](#item4) |
| PART II | PART II | PART II |
| Item 5 | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#item5) | [16](#item5) |
| Item 6 | [\[Reserved\]](#item6) | [16](#item6) |
| Item 7 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#item7) | [17](#item7) |
| Item 7A | [Quantitative and Qualitative Disclosures about Market Risk](#item7a) | [23](#item7a) |
| Item 8 | [Financial Statements and Supplementary Data](#item8) | [23](#item8) |
| Item 9 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#item9) | [23](#item9) |
| Item 9A | [Controls and Procedures](#item9a) | [24](#item9a) |
| Item 9B | [Other Information](#item9b) | [24](#item9b) |
| Item 9C | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#item9c) | [24](#item9c) |
| PART III | PART III | PART III |
| Item 10 | [Directors, Executive Officers and Corporate Governance](#item10) | [25](#item10) |
| Item 11 | [Executive Compensation](#item11) | [25](#item11) |
| Item 12 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#item12) | [25](#item12) |
| Item 13 | [Certain Relationships and Related Transactions, and Director Independence](#item13) | [25](#item13) |
| Item 14 | [Principal Accountant Fees and Services](#item14) | [25](#item14) |
| PART IV | PART IV | PART IV |
| Item 15 | [Exhibits and Financial Statement Schedules](#item15) | [26](#item15) |
| Item 16 | [Form 10-K/A Summary](#item16) | [31](#item16) |
|  | [Signatures](#sigs) | [32](#sigs) |

---

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***NOTE ON Forward-Looking Statements***

***This Annual Report on Form 10-K/A for the year ended December 31, 2024 (this "Annual Report"), contains forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, made by, or respecting, SPAR Group, Inc. ("SGRP" or the "Corporation") and its subsidiaries (and SGRP together with its subsidiaries may be referred to as "SPAR Group", the "Company" "SPAR", "We", or "Our"). There also are "forward-looking statements" contained in SGRP's definitive Proxy Statement respecting its 2025 Annual Meeting of Stockholders (the "Proxy Statement"), which SGRP filed** **on** **May*** **23*****, 2025, with the Securities and Exchange Commission (the "SEC"), and SGRP's Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and statements as and when filed with the SEC (including this Annual Report, the Proxy Statement and such Current Reports, each a "SEC Report").***

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

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5

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PART I

Item 1. Business

**Our Company**

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

As of December 31, 2024, we operated in the United States and Canada, having exited Mexico, Brazil, South Africa, China, Japan and India during 2024. 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. Our unique combination of resource scale, deep expertise, advanced technology and unwavering commitment to excellence, separates us from the competition.

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

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

<u>**Our Industry**</u>

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

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

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

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

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

<u>**Our Growth Strategy**</u>

As the need for flexibility and efficiency in merchandising and marketing services continues to increase, brand owners, consumer goods companies, manufacturers, distributors, and retailers will continue to rely on third-party providers for these services. SPAR Group is uniquely able to meet these needs because of our 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.

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

***Grow the Core Business***

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6

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***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 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. To accomplish this, we pursue business partnerships, look for acquisitions and joint ventures and explore ideas based on market trends and our own unique client experiences. Our market positioning provides us with an unparalleled window into changes and opportunities in the markets we serve. We carefully measure the results of these tests and look for new services that can have a material impact on our financial and operational performance.

***Invest in Technology***

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

<u>**Our Business Divisions**</u>

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

The following table provides details of the structure of our Domestic and International businesses as of December 31, 2024:

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| | | | |
|:---|:---|:---|:---|
| <br> **Primary Territory** | **Entity Name** | **SGRP Percentage**<br> **Ownership** | <br> **Principal Office Location** |
| <u>**Americas**</u> |  |  |  |
| 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. ("RPI") | 100% | Auburn Hills, Michigan |
| Canada | SPAR Canada Inc, | 100% | Vaughan, Ontario, Canada |

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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. 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 13 to the Company's Consolidated Financial Statements – Segment Information, below.

**Our Services**

The Company currently provides six (6) principal types of services: Merchandising and Marketing, Category Management and Setup, Remodel and Retail Transformation, Assembly and Installation, Business Analytics and Insights, and Fulfilment and Distribution.

***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. This category encompasses a broad range of activities tailored to maintain and elevate the retail experience, including: (i) resets and cut-ins, which involve the strategic rearrangement or introduction of products within the retail space to keep the store layout fresh and aligned with current marketing strategies or consumer trends, (ii) price and inventory audits, which ensures that pricing is accurate and inventory levels are properly maintained, providing valuable insights for inventory management and pricing strategies, (iii) stock replenishment and rotation services, which are essential for keeping shelves well-stocked and products fresh, especially for perishable goods, thereby enhancing customer satisfaction and minimizing waste, (iv) out of stock management, which focuses on minimizing the occurrence of stockouts and efficiently addressing them when they happen, thus reducing lost sales opportunities and maintaining customer trust, (v) promotional event setup, which entails the planning and execution of in-store events or displays to highlight specific products or sales promotions, creating an engaging shopping experience, and (vi) display management, which includes the design, setup, and maintenance of product displays to attract customer attention and promote featured items effectively. Together, these Merchandising & Marketing services are crucial for retail success, ensuring products are visible, accessible, and appealing to customers.

***Category Management and Setup***

Category Management and Setup is a comprehensive suite of services aimed at optimizing retail space and product presentation for enhanced customer experience and sales performance. This service category includes a variety of tasks such as (i) category and product resets, which involve reorganizing and refreshing product arrangements and categories in-store to maintain relevance and appeal; (ii) planogram maintenance, which ensures that the layout of products on shelves aligns with a strategic plan to optimize retail space and product visibility; (iii) display and shelf services, which focuses on the maintenance and arrangement of shelves and displays to ensure products are presented attractively; (iv) POP (Point of Purchase) installation and management, which involves setting up and managing marketing materials at the point of purchase to capture customer attention and encourage sales; and (v) display setup, which includes the assembly and arrangement of product displays to highlight new products or promotions, creating an engaging shopping environment. Together, these services work to maintain a coherent and appealing retail environment that enhances product visibility and shopper engagement.

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***Remodel and Retail Transformation***

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

***Assembly and Installation***

Assembly and Installation services play a crucial role in enhancing the retail and consumer experience by ensuring that products are properly assembled and set up, whether in-store, in the office, or within the consumer's home. This category covers a broad spectrum of tasks that facilitate the ready-to-use delivery of products, improving convenience and satisfaction for both retailers and end-users. Services include (i) the assembly of merchandise in stores, such as furniture and desks, enabling customers to visualize the final product and making the shopping experience more engaging and efficient; (ii) in-store services, which extend to the maintenance of these products, ensuring they remain in optimal condition for display and use; (iii) office setup/down-sizing services, which cater to businesses undergoing changes in their physical workspace, providing expert assembly and installation support for a seamless transition; (iv) National In-Home Furniture Assembly services, which offer consumers the convenience of having furniture professionally assembled in their homes, eliminating the hassle and time commitment typically associated with DIY assembly; and (v) the assembly and installation of fitness equipment, whether it's in a commercial gym setting or a home fitness space, ensures that equipment is set up safely and correctly, maximizing functionality and user safety. 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. This suite of services leverages data analysis and visualization tools to deliver actionable insights that drive efficiency, sales, and customer satisfaction, including: (i) product dashboards, which offer a comprehensive view of product performance, inventory levels, and sales trends, enabling quick adjustments to product strategy and stock management, (ii) stock out reporting, which identifies and analyzes instances where products are unavailable on the shelves, allowing for rapid response to restock items and prevent lost sales opportunities, (iii) visit reporting, which tracks and evaluates the effectiveness and outcomes of merchandising visits, providing insights into operational efficiency and areas for improvement, (iv) real-time service insights, which delivers immediate feedback on the execution of merchandising and marketing initiatives, enabling dynamic adjustments to enhance in-store experiences and promotional effectiveness, (v) share of shelf analytics, which assesses the visibility and presence of products on the retail shelf compared to competitors, crucial for strategic positioning and market share growth, and (vi) photo analysis, which uses visual data to evaluate the compliance and appeal of product displays, ensuring that merchandising standards are met and that displays are engaging to customers. Together, these Business Analytics & Insights services empower businesses with the knowledge to optimize operations, tailor marketing efforts, and ultimately drive better business outcomes through data-driven strategies.

***Fulfillment and Distribution***

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

**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

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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 services make it possible for clients to ensure the online orders can be filled from stores and that the pricing is competitive in individual markets.

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

As a result of the reclassification of Brazil to discontinued operations, the Company had one client in 2024 whose revenue represented more than 10% of consolidated revenue from continuing operations (10.5%, or approximately $17.3 million). The revenue is included in the Americas segment. The Company did not have any clients that represented 10% or more of the Company's consolidated revenue from continuing operations for the year ended December 31, 2023.

<u>**Trademarks and Technology Licensing**</u>

The Company has numerous registered trademarks. 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). Portions of the Company's proprietary scheduling, tracking, coordination, reporting and expense software (the "Co-Owned Software") currently included in the Company's technology are co-owned by the Company, SPAR Business Services, Inc. ("SBS") and SPAR InfoTech, Inc. ("Infotech"), pursuant to a 1999 agreement. The Company's global technology systems (including the Co-Owned Software) were maintained and further developed and improved by the Company at its own expense at a cost of $1.0 million in 2024 and $1.0 million in 2023, respectively. 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.

<u>**Our Labor Force**</u>

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

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

<u>**Our Competition**</u>

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

<u>**Corporate Website**</u>

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

**Item 1A. Risk Factors** 

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

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

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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.

***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. 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).

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.

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.

***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.***

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. 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"). 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. 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. We will be responsible for these costs in the event the Merger is not successful, which could adversely affect our liquidity and financial results.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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***We rely on our systems and third-party vendors.***

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

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

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

***Our stock is subject to volatility and general market risk.***

The market price of SGRP Common Stock has historically experienced and may continue to experience significant volatility. During the year ended December 31, 2024, the sale price of SGRP Common Stock fluctuated from $0.95 to $3.12 per share. The Company believes that its Common Stock is subject to wide price fluctuations due to (among other things) the following:

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

● The substantial beneficial ownership of the Company's voting stock and potential control by Mr. Robert G. Brown and Mr. William H. Bartels and related parties (the "Majority Stockholders"). Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") and our By-Laws, Item 3 -- Legal Proceedings, below, Note 7 to the Company's Consolidated Financial Statements - Commitments and Contingencies, and Note 11 to the Company's Consolidated Financial Statements - Related Party Transactions, below.

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

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

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

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

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

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

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

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

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

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

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. 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. 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. 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.

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

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

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

The timing, size and success of litigation settlement efforts and any associated capital commitments cannot be readily predicted. Future litigation settlements may be financed by issuing shares of the SGRP Common Stock (directly or through convertible securities), cash or a combination thereof. If the SGRP Common Stock does not maintain a sufficient market value, or if potential litigants are otherwise unwilling to accept the SGRP Common Stock as part of the consideration for the settlement of their litigation, the Company may be required to obtain additional capital through debt or equity financings. To the extent the SGRP Common Stock is used for all or a portion of the consideration to be paid for legal settlements, dilution may be experienced by existing stockholders. In addition, there can be no assurance that the Company will be able to obtain the additional financing it may need for litigation settlements on terms that the Company deems acceptable. Failure to obtain such capital would materially and adversely affect the Company or its performance or condition. There also can be no assurance that the other parties in any settlement will abide by the terms or any settlement or any related releases. See Item 3 -- Legal Proceedings, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations; Overview, and Note 11 to the Company's Consolidated Financial Statements - Related Party Transactions, below.

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

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

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

The Company's co-founders, Mr. Robert G. Brown and Mr. William H. Bartels, are significant stockholders ("Significant Stockholders") and 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. 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. See Security Ownership of Certain Beneficial Owners and Management, in Part III below, Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, and Note 11 to the Company's Consolidated Financial Statements- Related Party Transactions, below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 13

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**Item 1B. Unresolved Staff Comments**

None.

**Item *1C.* Cybersecurity**

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

Our cybersecurity risk management program is led by our Chief Information Officer ("CIO"), who is directly responsible for establishing cybersecurity strategies and structures and managing ongoing cybersecurity risk management activities. Our CIO is part of the executive management team, and updates our CEO and executive management on a monthly, or even more frequent basis, on cybersecurity enhancement and the development and implementation of our roadmap.

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

***Cybersecurity Risk Management and Strategy***

We believe this integrated approach allows cybersecurity considerations to be an integral part of our decision-making processes. Our day-to-day cybersecurity work is led by our CIO and Head of Infrastructure. Both are highly experienced professionals. This group works closely with our executive management to continuously evaluate and address cybersecurity risks in alignment with our business and operational needs.

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

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

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

● Conduct companywide cyber awareness training and on-going new employee cyber training.

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

● On-going testing and evaluation of backup processes.

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

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

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

● Detection of a security incident,

● Identification and containment,

● Response, eradication and recovery,

● Post-incident analysis and future preparations.

The plan also provides the process and workflow of communication for escalation of incidents to executive leadership to determine incident classification, impact severity, and if and what further actions are warranted. Incident responses are overseen by leaders from our Software, Infrastructure Engineering, and Executive team.

***Cybersecurity Governance***

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

The leadership of our cybersecurity risk management and strategy is guided by experts from our Software, Infrastructure Engineering, and Executive teams. With backgrounds spanning: information technology, security, systems, programming, and corporate strategy, these individuals are equipped to oversee prevention, detection, mitigation, and remediation of cybersecurity incidents. They actively engage in managing our cybersecurity risk processes, including executing our incident response plan, and regularly report relevant matters to the executive management and the Audit Committee.

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

***Last year***

During the last fiscal year, 2024, the Company did not encounter any material cybersecurity incidents, nor did it incur any notable expenses as a result.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14

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**Item 2. Properties**

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

The Company relocated its corporate headquarters from New York to its existing operations office in Auburn Hills, Michigan, in September of 2020. The Company also maintains its data processing center in Southfield, Michigan and its warehouse in Auburn Hills, Michigan, under an extended operating lease expiring October 31, 2025.

The following is a list of the headquarter locations for the Company and its domestic and international subsidiaries:

---

| |
|:---|
| **<u>DOMESTIC</u>:**  |
| Auburn Hills, Michigan (Corporate Headquarters)<br> Southfield, Michigan (Data Center)<br> Jacksonville, Florida (Resource Plus)  |

---

---

| |
|:---|
| <u>**INTERNATIONAL**</u>: |
| Vaughan, Ontario, Canada |

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**Item 3. Legal Proceedings** 

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

**Item 4. Mine Safety Disclosures**

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 15

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PART II

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

***The Company's Capital Stock Generally***

SGRP's Certificate of Incorporation authorizes it to issue 47,000,000 shares of SGRP Common Stock ("SGRP Shares") with a par value of $0.01 per share, which all have the same voting, dividend and liquidation rights. SGRP Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP." On December 31, 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). See Item IA - Risk Factors - Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") and our By-Laws, Security Ownership of Certain Beneficial Owners and Management, in Part III below, and Note 11 to the Company's Consolidated Financial Statements- Related Party Transactions, below.

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

The Corporation filed a "Certificate of Designation of Series "B" Preferred Stock of SPAR Group, Inc." (the "Preferred Designation") with the Secretary of State of Delaware, which designation had been approved by the Board on January 25, 2022. The Preferred Designation created a series of 2,000,000 shares of Preferred Stock designated as "Series B Preferred Stock" with a par value of $.01 per share (the "Preferred Stock"). The Preferred Stock shares do not carry any voting or dividend rights and automatically convert on vesting into the SGRP Common Stock on a 1 for 1.5 basis. See Note 11 to the Company's Consolidated Financial Statements - Related Party Transactions, below. However, the holders of the Series B Preferred Stock have a liquidation preference over the SGRP Common Stock and vote together for matters pertaining only to the Series B Preferred Stock (such as amending SGRP's Certificate of Designation of Series B Preferred Stock) where only the holders of the Series B Preferred Stock are entitled to vote. The holders of outstanding Series A Preferred Stock do not have the right to vote for directors or other matters submitted to the holders of the SGRP Common Stock.

On January 28, 2022, pursuant to the CIC Agreement, the Company issued to the Majority Stockholders 2,000,000 restricted shares of Series B Preferred Stock, which have all vested and automatically converted into 3,000,000 SGRP Shares pursuant to the 1:1.5 conversion ratio set forth in the Preferred Designation and the CIC Agreement. See Note 11 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. Since there are no more shares of Series B Preferred Stock outstanding, SGRP may change or cancel the authorized Series B Preferred Stock, and to the extent it reduces such authorization without issuance, it can create other series of Preferred Stock with potentially different dividends, preferences and other terms.

 ***Market Information***

SGRP's Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP". As of December 31, 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. The Company historically has retained earnings to finance its operations and fund future growth of the business. Any payment of future dividends will be at the discretion of the Board of Directors of the Corporation and will depend upon, among other things, the Company's earnings, financial condition, capital requirements, cash flow, level of indebtedness, contractual restrictions in respect to the payment of dividends and other factors that the Corporation Board of Directors deems relevant.

***Equity Compensation***

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

***Stock Repurchase Program***

On May 24, 2022, the Board of Directors of SGRP (the "Board"), authorized SGRP to repurchase up to 500,000 shares of its SGRP Shares pursuant to the 2022 Stock Repurchase Program (the "2022 Stock Repurchase Program"), which repurchases were made from time to time over the one-year period that ended May 24, 2023 in the open market and through privately-negotiated transactions. 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.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16

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***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. See The Company's Capital Stock Generally, in Item 5 above, and Note 12 to the Company's Consolidated Financial Statements – Share Based Compensation, below.

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

***Restatement of Previously Issued Consolidated Financial Statements***

In this Annual report on Form 10-K/A, we have restated our previously issued consolidated financial statements as of December 31, 2024 and 2023. Refer to the "Explanatory Note" at the beginning of this Form 10-K/A for more information on the restatement. As a result, we have also restated certain previously reported financial information in this "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations", including, but not limited to, information within the "Results of Operations" and "Liquidity and Capital Resources" to conform the discussion with the appropriate restated amounts. See "Item 8. Financial Statements and Supplementary Data and Note 3, Restatement of Previously Issued Consolidated Financial Statements for more information on the restatement.

***Overview of Our Business***

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

As of December 31, 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.

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

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

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

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

<u>**EBITDA and Adjusted EBITDA**</u>

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"). 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. In evaluating Adjusted EBITDA for the year ending December 31, 2024 Management has included adjusted EBITDA from discontinued operations for the time period that such discontinued operations were still owned by the Company. Adjusted EBITDA is a supplemental measure of our operating performance that is neither required by, nor presented in accordance with, US GAAP.

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 17

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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. Some of these limitations include:

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

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

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

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

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

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

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

Our Consolidated EBITDA was approximately $3.7 million and $11.4 million for the years ended December 31, 2024 and 2023, respectively. The following is a reconciliation of our net income to Adjusted EBITDA for the periods presented:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2024** | **2023** |
| (in thousands) | **(As Restated)** | **(As Restated)** |
| **Consolidated Net Income (Loss) from continuing operations** | $**(1806)** | $**2351** |
| Depreciation and amortization from continuing operations | 1553 | 1827 |
| Interest expense from continuing operations | 2191 | 2231 |
| Income tax expense from continuing operations | 144 | 648 |
| Other expense from continuing operations | 171 | 346 |
| EBITDA of discontinued operations | 1475 | 3996 |
| Subtotal of Adjustments to Consolidated Net Income | 5534 | 9048 |
| **Consolidated EBITDA** | $**3728** | $**11399** |
| Review of Strategic Alternatives | 5221 | 544 |
| (Gain)/ loss on sale of businesses | (2536) | 408 |
| Restructuring costs |  | 28 |
| Legal costs / Settlements - non-recurring | 100 | 289 |
| Share-based compensation | 137 | 297 |
| **Consolidated Adjusted EBITDA** | $**6650** | $**12965** |
| Adjusted EBITDA attributable to non-controlling interest | (1034) | (3022) |
| **Consolidated Adjusted EBITDA attributable to SPAR Group, Inc.** | $**5616** | $**9943** |

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<u>**Results of Operations**</u>

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2024** | | **2023** | |
|  | **(As Restated)** |% | **(As Restated)** |% |
| Net revenues | $163.6 | 100% | $187.9 | 100% |
| Related Party - Cost of revenues |  |  | 5.2 | 2.8 |
| Cost of revenues | 130 | 79.5 | 138.2 | 73.6 |
| Selling, general and administrative expense | 33.9 | 20.7 | 36.6 | 19.5 |
| (Gain) / Loss on sale of business | (2.5) | (1.5) | 0.4 | 0.2 |
| Depreciation and amortization | 1.5 | 0.9 | 1.8 | 1 |
| Interest expense | 2.2 | 1.3 | 2.2 | 1.2 |
| Other expense, net | 0.2 | 0.1 | 0.3 | 0.2 |
| Income (loss) from continuing operations before taxes | (1.7) | (1.0) | 3 | 1.6 |
| Income tax expense | 0.1 | 0.1 | 0.6 | 0.3 |
| Income (loss) from continuing operations | (1.8) | (1.1) | 2.4 | 1.3 |
| Net (loss) income from discontinued operations (net of tax) | (0.9) | (0.6) | 2.4 | 1.3 |
| Net income (loss) | (2.7) | (1.7) | 4.8 | 2.5 |
| Net income attributable to non-controlling interest | (0.5) | (0.3) | (0.9) | (0.5) |
| Net income (loss) attributable to SPAR Group, Inc. | $(3.2) | (2.0)% | $3.9 | 2.1% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023.**

**Net Revenues**

Consolidated net revenues for the year ended December 31, 2024, were $163.6 million compared to $187.9 million for the year ended December 31, 2023, a decrease of $24.3 million or 12.9% This decrease in revenue was primarily driven by the sale of all international joint ventures during various times throughout the year, excluding Brazil, which is classified as discontinued operations in 2024 and 2023.

The Americas net revenues totaled $144.0 million and $128.8 million for the years ended December 31, 2024 and 2023, respectively. The increase of $15.2 million or 11.8% is the result of 11% revenue growth in the United States, due to continued strength and rebound in the remodel business. Additionally, Canada's revenue grew 15% in 2024.

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%. 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.

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 76.0%. The decline in revenues is due to the exit of our South African joint venture in 2024.

**Cost of Revenues**

The Company's cost of revenues consists of its in-store labor and field management wages, related benefits, travel and other direct labor-related expenses and was 79.5% of net revenue for the year ended December 31, 2024 compared to 76.3% of net revenues for the year ended December 31, 2023. 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 79.1% and 73.8% for the years ended December 31, 2024 and 2023, respectively. The increase in cost of 5.3% 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, which is traditionally a lower margin business than those in the U.S. and Canada.

The Asia-Pacific cost of revenue as a percent of net revenue was 80.5% and 67.3% 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. 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 84.3% and 76.9% for the years ended December 31, 2024 and 2023, respectively. 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.

**Selling, General and Administrative Expenses**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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 were approximately $33.9 million, or 20.7% of net revenue, and approximately $36.6 million, or 19.5% of net revenue for the years ended December 31, 2024 and 2023, respectively. 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 Highwire capital. Absent these costs, which are not on-going in nature, Selling, general and administrative expenses were 16.9% of net revenue in 2024.

The Americas selling, general and administrative expenses totaled $29.6 million and $23.2 million for the years ended December 31, 2024 and 2023, respectively. Costs were essentially flat to prior year after considering the 2024 impact of higher costs associated with the evaluation of strategic alternatives, which are temporary in nature.

The Asia-Pacific selling, general and administrative expenses totaled $3.1 million and $8.4 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $5.3 million, or 63.1% 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Depreciation and Amortization**

Depreciation and amortization expense was approximately $1.6 million and $1.8 million for the years ended December 31, 2024 and 2023, respectively.

**Interest Expense**

The Company's interest expense was $2.2 million and $2.2 million for the years ended December 31, 2024 and 2023, respectively.

The America interest expense was $2.1 million and $1.7 million for the years ended December 31, 2024 and 2023, respectively. The increase was due to higher 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.

**Other Expense, Net**

Other expense, net was $0.2 and $0.3 million for the years ended December 31, 2024 and 2023, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19

------

**Income Tax Expense**

The Company had income tax expense of $0.1 million from continuing operations, with an effective tax rate of (8.7)% and $0.6 million, with an effective rate of 21.6%, for the years ended December 31, 2024 and 2023, respectively. For the year ended December 31, 2024, our effective income tax rate varied from the U.S. federal statutory rate of 21% primarily as a result of Brazilian withholding taxes, foreign disregarded income, and permanent differences.

**Net income attributable to non-controlling interest**

Net income attributable to noncontrolling interest was $0.5 million and $0.9 million for the years ended December 31, 2024 and 2023, respectively.

**<u>Critical Accounting Policies and Estimates</u>**

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

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

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

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

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

**Revenue Recognition** 

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

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

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

**Allowance for Credit Losses**

The Company continually monitors the collectability of its accounts receivable based upon current client credit information and financial condition. Balances that are deemed to be uncollectible after the Company has attempted reasonable collection efforts are written off through a charge to the bad debt allowance and a credit to accounts receivable. Accounts receivable balances, net of any applicable reserves or allowances, are stated at the amount that management expects to collect from the outstanding balances. The Company provides for probable uncollectible amounts through a charge to earnings and a credit to 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. Credit loss expense was $0.1 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20

------

**Internal Use Software**

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

The Company capitalized approximately $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/A.

**<u>Liquidity and Capital Resources</u>**

***Funding Requirements***

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

The Company is a party to various domestic and international credit facilities. 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 5 to the Company's Consolidated Financial Statements, *Debt,* included elsewhere in this Annual Report on Form 10-K/A.

***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. The year-over-year decrease in net cash provided by operating activities was primarily due to the sale of Brazil and South Africa, which generated strong operating cash flows in 2023. This impact was partially offset by improved working capital management in the US.

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. The net cash provided by investing activities was primarily attributable to the sale of international joint ventures, net of transaction costs.

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. The year-over-year increase in cash from financing activities was driven by an increase in borrowing under lines of credit.

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. The overall increase in cash was driven by proceeds from the sale of international joint ventures as well as improved working capital management.

<u>**Brazil Joint Venture Sale and Non-GAAP EPS Impact**</u>

**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. 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).

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.

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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21

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**U.S. GAAP Accounting Treatment and Impact**

Under U.S. 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. 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. 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. 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. 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.

For perspective, earnings per share (EPS) would have been materially higher if the $5.9 million gain were included - on such a basis, EPS for 2024 would have been $0.19 per share compared to the reported GAAP result of ($0.13).

This adjusted EPS measure adds back the after-tax impact of the reduction of the economic gain on the sale by $7.5 million (approximately $0.32 per share) to our GAAP EPS. This adjustment would have turned our reported net loss for the year into a net profit, underscoring the positive economic impact of the Brazil joint venture sale.

In summary, while our official results are reported in accordance with U.S. GAAP (and thus include the $1.6 million accounting loss on the Brazil sale), we believe it is helpful to provide investors with the economic context of this transaction. Excluding the technical accounting adjustment, the sale of our Brazilian joint venture was a highly accretive disposition that added substantial economic value. The adjusted gain and related EPS impact discussed above are supplemental, non-GAAP figures provided to illustrate the true economic outcome. Management emphasizes that the GAAP financial statements remain the authoritative source of our results, but the additional context is intended to clarify that the GAAP loss on the sale was driven by accounting requirements rather than an economic loss.

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
| (in thousands, except per share amounts) | **2024<br> (As Restated)** | **2023<br> (As Restated)** |
| GAAP Net (Loss) Income attributable to SPAR Group, Inc. | $(3150) | $3902 |
| GAAP Earnings (Loss) per share (basic) | (0.13) | 0.17 |
| Adjustment to reflect what management believes is true economic gain on Brazil joint venture sale | 7556 |  |
| EPS impact of adjustment (basic) | 0.32 |  |
| Non-GAAP Net Income | 4406 |  |
| Non-GAAP basic Earnings per share | 0.19 |  |

---

**Restatement of Quarterly Financial Data**

As explained further in the "EXPLANATORY NOTE" at the beginning of this Form 10-K/A, the Company has restated its previously issued unaudited interim financial statements for the three and six months ended June 30, 2024 and the three and nine months ended September 30, 2024 (the "Non-Reliance Periods"), and the respective periods in 2023 for comparison purposes. Detailed restatements of the Company's condensed consolidated quarterly financial statements are provided in Note 17 – Restatement of Quarterly Financial Information (Unaudited) in the accompanying notes to the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22

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The following unaudited quarterly statements of operations data for the quarter ended June 30, 2024 and for the quarter ended September 30, 2024 have been prepared on a basis consistent with our audited annual financial statements included in this Annual Report on Form 10-K/A and include, in our opinion, all normal recurring adjustments necessary for the fair presentation of the financial information contained in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following should be read in conjunction with our audited financial statements and the related notes included in this Annual Report on Form 10-K/A.

---

| | | |
|:---|:---|:---|
|  | **Three months ended** | **Three months ended** |
|  | **June 30, 2024** | **September 30, 2024** |
|  | **As Restated** | **As Restated** |
| Net revenues | $**43402** | $**37788** |
| Related party - cost of revenues | **-** | **-** |
| Cost of revenues | **34438** | **29346** |
| Gross profit | **8964** | **8442** |
| Selling, general and administrative expense | **8068** | **8558** |
| Loss on sale of business | **1411** | **960** |
| Depreciation and amortization | **451** | **454** |
| Operating loss | **(966)** | **(1530)** |
| Interest expense | **590** | **582** |
| Other (income) expense, net | **(296)** | **472** |
| Loss before income tax expense from continuing operations | **(1260)** | **(2584)** |
| Income tax expense (benefit) | **934** | **(2314)** |
| Loss from continuing operations | **(2194**) | **(270**) |
| Discontinued Operations |  |  |
| Income from discontinued operations | **552** | **-** |
| Loss on disposal of business | **(1188**) |  |
| Income tax (expense) benefit | **(613**) | **-** |
| Net (loss) income from discontinued operations | **(1249)** | **-** |
| Net loss | **(3443)** | **(270)** |
| Net (income) loss attributable to non-controlling interest | **(448)** | **88** |
| Net loss attributable to SPAR Group, Inc. | $**(3891)** | $**(182)** |
| Basic loss per common share attributable to SPAR Group, Inc. from continuing operations | $**(0.12)** | $**(0.01)** |
| Diluted loss per common share attributable to SPAR Group, Inc. from continuing operations | $**(0.11)** | $**(0.01)** |
| Basic loss per common share attributable to SPAR Group, Inc. from discontinued operations | $**(0.05)** | $**-** |
| Diluted loss per common share attributable to SPAR Group, Inc. from discontinued operations | $**(0.05)** | $**-** |
| Basic loss per common share attributable to SPAR Group, Inc. | $**(0.17)** | $**(0.01)** |
| Diluted loss per common share attributable to SPAR Group, Inc. | $**(0.16)** | $**(0.01**) |
| Weighted-average common shares outstanding – basic | **23786** | **23435** |
| Weighted-average common shares outstanding – diluted | **24010** | **23435** |
| Net loss | $**(3443)** | $**(270)** |
| Other comprehensive income (loss) |  |  |
| Foreign currency translation adjustments | **1372** | **(72)** |
| Comprehensive loss | **(2071)** | **(342)** |
| Comprehensive (income) loss attributable to non-controlling interest | **(393)** | **45** |
| Comprehensive loss attributable to SPAR Group, Inc. | $**(2464)** | $**(297)** |

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**Item 7A. Quantitative and Qualitative Disclosures about Market Risk**

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

**Item 8. Financial Statements and Supplementary Data** 

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

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

None

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23

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**Item 9A. Controls and Procedures**

**Management's Evaluation of Disclosure Controls and Procedures**

Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The Chief Executive Officer and the Chief Financial Officer, as our principal financial and accounting officer, have reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K/A and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to material weaknesses in internal control over financial reporting, described below.

**Management**'**s Report on Internal Control Over Financial Reporting**

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

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

Management utilized the criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to conduct an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2024. In connection with the preparation of our consolidated financial statements for the year ended December 31, 2024, we identified two material weaknesses in internal control over financial reporting, as described below. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

**Material Weakness in Internal Control Over Financial Reporting**

Management did not maintain effective controls related to the financial statement close process to ensure the completeness and accuracy of certain amounts and disclosures, specifically related to the preparation and review of balance sheet account reconciliations and presentation of segment disclosures. This material weakness resulted in errors in revenue, expense, accrual accounts, and prepaid accounts at year end.

Management did not design and implement effective controls used in the financial close process over non-recurring transactions, including accounting for the deconsolidation and sale of the international components. This material weakness resulted in errors in the calculation and presentation of the sale of international components and the deconsolidation of one subsidiary.

***Remediation Efforts***

The Company has begun the process of, and is focused on, designing and implementing effective internal control measures to improve its internal control over financial reporting and remediate the material weaknesses identified above. The Company's internal control remediation efforts include the following:

1. Implemented a modern and more efficient ERP system which went live January 1, 2025 with a parallel run in Q4 2024, and which includes modern and inherent controls and reduces the need for manual adjustments and likelihood of errors;

2. Hiring of an Assistant Controller as of January 1, 2025, who is an experienced CPA, and will provide necessary support to the existing Controller and ensure proper reconciliations are performed in a timely manner;

3. Consolidation of the finance and accounting team in one office (versus different offices and home offices), in a transition that started January 1, 2025, centralizing processes and ensuring more consistent application of controls across the Company

4. Simplified the organizational structure by divesting six foreign joint venture operations, thereby reducing the complexity of the Company's financial reporting and oversight processes.

Management expects that the actions described above and resulting improvements in controls will strengthen its internal control over financial reporting and will address the identified material weaknesses.

**Changes in Internal Controls Over Financial Reporting**

Other than the material weaknesses described above, there were no changes in the Company's internal controls over financial reporting that occurred during the Company's quarter ended December 31, 2024, that materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

**Item *9B.* Other Information** 

a. During the *fourth* quarter of *2024,* none of our directors or executive officers adopted or terminated any "Rule *10b5*-*1* trading arrangement" or "non-Rule *10b5*-*1* trading arrangement" (as each term is defined in Item *408*(a) of Regulation S-K).

**Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 24

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**PART III** 

"Reference is made below to SGRP's definitive Proxy Statement for its 2025 Annual Meeting of Stockholders, which SGRP filed pursuant to Regulation 14A on May 23, 2025, with the meeting held on June 12, 2025. For clarity (and without limitation), information appearing in the sections of such Proxy Statement entitled "PROPOSAL 3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION", "PROPOSAL 4 – ADVISORY VOTE ON THE FREQUENCY THAT THE CORPORATION HOLDS THE ADVISORY VOTE ON EXECUTIVE COMPENSATION", and "REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS" shall not be deemed to be incorporated by reference in this Annual Report.

**Item 10. Directors, Executive Officers and Corporate Governance** 

Reference is made to the information set forth under the captions "The Board of Directors of the Corporation", "Executives and Officers of the Corporation", "Security Ownership of Certain Beneficial Owners and Management" and "Corporate Governance" in the 2025 Proxy Statement.

**Item 11. Executive Compensation** 

Reference is made to the information set forth under the captions "Security Ownership of Certain Beneficial Owners and Management", "Executive Compensation, Directors and Other Information", "Executive Compensation, Equity Awards and Options" and "Compensation Plans" in the 2025 Proxy Statement.

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

Reference is made to the information set forth under the captions "Security Ownership of Certain Beneficial Owners and Management", "Executive Compensation, Equity Awards and Options" and "Compensation Plans" in the 2025 Proxy Statement.

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

Reference is made to the information set forth under the caption "Transactions with Related Persons, Promoters and Certain Control Persons" in the 2025 Proxy Statement.

**Item 14. Principal Accountant Fees and Services** 

Reference is made to the information set forth under the caption "PROPOSAL 2 – RATIFICATION, ON AN ADVISORY BASIS, OF THE APPOINTMENT OF BDO USA, P.C. AS THE COMPANY'S PRINCIPAL INDEPENDENT ACCOUNTANTS" in the 2025 Proxy Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 25

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**PART IV**

**Item 15. Exhibits and Financial Statement Schedules** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Index to Financial Statements filed as part of this report:**

---

| | |
|:---|:---|
| Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Troy, Michigan; PCAOB ID#243) | [33](#report) |
| Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 2024 and 2023 (as Restated) | [34](#income) |
| Consolidated Balance Sheets as of December 31, 2024 and 2023 (as Restated) | [35](#balance) |
| Consolidated Statement of Stockholders' Equity for the years ended December 31, 2024 and 2023 | [36](#equity) |
| Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 (as Restated) | [37](#cf) |
| Notes to Consolidated Financial Statements | [38](#notes) |

---

**Exhibits**<br>

---

| | |
|:---|:---|
| **Exhibit**<br> **<u>Number</u>** | **<u>Description</u>** |
| 2.1 | [<u>Agreement and Plan of Merger, dated August 30, 2024, by and among Highwire Capital, LLC, Highwire Merger Co. I, Inc. and SPAR Group, Inc.</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774924028210/ex_720310.htm) (incorporated by reference to Exhibit 2.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on September 3, 2024). |
| 3.1 | [Certificate of Incorporation of SPAR Group, Inc. (referred to therein under its former name of PIA Merchandising Services, Inc.), as amended, incorporated by reference to the Corporation's Registration Statement on Form S-1 (Registration No. 33-80429), as filed with the SEC on December 14, 1995, and the Certificate of Amendment filed with the Secretary of State of the State of Delaware on July 8, 1999 (which, among other things, changes the Corporation's name to SPAR Group, Inc.), (incorporated by reference to Exhibit 4.1 to the Corporation's Registration Statement on Form S-8 (Registration No. 33-80429) as filed with the SEC on April 2, 2021).](http://www.sec.gov/Archives/edgar/data/1004989/000089256999002279/0000892569-99-002279.txt) |
| 3.2 | [<u>Certificate of Elimination of the Certificate of Designation of Series "A" Preferred Stock of SPAR Group, Inc., adopted as of January 25, 2022 (incorporated by reference to Exhibit 3.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774922001867/ex_329139.htm) |
| 3.3 | [Certificate of Designation of Series "B" Convertible Preferred Stock of SPAR Group, Inc., adopted January 25, 2022 (incorporated by reference to Exhibit 3.2 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).](http://www.sec.gov/Archives/edgar/data/1004989/000143774922001867/ex_329140.htm) |
| 3.4 | [Amended and Restated By-Laws of SPAR Group, Inc., as adopted, restated, effective and dated January 18, 2019 and as further amended through January 25, 2022 (incorporated by reference to Exhibit 3.3 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).](http://www.sec.gov/Archives/edgar/data/1004989/000143774922001867/ex_329141.htm) |
| 3.5 | [Amended and Restated Charter of the Audit Committee of the Board of Directors of SPAR Group, Inc., adopted, restated, effective and dated August 12, 2020, (incorporated by reference to Exhibit 3.4 to the First Amendment to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, as filed with the SEC on April, 29, 2021 ("SGRP's 2020 Annual Report Amendment").](http://www.sec.gov/Archives/edgar/data/1004989/000143774921010224/ex_243874.htm) |
| 3.6 | [Charter of the Compensation Committee of the Board of Directors of SPAR Group, Inc., Amended, Restated and Dated (as of) August 11, 2020, (incorporated by reference to Exhibit 3.5 to the First Amendment to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, as filed with the SEC on April, 29, 2021 ("SGRP's 2020 Annual Report Amendment").](http://www.sec.gov/Archives/edgar/data/1004989/000143774921010224/ex_243875.htm) |
| 3.7 | [<u>Charter of the Governance Committee of the Board of Directors of SPAR Group, Inc., Dated (as of) April 23, 2020 and As Amended through March 18, 2021 (incorporated by reference to Exhibit 3.6 to the First Amendment to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, as filed with the SEC on April, 29, 2021 ("SGRP's 2020 Annual Report Amendment").</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774921010224/ex_243876.htm) |
| 3.08 | [<u>SPAR Group, Inc. Statement of Policy Respecting Stockholder Communications with Directors, adopted on May 18, 2004 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on May 27, 2004).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068004000558/f8k052104-exhibit3_5.txt)  |
| 3.9 | [<u>SPAR Group, Inc. Statement of Policy Regarding Director Qualifications and Nominations, adopted on May 18, 2004 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on May 27, 2004).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068004000558/f8k052104-exhibit3_6.txt) |
| 3.10 | [<u>SPAR Group, Inc. Statement of Policy Respecting Complaints and Communications by Employees and Others as Amended and Restated as of August 13, 2015 (also known as the Whistleblower Policy) (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the SEC on April 2, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918006047/ex_108819.htm)  |
| 3.11 | [<u>SGRP 2024 Stock Repurchase Program as approved by SGRP's Audit Committee and adopted by its Board of Directors on March 28, 2024 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on April 3, 2024).</u>](http://www.sec.gov/ix?doc=/Archives/edgar/data/0001004989/000143774924010743/sgrp20240401_8k.htm) |

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| 4.1 | [<u>Form of SGRP's Common Stock Certificate (incorporated by reference to SGRP's Pre-Effective Amendment No. 1 to its Registration Statement on Form S-3 (Registration No. 333-162657) as filed with the SEC on February 7, 2011).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068011000054/ex4-5.htm) |
| 4.2 | [Form of SGRP's Series B Preferred Stock Certificate (incorporated by reference to SGRP's Annual Report on Form 10-K, as filed with the SEC on April 17, 2023).](http://www.sec.gov/Archives/edgar/data/1004989/000143774923010432/ex_488281.htm) |
| 4.3  | Registration Rights Agreement entered into as of January 21, 1992, by and between SGRP (as successor to, by merger in 1996 with, PIA Holding Corporation, f/k/a RVM Holding Corporation, the California Limited Partnership, The Riordan Foundation and Creditanstalt-Bankverine (incorporated by reference to the Form S-1). |
| 4.4 | [<u>Summary Description and Prospectus dated August 24, 2009, respecting the SPAR Group, Inc. 2008 Stock Compensation Plan, as amended (incorporated by reference to Exhibit 99(a)(1)(G) to SGRP's SC TO-I).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068009000415/ex99a1g-sc13e4f_082409.htm) |
| 10.1 | [2021 Stock Compensation Plan of SPAR Group, Inc., effective as of August 12, 2021 (incorporated by reference to Appendix A to the Corporation's Definitive Proxy Statement filed with the SEC on July 13, 2021).](http://www.sec.gov/Archives/edgar/data/0001004989/000143774921017180/sgrp20210719_defr14a.htm) |
| 10.2 | [2020 Stock Compensation Plan of SPAR Group, Inc., effective as of January 19, 2021 (incorporated by reference to Annex B to the Corporation's Definitive Proxy Statement filed with the SEC on December 10, 2020).](http://www.sec.gov/Archives/edgar/data/1004989/000143774920025105/sgrp20201208_def14a.htm) |
| 10.3 | [<u>2018 Stock Compensation Plan of SGRP, effective as of May 2, 2018 (incorporated by reference to Annex A to SGRP's Definitive Proxy Statement filed with the SEC on April 18, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918007077/sgrp20180414_def14a.htm) |
| 10.4 | [<u>2008 Stock Compensation Plan, effective as of May 29, 2008, and as amended through May 28, 2009 (the "SGRP 2008 Plan") (incorporated by reference to SGRP's Current Report on Form 8-K dated June 4, 2009, as filed with the SEC on June 4, 2009).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068009000303/ex10_1-f8k052809.htm) |
| 10.5 | [<u>2000 Stock Option Plan, as amended through May 16, 2006 (incorporated by reference to SGRP's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, as filed with the SEC on November 14, 2006).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068006001086/ex10-1_f10q093006.htm) |
| 10.6 | [Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and Kori G. Belzer (incorporated by reference to Exhibit 10.6 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_643961.htm) |
| 10.7 | [Phantom Stock Unit Grant and Agreement entered into and effective as of March 24, 2022, between SGRP and Kori G. Belzer (incorporated by reference to Exhibit 10.7 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_597528.htm) |
| 10.8 | [Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and Antonio Calisto Pato (incorporated by reference to Exhibit 10.8 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_643960.htm) |
| 10.9 | [Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and William Linnane (incorporated by reference to Exhibit 10.9 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_643964.htm) |
| 10.10 | [Phantom Stock Unit Grant and Agreement entered into and effective as of March 24, 2022, between SGRP and William Linnane (incorporated by reference to Exhibit 10.10 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_597529.htm) |
| 10.11 | [Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and Ron Lutz (incorporated by reference to Exhibit 10.11 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_643963.htm) |
| 10.12 | [Phantom Stock Unit Grant and Agreement entered into and effective as of March 24, 2022, between SGRP and Ron Lutz (incorporated by reference to Exhibit 10.12 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_597530.htm) |
| 10.13 | [Phantom Stock Unit Grant and Agreement entered into and effective as of April 3, 2023, between SGRP and Mike Matacunas (incorporated by reference to Exhibit 10.13 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_643962.htm) |
| 10.14 | [Inducement RSU Contract between SPAR Group, Inc. and Antonio Calisto Pato dated March 10, 2023 (incorporated by reference to Exhibit 10.14 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_597531.htm) |
| 10.15 | [Inducement RSU Contract, between SPAR Group, Inc. and William Linnane, dated August 2, 2021 (incorporated by reference to Exhibit 10.6 to the Corporation's Annual Report on Form 10-K as filed with the SEC on April 15, 2022).](http://www.sec.gov/Archives/edgar/data/1004989/000143774922009005/ex_343376.htm) |
| 10.16 | [Inducement RSU Contract, between SPAR Group, Inc. and Ron Lutz, dated August 2, 2021 (incorporated by reference to Exhibit 10.7 to the Corporation's Annual Report on Form 10-K as filed with the SEC on April 15, 2022).](http://www.sec.gov/Archives/edgar/data/1004989/000143774922009005/ex_343377.htm) |
| 10.17 | [Inducement Nonqualified Stock Option Contract, between SGRP and Mike Matacunas, dated February 22, 2021 (incorporated by reference to Exhibit 4.5 to the Corporation's Registration Statement on Form S-8 (Registration No. 33-80429) as filed with the SEC on April 2, 2021).](http://www.sec.gov/Archives/edgar/data/0001004989/000143774921008074/ex_238839.htm) |
| 10.18 | [Inducement RSU Contract, between SGRP and Mike Matacunas, dated February 22, 2021 (incorporated by reference to Exhibit 10.9 to the Corporation's Annual Report on Form 10-K as filed with the SEC on April 15, 2022).](http://www.sec.gov/Archives/edgar/data/1004989/000143774922009005/ex_343378.htm) |

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| 10.19 | [Inducement Nonqualified Stock Option Contract, between SGRP and Fay DeVriese, dated August 31, 2020 (incorporated by reference to Exhibit 4.4 to the Corporation's Registration Statement on Form S-8 (Registration No. 33-80429) as filed with the SEC on April 2, 2021).](http://www.sec.gov/Archives/edgar/data/0001004989/000143774921008074/ex_238838.htm) |
| 10.20 | [<u>2001 Employee Stock Purchase Plan (incorporated by reference to SGRP's Proxy Statement for SGRP's annual stockholders meeting held on August 2, 2001, as filed with the SEC on July 12, 2001).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068001500252/sch14a_8-2.txt) |
| 10.21 | [<u>2001 Consultant Stock Purchase Plan (incorporated by reference to SGRP's Proxy Statement for SGRP's Annual meeting held on August 2, 2001, as filed with the SEC on July 12, 2001).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068001500252/sch14a_8-2.txt) |
| 10.22 | [Consulting Agreement dated January 27, 2022, effective February 1, 2022, between SGRP and Thenablers, Ltd., which is wholly owned by and will provide certain consulting services from Panagiotis ("Panos") N. Lazaretos (who retired as a SGRP director effective January 25, 2022) to SGRP regarding global sales and new markets' expansion (incorporated by reference to Exhibit 10.3 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).](http://www.sec.gov/Archives/edgar/data/1004989/000143774922001867/ex_329144.htm) |
| 10.23 | [<u>Consulting Agreement dated January 25, 2022, and effective January 26, 2022, between SGRP and James R. Brown, Sr. (who retired as a SGRP director effective January 25, 2022) (incorporated by reference to Exhibit 10.2 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774922001867/ex_329143.htm) |
| 10.24 | [Change of Control, Voting and Restricted Stock Agreement, effective January 28, 2022, by and among SGRP, Robert G. Brown, William H. Bartels, SPAR Administrative Services, Inc., a Nevada corporation, and SPAR Business Services, Inc., a Nevada corporation (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 28, 2022).](http://www.sec.gov/Archives/edgar/data/1004989/000143774922001867/ex_329142.htm) |
| 10.25 | [Change of Control Severance Agreement between SGRP and Antonio Calisto Pato dated as of February 28, 2023 (incorporated by reference to Exhibit 10.25 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_597533.htm) |
| 10.26 | [Corrective Global Amendment to Change of Control Severance Agreements <u>between SGRP, Fay DeVriese, William Linnane and Ron Lutz</u> <u>made and entered into and effective as of August 10, 2022 (</u>incorporated by reference to Exhibit 10.26 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024<u>).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_597532.htm) |
| 10.27 | [Amended and Restated Change of Control Severance Agreement (the "CICSA") between SGRP and Fay DeVriese made and entered into effective as of August 13, 2021 (incorporated by reference to Exhibit 10.1 to SGRP's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, as filed with the SEC on November 15, 2021).](http://www.sec.gov/Archives/edgar/data/1004989/000143774921026722/ex_302811.htm) |
| 10.28 | [Change of Control Severance Agreement between SGRP and William Linnane dated as of July 12, 2021 (incorporated by reference to Exhibit 10.18 to the Corporation's Annual Report on Form 10-K as filed with the SEC on April 15, 2022.](http://www.sec.gov/Archives/edgar/data/1004989/000143774922009005/ex_343387.htm) |
| 10.29 | [Change of Control Severance Agreement between SGRP and Ron Lutz dated as of July 12, 2021 (incorporated by reference to Exhibit 10.19 to the Corporation's Annual Report on Form 10-K as filed with the SEC on April 15, 2022).](http://www.sec.gov/Archives/edgar/data/1004989/000143774922009005/ex_343388.htm) |
| 10.30 | [<u>Change of Control Severance Agreement by and among SGRP, SPAR Marketing Force, Inc. and Mike Matacunas dated as of January 26, 2021 (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on February 16, 2021).</u>](http://www.sec.gov/Archives/edgar/data/0001004989/000143774921002904/ex_226591.htm) |
| 10.31 | [<u>Amended and Restated Change of Control Severance Agreement between Kori G. Belzer and SGRP, dated as of August 10, 2022 (incorporated by reference to Exhibit 10.2 to SGRP's Quarterly Report on Form 10-Q, as filed with the SEC on August 15, 2022).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774922020520/ex_411626.htm) |
| 10.32 | [<u>Amended and Restated Change of Control Severance Agreement between Lawrence David Swift and SGRP dated as of August 10, 2022 (incorporated by reference to Exhibit 10.3 to SGRP's Current Report on Form 8-K, as filed with the SEC on August 14, 2022).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774922020520/ex_411627.htm) |
| 10.33 | [<u>Trademark License Agreement dated as of July 8, 1999, by and between SPAR InfoTech, Inc., and SPAR Trademarks, Inc. (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2002, as filed with the SEC on March 31, 2003).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068003000277/sparinfotechgmt.txt) |
| 10.34 | [<u>Trademark License Agreement dated as of July 8, 1999, by and between SPAR Marketing Services, Inc., and SPAR Trademarks, Inc. (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2002, as filed with the SEC on March 31, 2003).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068003000277/d462356.txt) |
| 10.35 | [<u>Business Manager Agreement (re joint ownership of certain software) dated as of July 8, 1999, among SPAR Business Services, Inc. (f/k/a SPAR Marketing Services, Inc.), SPAR InfoTech, Inc., and SPAR Marketing Force, Inc.(incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1999, as filed with the SEC on May 1, 2000).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068000000302/0000910680-00-000302.txt) |
| 10.36 | [Joint Venture Agreement dated as of September 13, 2016, by and between JK Consultoria Empresarial Ltda.-ME, a limitada formed under the laws of Brazil, Earth Investments, LLC, a Nevada limited liability company, and SGRP Brasil Participações Ltda., a limitada formed under the laws of Brazil (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the SEC on April 2, 2018).](http://www.sec.gov/Archives/edgar/data/1004989/000143774917006637/ex10-25.htm) |
| 10.37 | [<u>Joint Venture Contract dated July 4, 2014, among SPAR China Inc., established and existing under the laws of Hong Kong, Wedone Shanghai, Co., Ltd., organized and existing under the laws of P.R. China, Shanghai Gold Pack Investment Management Co., Ltd., organized and existing under the laws of P.R. China, and XU Gang, an Australian citizen (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the SEC on April 17, 2017).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774917006637/ex10-24.htm) |

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| 10.38 | [<u>Joint Venture Agreement dated as of September 3, 2012, by and between Combined Manufacturers National (Pty) Ltd and SGRP Meridian (Pty) Ltd, respecting SGRP's additional consolidated subsidiary in South Africa (incorporated by reference to SGRP's Annual Report on Form 10-K, as filed with the SEC on April 2, 2013).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774913003821/ex10-20.htm) |
| 10.39 | [<u>Joint Venture Agreement dated as of August 30, 2012, by and between National Merchandising of America, Inc., a Georgia corporation, SPAR NMS Holdings, Inc., a Nevada corporation and consolidated subsidiary of SGRP, and National Merchandising Services, LLC, a Nevada limited liability company and consolidated subsidiary of SGRP (incorporated by reference to SGRP's Quarterly Report on Form 10-Q, as filed with the SEC on November 9, 2012).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774912011339/ex10-1.htm) |
| 10.40 | [<u>Joint Venture Agreement dated as of August 2, 2011, by and among Todopromo, S.A. de C.V., Sepeme, S.A. de C.V., Top Promoservicios, S.A. de C.V., Conapad, S.C., Mr. Juan Francisco Medina Domenzain, Mr. Juan Francisco Medina Staines, Mr. Jorge Carlos Medina Staines, Mr. Julio Cesar Hernandez Vanegas, and SPAR Group International, Inc., respecting SGRP's consolidated subsidiary in Mexico (incorporated by reference to SGRP's Annual Report on Form 10-K, as filed with the SEC on April 2, 2013).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774913003821/ex10-21.htm) |
| 10.41 | [<u>Joint Venture Agreement dated as of March 29, 2006, by and between FACE AND COSMETIC TRADING SERVICES PTY LIMITED and SPAR International Ltd., respecting the Company's subsidiary in Australia (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as filed with the SEC on April 2, 2007).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068007000256/jvandshareholderagmt_270306.htm) |
| 10.42 | [<u>Joint Venture Shareholders Agreement between Friedshelf 401 (Proprietary) Limited, SPAR Group International, Inc., Derek O'Brien, Brian Mason, SMD Meridian CC, Meridian Sales & Merchandising (Western Cape) CC, Retail Consumer Marketing CC, Merhold Holding Trust in respect of SGRP Meridian (Proprietary) Limited, dated as of June 25, 2004, respecting SGRP's consolidated subsidiary in South Africa (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as filed with the SEC on April 12, 2005).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068005000288/shareagmfor10k.txt) |
| 10.43 | [<u>$100,000.00 secured Promissory Note from SMF to Richard Justus dated as of January 1, 2018 (the "Resource Justus Note") (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on January 16, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918000648/ex_103048.htm) |
| 10.44 | [<u>Securities Pledge and Escrow Agreement securing the Resource Justus Note between SMF and Richard Justus dated as of January 1, 2018 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on January 16, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918000648/ex_103049.htm) |
| 10.45 | [<u>Executive Officer Employment Terms and Severance Agreement between RPI and Richard Justus dated as of January 1, 2018 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on January 16, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918000648/ex_103051.htm) |
| 10.46 | [<u>Stock Purchase Agreement as of October 13, 2017, by and between SMF, as buyer, and Richard Justus, as seller (the "Resource Justus SPA") (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on January 16, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918000648/ex_103044.htm) |
| 10.47 | [<u>Guaranty of the Resource Paulk Note by SGRP, in favor of Joseph L. Paulk dated as of January 1, 2018 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on January 16, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918000648/ex_103047.htm) |
| 10.48 | [<u>$2,600,000.00 secured promissory note from SMF to Joseph L. Paulk dated as of January 1, 2018 (the "Resource Paulk Note") (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on January 16, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918000648/ex_103045.htm) |
| 10.49 | [<u>Securities Pledge and Escrow Agreement securing the Resource Paulk Note between SMF and Joseph L. Paulk dated as of January 1, 2018 (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on January 16, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918000648/ex_103046.htm) |
| 10.50 | [<u>Stock Purchase Agreement as of October 13, 2017, by and between the SPAR Marketing Force, Inc. ("SMF"), as buyer and Joseph L. Paulk, as seller (the "Resource Paulk SPA") (incorporated by reference to SGRP's Current Report on Form 8-K, as filed with the SEC on January 16, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918000648/ex_103043.htm) |
| 10.51 | [<u>Collateral Assignment (Security Agreement) (Trademarks) effective: April 10, 2019, from SPAR Trademarks, Inc., to North Mill, (incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the SEC on April 24, 2019).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774919007807/ex_140831.htm) |
| 10.52 | [<u>Collateral Pledge Agreement dated as of April 10, 2019, by SGRP, the US NM Borrower and SPAR Acquisition, Inc., in favor of North Mill, (incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the SEC on April 24, 2019).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774919007807/ex_140830.htm) |
| 10.53 | [<u>Corporate Guaranty dated as of April 10, 2019, from the NM Guarantors to North Mill, (incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the SEC on April 24, 2019).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774919007807/ex_140829.htm) |
| 10.54 | [<u>Loan and Security Agreement entered into as of April 10, 2019, by and among North Mill Capital LLC, a Delaware limited liability company ("North Mill"), SPAR Marketing Force, Inc., a Nevada corporation (the "US NM Borrower"), SPAR Canada Company, an unlimited company organized under the laws of Nova Scotia (the "Canadian NM Borrower"), and each of SPAR Group, Inc., a Delaware corporation ("SGRP"), and SPAR Acquisition, Inc., SPAR Canada, Inc., SPAR Trademarks, Inc., and SPAR Assembly & Installation, Inc., each a Nevada corporation (including SGRP, each as a "NM Guarantor"), (incorporated by reference to SGRP's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, as filed with the SEC on April 24, 2019).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774919007807/ex_140840.htm) |
| 10.55 | [Waiver and Modification Agreement entered in as of January 4, 2021, and effective as of December 31, 2020 (the "Modification Agreement"), among North Mill Capital, LLC ("NM"), SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties" (incorporated by reference to Exhibit 99.1 to SGRP's Current Report on Form 8-K as filed with the SEC on January 11, 2021).](http://www.sec.gov/Archives/edgar/data/1004989/000143774921000487/ex_220252.htm) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 29

------

---

| | |
|:---|:---|
| 10.56 | [Second Modification Agreement dated as of March 22, 2021, and effective as of April 1, 2021 (the "Second Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 99.1 to SGRP's Current Report on Form 8-K as filed with the SEC on March 29, 2021).](http://www.sec.gov/Archives/edgar/data/1004989/000143774921007451/ex_237692.htm) |
| 10.57 | [Third Modification Agreement dated as of December 16, 2021, and effective as of December 1, 2021 (the "Third Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 10.57 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_597534.htm) |
| 10.58 | [<u>Fourth Modification Agreement dated as of July 1, 2022, and effective as of June 30, 2022 (the "Fourth Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 10-Q for the quarter ended June 30, 2022, as filed with the SEC on August 15, 2022).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774922020520/ex_411625.htm) |
| 10.59 | [Fifth Modification Agreement entered into as of August 9, 2022 (the "Fifth Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 10.59 to SGRP's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1004989/000143774924010386/ex_597535.htm) |
| 10.60 | [<u>Sixth Modification Agreement entered into as of February 1, 2023 (the "Sixth Modification Agreement"), among North Mill Capital, LLC ("NM"), d/b/a SLR Business Credit, SPAR Group, Inc. ("SGRP") and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force, Inc. ("SMF"), and SPAR Canada Company ("SCC"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors", and together with SMF and SCC, each a "NM Loan Party" and collectively, the "NM Loan Parties") (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 8-K as filed with the SEC on March 2, 2023).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774923005157/ex_478261.htm) |
| 10.61 | [US$28 million Fourth Amended and Restated Revolving Credit Master Promissory Note executed and delivered by SMF to NM and dated as of February 1, 2023 (incorporated by reference to Exhibit 10.2 to SGRP's Current Report on Form 8-K as filed with the SEC on March 2, 2023).](http://www.sec.gov/Archives/edgar/data/1004989/000143774923005157/ex_478263.htm) |
| 10.62 | [CDN$2 million Fourth Amended and Restated Revolving Credit Master Promissory Note executed and delivered by SCC to NM and dated as of February 1, 2023 (incorporated by reference to Exhibit 10.3 to SGRP's Current Report on Form 8-K as filed with the SEC on March 2, 2023).](http://www.sec.gov/Archives/edgar/data/1004989/000143774923005157/ex_478262.htm) |
| 10.63 | [Letter of Offer dated September 29, 2011, and General Business Factoring Agreement (undated) between Oxford Funding Pty Ltd and SPARFACTS Pty Ltd (incorporated by reference to SGRP's Annual Report on Form 10-K, as filed with the SEC on April 2, 2013).](http://www.sec.gov/Archives/edgar/data/1004989/000143774913003821/ex10-35.htm) |
| 10.64 | [<u>Limited Mutual Release Agreement, dated as of January 18, 2019, among Robert G. Brown, William H. Bartels, Christiaan Olivier, Lorrence T. Kellar, Jack W. Partridge, Arthur B. Drogue and R. Eric McCarthey (incorporated by reference to Exhibit 10.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 25, 2019).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774919001341/ex_133323.htm) |
| 10.65 | [<u>Stipulation of Dismissal, dated as of January 18, 2019 (incorporated by reference to Exhibit 10.2 to SGRP's Current Report on Form 8-K, as filed with the SEC on January 25, 2019).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774919001341/ex_133324.htm) |
| 10.66 | [<u>Text of Letter to SPAR Group, Inc. ("SGRP"), from the Nasdaq Stock Market, Inc. ("Nasdaq"), dated July 16, 2021 (incorporated by reference to Exhibit 99.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on July 30, 2021).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774921018009/ex_269745.htm) |
| 10.67 | [Text of Letter to SGRP, from the Nasdaq Stock Market, Inc. ("Nasdaq"), dated June 15, 2021, stating that SGRP no longer com3208plies with Nasdaq's majority independent director and audit committee requirements as set forth in Nasdaq Listing Rule 5605 (incorporated by reference to Exhibit 17.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on June 22, 2021).](http://www.sec.gov/Archives/edgar/data/1004989/000143774921015319/ex_258881.htm) |
| 10.68 | [Text of Letter to SGRP, from the Nasdaq Stock Market, Inc. ("Nasdaq"), dated March 11, 2025 (incorporated by reference to Exhibit 99.1 to SGRP's Current Report on Form 8-K, as filed with the SEC on March 17, 2025).](http://www.sec.gov/Archives/edgar/data/1004989/000143774925007997/ex_789535.htm) |
| 10.69 | [Seventh Modification Agreement entered into as of March 28 2024, by and among North Mill Capital LLC, d/b/a SLR Business Credit, SPAR MARKETING FORCE, INC., and SPAR CANADA COMPANY (as filed herewith).](ex_834273.htm) |
| 10.70 | [Fifth Amended and Restated Revolving Credit Master Promissory Note, dated as of October 10, 2024 (as filed herewith)](ex_834274.htm) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 30

------

---

| | |
|:---|:---|
| 14.1 | [<u>SPAR Group Code of Ethical Conduct for its Directors, Executives, Officers, Employees, Consultants and other Representatives Amended and Restated (as of) March 15, 2018 (incorporated by reference to SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the SEC on April 2, 2018).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000143774918006047/ex_108822.htm) |
| 19.1 | [<u>Statement of Policy Regarding Personal Securities Transactions in SGRP Stock and Non-Public Information, as adopted, restated, effective and dated as of May 1, 2004, and as further amended through March 10, 2011 (incorporated by reference to SGRP's Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on March 15, 2011).</u>](http://www.sec.gov/Archives/edgar/data/1004989/000091068011000109/ex14_2-f10k12312010.htm) |
| 21.1 | [List of Subsidiaries (as filed herewith).](ex_834275.htm) |
| 23.1 | [Consent of BDO USA, P.C. (as filed herewith).](ex_834276.htm) |
| 31.1 | [Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (as filed herewith).](ex_834277.htm) |
| 31.2 | [Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (as filed herewith).](ex_834278.htm) |
| 32.1 | [Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (as filed herewith).](ex_834279.htm) |
| 32.2 | [Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (as filed herewith).](ex_834280.htm) |
| 97 | [Spar Group, Inc. Compensation Recovery Policy](ex_834281.htm) |
| 101.INS\* | Inline XBRL Instance |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition |
| 101.LAB\* | Inline XBRL Taxonomy Extension Labels |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |

---

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

**Item 16. Form 10-K/A Summary**

None.

&nbsp;&nbsp;&nbsp;&nbsp; 31

------

**SIGNATURES** 

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

---

| | |
|:---|:---|
| SPAR Group, Inc. | SPAR Group, Inc. |
| By: | /s/ Michael R. Matacunas |
|  | &nbsp;&nbsp;&nbsp; Michael R. Matacunas |
|  | &nbsp;&nbsp;&nbsp; President and Chief Executive Officer |
| Dated as of: July 17, 2025 | Dated as of: July 17, 2025 |

---

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

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

---

| | |
|:---|:---|
| SIGNATURE | TITLE |
| /s/ Michael R. Matacunas | President, Chief Executive Officer and Director, |
| &nbsp;&nbsp;&nbsp;&nbsp; Michael R. Matacunas | (Principal Executive Officer) |
| Dated as of: July 17, 2025 |  |
| /s/ James R. Gillis | Director |
| &nbsp;&nbsp;&nbsp;&nbsp; James R. Gillis |  |
| Dated as of: July 17, 2025 |  |
| /s/ John Bode | Director |
| &nbsp;&nbsp;&nbsp;&nbsp; John Bode |  |
| Dated as of: July 17, 2025 |  |
| /s/ Linda Houston | Director |
| &nbsp;&nbsp;&nbsp;&nbsp; Linda Houston |  |
| Dated as of: July 17, 2025 |  |
| /s/ William H. Bartels | Director |
| &nbsp;&nbsp;&nbsp;&nbsp; William H. Bartels |  |
| Dated as of: July 17, 2025 |  |
|  | Director |
| James R. Brown, Sr |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dated as of: July 17, 2025  |  |
|  | Director |
| Panagiotis Lazaretos |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dated as of: July 17, 2025  |  |
| /s/ Antonio Calisto Pato | Chief Financial Officer, |
| &nbsp;&nbsp;&nbsp;&nbsp; Antonio Calisto Pato | Treasurer and Secretary (Principal Financial and Accounting Officer) |
| Dated as of: July 17, 2025 |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 32

------

**Report of Independent Registered Public Accounting Firm** 

Shareholders and Board of Directors

SPAR Group, Inc.

Auburn Hills, MI

**Opinion on the Consolidated Financial Statements**

We have audited the accompanying consolidated balance sheets of SPAR Group, Inc. (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive (loss) income, stockholders' equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended**,** in conformity with accounting principles generally accepted in the United States of America.

**Restatement of Previously Issued Financial Statements**

As discussed in Notes 2 and 3 to the consolidated financial statements, the 2024 and 2023 consolidated financial statements have been restated to correct a misstatement.

**Basis for Opinion**

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

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

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

**Critical Audit Matter**

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

**Revenue Recognition**

As indicated in Note 2 to the consolidated financial statements, the Company generates revenues by providing merchandising services to its customers, generally on a daily, weekly, or monthly basis. The Company recognizes revenues as the services are performed based on the contractually specified rate-per-driver metric(s) (i.e., rate per hour, rate per store visit or rate per unit stocked). For the year ended December 31, 2024, the Company's net revenues were $163.6 million from continuing operations and $33.2 million from discontinued operations.

We identified revenue recognition from merchandising services as a critical audit matter due to the large volume of customer contracts and transactions. The principal consideration for our determination is the increased extent of auditor effort involved in performing procedures and evaluating audit evidence related to the Company's revenue recognition.

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

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

● Testing the cut off of revenue recognized for a sample of revenue transactions prior to and subsequent to December 31, 2024.

<u>/s/</u> BDO USA, P.C.

We have served as the Company's auditor since 2013.

Troy, Michigan

May 16, 2025, except for the effects of the restatement discussed in Notes 2 and 3, as to which the date is July 17, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 33

------

**SPAR Group, Inc. and Subsidiaries** 

**Consolidated Statements of Operations and Comprehensive (Loss) Income**

*(In thousands, except per share data)* 

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** |
|  | **(As Restated)** | **(As Restated)** |
| Net revenues | $**163629** | $187874 |
| Related Party - Cost of revenues | **-** | 5197 |
| Cost of revenues | **130032** | 138240 |
| Gross profit | **33597** | 44437 |
| Selling, general and administrative expense | **33880** | 36626 |
| (Gain) / loss on sale of business | **(2536)** | 408 |
| Depreciation and amortization | **1553** | 1827 |
| Operating income | **700** | 5576 |
| Interest expense | **2191** | 2231 |
| Other expenses, net | **171** | 346 |
| Income (loss) from continuing operations before taxes | **(1662)** | 2999 |
| Income tax expense | **144** | 648 |
| Income (loss) from continuing operations | **(1806**) | 2351 |
| Discontinued Operations |  |  |
| Income from discontinued operations | **1381** | 4134 |
| Loss on disposal of business | **(1188)** |  |
| Income tax expense | **(1074**) | (1709) |
| Net (loss) income from discontinued operations | **(881)** | 2425 |
| Net income (loss) | **(2687)** | 4776 |
| Net income attributable to non-controlling interest | **(463**) | (874) |
| Net income (loss) attributable to SPAR Group, Inc. | $**(3150)** | $3902 |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**(0.09)** | $0.07 |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**(0.09)** | $0.06 |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**(0.04)** | $0.10 |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**(0.04)** | $0.10 |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. | $**(0.13)** | $0.17 |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. | $**(0.13)** | $0.16 |
| Weighted average common shares – basic | **23555** | 23333 |
| Weighted average common shares – diluted | **23729** | 24455 |
| Net income (loss) | $**(2687)** | $4776 |
| Other comprehensive income (loss): |  |  |
| Foreign currency translation adjustments | **(1553)** | 1283 |
| Comprehensive income (loss) | **(4240)** | 6059 |
| Comprehensive income attributable to non-controlling interest | **(172)** | (317) |
| Comprehensive income (loss) attributable to SPAR Group, Inc. | $**(4412)** | $5742 |

---

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 34

------

**SPAR Group, Inc. and Subsidiaries**

**Consolidated Balance Sheets**

*(In thousands, except share and per share data)*

---

| | | |
|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2023*** |
|  | | **(As Restated)** |
| **Assets** |  |  |
| Current assets: |  |  |
| Cash and cash equivalents | $**18221** | $**4491** |
| Accounts receivable, net | **24766** | **43106** |
| Prepaid expenses and other current assets | **3009** | **2264** |
| Current assets of discontinued operations | **-** | **26248** |
| Total current assets | **45996** | **76109** |
| Property and equipment, net | **2015** | **2717** |
| Operating lease right-of-use assets | **630** | **1931** |
| Goodwill | **856** | **1294** |
| Intangible assets, net | **841** | **1178** |
| Deferred income taxes | **4259** | **3322** |
| Other assets | **1834** | **1727** |
| Non-current assets of discontinued operations | **-** | **2003** |
| Total assets | $**56431** | $**90281** |
| **Liabilities and equity** |  |  |
| Current liabilities: |  |  |
| Accounts payable | $**8767** | $**4815** |
| Accrued expenses and other current liabilities | **3533** | **4710** |
| Due to affiliates | **-** | **3205** |
| Customer incentives and deposits | **892** | **1905** |
| Lines of credit and short-term loans | **16082** | **17530** |
| Current portion of long-term debt | **500** | *-* |
| Current operating lease liabilities | **276** | **945** |
| Current liabilities of discontinued operations | **-** | **15455** |
| Total current liabilities | **30050** | **48565** |
| Operating lease liabilities, less current portion | **353** | **986** |
| Long-term debt | **1722** | **310** |
| Non-current liabilities of discontinued operations | **-** | **174** |
| Total liabilities | **32125** | **50035** |
| Commitments and contingencies – See Note 7 |  |  |
| **Equity:** |  |  |
| SPAR Group, Inc. equity |  |  |
| Preferred stock, Series - B. $.01 par value: |  |  |
| Authorized and available shares– 2,000,000 Issued and outstanding shares– 0 at December 31, 2024 and 650,000 at December 31, 2023 |  | **7** |
| Common stock, $.01 par value: |  |  |
| Authorized shares – 47,000,000 Issued and outstanding shares – 23,449,701 at December 31, 2024 and 23,240,959 at December 31, 2023 | **234** | **232** |
| Treasury stock, at cost 1,205,485 shares at December 31, 2024 and 205,485 Shares at December 31, 2023 | **(2075)** | **(285)** |
| Additional paid-in capital | **19886** | **21004** |
| Accumulated other comprehensive (loss) | **(1198)** | **(3341)** |
| Retained earnings | **7459** | **10609** |
| Total SPAR Group, Inc. equity | **24306** | **28226** |
| Non-controlling interest | **-** | **12020** |
| Total equity | **24306** | **40246** |
| Total liabilities and equity | $**56431** | $**90281** |

---

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 35

------

**SPAR Group, Inc. and Subsidiaries** 

**Consolidated Statements of Stockholders' Equity**

*(In thousands)* 

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***Common Stock*** | ***Common Stock*** | ***Series B Preferred Stock*** | ***Series B Preferred Stock*** | ***Treasury Stock*** | ***Treasury Stock*** | ***Additional Paid-In*** | ***Accumulated Other Comprehensive*** | ***Retained*** | ***Non- Controlling*** | ***Total*** |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Capital*** | ***Loss*** | ***Earnings*** | ***Interest*** | ***Equity*** |
| Balance at January 1, 2023 | 22961 | $229 | 855.00 | $9 | 205 | $(285) | $20708 | $(4941) | $6707 | $15634 | $38061 |
| Share-based compensation | *–* | *–* | *–* | *–* | *–* | *–* | 297 | *–* | *–* | *–* | 297 |
| Conversion of Series B convertible preferred stock | 307 | 3 | (205) | (2) |  |  | (1) |  |  |  |  |
| Retirement of Shares | (27) |  |  |  |  |  |  |  |  |  |  |
| Payments to Acquire NCI | *–* |  | *–* |  | *–* |  |  |  |  | (460) | (460) |
| Sale of Joint Ventures | *–* |  | *–* |  | *–* |  |  |  |  | (694) | (694) |
| Distribution to non-controlling investors | *–* |  | *–* |  | *–* |  |  |  |  | (3017) | (3017) |
| Other comprehensive income (loss), net of tax | *–* |  | *–* |  | *–* |  |  | 1600 |  | (317) | 1283 |
| Net income | *–* |  | *–* |  | *–* |  |  |  | 3902 | 874 | 4776 |
| **Balance at December 31, 2023** | **23241** | $**232** | **650** | $**7** | **205** | $**(285)** | $**21004** | $**(3341)** | $**10609** | $**12020** | $**40246** |
| Share-based compensation | *–* | *–* | *–* | *–* | *–* | *–* | 137 | *–* | *–* | *–* | 137 |
| Conversion of Series B convertible preferred stock | 975 | 10 | (650) | (7) |  |  | (1) |  |  |  | 2 |
| Exercise of stock options | 233 | 2 |  |  |  |  | (398) |  |  |  | (396) |
| Purchase of treasury shares | (1000) | (10) |  |  | 1000 | (1790) |  |  |  |  | (1800) |
| Sale of Joint Ventures | *–* |  | *–* |  | *–* |  |  | 3524 |  | (10616) | (7092) |
| Purchase of non-controlling interest | *–* |  | *–* |  | *–* |  | (856) |  |  | (1695) | (2551) |
| Other comprehensive loss | *–* |  | *–* |  | *–* |  |  | (1381) |  | (172) | (1553) |
| Net income (loss) | *–* |  | *–* |  | *–* |  |  |  | (3150) | 463 | (2687) |
| **Balance at December 31, 2024** | **23449** | $**234** | $**-** | $**-** | **1205** | $**(2075)** | $**19886** | $**(1198)** | **7459** | $**-** | $**24306** |

---

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36

------

**SPAR Group, Inc. and Subsidiaries** 

**Consolidated Statements of Cash Flows**

*(In thousands)* 

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** |
|  | **(As Restated)** | **(As Restated)** |
| **Cash flows from operating activities:** |  |  |
| Net income (loss) | $**(2687)** | $4776 |
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities |  |  |
| Depreciation and amortization | **1553** | 1827 |
| Amortization of operating lease assets | **545** | 875 |
| Provision for expected credit losses | **128** | 88 |
| Deferred income tax expense/(benefit) | **(1500)** | 1258 |
| Share based compensation | **137** | 297 |
| (Gain) loss on disposal of business | **(2536)** | 408 |
| Changes in operating assets and liabilities, net of business disposals: |  |  |
| Accounts receivable | **(2089)** | 246 |
| Prepaid expenses and other assets | **416** | (1350) |
| Accounts payable | **7459** | (2010) |
| Operating lease liabilities | **(541)** | (875) |
| Accrued expenses, other current liabilities and customer incentives and deposits | **(1124)** | (1919) |
| Net cash (used in) provided by operating activities of continuing operations | **(239)** | 3621 |
| Net cash (used in) provided by operating activities of discontinued operations | **(426**) | 3200 |
| Net cash (used in) provided by operating activities | **(665)** | 6821 |
| **Cash flows from investing activities:** |  |  |
| Proceeds from sale of joint ventures, net of cash transferred | **7259** | (1067) |
| Purchases of property and equipment and internal use software | **(1129)** | (1194) |
| Net cash provided by (used in) investing activities of continuing operations | **6130** | (2261) |
| Net cash provided by (used in) investing activities of discontinued operations | **3751** | (8) |
| Net cash provided by (used in) investing activities | **9881** | (2269) |
| **Cash flows from financing activities:** |  |  |
| Borrowings under lines of credit | **132133** | 103742 |
| Repayments under lines of credit | **(128347)** | (104845) |
| Payment of notes to seller | **(1843)** |  |
| Repurchase of common stock | **(1800)** |  |
| Distribution to non-controlling investors | **-** | (426) |
| Payments to acquire noncontrolling interests | **(500)** | (473) |
| Proceeds from long-term debt | **15** | 930 |
| Payments on term debt | **-** | (701) |
| Net cash used in financing activities of continuing operations | **(341)** | (1773) |
| Net cash used in financing activities of discontinued operations | **(1315)** | (1247) |
| Net cash used in financing activities | **(1656)** | (3020) |
| Effect of foreign exchange rate changes on cash | **(58)** | (158) |
| Net increase in cash and cash equivalents | **7502** | 1374 |
| Cash and cash equivalents at beginning of year | **10719** | 9345 |
| Cash and cash equivalents at end of year | $**18221** | $10719 |
| Less cash and cash equivalents of discontinued operations | **-** | 6228 |
| Cash and cash equivalents from continuing operations | $**18221** | $4491 |
| **Supplemental disclosure of cash flows information** |  |  |
| Interest paid | $2059 | $2331 |
| Income taxes paid | $277 | $1585 |
| Promissory notes issued to Resource Plus non-controlling interest | $2500 | $- |

---

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 37

------

SPAR Group, Inc. and Subsidiaries

 **Notes to Consolidated Financial Statements**

***1.* Nature of the Business**

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

***2.* Summary of Significant Accounting Policies**

***Principles of Consolidation* **

The Company consolidates its *100%*-owned subsidiaries and all of the *51%*-owned joint ventures in which the Company has a controlling financial interest. All significant intercompany transactions have been eliminated in the consolidated financial statements.

***Restatement of Previously Issued Consolidated Financial Statements***

As described in Note *3, Restatement of Previously Issued Consolidated Financial Statements*, our consolidated financial statements for fiscal years *2024* and *2023* (collectively, the "Affected Periods"), are restated in this Annual Report on Form *10*-K/A (this "Amendment *No.1",* this "Annual Report" or this "Form *10*-K/A") to reflect the corrections related to the recognition of the Company's operations in its Brazilian joint venture as discontinued operations and corrections to certain tables in Note *13,* Segment Information. The restated consolidated financial statements are indicated as "Restated" in the audited consolidated financial statements and accompanying notes, as applicable. See Note *3, Restatement of Previously Issued Consolidated Financial Statements* for further discussion.

***Use of Estimates***

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

 ****

***Segment Reporting***

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

The Company provides similar merchandising, marketing and business services throughout the world and has three reportable regional segments: (i) Americas, which is comprised of United States, Canada, and Mexico; (ii) Asia-Pacific ("APAC"), which is comprised of Japan, China, and India; and (iii) Europe, Middle East and Africa ("EMEA"), which is comprised of South Africa. Certain corporate expenses have been allocated to segments based on each segment's revenue as a percentage of total company revenue. Brazil was previously included in the Americas segment. Due to the reclassification of the Brazilian joint venture as discontinued operations, this component has been removed from the Americas segment reporting.

***Variable Interest Entities***

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

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

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

***Cash Equivalents***

The Company considers all short-term, highly liquid investments with original maturities of *three* months or less at the date of purchase to be cash equivalents. There are *no* cash equivalents at *December 31, 2024* or *2023.*

 ****

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *38*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***2.* Summary of Significant Accounting Policies (continued)**

***Concentration of Credit Risk***

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash balances with high quality financial institutions and periodically evaluates the creditworthiness of such institutions. At times, the Company's cash and cash equivalents balances with individual banking institutions are in excess of insured limits. The Company does *not* believe it is exposed to significant credit risk and the Company has *not* experienced any losses related to its cash and cash equivalents balances. As a result of the reclassification of Brazil to discontinued operations, the Company had one client in *2024* whose revenue represented more than *10%* of consolidated revenue from continuing operations (10.5%, or approximately $17.3 million). The revenue is included in the Americas segment. The Company did not have any clients that represented *10%* or more of the Company's consolidated revenue from continuing operations for the year ended *December 31, 2023.*

***Revenue Recognition***

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

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

***Unbilled Accounts Receivable***

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

 ****

***Allowance for Credit Losses***

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

***Leases***

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

***Property and Equipment, Net***

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

***Internal Use Software***

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

 ****

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *39*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***2.* Summary of Significant Accounting Policies (continued)**

***Impairment of Long-Lived Assets***

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

***Intangible Assets, Net***

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

***Goodwill***

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

***Treasury Stock***

***Noncontrolling Interest***

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

***Advertising and Promotional Expenses***

Advertising and promotional expenses are included in selling, general and administrative expenses within the consolidated statements of operations and comprehensive loss and are expensed when incurred. Advertising and promotional expenses were $41,352 and $9,466 during the years ended *December 31, 2024* and *2023,* respectively.

***Share-Based Compensation***

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *40*

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SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***2.* Summary of Significant Accounting Policies (continued)**

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

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

***Fair Value Measurements***

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

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

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

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

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

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

***Income Taxes***

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

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

***Recently Adopted Accounting Pronouncements***

In *November 2023,* the FASB issued ASU *No. 2023*-*07, Segment Reporting (Topic *280*): Improvements to Reportable Segment Disclosures*, which will require Companies to report additional segment information, including certain significant segment expenses, and permit the disclosure of additional measures of a segment's profit or loss. The guidance was effective for the Company's fiscal year beginning *January 1, 2024* and for interim periods thereafter. The Company adopted ASU *No. 2023*-*07* on *January 1, 2024* and the impact was *not* material.

***Recently Issued Accounting Pronouncements *Not* Yet Adopted***

In *August 2023,* the FASB issued ASU *No. 2023*-*05, Business Combinations – Joint Venture Formations (Subtopic *805*):Recognition and Initial Measurement*, which will require joint ventures to recognize and initially measure its assets and liabilities at fair value upon formation. The guidance will be effective for the Company prospectively for all joint venture formations on or after *January 1, 2025.* Early adoption and retrospective application is permitted. The Company does *not* believe adoption will have a material effect on its consolidated financial statements and related disclosures.

In *December 2023,* the FASB issued ASU *No. 2023*-*09, Income Taxes (Topic *740*):Improvements to Income Tax Disclosures*, which will require Companies to report specific categories of rate-reconciliation, certain details of income taxes paid and of certain information by tax jurisdictions. The guidance will be effective for the Company's fiscal year beginning *January 1, 2025.* The Company does *not* believe adoption will have a material effect on its consolidated financial statements and related disclosures.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *41*

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SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***3.* Restatement of Previously Issued Consolidated Financial Statements (as Restated)**

Subsequent to filing the Company's *December 31, 2024* form *10*-K on *May 16, 2025,* the Company determined that the sale of its Brazilian joint venture (see Note *11, Related Party Transactions*) represented a strategic shift in the Company's operations that will have a significant impact to the financial statements. As such, the Company has restated its *December 31, 2024* and *2023* audited financial statements to reflect the Brazilian joint venture as discontinued operations. The Company has also restated impacted amounts within the accompanying Notes to Consolidated Financial Statements. Below are tables that reconcile the previously filed audited financial statements with the "as restated" financial statements in this Form *10*-K/A:

The following tables reflect the impact of the restatements to the specific line items presented in the Company's previously reported Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended *December 31, 2024* and *2023* (in thousands, except per share data).

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***Year Ended December 31*** | ***Year Ended December 31*** | ***Year Ended December 31*** | ***Year Ended December 31*** | ***Year Ended December 31*** | ***Year Ended December 31*** |
|  | ***2024*** | ***2024*** | ***2024*** | ***2023*** | ***2023*** | ***2023*** |
|  | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| Net revenues | $**196814** | $**(33185)** | $**163629** | $**262747** | $**(74873)** | $**187874** |
| Related party - cost of revenues | **-** | **-** | **-** | **5197** | **-** | **5197** |
| Cost of revenues | **158357** | **(28325)** | **130032** | **202070** | **(63830)** | **138240** |
| Gross profit | **38457** | **(4860)** | **33597** | **55480** | **(11043)** | **44437** |
| Selling, general and administrative expense | **37265** | **(3385)** | **33880** | **43673** | **(7047)** | **36626** |
| (Gain) / Loss on sale of business | **(1348)** | **(1188)** | **(2536)** | **408** | **-** | **408** |
| Depreciation and amortization | **1616** | **(63)** | **1553** | **2001** | **(174)** | **1827** |
| Operating income (loss) | **924** | **(224**) | **700** | **9398** | **(3822)** | **5576** |
| Interest expense (income) | **2222** | **(31)** | **2191** | **1919** | **312** | **2231** |
| Other expense, net | **171** | **-** | **171** | **346** | **-** | **346** |
| Income (loss) before income tax expense | **(1469)** | **(193**) | **(1662)** | **7133** | **(4134)** | **2999** |
| Income tax expense (benefit) | **1218** | **(1074)** | **144** | **2357** | **(1709)** | **648** |
| Income (loss) from continuing operations | **(2687)** | **881** | **(1806)** | **4776** | **(2425)** | **2351** |
| Discontinued Operations |  |  |  |  |  |  |
| Income from discontinued operations |  | **1381** | **1381** |  | **4134** | **4134** |
| Loss on disposal of business |  | **(1188)** | **(1188)** |  |  |  |
| Income tax expense |  | **(1074)** | **(1074)** |  | **(1709)** | **(1709**) |
| Net (loss) income from discontinued operations | **-** | **(881)** | **(881)** | **-** | **2425** | **2425** |
| Net income (loss) | **(2687)** | **-** | **(2687)** | **4776** | **-** | **4776** |
| Net income attributable to non-controlling interest | **(463)** | **-** | **(463)** | **(874)** | **-** | **(874)** |
| Net income (loss) attributable to SPAR Group, Inc. | $**(3150)** | $**-** | $**(3150)** | $**3902** | $**-** | $**3902** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**(0.13)** | $**0.04** | $**(0.09)** | $**0.17** | $**(0.10)** | $**0.07** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**(0.13)** | $**0.04** | $**(0.09)** | $**0.16** | $**(0.10)** | $**0.06** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**(0.04)** | $**(0.04)** | $**-** | $**0.10** | $**0.10** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**(0.04)** | $**(0.04)** | $**-** | $**0.10** | $**0.10** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. | $**(0.13)** | $**-** | $**(0.13)** | $**0.17** | $**-** | $**0.17** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. | $**(0.13)** | $**-** | $**(0.13)** | $**0.16** | $**-** | $**0.16** |
| Weighted-average common shares outstanding – basic | **23555** | **-** | **23555** | **23333** | **-** | **23333** |
| Weighted-average common shares outstanding – diluted | **23729** | **-** | **23729** | **24455** | **-** | **24455** |
| Net income (loss) | $**(2687)** | $**-** | $**(2687)** | $**4776** | $**-** | $**4776** |
| Other comprehensive (loss) income |  |  |  |  |  |  |
| Foreign currency translation adjustments | **(1553)** |  | **(1553)** | **1283** |  | **1283** |
| Comprehensive income (loss) | **(4240)** | **-** | **(4240)** | **6059** | **-** | **6059** |
| Comprehensive income attributable to non-controlling interest | **(172)** | **-** | **(172)** | **(317)** | **-** | **(317)** |
| Comprehensive income (loss) attributable to SPAR Group, Inc. | $**(4412)** | $**-** | $**(4412)** | $**5742** | $**-** | $**5742** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *42*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

The following tables reflect the impact of the restatements to the specific line items presented in the Company's previously reported Consolidated Balance Sheets as of *December 31, 2023 (*in thousands, except share and per share data).

---

| | | | |
|:---|:---|:---|:---|
|  | ***December 31, 2023*** | ***December 31, 2023*** | ***December 31, 2023*** |
|  | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| **Assets** |  |  |  |
| Current assets: |  |  |  |
| Cash and cash equivalents | $**10719** | $**(6228)** | $**4491** |
| Accounts receivable, net | **59776** | **(16670)** | **43106** |
| Prepaid expenses and other current assets | **5614** | **(3350)** | **2264** |
| Current assets of discontinued operations | **-** | **26248** | **26248** |
| Total current assets | **76109** | **-** | **76109** |
| Property and equipment, net | **2871** | **(154)** | **2717** |
| Operating lease right-of-use assets | **2323** | **(392)** | **1931** |
| Goodwill | **1382** | **(88)** | **1294** |
| Intangible assets, net | **1180** | **(2)** | **1178** |
| Deferred income taxes, net | **4687** | **(1365)** | **3322** |
| Other assets | **1729** | **(2)** | **1727** |
| Non-current assets of discontinued operations | **-** | **2003** | **2003** |
| Total assets | $**90281** | $**-** | $**90281** |
| **Liabilities and stockholders' equity** |  |  |  |
| Current liabilities: |  |  |  |
| Accounts payable | $**9488** | $**(4673)** | $**4815** |
| Accrued expenses and other current liabilities | **15274** | **(10564)** | **4710** |
| Due to affiliates | **3205** | **-** | **3205** |
| Customer incentives and deposits | **1905** | **-** | **1905** |
| Lines of credit and short-term loans | **17530** | **-** | **17530** |
| Current portion of operating lease liabilities | **1163** | **(218)** | **945** |
| Current liabilities of discontinued operations | **-** | **15455** | **15455** |
| Total current liabilities | **48565** | **-** | **48565** |
| Operating lease liabilities, net of current portion | **1160** | **(174)** | **986** |
| Long-term debt | **310** | **-** | **310** |
| Non-current liabilities of discontinued operations |  | **174** | 174 |
| Total liabilities | **50035** | **-** | **50035** |
| Commitments and contingencies – See Note 7 |  |  |  |
| **Stockholders' equity:** |  |  |  |
| Preferred stock, Series - B. $.01 par value: |  |  |  |
| Authorized and available shares– 2,000,000 Issued and outstanding shares– 0 at December 31, 2024 and 650,000 at December 31, 2023 | **7** | **-** | **7** |
| Common stock, $.01 par value: |  |  |  |
| Authorized shares – 47,000,000 Issued and outstanding shares – 23,449,701 at December 31, 2024 and 23,240,959 at December 31, 2023 | **232** | **-** | **232** |
| Treasury stock, at cost 1,205,485 shares at December 31, 2024 and 205,485 Shares at December 31, 2023 | **(285)** | **-** | **(285)** |
| Additional paid-in capital | **21004** | **-** | **21004** |
| Accumulated other comprehensive (loss) | **(3341)** | **-** | **(3341)** |
| Retained earnings | **10609** | **-** | **10609** |
| Total stockholders' equity attributable to SPAR Group, Inc. | **28226** | **-** | **28226** |
| Non-controlling interest | **12020** | **-** | **12020** |
| Total stockholders' equity | **40246** | **-** | **40246** |
| Total liabilities and stockholders' equity | $**90281** | $**-** | $**90281** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *43*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

The following tables reflect the impact of the restatement to the specific line items presented in the Company's previously reported Consolidated Statements of Cash Flows for the years ended *December 31, 2024* and *2023* (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31, 2024*** | ***Year Ended December 31, 2024*** | ***Year Ended December 31, 2024*** |
|  | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| **Cash flows from operating activities:** |  |  |  |
| Net loss | $**(2687)** | $**-** | $**(2687)** |
| Adjustments to reconcile net loss to net cash used in operating activities |  |  |  |
| Depreciation and amortization | **1616** | **(63)** | **1553** |
| Amortization of operating lease assets | **545** | **-** | **545** |
| Provision for expected credit losses | **128** | **-** | **128** |
| Deferred income tax benefit | **(1500)** | **-** | **(1500)** |
| Share based compensation | **137** | **-** | **137** |
| Gain on disposal of business | **(1348)** | **(1188)** | **(2536)** |
| Changes in operating assets and liabilities, net of business disposals: |  |  |  |
| Accounts receivable | **(5656)** | **3567** | **(2089)** |
| Prepaid expenses and other assets | **(2375)** | **2791** | **416** |
| Accounts payable | **6958** | **501** | **7459** |
| Operating lease liabilities | **(541)** | **-** | **(541)** |
| Accrued expenses, other current liabilities and customer incentives and deposits | **4058** | **(5182)** | **(1124)** |
| Net cash (used in) provided by operating activities of continuing operations | **(665)** | **426** | **(239)** |
| Net cash used in operating activities of discontinued operations | **-** | **(426)** | **(426)** |
| Net cash used in operating activities | **(665)** | **-** | **(665)** |
| **Cash flows from investing activities:** |  |  |  |
| Proceeds from sale of joint ventures, net of cash transferred | **11020** | **(3761**) | **7259** |
| Purchases of property and equipment and internal use software | **(1139)** | **10** | **(1129)** |
| Net cash provided by (used in) investing activities of continuing operations | **9881** | **(3751**) | **6130** |
| Net cash provided by investing activities of discontinued operations | **-** | **3751** | **3751** |
| Net cash provided by investing activities | **9881** | **-** | **9881** |
| **Cash flows from financing activities:** |  |  |  |
| Borrowings under lines of credit | **132133** | **-** | **132133** |
| Repayments under lines of credit | **(128347)** | **-** | **(128347)** |
| Payment of notes to seller | **(1843)** | **-** | **(1843)** |
| Repurchase of common stock | **(1800)** | **-** | **(1800)** |
| Distribution to non-controlling investors | **(1315)** | **1315** | **-** |
| Payments to acquire noncontrolling interests | **(500)** | **-** | **(500)** |
| Proceeds from long-term debt | **15** | **-** | **15** |
| Net cash (used in) provided by financing activities of continuing operations | **(1657)** | **1315** | **(341)** |
| Net cash used in financing activities of discontinued operations | **-** | **(1315)** | **(1315)** |
| Net cash used in financing activities | **(1657)** | **-** | **(1656)** |
| Effect of foreign exchange rate changes on cash | **(58)** | **-** | **(58)** |
| Net increase in cash and cash equivalents | **7502** | **-** | **7502** |
| Cash and cash equivalents at beginning of year | **10719** | **-** | **10719** |
| Cash and cash equivalents at end of year | $**18221** | $**-** | $**18221** |
| Less cash and cash equivalents of discontinued operations | **-** | **-** | **-** |
| Cash and cash equivalents from continuing operations | $**18221** | $**-** | $**18221** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *44*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

---

| | | | |
|:---|:---|:---|:---|
|  | ***Year Ended December 31, 2023*** | ***Year Ended December 31, 2023*** | ***Year Ended December 31, 2023*** |
|  | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| **Cash flows from operating activities:** |  |  |  |
| Net income | $**4776** | $**-** | $**4776** |
| Adjustments to reconcile net income to net cash provided by operating activities |  |  |  |
| Depreciation and amortization | **2001** | **(174)** | **1827** |
| Amortization of operating lease assets | **875** | **-** | **875** |
| Provision for expected credit losses | **88** | **-** | **88** |
| Deferred income tax expense | **921** | **337** | **1258** |
| Share based compensation | **297** | **-** | **297** |
| Loss on disposal of business | **408** | **-** | **408** |
| Changes in operating assets and liabilities, net of business disposals: |  |  |  |
| Accounts receivable | **3232** | **(2986)** | **246** |
| Prepaid expenses and other assets | **2082** | **(3432)** | **(1350)** |
| Accounts payable | **(2960)** | **950** | **(2010)** |
| Operating lease liabilities | **(875)** | **-** | **(875)** |
| Accrued expenses, other current liabilities and customer incentives and deposits | **(4024)** | **2105** | **(1919)** |
| Net cash (used in) provided by operating activities of continuing operations | **6821** | **(3200)** | **3621** |
| Net cash provided by operating activities of discontinued operations | **-** | **3200** | **3200** |
| Net cash provided by operating activities | **6821** | **-** | **6821** |
| **Cash flows from investing activities:** |  |  |  |
| Proceeds from sale of joint ventures, net of cash transferred | **(1027)** | **(40)** | **(1067)** |
| Purchases of property and equipment and internal use software | **(1242)** | **48** | **(1194)** |
| Net cash provided by (used in) investing activities of continuing operations | **(2269)** | **8** | **(2261)** |
| Net cash used in investing activities of discontinued operations | **-** | **(8)** | **(8)** |
| Net cash used in investing activities | **(2269)** | **-** | **(2269)** |
| **Cash flows from financing activities:** |  |  |  |
| Borrowings under lines of credit | **103742** | **-** | **103742** |
| Repayments under lines of credit | **(104845)** | **-** | **(104845)** |
| Payment of notes to seller | **-** | **-** | **-** |
| Repurchase of common stock | **-** | **-** | **-** |
| Distribution to non-controlling investors | **(1673)** | **1247** | **(426)** |
| Payments to acquire noncontrolling interests | **(473)** | **-** | **(473)** |
| Proceeds from long-term debt | **930** |  | **930** |
| Payments on term debt | **(701)** | **-** | **(701)** |
| Net cash (used in) provided by financing activities of continuing operations | **(3020)** | **1247** | **(1773)** |
| Net cash used in financing activities of discontinued operations | **-** | **(1247)** | **(1247)** |
| Net cash used in financing activities | **(3020)** | **-** | **(3020)** |
| Effect of foreign exchange rate changes on cash | **(158)** | **-** | **(158)** |
| Net increase in cash and cash equivalents | **1374** | **-** | **1374** |
| Cash and cash equivalents at beginning of year | **9345** | **-** | **9345** |
| Cash and cash equivalents at end of year | $**10719** | $**-** | $**10719** |
| Less cash and cash equivalents of discontinued operations | **-** | **6228** | **6228** |
| Cash and cash equivalents from continuing operations | $**10719** | $**(6228)** | $**4491** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *45*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

Amounts included in the consolidated financial statements for discontinued operations are detailed below:

---

| | | |
|:---|:---|:---|
| ***Summary of Results from Discontinued Operations*** | ***Summary of Results from Discontinued Operations*** | ***Summary of Results from Discontinued Operations*** |
|  | ***Twelve Months Ended December 31,*** | ***Twelve Months Ended December 31,*** |
| **$ in thousands** | ***2024*** | ***2023*** |
| Net revenues | $33185 | $74873 |
| Cost of revenues | 28325 | 63830 |
| Gross profit | 4860 | 11043 |
| Selling, general, and administrative expenses | 3385 | 7047 |
| Loss on disposal of business | 1188 |  |
| Depreciation and amortization | 63 | 174 |
| Income from operations before tax | 224 | 3822 |
| Income tax expense | 1074 | 1709 |
| Interest expense (income) | 31 | (312) |
| Income (loss) from discontinued operations, net of tax | $(881) | $2425 |

---

---

| | | |
|:---|:---|:---|
| ***Summary of assets and liabilities of discontinued operations*** | ***Summary of assets and liabilities of discontinued operations*** | ***Summary of assets and liabilities of discontinued operations*** |
| **$ in thousands** | ***December 31, 2024*** | ***December 31, 2023*** |
| Assets |  |  |
| Current Assets: |  |  |
| Cash and cash equivalents | $- | $6228 |
| Accounts receivable, net |  | 16670 |
| Prepaid expenses and other current assets |  | 3350 |
| Total current assets |  | 26248 |
| Property and equipment, net |  | 154 |
| Operating lease right-of-use assets |  | 392 |
| Goodwill |  | 88 |
| Intangible assets, net |  | 2 |
| Deferred income taxes, net |  | 1365 |
| Other assets |  | 2 |
| Total assets |  | 28251 |
| Liabilities: |  |  |
| Current Liabilities: |  |  |
| Accounts payable |  | 4673 |
| Accrued expenses and other current liabilities |  | 10564 |
| Current portion of operating lease liabilities |  | 218 |
| Total current liabilities |  | 15455 |
| Operating lease liabilities, net of current portion |  | 174 |
| Total liabilities | $- | $15629 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *46*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

While preparing this Form *10*-K/A, management identified a separate, unrelated presentation error in the Segment Information footnote involving *four* tables that were *not* accurately reported. Below are restated segment disclosures that correct the presentation error and the restatement of discontinued operations:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Year Ended December 31*** | ***Year Ended December 31*** | ***Year Ended December 31*** |  |
|  | ***2024*** | ***2024*** | ***2024*** |  |
| **$ in thousands** | ***As Previously Reported*** | ***Reclass Adjustment*** | ***Discontinued Operations Adjustment*** | ***Restated*** |
| Interest expense |  |  |  |  |
| Americas | $**65** | $**2092** | $**(31)** | $**2126** |
| Asia - Pacific | **2157** | **(2092)** | **-** | **65** |
| EMEA |  |  |  |  |
| Total Interest expense | $**2222** | $**-** | $**(31)** | $**2191** |
|  | ***As Previously Reported*** | ***Reclass Adjustment*** | ***Discontinued Operations Adjustment*** | ***Restated*** |
| Income (loss) before income tax expense |  |  |  |  |
| Americas | $**(4990)** | $**5737** | $**(193**) | $**554** |
| Asia - Pacific | **6338** | **(7402)** | **-** | **(1064)** |
| EMEA | **(2817)** | **1665** | **-** | **(1152)** |
| Total Income (loss) before income tax expense | $**(1469)** | $**-** | $**(193**) | $**(1662)** |
|  | ***As Previously Reported*** | ***Reclass Adjustment*** | ***Discontinued Operations Adjustment*** | ***Restated*** |
| Net income (loss) |  |  |  |  |
| Americas | $**(6233)** | $**5737** | $**881** | $**385** |
| Asia - Pacific | **6402** | **(7402)** | **-** | **(1000)** |
| EMEA | **(2856)** | **1665** | **-** | **(1191)** |
| Total Net income (loss) | $**(2687)** | $**-** | $**881** | $**(1806)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *47*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***4.* Supplemental Balance Sheet Information**

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
| Accounts receivable, net, consists of the following: | ***2024*** | ***2023*** |
| *(in thousands)* |  |  |
| Trade | $**12059** | $37692 |
| Unbilled | **9284** | 3768 |
| Non-trade | **3834** | 3107 |
| Gross accounts receivable | **25177** | 44567 |
| Less allowance for credit losses | **(411** | (1461) |
| Accounts Receivable, net | $**24766** | $43106 |

---

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
| Activity in allowance for credit losses | ***2024*** | ***2023*** |
| *(in thousands)* |  |  |
| Beginning balance in allowance for credit losses | $**1461** | $1654 |
| Current provision for expected credit losses | **128** | 261 |
| Allowances associated with businesses sold | **(12** | (281) |
| Write-offs charged against the allowance | **(1166** | (126) |
| Recoveries of amounts previously written off | **-** | (47) |
| Ending balance in allowance for credit losses | $**411** | $1461 |

---

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
| Property and equipment consist of the following: | ***2024*** | ***2023*** |
| *(in thousands)* |  |  |
| Equipment | $**4060** | $4513 |
| Furniture and fixtures | **591** | 2293 |
| Leasehold improvements | **384** | 366 |
| Capitalized internal use software costs | **18967** | 18113 |
|  | **24002** | 25285 |
| Less accumulated depreciation and amortization | **(21987** | (22568) |
| Property and equipment, net | $**2015** | $2717 |

---

Depreciation expense from continuing operations (including amortization of internal use software and intangible assets as described below) was $1.6 million and $1.8 million for the years ended *December 31, 2024* and *2023,* respectively. The Company capitalized $1.0 million and $1.0 million of costs related to internal use software in the years ended *December 31, 2024* and *2023.* The Company recognized approximately $1.3 million and $1.1 million of amortization expense related to internal use software for the years ended *December 31, 2024* and *2023,* respectively.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Americas*** | ***Asia-Pacific*** |  | ***EMEA*** | ***Total*** |
| Goodwill |  |  |  |  |  |
| *(in thousands)* |  |  | |  |  |
| **Balance at January 1, 2023** |  |  |  |  |  |
| Aggregate goodwill acquired | $1270 |  |  | 438 | 1708 |
| Change in goodwill due to impact of foreign currency | 7 |  |  |  | 7 |
| Impact of Discontinued Operations | (88) |  |  |  | (88) |
| Sale of business | (333) |  |  |  | (333) |
| **Balance at December 31, 2023** | **856** | **-** |  | **438** | **1294** |
| Sale of business |  |  |  | (438) | (438) |
| **Balance at December 31, 2024** | $**856** | $**-** |  | $**-** | $**856** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *48*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***4.* Supplemental Balance Sheet Information (continued)**

***Intangible Assets***

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
| Intangible assets consist of the following: | ***2024*** | ***2023*** |
| *(in thousands)* |  |  |
| Customer contracts and lists | $**-** | $3011 |
| Trade names | **900** | 900 |
| Patents | **870** | 870 |
| Gross intangible assets | **1770** | **4781** |
| Less accumulated amortization | **(929** | (3603) |
| Intangible assets, net | $**841** | $1178 |

---

The decline in gross intangible assets of $3 million is due to the sale of the remaining international Joint Ventures.

The Company is amortizing its intangible assets over lives ranging from 5 to 25 years. Amortization expense for the years ended *December 31, 2024* and *2023* was approximately $0.2 million and $0.4 million, respectively.

The annual amortization for each of the following years succeeding *December 31, 2024* is summarized as follows (in thousands):

---

| | | |
|:---|:---|:---|
| *(in thousands)* |  | |
| Year | *Amount* |  |
| 2025 | $133 |  |
| 2026 | 133 |  |
| 2027 | 36 |  |
| 2028 | 36 |  |
| 2029 | 36 |  |
| Thereafter | 467 |  |
| Total | $841 |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** | ***December 31,*** |  |
| Accrued expenses and other current liabilities: | ***2024*** |  | ***2023*** |  |
| *(in thousands)* |  | |  | |
| Taxes payable | $**137** |  | $584 |  |
| Accrued salaries and wages | **1644** |  | 995 |  |
| Accrued accounting and legal expenses | **-** |  | 0 |  |
| Accrued third party labor | **131** |  | 1477 |  |
| Other | **1621** |  | 1654 |  |
| Accrued expenses and other current liabilities | $**3533** |  | $4710 |  |

---

***5.* Debt**

***North Mill Capital Credit Facility***

The Company, through SPAR Marketing Force, Inc. ("SMF") and SPAR Canada Company ULC ("SCC", and collectively with SMF, the "NM Borrowers"), has a secured revolving credit facility in the United States (the "US Revolving Credit Facility") and Canada (the "Canada Revolving Credit Facility", and collectively with the US Revolving Credit Facility, the "NM Credit Facility") with North Mill Capital, LLC, d/b/a SLR Business Credit ("NM").In order to obtain, document and govern the NM Credit Facility, SMF, SCC, SGRP and certain of SGRP's direct and indirect subsidiaries in the United States and Canada (including SMF and SCC as borrowers and SGRP as a guarantor, collectively, the "NM Loan Parties") entered into a Loan and Security Agreement with NM dated as of *April 10, 2019,* which, as amended from time to time (as amended, the "NM Loan Agreement"), governs the NM Credit Facility. Pursuant to the NM Loan Agreement, the NM Borrowers agreed to reimburse NM for legal and documentation fees incurred in connection with the NM Loan Agreement and such amendments.

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *49*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***5.* Debt (continued)**

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

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

The Restated US Note and Restated Canadian Note (together, the "NM Notes") and the NM Loan Agreement together require the NM Borrowers to pay interest on the loans thereunder equal to: (i) the Prime Rate designated from time to time by Wells Fargo Bank; plus (ii) *one* and *nine*-tenths percentage points (1.90%) or an aggregate minimum of 6.75% per annum. In addition, the NM Borrowers are paying a facility fee to NM in an amount equal to: (i) for the year commencing on *October 10, 2022,* approximately $0.1 million plus 0.80% of the amount of any advances other than under the US Revolving Credit Facility plus an additional facility fee of $15,000 for every incremental *$1.0* million of loan balance in excess of *$21.0* million, and (ii) for the year commencing on *October 10, 2023,* approximately $0.2 million plus 0.80% of the amount of any advances other than under the US Revolving Credit Facility plus an additional facility fee of $15,000 for every incremental *$1.0* million of loan balance in excess of *$21.0* million. For the Sixth Modification Agreement, the NM Borrowers paid NM a fee of approximately $28,000 for the US and $3,000 for Canada.

As of *December 31, 2024,* the aggregate interest rate was 9.40% per annum and the aggregate outstanding loan balance was approximately $16.1 million, which is included within lines of credit and short-term loans in the consolidated balance sheets. The aggregate outstanding loan balance is divided between the US Revolving Credit Facility and the Canada Revolving Credit Facility as follows: (i) the outstanding loan balance under the US Revolving Credit Facility was approximately $14.8 million; and (ii) the outstanding loan balance under the Canada Revolving Credit Facility was approximately $1.3 million.

The NM Credit Facility contains certain financial and other restrictive covenants and also limits certain expenditures by the NM Loan Parties, including maintaining a positive trailing EBITDA for each the NM Borrowers (i.e., SMF and SCC) and imposes limits on all of the NM Loan Parties (including SGRP) on non-ordinary course payments and transactions, incurring or guaranteeing indebtedness, increases in executive, officer or director compensation, capital expenditures and certain other investments. The NM Loan Parties were in compliance with such covenants as of *December 31, 2024.* The obligations of the NM Borrowers are secured by the receivables and other assets of the NM Borrowers and substantially all of the assets of the other NM Loan Parties, however, the obligations are *not* secured by any equity in, financial asset respecting or asset of any Excluded Subsidiary meaning each of the following direct or indirect subsidiaries of SGRP: (i) Resource Plus of North Florida, Inc. ("Resource Plus"), Mobex of North Florida, Inc., and Leasex, LLC, and their respective subsidiaries; (ii) NMS Retail Services ULC, which is an inactive Nova Scotia ULC; (iii) SPAR Group International, Inc.; (iv) SPAR FM Japan, Inc.; (v) SPAR International, Ltd.; (vi) each other subsidiary formed outside of the United States or Canada; and (vii) any other entity in which any such subsidiary is a partner, joint venture or other equity investor.

***Resource Plus – Seller Notes***

On *April 18, 2024,* the Company entered into a Securities Purchase Agreement to buy from Mr. Richard Justus the remaining minority joint venture interests of Resource Plus and its sister companies, Mobex of North Florida, Inc., and Leasex, LLC. Based on the terms set in the original joint venture agreement, the Company will pay a total of $3 million in annual payments over a *five*-year period. $0.25 million was paid within the *five* business days of closing, and the remaining $2.75 million will be paid pursuant to a Secured Promissory Note. The agreement resulted in the termination of all relevant shareholder and operating agreements, although specific confidentiality obligations remain effective for *three* years post-closing and specific mutual releases were provided. The purchase was closed and completed on *May 1, 2024.* As of *December 31, 2024,* $0.5 million has been paid and the remaining $2.2 million Promissory Note (net of discount) is outstanding and is reported on the balance sheet in current portion of long-term debt and long-term debt.

***International Credit Facilities***

In *December 2020,* SPAR (Shanghai) Marketing Management Company Ltd. ("SPAR China") secured a loan with Industrial Bank for 2.0 million Chinese Yuan. The loan was renewed in *December 22 2023,* with an expiration date in *December 2024.* In *December 2021,* SPAR China secured a loan with Industrial and Commercial Bank of China for 2.0 million Chinese Yuan. The loan was paid in *July 2023* and a new loan was secured in *November 2023* for 2.0 million Chinese Yuan with expiration date of *November 2024.* The company's controlling interest in the China JV was sold in the *second* quarter of *2024.* This debt was deconsolidated at that time and remained with Chinese company. The Company *no* longer has any interest in SPAR China.

In *March 2022,* SGRP Meridian (Pty), Ltd. secured loans with Investec Bank Ltd, for 105 million South African Rand which expires *July 2025.* This loan is secured by the company's available cash and Accounts Receivable and is being repaid in monthly installments commensurate with an amortization schedule. The interest rate of 11.75% is calculated based on the South African Prime rate. As part of the agreement, SGRP Meridian is subject to covenant restrictions that mandate minimum levels of Debt to EBITDA, Asset and Accounts Receivable balances, and coverage ratios. The Company's controlling interest in the South Africa JV was sold in the *first* quarter of *2024.* This debt was deconsolidated at that time and remained with South African company. The Company *no* longer has any interest in SGRP Meridian (Pty), Ltd.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *50*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***5.* Debt (continued)**

***Summary of the Company***'***s lines of credit and short-term loans (in thousands):***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Interest Rate as of*** | ***Balance as of*** | ***Interest Rate as of*** | ***Balance as of*** |
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2023*** | ***December 31, 2023*** |
| USA - North Mill Capital | 9.40% | $16082 | 10.40% | $12475 |
| USA - Resource Plus Sellers | 4.30% | 500 | 1.85% | 1120 |
| South Africa - Investec Bank Ltd. | *N/A* |  | 11.75% | 3369 |
| China- Industrial Bank | *N/A* |  | 3.56% | 283 |
| China- Industrial and Commercial Bank of China | *N/A* |  | 4.00% | 283 |
| Total |  | $16582 |  | $17530 |

---

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

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

 

---

| | | |
|:---|:---|:---|
|  | *December 31, 2024* | *December 31, 2023* |
| <u>Unused Availability:</u> |  |  |
| United States | $13310 | $6525 |
| South Africa | *N/A* | 2064 |
| Total Unused Availability | $13310 | $8589 |

---

***Summary of the Company's Long-term debt (dollars in thousands):***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Interest Rate*** | ***Balance*** | ***Interest Rate*** | ***Balance*** |
|  | ***as of*** | ***as of*** | ***as of*** | ***as of*** |
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2023*** | ***December 31, 2023*** |
| USA - Resource Plus Seller Notes | 4.30% | $1722 | *N/A* | $- |
| South Africa - Investec Bank Ltd. | *N/A* |  | 11.75% | 310 |
|  |  | $**1722** |  | $**310** |

---

***6.* Income Taxes**

Beginning in *2018,* the Tax Cuts and Jobs Act (the <u>"Act</u>") included *two* (*2*) new U.S. corporate tax provisions, the global intangible low-taxed income regime ("<u>GILTI</u>") and the base-erosion and anti-abuse tax ("<u>BEAT</u>"). The GILTI provision requires the Company to include in its U.S. income tax return non-U.S. subsidiary earnings in excess of an allowable return on the non-U.S. subsidiary's tangible assets. The Company has elected to treat GILTI as a period cost. The Company evaluated the GILTI provision resulting in a financial statement impact of approximately $0.28 million and $0 for the years ended *December 31, 2024* and *December 31, 2023,* respectively. The Company is below the *three*-year average gross receipts threshold for BEAT to apply.

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

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** |
| Domestic | $668 | $(1424) |
| Foreign | (2330) | 4423 |
| Total | $(1662) | $2999 |

---

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

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** |
| Current: |  |  |
| Federal | $21 | $(54) |
| Foreign from continuing operations | 1401 | 826 |
| State | 222 | 150 |
| Deferred: |  |  |
| Federal | (1196) | (145) |
| Foreign | (114) | (133) |
| State | (190) | 4 |
| Net expense | $144 | $648 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *51*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***6.* Income Taxes (continued)**

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***Rate*** | ***2023*** | ***Rate*** |
| Provision for income taxes at federal statutory rate | $(349) | 21.0% | $630 | 21.0% |
| State income taxes, net of federal benefit | 32 | (1.9)% | 123 | 4.1% |
| Permanent differences | (136) | 8.2% | 91 | 3.0% |
| Section 162(m) adjustment | 245 | (14.7)% | 55 | 1.8% |
| Return to provision adjustment | (10) | 0.6% | (339) | (11.3)% |
| Foreign tax rate differential | (288) | 17.3% | 277 | 9.2% |
| GILTI tax | 284 | (17.1)% |  |  |
| Sale of membership interest |  | 0.0% | 149 | 5.0% |
| Sale of foreign entities | (369) | 22.2% |  |  |
| Transaction costs | 118 | (7.1)% |  |  |
| Withholding tax | 1046 | (62.9)% |  |  |
| Subpart F Income | 213 | (12.8)% |  |  |
| Foreign tax credit | (556) | 33.5% |  |  |
| Foreign disregarded income | 292 | (17.6)% |  |  |
| Change in valuation allowance | (2) | 0.1% | (268) | (8.9)% |
| Discontinued operations SG&A allocation | (430) | 25.9% | (101) | (3.4)% |
| Other | 54 | (3.3)% | 31 | 1.0% |
| Net expense | $144 | (8.7)% | $648 | 21.6% |

---

---

| | | |
|:---|:---|:---|
| Deferred taxes from continuing operations consist of the following (in thousands): | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
| Deferred tax assets: |  |  |
| Net operating loss carry forwards | $389 | $1656 |
| Capital loss carry forwards |  | 58 |
| Federal research and development credit | 164 | 240 |
| Foreign withholding tax | 872 | 316 |
| Accrued payroll | 4 | 155 |
| Transaction costs | 753 | **-** |
| Allowance for credit losses and other receivable | 93 | 63 |
| Share-based compensation expense | 258 | 253 |
| Business interest limitation | 889 | 519 |
| Operating lease liability | 128 | 504 |
| Capitalized software development costs | 277 | 63 |
| Other | 891 | 620 |
| Total deferred tax assets, gross | 4718 | 4447 |
| Valuation allowance |  | (242) |
| Total deferred tax assets | 4718 | 4205 |
| Deferred tax liabilities: |  |  |
| Goodwill & Intangible assets of subsidiaries | 291 | 324 |
| Right to use asset | 127 | 504 |
| Depreciation | 41 | 55 |
| Total deferred tax liabilities | 459 | 883 |
| Net deferred income taxes | $4259 | $3322 |

---

As of *December 31, 2024,* the Company's deferred tax assets were primarily the result of the business interest limitation and transaction costs. The Company has gross U.S. Federal NOL carryforwards of $1.5 million and tax effected amount of $0.3 million. The $0.3 million U.S Federal NOL carryforward has *no* expiration date. The Company has a U.S. State NOL deferred tax asset of $0.1 million of varying expiration dates from *2024* to *2041.* The Company has $0.1 million of US Research and Development credits with expiration dates ranging from *2031* to *2035.* The Company has $0.9 million of US foreign tax credits with expiration dates ranging from *2033* to *2034.*

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing net deferred tax assets. U.S.-based net deferred tax assets are approximately $4.2 million. Management continues to monitor its operating performance and currently believes that the achievement of the required future taxable income necessary to realize these deferred assets is more likely than *not.* Key considerations in this assessment include our expectation of continued improvements in U.S. operating results and the period of time available to generate future taxable income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *52*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***6.* Income Taxes (continued)**

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

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** |
| Beginning balance | $54 | $46 |
| Additions based on tax positions related to the current year | 60 | 8 |
| Ending balance | $114 | $54 |

---

The provision for income taxes includes the impact of uncertain tax position reserves and changes to reserves that are considered appropriate. As of *December 31, 2024,* included in the balance of uncertain tax position reserves are $0.11 million of reserves that, if recognized, would affect the effective rate of income from continuing operations. Interest and penalties that the tax law requires to be paid on the underpayment of taxes should be accrued on the difference between the amount claimed or expected to be claimed on the return and the tax benefit recognized in the financial statements. The Company's policy is to record this interest and penalties as additional tax expense. We accrued penalties of $0.8 thousand and interest of $3 thousand during *2024* and in total, as of *December 31, 2024* recognized a liability related to the uncertain tax position reserves noted above for penalties of $16 thousand and interest of $20 thousand. During *2023,* we accrued penalties of $1 thousand and interest of $0.4 thousand and in total, as of *December 31, 2023,* recognized a liability of penalties of $15 thousand and interest of $17 thousand. Management does *not* expect in the next *12* months that the uncertain tax position reserves will significantly increase or decrease. Consistent with that expectation, interest and penalties related to the uncertain tax position reserve should *not* significantly increase.

Details of the Company's tax reserves at *December 31, 2024* are outlined in the table below (in thousands). These reserves are presented on the balance sheet within accrued expenses and other current liabilities.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | *Taxes* | *Interest* | *Penalty* | *Total Tax Liability* |
| Domestic |  |  |  |  |
| State | $114 | $20 | $16 | $150 |
| Federal |  |  |  |  |
| International |  |  |  |  |
| Total reserve | $114 | $20 | $16 | $150 |

---

In management's view, the Company's tax reserves at *December 31, 2024* and *2023,* for potential domestic state tax liabilities were sufficient.

SPAR and its subsidiaries file numerous consolidated, combined and separate company income tax returns in the U.S. Federal jurisdiction and in many U.S. states and foreign jurisdictions. With few exceptions, SPAR is subject to U.S. Federal, state and local income tax examinations for the years *2021* through the present. Foreign entities are subject to tax audits that vary based on jurisdiction. However, tax authorities have the ability to review years prior to the position taken by the Company to the extent that SPAR utilized tax attributes carried forward from those prior years.

***7.* Commitments and Contingencies**

***Legal Matters***

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

***8.* Common Stock**

As of *December 31, 2024,* the Corporation's certificate of incorporation authorized the Corporation to issue 47,000,000 shares of common stock, par value $0.01 per share. The voting, dividend and liquidation rights of the holders of the Corporation's common stock are subject to and qualified by the rights, powers and preferences of the holders of the Corporation's Series B convertible preferred stock. Each share of the Corporation's common stock is entitled to *one* vote on all matters submitted to a vote of the Corporation's stockholders. Holders of the Corporation's common stock are entitled to receive dividends as *may* be declared by the Corporation's board of directors (the "Board"), if any, subject to the preferential dividend rights of the Corporation's Series B convertible preferred stock. No cash dividends had been declared or paid during the periods presented.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *53*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***9.* Preferred Stock**

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

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

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

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

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

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

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

***10.* Retirement Plans** 

The Company has a *401*(k) Profit Sharing Plan covering substantially all eligible domestic employees. The Company made discretionary contributions of $0.1 million and $0.1 million for the years ended *December 31, 2024* and *2023,* respectively.

***11.* Related Party Transactions** 

***Domestic Related Party Transactions***

On *December 1, 2021,* the Corporation entered into the Agreement for Marketing and Advertising Services (the "WB Agreement") with WB Marketing, Inc. (the "Agent", and together with the Company, the "Parties"). The Agent is an entity owned and controlled by Mrs. Jean Matacunas who is the wife of President and Chief Executive Officer, Michael R. Matacunas. Mr. Matacunas is also a minority owner of the Agent. The service fees paid to WB Marketing for the years ended *December 31, 2024* and *2023,* were $104,000 and $103,000, respectively.

Prior to *December 31, 2023,* National Merchandising Services, LLC ("<u>NMS</u>"), was a consolidated domestic subsidiary of the Company owned jointly by SGRP and by National Merchandising of America, Inc. ("<u>NMA</u>"). Mr. Edward Burdekin was the Chief Executive Officer and President and a director of NMS and also an executive officer and director of NMA. Ms. Andrea Burdekin, Mr. Burdekin's wife, was the sole stockholder and also a director of both NMA and NMS. NMA was a related party of the Company but is *not* under the control of or consolidated with the Company. Mr. Burdekin's wife also owns National Remodel & Setup Services, LLC ("NRSS"). During the years ended *December 31, 2023* and *2022,* NRSS provided substantially all of the domestic merchandising specialist field force used by NMS. For those services, NMS reimbursed NRSS certain costs for providing those services plus a premium ranging from 4.0% to 10.0% of certain costs. NMS also leased office space from Mr. Burdekin's personal property. In *December 2023,* the Company sold its ownership interest in NMS.

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *54*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***11.* Related Party Transactions (continued)**

***Summary of Certain Related Party Transactions***

 ****

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

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** |
| Services provided by affiliates: |  |  |
| National Remodel & Setup Services (NRSS) (1) | $**-** | $5173 |
| Consulting and administrative services (RJ Holdings) (2) | **161** | 472 |
| Office lease expenses (RJ Holdings) (2) | **4** | 8 |
| Consulting and administrative fees (SPARFACTS) (2) | **-** | 112 |
| Other (2) | **50** | 178 |
| Total services provided by affiliates | $**215** | $5943 |

---

---

| | | |
|:---|:---|:---|
| Due to affiliates consists of the following (in thousands): | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
| Loans from local investors:(3) |  |  |
| China | $**-** | $2316 |
| Mexico | **-** | 623 |
| Resource Plus | **-** | 266 |
| Total due to affiliates | $**-** | $3205 |

---

(*1*) Represent loans from the local investors into the Company's subsidiaries (representing their proportionate share of working capital loans). The loans have *no* payment terms and are due on demand.

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

(*3*) Represent loans from the local investors into the Company's subsidiaries (representing their proportionate share of working capital loans). The loans have *no* payment terms and are due on demand.

***Bartels' Retirement and Director Compensation***

William H. Bartels retired as an employee of the Company as of *January 1, 2020.* However, he continues to serve as a member of SPAR's Board. Mr. Bartels is a significant stockholder of SGRP, is **one* of the founders of the Company, and is an affiliate and related party of SGRP.

Effective as of *January 18, 2020,* SPAR's Governance Committee proposed and unanimously approved retirement benefits for Mr. Bartels, for the *five*-year period commencing *January 1, 2020,* and ending *December 31, 2024 (*the "Five-Year Period"), for Mr. Bartels. The aggregate value of benefits payable to Mr. Bartels is approximately $0.2 million per year and a total of $1.1 million for the Five-Year Period. As of *December 31, 2024* $23,000 of retirement benefits remains outstanding and is included within Accrued expenses and other current liabilities on the consolidated balance sheets.

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

 ***Other Related Party Transactions and Arrangements***

On *April 18, 2024,* the Company entered into a Securities Purchase Agreement to buy from Mr. Richard Justus the remaining minority joint venture interests of Resource Plus and its sister companies, Mobex of North Florida, Inc., and Leasex, LLC. Based on the terms set in the original joint venture agreement, the Company will pay a total of $3 million in annual payments over a *five*-year period. $0.3 million was paid within the *five* business days of closing, and the remaining $2.8 million will be paid pursuant to a Secured Promissory Note. The agreement resulted in the termination of all relevant shareholder and operating agreements, although specific confidentiality obligations remain effective for *three* years post-closing and specific mutual releases were provided. The purchase was closed and completed on *May 1, 2024.* As of *December 31, 2024,* $0.5 million has been paid and the remaining $2.2 million Promissory Note is outstanding and is reported on the balance sheet in long-term debt (including current portion).

***International Joint Venture Transactions***

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

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *55*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***11.* Related Party Transactions (continued)**

The closing conditions under that agreement were satisfied in all material respects by *March 31, 2024.* and on *April 29,* the Company received 144,560,000 South African Rand from the Local Buyers (or approximately $7.7 million). The remaining purchase price of approximately $1.9 million is recorded as other receivable on the balance sheet and will be paid on *December 31, 2025,* and its payment is secured by an irrevocable unconditional guarantee from Investec Bank Limited. The Company has also licensed certain technology (including SPARView) and trademarks to Meridian in connection with the sale. The Company recognized a pre-tax gain of approximately $7.2 million on this transaction, which is presented within "(Gain) / loss on sale of business" in the Consolidated Statements of Operations and Comprehensive (Loss) Income. The company has *no* continuing involvement in Meridian.

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

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

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

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

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

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

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

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

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

On *December 19, 2024,* the Company closed on an agreement to sell its 51% ownership interest in its Mexican Joint venture for $417,000. The sale closed on *December 19, 2024.* The Company has recognized a loss of $1.1 million in the *fourth* quarter of *2024* as a result of this transaction, which is presented within "(Gain) / Loss on sale of business" in the Consolidated Statements of Operations and Comprehensive (Loss) Income. The company has *no* continuing involvement in the Mexican Joint Venture.

***12.* Share Based Compensation** 

As of *December 31, 2024,* the Company has outstanding stock options and unvested restricted stock units granted under its *2008* Stock Compensation Plan, *2018* Stock Compensation Plan, *2020* Stock Compensation Plan and *2021* Stock Compensation Plan, which generally permitted stock-based awards under terms determined by the Company's board of directors. Stock options and RSUs generally provided for vesting over service periods of one to four years, with option exercise prices generally equal to fair market value on the date of grant. As of *December 31, 2024,* no further shares were available under these plans for future awards. The Company also granted stock options and restricted stock units as inducements under contracts with selected executives.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *56*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***12.* Share Based Compensation (continued)**

***Stock options***

***2008* Plan Summary***

The Company's *2008* Stock Compensation Plan, as amended, provides for equity-based awards to employees, directors, and eligible consultants. Awards under the Plan *may* take the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units (RSUs), stock appreciation rights (SARs), or other stock-based awards, all of which are classified as equity. Awards are generally settled by issuing shares of the Company's common stock. Stock options and SARs are granted with exercise prices at least equal to the fair market value of the common stock on the grant date and typically have a contractual term of up to *ten* years. In accordance with ASC *718,* the Company measures stock-based compensation expense for awards under the Plan at the grant-date fair value and recognizes it over the awards' requisite service or performance period (generally the vesting period). The fair value of stock option and SAR grants is estimated on the grant date using the Black-Scholes option pricing model, while the fair value of restricted stock and RSUs is based on the market price of the Company's stock at grant. Awards generally vest over a multi-year period of continuous service (e.g. *four*-year graded vesting for stock options) or upon achievement of specified performance goals, as applicable. Unvested awards are generally forfeited upon termination of employment or service, unless the Company's Compensation Committee exercises its discretion to accelerate vesting or provide for alternative vesting arrangements in certain cases. The *2008* Plan Stock option award activity for the years ended *December 31, 2024* and *2023* is summarized below for the periods presented.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | ***Weighted-*** |  |
|  |  | ***Weighted-*** | ***Average*** | ***Aggregate*** |
|  |  | ***Average*** | ***Remaining*** | ***Intrinsic*** |
|  |  | ***Exercise*** | ***Contractual*** | ***Value*** |
| **Option Awards** | ***Shares*** | ***Price*** | ***Term (Years)*** | *(thousands)* |
| Outstanding at January 1, 2023 | 513100 | $1.63 | 2.16 | $68 |
| Granted | *–* | *–* | *–* | *–* |
| Exercised / cancelled |  |  | *–* |  |
| Forfeited or expired | (291100) | *2.10* | *–* | *–* |
| Outstanding at December 31, 2023 | 222000 | 1.01 | 3.27 | 12 |
| Granted | *–* |  |  |  |
| Exercised / cancelled | (79000) | $0.97 |  | 98 |
| Forfeited or expired | (56000) |  |  |  |
| Outstanding at December 31, 2024 | 87000 | $1.01 | 2.66 | $73 |
| Exercisable at December 31, 2024 | 87000 | $1.01 | 2.66 | $73 |

---

The Company recognized no stock-based compensation expense relating to stock option awards during the years ended *December 31, 2024* and *2023* for the *2008* plan. The total intrinsic value of shares exercised in *2024* was $98,000. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended *December 31, 2024* and *2023,* was $0.

***2018* Plan Summary***

SPAR Group's *2018* Stock Compensation Plan provides for stock-based awards including stock options, stock appreciation rights ("SARs"), restricted stock, and restricted stock units ("RSUs"). All awards under the plan are classified as equity instruments and are generally settled by issuing shares of the Company's common stock. Stock options are granted with exercise prices at least equal to the fair market value of the stock on the grant date and have a contractual term of up to *ten* years. The fair value of stock option and SAR awards is measured on the grant date using the Black-Scholes option pricing model, and the fair value of restricted stock and RSU awards is determined based on the market price of the Company's common stock on the grant date. Awards generally vest over the recipients' requisite service period, often in equal annual installments over *four* years from the grant date. Stock-based compensation cost is measured at the grant-date fair value of awards and recognized as expense on a straight-line basis over the vesting period, net of estimated forfeitures. If an award is forfeited before it vests, any previously recognized compensation expense is reversed. The plan also provides for accelerated vesting of outstanding awards under certain conditions such as the participant's death, disability, or a change in control, which would result in immediate recognition of any remaining unrecognized compensation cost. *2018* Plan Stock option award activity for the years ended *December 31, 2024* and *2023* are summarized below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | ***Weighted-*** |  |
|  |  | ***Weighted-*** | ***Average*** | ***Aggregate*** |
|  |  | ***Average*** | ***Remaining*** | ***Intrinsic*** |
|  |  | ***Exercise*** | ***Contractual*** | ***Value*** |
| **Option Awards** | ***Shares*** | ***Price*** | ***Term (Years)*** | *(thousands)* |
| Outstanding at January 1, 2023 | 145000 | $0.94 | 5.79 | $52 |
| Granted | *–* | *–* | *–* | *–* |
| Exercised/cancelled |  |  | *–* |  |
| Forfeited or expired |  | *–* | *–* | *–* |
| Outstanding at December 31, 2023 | 145000 | $0.94 | 4.79 | $26 |
| Granted | *–* | *–* |  |  |
| Exercised | (75000) | $0.99 |  | 90 |
| Forfeited or expired | (30000) | *–* |  |  |
| Outstanding at December 31, 2024 | 40000 | $0.93 | 3.80 | $40 |
| Exercisable at December 31, 2024 | 40000 | $0.93 | 3.80 | $26 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *57*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***12.* Share Based Compensation (continued)**

The Company recognized no stock-based compensation expense relating to stock option awards during the years ended *December 31, 2024* and *2023* under the *2018* plan. The total intrinsic value of shares exercised in *2024* was $90,000. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended *December 31, 2024* and *2023,* was $0.

***2020* Plan Summary***

Under the *2020* Stock Compensation Plan, SPAR Group grants equity-classified stock-based awards exclusively in the form of non-qualified stock options (NQSOs). The plan does *not* authorize incentive stock options, stock appreciation rights, restricted stock, or restricted stock units. Each option award is settled by issuing shares of the Company's common stock upon exercise. In accordance with ASC *718,* the Company measures stock-based compensation expense for stock options at the grant-date fair value of the award (estimated using the Black-Scholes option pricing model) and recognizes it over the requisite service period (generally the vesting period) on a straight-line basis. The total expense is adjusted for estimated forfeitures of awards to reflect only those options expected to vest. Stock options under the *2020* Plan generally vest in annual installments over approximately *four* years of continuous service. The options have a contractual term of *five* years from the grant date. If a participant's service terminates before an option is fully vested, any unvested portion is forfeited (*no* acceleration occurs on termination). Vested options typically remain exercisable for up to *three* months following termination of service, including in cases of retirement, death, or disability. In the event of a participant's death, any remaining unvested options become fully vested immediately and are exercisable for up to *three* months thereafter by the participant's estate or legal representative. *2020* Plan Stock option award activity for the years ended *December 31, 2024* and *2023* are summarized below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | ***Weighted-*** |  |
|  |  | ***Weighted-*** | ***Average*** | ***Aggregate*** |
|  |  | ***Average*** | ***Remaining*** | ***Intrinsic*** |
|  |  | ***Exercise*** | ***Contractual*** | ***Value*** |
| **Option Awards** | ***Shares*** | ***Price*** | ***Term (Years)*** | *(thousands)* |
| Outstanding at January 1, 2023 | 375000 | $1.55 | 3.10 | $*-* |
| Granted | *–* | *–* | *–* | *–* |
| Exercised/cancelled | *–* | *–* | *–* | *–* |
| Forfeited or expired | (20000) | *–* | *–* | *–* |
| Outstanding at December 31, 2023 | 355000 | $1.55 | 2.10 | $*-* |
| Granted | *–* | *–* | *–* | *–* |
| Exercised | (22500) | 1.55 |  | 17 |
| Forfeited or expired | (220000) | *–* | *–* | *–* |
| Outstanding at December 31, 2024 | 112500 | $1.55 | 1.10 | $44 |
| Exercisable at December 31, 2024 | 78750 | $1.55 | 1.10 | $31 |

---

The Company recognized $19,500 and $47,000 in stock-based compensation expense relating to stock option awards during the years ended *December 31, 2024* and *2023,* respectively. The total intrinsic value of shares exercised in *2024* was $17,000.

As of *December 31, 2024,* total unrecognized stock-based compensation expense related to stock options was $2,200, which will be recognized by the end of *2025.* The recognized tax benefit on stock-based compensation expense related to stock options during the years ended *December 31, 2024* and *2023,* was $5,800 and $12,000.

***CEO Inducement Plan Summary***

The Company granted a nonqualified stock option as an inducement award to the CEO, outside of the Company's stockholder-approved equity plan. This stock option is classified as an equity award and carries a *ten*-year term. The grant-date fair value of the option was measured using the Black-Scholes option pricing model. The resulting compensation cost is recognized over the award's requisite service period (the vesting period) on a straight-line basis. Vesting and Forfeiture Provisions: The option vested *100%* on *February 22, 2022.* Upon vesting, any exercised portions were settled in shares of the Company's common stock. The CEO Inducement Plan stock option award activity for the years ended *December 31, 2024* and *2023* are summarized below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **Weighted-** |  |
|  |  | ***Weighted-*** | ***Average*** | ***Aggregate*** |
|  |  | ***Average*** | ***Remaining*** | ***Intrinsic*** |
|  |  | ***Exercise*** | ***Contractual*** | ***Value*** |
| **Option Awards** | ***Shares*** | ***Price*** | ***Term (Years)*** | *(thousands)* |
| Outstanding at January 1, 2023 | 630000 | $1.90 | 8.15 | $*-* |
| Granted | *–* | *–* | *–* | *–* |
| Exercised/cancelled | *–* | *–* | *–* | *–* |
| Forfeited or expired | *–* | *–* | *–* | *–* |
| Outstanding at December 31, 2023 | 630000 | $1.90 | 7.15 | $*-* |
| Granted | *–* | *–* | *–* | *–* |
| Exercised | *–* | *–* | *–* | *–* |
| Forfeited or expired | *–* | *–* | *–* | *–* |
| Outstanding at December 31, 2024 | 630000 | $1.90 | 6.15 | $25 |
| Exercisable at December 31, 2024 | 630000 | $1.90 | 6.15 | $25 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *58*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***12.* Share Based Compensation (continued)**

The Company recognized $0 stock-based compensation expense relating to stock option awards during the years ended *December 31, 2024* and *2023.* The recognized tax benefit on stock-based compensation expense related to stock options during the years ended *December 31, 2024* and *2023,* was $0.

As of *December 31, 2024,* there was no unrecognized share-based compensation expense related to stock options granted under the CEO Inducement Plan.

 ***Restricted Stock Units***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The following table summarizes the activity for Restricted Stock Unit (RSU) awards during the years ended *December 31, 2024* and *2023*.

---

| | | |
|:---|:---|:---|
|  |  | ***Weighted-*** |
|  |  | ***Average*** |
|  |  | ***Grant Date*** |
|  |  | ***Fair Value*** |
|  | ***Shares*** | ***per Share*** |
| Unvested at January 1, 2023 | 38675 | $1.81 |
| Granted | 304513 | 1.16 |
| Vested | (100337) | 1.20 |
| Forfeited | (16575) | 1.81 |
| Unvested at December 31, 2023 | 226276 | $1.19 |
| Granted | 57143 | 1.75 |
| Vested | (226276) | 1.19 |
| Forfeited |  |  |
| Unvested at December 31, 2024 | 57143 | $1.75 |

---

During the years ended *December 31, 2024* and *2023,* the Company recognized approximately $117,500 and $235,000, respectively, of stock-based compensation expense related to RSUs. During the years ended *December 31, 2024* and *2023,* the total fair value of RSUs vested was $315,000 and $104,000, respectively. As of *December 31, 2024,* total unrecognized stock-based compensation expense related to unvested RSUs awards was $36,885, which is expected to be recognized over a weighted average period of approximately 0.3 years.

***Phantom Stock Awards***

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

On and effective as of *March 24, 2022,* the Corporation issued an award of 111,111 Phantom Stock Units to each of its executives: Kori G. Belzer; William Linnane; and Ron Lutz. Each Phantom Stock Unit represents the right of the grantee to receive cash payments based on the fair market value of SGRP's Common Stock at the time of vesting. Vesting will occur in *three* tranches of *one*-*third* each over the three (*3*) year period following the Grant Date, provided that (i) the Grantee is an employee of the Company at the time and (ii) the Corporation has achieved *90%* of the agreed upon the applicable financial target for the year commencing with *2022* (which was EBITDA for *2022*), but tranches will rollover to the following year and be payable upon achievement of *120%* of the agreed upon the applicable financial target for such following year. The Phantom Stock Units do *not* possess the rights of common stockholders of the Corporation, including any voting or dividend rights, and cannot be exercised or traded for the SGRP's Common Stock. Due to the cash settlement feature, the Phantom Stock Units are classified as liabilities in accrued expenses and other current liabilities and other long-term liabilities in the consolidated balance sheet. Accrued expenses and other current liabilities on the Consolidated Balance Sheet included $0 and $0.6 million related to Phantom Stock Units as of *December 31, 2024* and *December 31, 2023,* respectively.

.

***13.* Segment Information**

The Company has *three* reportable geographic segments: Americas, Asia-Pacific, and EMEA. The Company's Chief Executive Officer, who serves as the Chief Operating Decision Maker (CODM), regularly reviews financial information for each segment, including net revenues, selling, general and administrative expense, depreciation and amortization, interest expense, other expense (income), net income (loss) from continuing operations before income tax expense, income tax expense (benefit), and net income (loss) from continuing operations. These measures are used by the CODM to assess segment performance, make decisions regarding resource allocation, and evaluate current operating results and long-term strategic opportunities in each geographic market. As detailed in Note *2, Summary of Significant Accounting Policies*, and Note *3, Restatement of Previously Issued Consolidated Financial Statements*, the presentation of certain amounts disclosed below have been restated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *59*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***13.* Segment Information (continued)**

---

| | | |
|:---|:---|:---|
| *(in Thousands)* | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** |
| Net revenues |  |  |
| Americas | $**144047** | $128832 |
| Asia - Pacific | **11305** | 24480 |
| EMEA | **8277** | 34562 |
| Total Net revenues | $**163629** | $187874 |
| Selling, general and administrative expense |  |  |
| Americas | $**29635** | $23166 |
| Asia - Pacific | **3107** | 8437 |
| EMEA | **1138** | 5023 |
| Total Selling, general and administrative expense | $**33880** | $36626 |
| Operating Income (loss) |  |  |
| Americas | $**1597** | $3418 |
| Asia - Pacific | **(999)** | (599) |
| EMEA | **102** | 2757 |
| Total Operating Income | $**700** | $5576 |
| Interest expense |  |  |
| Americas | $**2126** | $1700 |
| Asia - Pacific | **65** | 122 |
| EMEA | **-** | 409 |
| Total Interest expense | $**2191** | $2231 |
| Other expense (income), net |  |  |
| Americas | $**(1083)** | $1070 |
| Asia - Pacific | **1254** | (759) |
| EMEA | ***-*** | 35 |
| Total Other expense, net | $**171** | $346 |
| Income (loss) from continuing operations before taxes |  |  |
| Americas | $**554** | $170 |
| Asia - Pacific | **(1064)** | 236 |
| EMEA | **(1152)** | 2593 |
| Total Income (loss) from continuing operations before taxes | $**(1662)** | $2999 |
| Income tax expense (benefit) |  |  |
| Americas | $**169** | $(166) |
| Asia - Pacific | **(64)** | 62 |
| EMEA | **39** | 752 |
| Total Income tax expense | $**144** | $648 |
| Income (loss) from continuing operations |  |  |
| Americas | $**385** | $811 |
| Asia - Pacific | **(1000)** | (24) |
| EMEA | **(1191)** | 1564 |
| Total Income (loss) from continuing operations | $**(1806)** | $2351 |
| Depreciation and amortization: |  |  |
| Americas | $**1455** | $1563 |
| Asia - Pacific | **66** | 94 |
| EMEA | **32** | 170 |
| Total Depreciation and amortization: | $**1553** | $1827 |
| Capital expenditures: |  |  |
| Americas | $**1134** | $1077 |
| Asia - Pacific | **5** | 71 |
| EMEA | **-** | 101 |
| Total Capital expenditures: | $**1139** | $1249 |

---

There were no inter-segment sales for *2024* or *2023.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *60*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***13.* Segment Information (continued)**

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2024*** | ***2023*** |
| Assets: |  |  |
| Americas | $56431 | $43121 |
| Asia - Pacific |  | 13361 |
| EMEA |  | 5548 |
| Discontinued Operations |  | 28251 |
| Total assets | $56431 | $90281 |

---

***Geographic Data*** (in thousands)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2024*** | ***2023*** | ***2023*** |
| <u>Net international revenue:</u> |  | *% of consolidated net revenue* |  | *% of consolidated net revenue* |
| United States | $**117507** | **71.8%** | $104648 | 55.7% |
| South Africa | **8277** | **5.1%** | 34562 | 18.4% |
| Mexico | **12235** | **7.5%** | 11691 | 6.2% |
| China | **2698** | **1.6%** | 10167 | 5.4% |
| Japan | **3778** | **2.3%** | 6256 | 3.3% |
| India | **4829** | **3.0%** | 6148 | 3.3% |
| Canada | **14305** | **8.7%** | 12494 | 6.7% |
| Australia | **-** | **0.0%** | 1909 | 1.0% |
| Total net international revenue | $**163629** | **100.0%** | $187875 | 100.0% |

---

---

| | | |
|:---|:---|:---|
| *(in thousands)* | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2024*** | ***2023*** |
| Long lived assets: |  |  |
| Americas | $**4479** | $4615 |
| Asia - Pacific | **-** | 1015 |
| EMEA | **-** | 745 |
| Total long lived assets | $**4479** | $6375 |

---

***14.* Earnings Per Share** 

The following table sets forth the computations of consolidated basic and diluted earnings per share (in thousands, except per share data):

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2024** | **2023** |
| Numerator: |  |  |
| Net income (loss) attributable to SPAR Group, Inc. | $**(3150)** | $3902 |
| Denominator: |  |  |
| Shares used in basic net income per share calculation | **23555** | 23333 |
| Effect of diluted securities: |  |  |
| Stock options and unvested restricted shares | **174** | 147 |
| Convertible Series B Preferred Stock |  | 975 |
| Shares used in diluted net income per share calculations | **23729** | 24455 |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. | $**(0.13)** | $**0.17** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. | $**(0.13)** | $**0.16** |

---

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *61*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***15.* Leases**

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

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

---

| | | | |
|:---|:---|:---|:---|
|  |  | ***Year Ended*** | ***Year Ended*** |
| **Lease Costs** | ***Classification*** | ***December 31, 2024*** | ***December 31, 2023*** |
| Operating lease cost | *Selling, General and Administrative Expense* | $545 | $875 |
| Short-term lease cost | *Selling, General and Administrative Expense* | 370 | 378 |
| *Total lease cost* | *Total lease cost* | $915 | $1253 |

---

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

---

| | | |
|:---|:---|:---|
|  | ***Year Ended*** | ***Year Ended*** |
|  | ***December 31, 2024*** | ***December 31, 2023*** |
| Operating cash flows from operating leases | $545 | $875 |
| Right-of-use assets obtained in exchange for lease obligations |  |  |
| Operating leases | $- | $1931 |

---

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| Leases | *December 31, 2024* |  | *December 31, 2023* |  |
| *Assets:* |  | |  | |
| Operating lease right-of-use assets | $630 |  | $1931 |  |
| *Liabilities:* |  | |  | |
| Current portion of operating lease liabilities | 276 |  | 945 |  |
| Non-current portion of operating lease liabilities | 353 |  | 986 |  |
| Total operating lease liabilities | $629 |  | $1931 |  |
| Weighted average remaining lease term - operating leases (in years) | 2.64 |  | 2.67 |  |
| Weighted average discount rate - operating leases | 7.7 | % | 8.8 | % |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The following table summarizes the maturities of lease liabilities as of *December 31, 2024 (*in thousands):

---

| | |
|:---|:---|
| For the Year Ended December 31, | *Amount* |
| 2025 | $331 |
| 2026 | 165 |
| 2027 | 139 |
| 2028 | 87 |
| 2029 |  |
| Thereafter |  |
| Total future operating lease liability | $722 |
| Less: present value discount | (93) |
| Present value of operating lease liabilities | $629 |

---

***16.* Subsequent Events**

***Potential Going Private Transaction***

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. I, Inc., a Delaware corporation and a wholly owned subsidiary of Highwire ("Merger Sub"), pursuant to which Highwire 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) (the "Merger Consideration"), upon the closing of the Merger Agreement and the transactions contemplated thereby ("Merger Transaction").

The board of directors of the Corporation (the "Board") established a special committee (the "Special Committee") to, among other things, evaluate the advisability and fairness of strategic alternatives to the Corporation and its stockholders (including unaffiliated stockholders of the Corporation). The Special Committee eventually received, negotiated and approved the letter of intent from Highwire previously announced on *June 5, 2024,* which led to the negotiation of the Merger Agreement.

The Special Committee and the Board approved the execution, delivery and performance by the Corporation of the Merger Transaction. The SGRP stockholders approved the Merger Transaction on *October 25, 2024.* 

The parties to the Merger Agreement are working to finalize the closing of the Merger Transaction. The Merger Agreement currently allows until *May 30, 2025,* to close the Merger Transaction. If the Corporation terminates the Merger Agreement because all closing conditions are satisfied and Highwire fails to close within *five* business days following written confirmation from the Corporation that it is prepared to close, then Highwire shall pay to the Corporation a termination fee of 3% of the Merger Consideration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *62*

------

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

***17.* Restatement of Quarterly Financial Information (Unaudited)**

Prior to the filing of the Company's *December 31, 2024* Form *10*-K, management determined that there was an error in the reported gain on sale of its joint venture in Brazil during the quarter ended *June 30, 2024,* which resulted in the gain being overstated and additional paid in capital being understated (the "Original Adjustment"). Management determined that there was an error in the reported gain on sale of its joint venture in Brazil during the quarter ended *June 30, 2024,* which resulted in the gain being overstated and additional paid in capital being understated. The Company's management and the audit committee of the Company's Board of Directors concluded that it is appropriate to restate the unaudited quarterly condensed consolidated financial statements for the quarterly periods ended *June 30, 2024* and *September 30, 2024 (*collectively, the "Original as Restated").

Subsequent to the filing of the Company's *December 31, 2024* Form *10*-K, management determined that the Company's Brazilian joint venture should be presented as discontinued operations as of *June 30, 2024 (*the "Adjustment"). The Company's management and the audit committee of the Company's Board of Directors concluded that it is appropriate to restate the unaudited quarterly condensed consolidated financial statements for the quarterly periods ended *June 30, 2024* and *September 30, 2024.* The following presents the restated unaudited quarterly condensed financial statements as of *June 30, 2024, September 30, 2024,* and for the *three* and *six* month periods ended *June 30, 2024* and *2023* and the *three* and *nine* month periods ended *September 30, 2024* and *2023* (collectively, the "Restated").

**SPAR Group, Inc. and Subsidiaries**

**Condensed Consolidated Balance Sheets**

*(In thousands, except share and per share data)*

---

| | | | |
|:---|:---|:---|:---|
|  | ***June 30, 2024*** | ***June 30, 2024*** | ***June 30, 2024*** |
|  | ***As Previously Reported*** | ***Original Adjustment*** | ***Restated*** |
| **Assets** |  |  |  |
| Current assets: |  |  |  |
| Cash and cash equivalents | $**21695** | $**-** | $**21695** |
| Accounts receivable, net | **37963** | **-** | **37963** |
| Prepaid expenses and other current assets | **2117** | **-** | **2117** |
| Current assets of discontinued operations | **-** | **-** | **-** |
| Total current assets | **61775** | **-** | **61775** |
| Property and equipment, net | **2467** | **-** | **2467** |
| Operating lease right-of-use assets | **1154** | **-** | **1154** |
| Goodwill | **1238** | **-** | **1238** |
| Intangible assets, net | **718** | **-** | **718** |
| Deferred income taxes, net | **1029** | **-** | **1029** |
| Other assets | **1644** | **-** | **1644** |
| Non-current assets of discontinued operations |  | **-** |  |
| Total assets | $**70025** | $**-** | $**70025** |
| **Liabilities and stockholders' equity** |  |  |  |
| Current liabilities: |  |  |  |
| Accounts payable | $**7211** | $**-** | $**7211** |
| Accrued expenses and other current liabilities | **5643** | **-** | **5643** |
| Due to affiliates | **623** | **-** | **623** |
| Customer incentives and deposits | **4541** | **-** | **4541** |
| Lines of credit and short-term loans | **18442** | **-** | **18442** |
| Current portion of operating lease liabilities | **482** | **-** | **482** |
| Current liabilities of discontinued operations | **-** | **-** | **-** |
| Total current liabilities | **36942** | **-** | **36942** |
| Operating lease liabilities, net of current portion | **672** | **-** | **672** |
| Long-term debt | **1711** | **-** | **1711** |
| Non-current liabilities of discontinued operations |  | **-** |  |
| Total liabilities | **39325** | **-** | **39325** |
| Commitments and contingencies – See Note 7 |  |  |  |
| **Stockholders' equity:** |  |  |  |
| Series B convertible preferred stock, $0.01 par value per share: Authorized and available shares 3,000,000. Issued and outstanding shares 0 at June 30, 2024 and 650,000 at December 31, 2023 | **-** | **-** | **-** |
| Common stock, $0.01 par value per share: 47,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 23,419,744 and 23,446,444 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | **234** | **-** | **234** |
| Treasury stock, at cost, 1,205,485 shares as of June 30, 2024 and 205,485 as of December 31, 2023 | **(2075)** | **-** | **(2075)** |
| Additional paid-in capital | **13338** | **7518** | **20856** |
| Accumulated other comprehensive (loss) | **(2268)** | **-** | **(2268)** |
| Retained earnings | **20151** | **(7518)** | **12633** |
| Total stockholders' equity attributable to SPAR Group, Inc. | **29380** | **-** | **29380** |
| Non-controlling interest | **1320** | **-** | **1320** |
| Total stockholders' equity | **30700** | **-** | **30700** |
| Total liabilities and stockholders' equity | $**70025** | $**-** | $**70025** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *63*

------

**SPAR Group, Inc. and Subsidiaries**

**Condensed Consolidated Balance Sheets**

*(In thousands, except share and per share data)*

---

| | | | |
|:---|:---|:---|:---|
|  | ***September 30, 2024*** | ***September 30, 2024*** | ***September 30, 2024*** |
|  | ***As Previously Reported*** | ***Original Adjustment*** | ***Restated*** |
| **Assets** |  |  |  |
| Current assets: |  |  |  |
| Cash and cash equivalents | $**19652** | $**-** | $**19652** |
| Accounts receivable, net | **37777** | **-** | **37777** |
| Prepaid expenses and other current assets | **3078** | **-** | **3078** |
| Current assets of discontinued operations | **-** | **-** | **-** |
| Total current assets | **60507** | **-** | **60507** |
| Property and equipment, net | **2142** | **-** | **2142** |
| Operating lease right-of-use assets | **838** | **-** | **838** |
| Goodwill | **1238** | **-** | **1238** |
| Intangible assets, net | **693** | **-** | **693** |
| Deferred income taxes, net | **-** | **-** | **-** |
| Other assets | **1978** | **-** | **1978** |
| Non-current assets of discontinued operations |  | **-** |  |
| Total assets | $**67396** | $**-** | $**67396** |
| **Liabilities and stockholders' equity** |  |  |  |
| Current liabilities: |  |  |  |
| Accounts payable | $**9220** | $**-** | $**9220** |
| Accrued expenses and other current liabilities | **3713** | **-** | **3713** |
| Due to affiliates | **623** | **-** | **623** |
| Customer incentives and deposits | **1678** | **-** | **1678** |
| Lines of credit and short-term loans | **18538** | **-** | **18538** |
| Current portion of operating lease liabilities | **508** | **-** | **508** |
| Current liabilities of discontinued operations | **-** | **-** | **-** |
| Total current liabilities | **34280** | **-** | **34280** |
| Operating lease liabilities, net of current portion | **330** | **-** | **330** |
| Deferred income taxes, net | **1707** | **-** | **1707** |
| Long-term debt | **1538** | **-** | **1538** |
| Non-current liabilities of discontinued operations | **-** | **-** | **-** |
| Total liabilities | **37855** | **-** | **37855** |
| Commitments and contingencies – See Note 7 |  |  |  |
| **Stockholders' equity:** |  |  |  |
| Series B convertible preferred stock, $0.01 par value per share: Authorized and available shares 3,000,000. Issued and outstanding shares 0 at June 30, 2024 and 650,000 at December 31, 2023 | **-** | **-** | **-** |
| Common stock, $0.01 par value per share: 47,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 23,419,744 and 23,446,444 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | **234** | **-** | **234** |
| Treasury stock, at cost, 1,205,485 shares as of June 30, 2024 and 205,485 as of December 31, 2023 | **(2075)** | **-** | **(2075)** |
| Additional paid-in capital | **13151** | **7556** | **20707** |
| Accumulated other comprehensive (loss) | **(2022)** | **-** | **(2022)** |
| Retained earnings | **20007** | **(7556)** | **12451** |
| Total stockholders' equity attributable to SPAR Group, Inc. | **29295** | **-** | **29295** |
| Non-controlling interest | **246** | **-** | **246** |
| Total stockholders' equity | **29541** | **-** | **29541** |
| Total liabilities and stockholders' equity | $**67396** | $**-** | $**67396** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *64*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income**

*(In thousands, except per share data)*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** |
|  | ***June 30, 2024*** | ***June 30, 2024*** | ***June 30, 2024*** | ***June 30, 2024*** | ***June 30, 2024*** | ***June 30, 2023*** | ***June 30, 2023*** | ***June 30, 2023*** |
|  | ***As Previously Reported*** | ***Original Adjustment*** | ***Original As Restated*** | ***Adjustment*** | ***Restated*** | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| Net revenues | $**57290** | $**-** | $**57290** | $**(13888)** | $**43402** | $**65936** | $**(20016)** | $**45920** |
| Related party - cost of revenues | **-** | **-** | **-** | **-** | **-** | **1682** | **-** | **1682** |
| Cost of revenues | **46297** | **-** | **46297** | **(11859)** | **34438** | **51158** | **(17124)** | **34034** |
| Gross profit | **10993** | **-** | **10993** | **(2029)** | **8964** | **13096** | **(2892)** | **10204** |
| Selling, general and administrative expense | **9541** | **-** | **9541** | **(1473)** | **8068** | **10605** | **(1810)** | **8795** |
| (Gain) / loss on sale of business | **(4919)** | **7518** | **2599** | **(1188)** | **1411** | **-** | **-** | **-** |
| Depreciation and amortization | **478** | **-** | **478** | **(27)** | **451** | **494** | **(43)** | **451** |
| Operating income (loss) | **5893** | **(7518)** | **(1625)** | **659** | **(966)** | **1997** | **(1039)** | **958** |
| Interest expense | **567** | **-** | **567** | **23** | **590** | **478** | **24** | **502** |
| Other income, net | **(296)** | **-** | **(296)** | **-** | **(296)** | **(125)** | **-** | **(125)** |
| Income (loss) before income tax expense | **5622** | **(7518)** | **(1896)** | **636** | **(1260)** | **1644** | **(1063)** | **581** |
| Income tax expense (benefit) | **1547** | **-** | **1547** | **(613)** | **934** | **538** | **(309)** | **229** |
| Income (loss) from continuing operations | **4075** | **(7518)** | **(3443)** | **1249** | **(2194)** | **1106** | **(754)** | **352** |
| Discontinued Operations |  |  |  |  |  |  |  |  |
| Income from discontinued operations |  | **-** |  | **552** | **552** |  | **1063** | **1063** |
| Loss on disposal of business |  | **-** |  | **(1188)** | **(1188**) |  | **-** |  |
| Income tax expense |  | **-** |  | **(613)** | **(613**) |  | **(309)** | **(309**) |
| Net income (loss) from discontinued operations | **-** | **-** | **-** | **(1249)** | **(1249)** | **-** | **754** | **754** |
| Net income (loss) | **4075** | **(7518)** | **(3443)** | **-** | **(3443)** | **1106** | **-** | **1106** |
| Net income attributable to non-controlling interest | **(448)** | **-** | **(448)** | **-** | **(448)** | **(467)** | **-** | **(467)** |
| Net income (loss) attributable to SPAR Group, Inc. | $**3627** | $**(7518)** | $**(3891)** | **-** | $**(3891)** | $**639** | **-** | $**639** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**0.15** | $**(0.32)** | $**(0.17)** | $**0.05** | $**(0.12)** | $**0.03** | $**(0.03)** | $**-** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**0.15** | $**(0.31)** | $**(0.16)** | $**0.05** | $**(0.11)** | $**0.03** | $**(0.03)** | $**-** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**-** | $**-** | $**(0.05)** | $**(0.05)** | $**-** | $**0.03** | $**0.03** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**-** | $**-** | $**(0.05)** | $**(0.05)** | $**-** | $**0.03** | $**0.03** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. | $**0.15** | $**(0.32)** | $**(0.17)** | $**-** | $**(0.17)** | $**0.03** | $**-** | $**0.03** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. | $**0.15** | $**(0.31)** | $**(0.16)** | $**-** | $**(0.16)** | $**0.03** | $**-** | $**0.03** |
| Weighted-average common shares outstanding – basic | **23786** | **-** | **23786** | **-** | **23786** | **23250** | **-** | **23250** |
| Weighted-average common shares outstanding – diluted | **24010** | **-** | **24010** | **-** | **24010** | **23392** | **-** | **23392** |
| Net income (loss) | $**4075** | $**(7518)** | $**(3443)** | $**-** | $**(3443)** | $**1106** | $**-** | $**1106** |
| Other comprehensive income (loss) |  |  |  |  |  |  |  |  |
| Foreign currency translation adjustments | **1372** |  | **1372** |  | **1372** | **(39)** |  | **(39)** |
| Comprehensive income (loss) | **5447** | **(7518)** | **(2071)** | **-** | **(2071)** | **1067** | **-** | **1067** |
| Comprehensive income attributable to non-controlling interest | **(393)** | **-** | **(393)** | **-** | **(393)** | **(97)** | **-** | **(97)** |
| Comprehensive income (loss) attributable to SPAR Group, Inc. | $**5054** | $**(7518)** | $**(2464)** | $**-** | $**(2464)** | $**970** | $**-** | $**970** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *65*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income**

*(In thousands, except per share data)*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** | ***Three Months Ended*** |
|  | ***September 30, 2024*** | ***September 30, 2024*** | ***September 30, 2024*** | ***September 30, 2024*** | ***September 30, 2024*** | ***September 30, 2023*** | ***September 30, 2023*** | ***September 30, 2023*** |
|  | ***As Previously Reported*** | ***Original Adjustment*** | ***Original As Restated*** | ***Adjustment*** | ***Restated*** | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| Net revenues | $**37788** | $**-** | $**37788** | $**-** | $**37788** | $**67333** | $**(18619)** | $**48714** |
| Related party - cost of revenues | **-** | **-** | **-** | **-** | **-** | **1628** | **-** | **1628** |
| Cost of revenues | **29346** | **-** | **29346** | **-** | **29346** | **52332** | **(15886)** | **36446** |
| Gross profit | **8442** | **-** | **8442** | **-** | **8442** | **13373** | **(2733)** | **10640** |
| Selling, general and administrative expense | **8558** | **-** | **8558** | **-** | **8558** | **11284** | **(1941)** | **9343** |
| Loss on sale of business | **922** | **38** | **960** | **-** | **960** | **-** | **-** | **-** |
| Depreciation and amortization | **454** | **-** | **454** | **-** | **454** | **548** | **(51)** | **497** |
| Operating income (loss) | **(1492)** | **(38)** | **(1530)** | **-** | **(1530)** | **1541** | **(741)** | **800** |
| Interest expense | **582** | **-** | **582** | **-** | **582** | **380** | **135** | **515** |
| Other expense (income), net | **472** | **-** | **472** | **-** | **472** | **(164)** | **-** | **(164)** |
| Income (loss) before income tax benefit | **(2546)** | **(38)** | **(2584)** | **-** | **(2584)** | **1325** | **(876)** | **449** |
| Income tax expense (benefit) | **(2314)** | **-** | **(2314)** | **-** | **(2314)** | **227** | **356** | **583** |
| Income (loss) from continuing operations | **(232)** | **(38)** | **(270)** | **-** | **(270)** | **1098** | **(1232)** | **(134**) |
| Discontinued Operations |  |  |  |  |  |  |  |  |
| Income from discontinued operations |  |  |  |  |  |  | **876** | **876** |
| Loss on disposal of business |  |  |  |  |  |  |  |  |
| Income tax benefit |  | **-** |  | **-** | **-** |  | **356** | **356** |
| Net income from discontinued operations | **-** | **-** | **-** | **-** | **-** | **-** | **1232** | **1232** |
| Net income (loss) | **(232)** | **(38)** | **(270)** | **-** | **(270)** | **1098** | **-** | **1098** |
| Net loss (income) attributable to non-controlling interest | **88** | **-** | **88** | **-** | **88** | **(839)** | **-** | **(839)** |
| Net income (loss) attributable to SPAR Group, Inc. | $**(144)** | $**(38)** | $**(182)** | $**-** | $**(182)** | $**259** | $**-** | $**259** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**(0.01)** | $**-** | $**(0.01)** | $**-** | $**(0.01)** | $**0.01** | $**(0.05)** | $**(0.04)** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**(0.01)** | $**-** | $**(0.01)** | $**-** | $**(0.01)** | $**0.01** | $**(0.05)** | $**(0.04)** |
| Basic earnings per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**-** | $**-** | $**-** | $**-** | $**-** | $**0.05** | $**0.05** |
| Diluted earnings per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**-** | $**-** | $**-** | $**-** | $**-** | $**0.05** | $**0.05** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. | $**(0.01)** | $**-** | $**(0.01)** | $**-** | $**(0.01)** | $**0.01** | $**-** | $**0.01** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. | $**(0.01)** | $**-** | $**(0.01)** | $**-** | $**(0.01)** | $**0.01** | $**-** | $**0.01** |
| Weighted-average common shares outstanding – basic | **23435** | **-** | **23435** | **-** | **23435** | **23237** | **-** | **23237** |
| Weighted-average common shares outstanding – diluted | **23435** | **-** | **23435** | **-** | **23435** | **23376** | **-** | **23376** |
| Net income (loss) | $**(232)** | $**(38)** | $**(270)** | $**-** | $**(270)** | $**1098** | $**-** | $**1098** |
| Other comprehensive loss |  |  |  |  |  |  |  |  |
| Foreign currency translation adjustments | **(72)** |  | **(72)** |  | **(72)** | **(497)** |  | **(497)** |
| Comprehensive income (loss) | **(304)** | **(38)** | **(342)** | **-** | **(342)** | **601** | **-** | **601** |
| Comprehensive loss (income) attributable to non-controlling interest | **45** | **-** | **45** | **-** | **45** | **(688)** | **-** | **(688)** |
| Comprehensive (loss) attributable to SPAR Group, Inc. | $**(259)** | $**(38)** | $**(297)** | $**-** | $**(297)** | $**(87)** | $**-** | $**(87)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *66*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income**

*(In thousands, except per share data)*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***Six Months Ended*** | ***Six Months Ended*** | ***Six Months Ended*** | ***Six Months Ended*** | ***Six Months Ended*** | ***Six Months Ended*** | ***Six Months Ended*** | ***Six Months Ended*** |
|  | ***June 30, 2024*** | ***June 30, 2024*** | ***June 30, 2024*** | ***June 30, 2024*** | ***June 30, 2024*** | ***June 30, 2023*** | ***June 30, 2023*** | ***June 30, 2023*** |
|  | ***As Previously Reported*** | ***Original Adjustment*** | ***Original As Restated*** | ***Adjustment*** | ***Restated*** | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| Net revenues | $**125984** | $**-** | $**125984** | $**(33185)** | $**92799** | $**130316** | $**(38098)** | $**92218** |
| Related party - cost of revenues | **-** | **-** | **-** | **-** | **-** | **3179** | **-** | **3179** |
| Cost of revenues | **102448** | **-** | **102448** | **(28325)** | **74123** | **99903** | **(32697)** | **67206** |
| Gross profit | **23536** | **-** | **23536** | **(4860)** | **18676** | **27234** | **(5401)** | **21833** |
| Selling, general and administrative expense | **19158** | **-** | **19158** | **(3385)** | **15773** | **21061** | **(3446)** | **17615** |
| (Gain) / loss on sale of business | **(12076)** | **7518** | **(4558)** | **(1188)** | **(5746)** | **-** | **-** | **-** |
| Depreciation and amortization | **989** | **-** | **989** | **(63)** | **926** | **1026** | **(85)** | **941** |
| Operating income (loss) | **15465** | **(7518)** | **7947** | **(224)** | **7723** | **5147** | **(1870)** | **3277** |
| Interest expense (income) | **1097** | **-** | **1097** | **(31)** | **1066** | **868** | **130** | **998** |
| Other income, net | **(288)** | **-** | **(288)** | **-** | **(288)** | **(183)** | **-** | **(183)** |
| Income (loss) before income tax expense | **14656** | **(7518)** | **7138** | **(193)** | **6945** | **4462** | **(2000)** | **2462** |
| Income tax expense (benefit) | **3401** | **-** | **3401** | **(1074)** | **2327** | **1579** | **(736)** | **843** |
| Income (loss) from continuing operations | **11255** | **(7518)** | **3737** | **881** | **4618** | **2883** | **(1264)** | **1619** |
| Discontinued Operations |  |  |  |  |  |  |  |  |
| Income from discontinued operations |  | **-** | **-** | **1381** | **1381** | **-** | **2000** | **2000** |
| Loss on disposal of business |  | **-** | **-** | **(1188)** | **(1188)** | **-** | **-** | **-** |
| Income tax expense |  | **-** | **-** | **(1074)** | **(1074)** | **-** | **(736)** | **(736)** |
| Net income (loss) from discontinued operations | **-** | **-** | **-** | **(881)** | **(881)** | **-** | **1264** | **1264** |
| Net income (loss) | **11255** | **(7518)** | **3737** | **-** | **3737** | **2883** | **-** | **2883** |
| Net income attributable to non-controlling interest | **(1002)** | **-** | **(1002)** | **-** | **(1002)** | **(1378)** | **-** | **(1378)** |
| Net income (loss) attributable to SPAR Group, Inc. | $**10253** | $**(7518)** | $**2735** | $**-** | $**2735** | $**1505** | $**-** | $**1505** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**0.43** | $**(0.32)** | $**0.11** | $**0.04** | $**0.15** | $**0.06** | $**(0.05)** | $**0.01** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**0.43** | $**(0.31)** | $**0.12** | $**0.04** | $**0.16** | $**0.06** | $**(0.05)** | $**0.01** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**-** | $**-** | $**(0.04)** | $**(0.04)** | $**-** | $**0.05** | $**0.05** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**-** | $**-** | $**(0.04)** | $**(0.04)** | $**-** | $**0.05** | $**0.05** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. | $**0.43** | $**(0.32)** | $**0.11** | $**-** | $**0.11** | $**0.06** | $**-** | $**0.06** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. | $**0.43** | $**(0.31)** | $**0.12** | $**-** | $**0.12** | $**0.06** | $**-** | $**0.06** |
| Weighted-average common shares outstanding – basic | **23670** | **-** | **23670** | **-** | **23670** | **23182** | **-** | **23182** |
| Weighted-average common shares outstanding – diluted | **23873** | **-** | **23873** | **-** | **23873** | **23337** | **-** | **23337** |
| Net income (loss) | $**11255** | $**(7518)** | $**3737** | $**-** | $**3737** | $**2883** | $**-** | $**2883** |
| Other comprehensive income (loss) |  |  |  |  |  |  |  |  |
| Foreign currency translation adjustments | **(1148)** |  | **(1148)** |  | **(1148)** | **138** |  | **138** |
| Comprehensive income (loss) | **10107** | **(7518)** | **2589** | **-** | **2589** | **3021** | **-** | **3021** |
| Comprehensive (income) loss attributable to non-controlling interest | **97** | **-** | **97** | **-** | **97** | **(1100)** | **-** | **(1100)** |
| Comprehensive income (loss) attributable to SPAR Group, Inc. | $**10204** | $**(7518)** | $**2686** | $**-** | $**2686** | $**1921** | $**-** | $**1921** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *67*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income**

*(In thousands, except per share data)*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***Nine Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** | ***Nine Months Ended*** |
|  | ***September 30, 2024*** | ***September 30, 2024*** | ***September 30, 2024*** | ***September 30, 2024*** | ***September 30, 2024*** | ***September 30, 2023*** | ***September 30, 2023*** | ***September 30, 2023*** |
|  | ***As Previously Reported*** | ***Original Adjustment*** | ***Original As Restated*** | ***Adjustment*** | ***Restated*** | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| Net revenues | $**163771** | $**-** | $**163771** | $**(33185)** | $**130586** | $**197649** | $**(56717)** | $**140932** |
| Related party - cost of revenues | **-** | **-** | **-** | **-** | **-** | **4807** | **-** | **4807** |
| Cost of revenues | **131801** | **-** | **131801** | **(28325)** | **103476** | **152235** | **(48584)** | **103652** |
| Gross profit | **31970** | **-** | **31970** | **(4860)** | **27110** | **40607** | **(8134)** | **32473** |
| Selling, general and administrative expense | **27707** | **-** | **27707** | **(3385)** | **24322** | **32345** | **(5394)** | **26951** |
| (Gain) / loss on sale of business | **(11154)** | **7556** | **(3598)** | **(1188)** | **(4786)** | **-** | **-** | **-** |
| Depreciation and amortization | **1443** | **-** | **1443** | **(63)** | **1380** | **1574** | **(136)** | **1438** |
| Operating income (loss) | **13974** | **(7556)** | **6418** | **(224**) | **6194** | **6688** | **(2604)** | **4084** |
| Interest expense (income) | **1678** | **-** | **1678** | **(31)** | **1647** | **1248** | **265** | **1513** |
| Other expense (income), net | **184** | **-** | **184** | **-** | **184** | **(347)** | **-** | **(347)** |
| Income (loss) before income tax expense | **12112** | **(7556)** | **4556** | **(193**) | **4363** | **5787** | **(2869)** | **2918** |
| Income tax expense (benefit) | **1088** | **-** | **1088** | **(1074)** | **14** | **1806** | **(380**) | **1426** |
| Income (loss) from continuing operations | **11024** | **(7556)** | **3468** | **881** | **4349** | **3981** | **(2489)** | **1492** |
| Discontinued Operations |  |  |  |  |  |  |  |  |
| Income from discontinued operations |  | **-** |  | **1381** | **1381** |  | **2869** | **2869** |
| Loss on disposal of business |  | **-** |  | **(1188)** | **(1188**) |  |  |  |
| Income tax benefit (expense) |  | **-** |  | **(1074)** | **(1074**) |  | **(380)** | **(380**) |
| Net income (loss) from discontinued operations | **-** | **-** | **-** | **(881)** | **(881)** | **-** | **2489** | **2489** |
| Net income (loss) | **11024** | **(7556)** | **3468** | **-** | **3468** | **3981** | **-** | **3981** |
| Net income attributable to non-controlling interest | **(914)** | **-** | **(914)** | **-** | **(914)** | **(2217)** | **-** | **(2217)** |
| Net income (loss) attributable to SPAR Group, Inc. | $**10110** | $**(7556)** | $**2554** | $**-** | $**2554** | $**1764** | $**-** | $**1764** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**0.43** | $**(0.32)** | $**0.11** | $**0.04** | $**0.15** | $**0.08** | $**(0.11)** | $**(0.03**) |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from continuing operations | $**0.43** | $**(0.32)** | $**0.11** | $**0.04** | $**0.15** | $**0.08** | $**(0.11)** | $**(0.03**) |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**-** | $**-** | $**(0.04)** | $**(0.04)** | $**-** | $**0.11** | $**0.11** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. from discontinued operations | $**-** | $**-** | $**-** | $**(0.04)** | $**(0.04)** | $**-** | $**0.11** | $**0.11** |
| Basic earnings (loss) per common share attributable to SPAR Group, Inc. | $**0.43** | $**(0.32)** | $**0.11** | $**-** | $**0.11** | $**0.08** | $**-** | $**0.08** |
| Diluted earnings (loss) per common share attributable to SPAR Group, Inc. | $**0.43** | $**(0.32)** | $**0.11** | $**-** | $**0.11** | $**0.08** | $**-** | $**0.08** |
| Weighted-average common shares outstanding – basic | **23591** | **-** | **23591** | **-** | **23591** | **23201** | **-** | **23201** |
| Weighted-average common shares outstanding – diluted | **23768** | **-** | **23768** | **-** | **23768** | **23350** | **-** | **23350** |
| Net income (loss) | $**11024** | $**(7556)** | $**3468** | $**-** | $**3468** | $**3981** | $**-** | $**3981** |
| Other comprehensive loss |  |  |  |  |  |  |  |  |
| Foreign currency translation adjustments | **(1220)** |  | **(1220)** |  | **(1220)** | **(359)** |  | **(359)** |
| Comprehensive income (loss) | **9804** | **(7556)** | **2248** | **-** | **2248** | **3622** | **-** | **3622** |
| Comprehensive loss (income) attributable to non-controlling interest | **142** | **-** | **142** | **-** | **142** | **(1788)** | **-** | **(1788)** |
| Comprehensive income (loss) attributable to SPAR Group, Inc. | $**9946** | $**(7556)** | $**2390** | $**-** | $**2390** | $**1834** | $**-** | $**1834** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *68*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Stockholders' Equity** 

**Three Months Ended *June 30***

*(In thousands)*

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **As Previously Reported** | ***Common Stock*** | ***Common Stock*** | ***Series B Convertible Preferred Stock*** | ***Series B Convertible Preferred Stock*** | ***Treasury Stock*** | ***Treasury Stock*** | ***Additional*** | ***Accumulated Other*** |  | ***Non-*** |  |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Paid-In Capital*** | ***Comprehensive Loss*** | ***Retained Earnings*** | ***Controlling Interest*** | ***Total Stockholders' Equity*** |
| **Balance at March 31, 2024** | **24216** | $**242** |  | $**-** | **205** | $**(285)** | $**21131** | $**(4659)** | $**16524** | $**7103** | $**40056** |
| Share-based compensation | *-* |  |  |  | *-* |  | 128 |  |  |  | 128 |
| Exercise of stock options | 204 | 2 |  |  |  |  | (403) |  |  |  | (401) |
| Sale of joint ventures | *-* |  |  |  | *-* |  | (7518) | 1412 |  | (4509) | (10615) |
| Purchase of non-controlling interest | *-* |  |  |  | *-* |  |  |  |  | (2115) | (2115) |
| Purchase of treasury shares | (1000) | (10) |  |  | 1000 | (1790) |  |  |  |  | (1800) |
| Other comprehensive income | *-* |  |  |  | *-* |  |  | 979 |  | 393 | 1372 |
| Net income | *-* |  |  |  | *-* |  |  |  | 3627 | 448 | 4075 |
| **Balance at June 30, 2024** | **23420** | $**234** |  | $**-** | **1205** | $**(2075)** | $**13338** | $**(2268)** | $**20151** | $**1320** | $**30700** |
| Original Adjustment |  |  |  |  |  |  |  |  |  |  |  |
| Sale of joint ventures | *-* |  |  |  | *-* |  | 7518 |  |  |  | 7518 |
| Net (loss) | *-* |  |  |  | *-* |  |  |  | (7518) |  | (7518) |
| Total Adjustments | *-* | $- |  | $- | *-* | $- | $7518 | $- | $(7518) | $- | $- |
| **As Restated** | ***Common Stock*** | ***Common Stock*** | ***Series B Convertible Preferred Stock*** | ***Series B Convertible Preferred Stock*** | ***Treasury Stock*** | ***Treasury Stock*** | ***Additional*** | ***Accumulated Other*** |  | ***Non-*** |  |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Paid-In Capital*** | ***Comprehensive Loss*** | ***Retained Earnings*** | ***Controlling Interest*** | ***Total Stockholders' Equity*** |
| Balance at March 31, 2024 | 24216 | $242 |  | $- | 205 | $(285) | $21131 | $(4659) | $16524 | $7103 | $40056 |
| Share-based compensation | *-* |  |  |  | *-* |  | 128 |  |  |  | 128 |
| Exercise of stock options | 204 | 2 |  |  |  |  | (403) |  |  |  | (401) |
| Sale of joint ventures | *-* |  |  |  | *-* |  |  | 1412 |  | (4509) | (3097) |
| Purchase of non-controlling interest | *-* |  |  |  | *-* |  |  |  |  | (2115) | (2115) |
| Purchase of treasury shares | (1000) | (10) |  |  | 1000 | (1790) |  |  |  |  | (1800) |
| Other comprehensive income | *-* |  |  |  | *-* |  |  | 979 |  | 393 | 1372 |
| Net income (loss) | *-* |  |  |  | *-* |  |  |  | (3891) | 448 | (3443) |
| **Balance at June 30, 2024** | **23420** | $**234** |  | $**-** | **1205** | $**(2075**) | $**20856** | $**(2268**) | $**12633** | $**1320** | $**30700** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *69*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Stockholders' Equity** 

**Three Months Ended *September 30***

*(In thousands)*

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **As Previously Reported** | ***Common Stock*** | ***Common Stock*** | ***Series B Convertible Preferred Stock*** | ***Series B Convertible Preferred Stock*** | ***Treasury Stock*** | ***Treasury Stock*** | ***Additional*** | ***Accumulated Other*** |  | ***Non-*** |  |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Paid-In Capital*** | ***Comprehensive Loss*** | ***Retained Earnings*** | ***Controlling Interest*** | ***Total Stockholders' Equity*** |
| **Balance at June 30, 2024** | **23420** | $**234** |  | $**-** | **1205** | $**(2075)** | $**13338** | $**(2268)** | $**20151** | $**1320** | $**30700** |
| Share-based compensation | *-* |  |  |  | *-* |  | (149) |  |  |  | (149) |
| Exercise of stock options | 28 |  |  |  |  |  |  |  |  |  |  |
| Sale of joint ventures | *-* |  |  |  | *-* |  | (38) | 273 |  | (941) | (706) |
| Purchase of non-controlling interest | *-* |  |  |  | *-* |  |  |  |  |  |  |
| Purchase of treasury shares |  |  |  |  |  |  |  |  |  |  |  |
| Other comprehensive income | *-* |  |  |  | *-* |  |  | (27) |  | (45) | (72) |
| Net (loss) | *-* |  |  |  | *-* |  |  |  | (144) | (88) | (232) |
| **Balance at September 30, 2024** | **23448** | $**234** |  | $**-** | **1205** | $**(2075)** | $**13151** | $**(2022)** | $**20007** | $**246** | $**29541** |
| Original Adjustment |  |  |  |  |  |  |  |  |  |  |  |
| Balance at June 30, 2024 | *-* | $- |  | $- | *-* | $- | $7518 | $- | $(7518) | $- | $- |
| Sale of joint ventures | *-* |  |  |  | *-* |  | 38 |  |  |  | 38 |
| Net (loss) | *-* |  |  |  | *-* |  |  |  | (38) |  | (38) |
| Total Adjustments | *-* | $- |  | $- | *-* | $- | $38 | $- | $(38) | $- | $- |
| **As Restated** | ***Common Stock*** | ***Common Stock*** | ***Series B Convertible Preferred Stock*** | ***Series B Convertible Preferred Stock*** | ***Treasury Stock*** | ***Treasury Stock*** | ***Additional*** | ***Accumulated Other*** |  | ***Non-*** |  |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Paid-In Capital*** | ***Comprehensive Loss*** | ***Retained Earnings*** | ***Controlling Interest*** | ***Total Stockholders' Equity*** |
| Balance at June 30, 2024 | 23420 | $234 |  | $- | 1205 | $(2075) | $20856 | $(2268) | $12633 | $1320 | $30700 |
| Share-based compensation | *-* |  |  |  | *-* |  | (149) |  |  |  | (149) |
| Exercise of stock options | 28 |  |  |  |  |  |  |  |  |  |  |
| Sale of joint ventures | *-* |  |  |  | *-* |  |  | 273 |  | (941) | (668) |
| Purchase of non-controlling interest | *-* |  |  |  | *-* |  |  |  |  |  |  |
| Purchase of treasury shares |  |  |  |  |  |  |  |  |  |  |  |
| Other comprehensive (loss) | *-* |  |  |  | *-* |  |  | (27) |  | (45) | (72) |
| Net (loss) | *-* |  |  |  | *-* |  |  |  | (182) | (88) | (270) |
| **Balance at September 30, 2024** | **23448** | $**234** |  | $**-** | **1205** | $**(2075**) | $**20707** | $**(2022**) | $**12451** | $**246** | $**29541** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *70*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Stockholders' Equity** 

**Six Months Ended *June 30***

*(In thousands)*

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **As Previously Reported** | ***Common Stock*** | ***Common Stock*** | ***Series B Convertible Preferred Stock*** | ***Series B Convertible Preferred Stock*** | ***Treasury Stock*** | ***Treasury Stock*** | ***Additional*** | ***Accumulated Other*** |  | ***Non-*** |  |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Paid-In Capital*** | ***Comprehensive Loss*** | ***Retained Earnings*** | ***Controlling Interest*** | ***Total Stockholders' Equity*** |
| **Balance at January 1, 2024** | **23241** | $**232** | **650** | $**7** | **205** | $**(285)** | $**21004** | $**(3341)** | $**10609** | $**12020** | $**40246** |
| Share-based compensation | *-* |  | *-* |  | *-* |  | 256 |  |  |  | 256 |
| Conversion of preferred stock to common stock | 975 | 10 | (650) | (7) |  |  | (1) |  |  |  | 2 |
| Exercise of stock options | 204 | 2 |  |  |  |  | (403) |  |  |  | (401) |
| Sale of joint ventures | *-* |  | *-* |  | *-* |  | (7518) | 2124 | (711) | (9490) | (15595) |
| Purchase of non-controlling interest | *-* |  | *-* |  | *-* |  |  |  |  | (2115) | (2115) |
| Purchase of treasury shares | (1000) | (10) |  |  | 1000 | (1790) |  |  |  |  | (1800) |
| Other comprehensive (loss) | *-* |  | *-* |  | *-* |  |  | (1051) |  | (97) | (1148) |
| Net income | *-* |  | *-* |  | *-* |  |  |  | 10253 | 1002 | 11255 |
| **Balance at June 30, 2024** | **23420** | $**234** | **-** | $**-** | **1205** | $**(2075)** | $**13338** | $**(2268)** | $**20151** | $**1320** | $**30700** |
| Original Adjustment |  |  |  |  |  |  |  |  |  |  |  |
| Sale of joint ventures | *-* |  | *-* |  | *-* |  | 7518 |  |  |  | 7518 |
| Net (loss) | *-* |  | *-* |  | *-* |  |  |  | (7518) |  | (7518) |
| Total Adjustments | *-* | $- | *-* | $- | *-* | $- | $7518 | $- | $(7518) | $- | $- |
| **As Restated** | ***Common Stock*** | ***Common Stock*** | ***Series B Convertible Preferred Stock*** | ***Series B Convertible Preferred Stock*** | ***Treasury Stock*** | ***Treasury Stock*** | ***Additional*** | ***Accumulated Other*** |  | ***Non-*** |  |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Paid-In Capital*** | ***Comprehensive Loss*** | ***Retained Earnings*** | ***Controlling Interest*** | ***Total Stockholders' Equity*** |
| Balance at January 1, 2024 | 23241 | $232 | 650 | $7 | 205 | $(285) | $21004 | $(3341) | $10609 | $12020 | $40246 |
| Share-based compensation | *-* |  | *-* |  | *-* |  | 256 |  |  |  | 256 |
| Conversion of preferred stock to common stock | 975 | 10 | (650) | (7) |  |  | (1) |  |  |  | 2 |
| Exercise of stock options | 204 | 2 |  |  |  |  | (403) |  |  |  | (401) |
| Sale of joint ventures | *-* |  | *-* |  | *-* |  |  | 2124 | (711) | (9490) | (8077) |
| Purchase of non-controlling interest | *-* |  | *-* |  | *-* |  |  |  |  | (2115) | (2115) |
| Purchase of treasury shares | (1000) | (10) |  |  | 1000 | (1790) |  |  |  |  | (1800) |
| Other comprehensive (loss) | *-* |  | *-* |  | *-* |  |  | (1051) |  | (97) | (1148) |
| Net income | *-* |  | *-* |  | *-* |  |  |  | 2735 | 1002 | 3737 |
| **Balance at June 30, 2024** | **23420** | $**234** | **-** | $**-** | **1205** | $**(2075**) | $**20856** | $**(2268**) | $**12633** | $**1320** | $**30700** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *71*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Stockholders' Equity** 

**Nine Months Ended *September 30***

*(In thousands)*

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **As Previously Reported** | ***Common Stock*** | ***Common Stock*** | ***Series B Convertible Preferred Stock*** | ***Series B Convertible Preferred Stock*** | ***Treasury Stock*** | ***Treasury Stock*** | ***Additional*** | ***Accumulated Other*** |  | ***Non-*** |  |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Paid-In Capital*** | ***Comprehensive Loss*** | ***Retained Earnings*** | ***Controlling Interest*** | ***Total Stockholders' Equity*** |
| **Balance at January 1, 2024** | **23241** | $**232** | **650** | $**7** | **205** | $**(285)** | $**21004** | $**(3341)** | $**10609** | $**12020** | $**40246** |
| Share-based compensation | *-* |  | *-* |  | *-* |  | 107 |  |  |  | 107 |
| Conversion of preferred stock to common stock | 975 | 10 | (650) | (7) |  |  | (1) |  |  |  | 2 |
| Exercise of stock options | 232 | 2 |  |  |  |  | (403) |  |  |  | (401) |
| Sale of joint ventures | *-* |  | *-* |  | *-* |  | (7556) | 2397 | (712) | (10431) | (16302) |
| Purchase of non-controlling interest | *-* |  | *-* |  | *-* |  |  |  |  | (2115) | (2115) |
| Purchase of treasury shares | (1000) | (10) |  |  | 1000 | (1790) |  |  |  |  | (1800) |
| Other comprehensive (loss) | *-* |  | *-* |  | *-* |  |  | (1078) |  | (142) | (1220) |
| Net income | *-* |  | *-* |  | *-* |  |  |  | 10110 | 914 | 11024 |
| **Balance at September 30, 2024** | **23448** | $**234** | **-** | $**-** | **1205** | $**(2075)** | $**13151** | $**(2022)** | $**20007** | $**246** | $**29541** |
| Original Adjustment |  |  |  |  |  |  |  |  |  |  |  |
| Sale of joint ventures | *-* |  | *-* |  | *-* |  | 7556 |  |  |  | 7556 |
| Net (loss) | *-* |  | *-* |  | *-* |  |  |  | (7556) |  | (7556) |
| Total Adjustments | *-* | $- | *-* | $- | *-* | $- | $7556 | $- | $(7556) | $- | $- |
| **As Restated** | ***Common Stock*** | ***Common Stock*** | ***Series B Convertible Preferred Stock*** | ***Series B Convertible Preferred Stock*** | ***Treasury Stock*** | ***Treasury Stock*** | ***Additional*** | ***Accumulated Other*** |  | ***Non-*** |  |
|  | *Shares* | *Amount* | *Shares* | *Amount* | *Shares* | *Amount* | *Paid-In Capital* | *Comprehensive Loss* | *Retained Earnings* | *Controlling Interest* | *Total Stockholders' Equity* |
| Balance at January 1, 2024 | 23241 | $232 | 650 | $7 | 205 | $(285) | $21004 | $(3341) | $10609 | $12020 | $40246 |
| Share-based compensation | *-* |  | *-* |  | *-* |  | 107 |  |  |  | 107 |
| Conversion of preferred stock to common stock | 975 | 10 | (650) | (7) |  |  | (1) |  |  |  | 2 |
| Exercise of stock options | 232 | 2 |  |  |  |  | (403) |  |  |  | (401) |
| Sale of joint ventures | *-* |  | *-* |  | *-* |  |  | 2397 | (712) | (10431) | (8746) |
| Purchase of non-controlling interest | *-* |  | *-* |  | *-* |  |  |  |  | (2115) | (2115) |
| Purchase of treasury shares | (1000) | (10) |  |  | 1000 | (1790) |  |  |  |  | (1800) |
| Other comprehensive (loss) | *-* |  | *-* |  | *-* |  |  | (1078) |  | (142) | (1220) |
| Net income | *-* |  | *-* |  | *-* |  |  |  | 2554 | 914 | 3468 |
| **Balance at September 30, 2024** | **23448** | $**234** | **-** | $**-** | **1205** | $**(2075**) | $**20707** | $**(2022**) | $**12451** | $**246** | $**29541** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *72*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Cash Flows**

*(In thousands)*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Six months ended June 30, 2024*** | ***Six months ended June 30, 2024*** | ***Six months ended June 30, 2024*** | ***Six months ended June 30, 2024*** | ***Six months ended June 30, 2024*** |
|  | ***As Previously Reported*** | ***Original Adjustment*** | ***Original As Restated*** | ***Adjustment*** | ***Restated*** |
| **Cash flows from operating activities:** |  |  |  |  |  |
| Net income (loss) | $**11255** | $**(7518)** | $**3737** | $**-** | $**3737** |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities |  |  |  |  |  |
| Depreciation and amortization | **989** | **-** | **989** | **(63)** | **926** |
| Amortization of operating lease right-of-use assets | **310** | **-** | **310** | **-** | **310** |
| Provision for expected credit losses | **89** | **-** | **89** | **-** | **89** |
| Deferred income tax expense | **1349** | **-** | **1349** | **-** | **1349** |
| (Gain) loss on sale of business | **(12076)** | **7518** | **(4558)** | **(1188)** | **(5746)** |
| Share-based compensation | **256** | **-** | **256** | **-** | **256** |
| Changes in operating assets and liabilities: |  |  |  |  |  |
| Accounts receivable, net | **(9766)** | **-** | **(9766)** | **3567** | **(6199)** |
| Prepaid expenses and other current assets | **(2620)** | **-** | **(2620)** | **2791** | **171** |
| Change in deferred taxes due to deconsolidation | **2307** | **-** | **2307** | **-** | **2307** |
| Accounts payable | **1992** | **-** | **1992** | **501** | **2493** |
| Operating lease liabilities | **(310)** | **-** | **(310)** | **-** | **(310)** |
| Accrued expenses, other current liabilities, due to affiliates and customer incentives and deposits | **6395** | **-** | **6395** | **(5182)** | **1213** |
| Net cash provided by operating activities of continuing operations | **170** | **-** | **170** | **426** | **596** |
| Net cash used in operating activities of discontinued operations |  | **-** | **-** | **(426)** | **(426)** |
| Net cash provided by operating activities | **170** | **-** | **170** | **-** | **170** |
| **Cash flows from investing activities** |  |  |  |  |  |
| Proceeds from sale of joint ventures, net of cash transferred | **11743** | **-** | **11743** | **(3761**) | **7982** |
| Purchases of property and equipment | **(781)** | **-** | **(781)** | **10** | **(771)** |
| Net cash provided by (used in) investing activities of continuing operations | **10962** | **-** | **10962** | **(3751**) | **7211** |
| Net cash provided by investing activities of discontinued operations | **-** | **-** | **-** | **3751** | **3751** |
| Net cash provided by investing activities | **10962** | **-** | **10962** | **-** | **10962** |
| **Cash flows from financing activities** |  |  |  |  |  |
| Borrowings under line of credit | **69117** | **-** | **69117** | **-** | **69117** |
| Repayments under line of credit | **(64044)** | **-** | **(64044)** | **-** | **(64044)** |
| Proceeds from term debt | **26** | **-** | **26** | **-** | **26** |
| Net cash settlement of stock options | ***-*** | ***-*** | ***-*** | ***-*** | ***-*** |
| Repurchases of common stock | **(1800)** | **-** | **(1800)** | **-** | **(1800)** |
| Payments of notes to seller | **(1843)** | **-** | **(1843)** | **-** | **(1843)** |
| Payments to acquire noncontrolling interests | **(250)** | **-** | **(250)** | **-** | **(250)** |
| Dividend on noncontrolling interest | **(1315)** | **-** | **(1315)** | **1315** | **-** |
| Net cash provided by (used in) financing activities of continuing operations | **(109)** | **-** | **(109)** | **1315** | **1206** |
| Net cash used in financing activities of discontinued operations | **-** | **-** | **-** | **(1315)** | **(1315)** |
| Net cash used in financing activities | **(109)** | **-** | **(109)** | **-** | **(109)** |
| Effect of foreign exchange rate changes on cash | **(48)** | **-** | **(48)** | **-** | **(48)** |
| Net change in cash, cash equivalents and restricted cash | **10976** | **-** | **10976** | **-** | **10976** |
| Cash, cash equivalents at beginning of period | **10719** | **-** | **10719** | **-** | **10719** |
| Cash, cash equivalents at end of period | $**21695** | $**-** | $**21695** | $**-** | $**21695** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *73*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Cash Flows**

*(In thousands)*

---

| | | | |
|:---|:---|:---|:---|
|  | ***Six months ended June 30, 2023*** | ***Six months ended June 30, 2023*** | ***Six months ended June 30, 2023*** |
|  | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| **Cash flows from operating activities:** |  |  |  |
| Net income | $**2883** | $**-** | $**2883** |
| Adjustments to reconcile net income to net cash provided by operating activities |  |  |  |
| Depreciation and amortization | **1026** | **(85)** | **941** |
| Amortization of operating lease right-of-use assets | **256** | **-** | **256** |
| Provision for expected credit losses | **38** | **-** | **38** |
| Deferred income tax expense | **111** | **2107** | **2218** |
| Share-based compensation | **134** | **-** | **134** |
| Changes in operating assets and liabilities: |  |  |  |
| Accounts receivable, net | **1205** | **1320** | **2525** |
| Prepaid expenses and other current assets | **3118** | **(5260)** | **(2142)** |
| Accounts payable | **(803)** | **251** | **(552)** |
| Operating lease liabilities | **(256)** | **-** | **(256)** |
| Accrued expenses, other current liabilities, due to affiliates and customer incentives and deposits | **(968)** | **1395** | **427** |
| Net cash provided by (used in) operating activities of continuing operations | **6744** | **(272)** | **6472** |
| Net cash provided by operating activities of discontinued operations |  | **272** | **272** |
| Net cash provided by operating activities | **6744** | **-** | **6744** |
| **Cash flows from investing activities** |  |  |  |
| Purchases of property and equipment | **(717)** | **23** | **(694)** |
| Net cash provided by (used in) investing activities of continuing operations | **(717)** | **23** | **(694)** |
| Net cash used in investing activities of discontinued operations | **-** | **(23)** | **(23)** |
| Net cash used in by investing activities | **(717)** | **-** | **(717)** |
| **Cash flows from financing activities** |  |  |  |
| Borrowings under line of credit | **47340** | **-** | **47340** |
| Repayments under line of credit | **(50003)** | **-** | **(50003)** |
| Payments to acquire noncontrolling interests | **(473)** | **-** | **(473**) |
| Dividend on noncontrolling interest | **(1196)** | **1196** | **-** |
| Net cash provided by (used in) financing activities of continuing operations | **(4332)** | **1196** | **(3136)** |
| Net cash used in financing activities of discontinued operations | **-** | **(1196)** | **(1196)** |
| Net cash used in financing activities | **(4332)** | **-** | **(4332)** |
| Effect of foreign exchange rate changes on cash | **(124)** | **-** | **(124)** |
| Net change in cash, cash equivalents and restricted cash | **1571** | **-** | **1571** |
| Cash, cash equivalents at beginning of period | **9345** |  | **9345** |
| Reclass to discontinued operations | **-** | **(1815)** | **(1815)** |
| Cash, cash equivalents at end of period | $**10916** | $**-** | $**9101** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *74*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Cash Flows**

*(In thousands)*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***Nine months ended September 30, 2024*** | ***Nine months ended September 30, 2024*** | ***Nine months ended September 30, 2024*** | ***Nine months ended September 30, 2024*** | ***Nine months ended September 30, 2024*** |
|  | ***As Previously Reported*** | ***Original Adjustment*** | ***Original As Restated*** | ***Adjustment*** | ***Restated*** |
| **Cash flows from operating activities:** |  |  |  |  |  |
| Net income (loss) | $**11024** | $**(7556)** | $**3468** | $**-** | $**3468** |
| Adjustments to reconcile net income (loss) to net cash used in operating activities |  |  |  |  |  |
| Depreciation and amortization | **1443** | **-** | **1443** | **(63)** | **1380** |
| Amortization of operating lease right-of-use assets | **415** | **-** | **415** | **-** | **415** |
| Provision for expected credit losses | **133** | **-** | **133** | **-** | **133** |
| Deferred income tax expense | **4577** | **-** | **4577** | **-** | **4577** |
| (Gain) / loss on sale of business | **(11154)** | **7556** | **(3598)** | **(1188)** | **(4786)** |
| Share-based compensation | **107** | **-** | **107** | **-** | **107** |
| Changes in operating assets and liabilities: |  |  |  |  |  |
| Accounts receivable, net | **(5843)** | **-** | **(5843)** | **3567** | **(2276)** |
| Prepaid expenses and other current assets | **(2383)** | **-** | **(2383)** | **2791** | **408** |
| Accounts payable | **3832** | **-** | **3832** | **501** | **4333** |
| Operating lease liabilities | **(415)** | **-** | **(415)** | **-** | **(415)** |
| Accrued expenses, other current liabilities, due to affiliates and customer incentives and deposits | **(2466)** | **-** | **(2466)** | **(5182)** | **(7648)** |
| Net cash provided by (used in) operating activities of continuing operations | **(730)** | **-** | **(730)** | **426** | **(304)** |
| Net cash used in operating activities of discontinued operations |  | **-** | **-** | **(426)** | **(426)** |
| Net cash used in operating activities | **(730)** | **-** | **(730)** | **-** | **(730)** |
| **Cash flows from investing activities** |  |  |  |  |  |
| Proceeds from sale of joint ventures, net of cash transferred | **10436** | **-** | **10436** | **(3761**) | **6675** |
| Purchases of property and equipment | **(908)** | **-** | **(908)** | **10** | **(898)** |
| Net cash provided by (used in) investing activities of continuing operations | **9528** | **-** | **9528** | **(3751**) | **5777** |
| Net cash provided by investing activities of discontinued operations | **-** | **-** | **-** | **3751** | **3751** |
| Net cash provided by investing activities | **9528** | **-** | **9528** | **-** | **9528** |
| **Cash flows from financing activities** |  |  |  |  |  |
| Borrowings under line of credit | **103184** | **-** | **103184** | **-** | **103184** |
| Repayments under line of credit | **(97782)** | **-** | **(97782)** | **-** | **(97782)** |
| Proceeds from term debt | **16** | **-** | **16** | **-** | **16** |
| Net cash settlement of stock options | ***-*** | ***-*** | ***-*** | ***-*** | ***-*** |
| Repurchases of common stock | **(1800)** | **-** | **(1800)** | **-** | **(1800)** |
| Payments of notes to seller | **(1843)** | **-** | **(1843)** | **-** | **(1843)** |
| Payments to acquire noncontrolling interests | **(250)** | **-** | **(250)** | **-** | **(250)** |
| Dividend on noncontrolling interest | **(1315)** | **-** | **(1315)** | **1315** | **-** |
| Net cash provided by financing activities of continuing operations | **210** | **-** | **210** | **1315** | **1525** |
| Net cash used in financing activities of discontinued operations | **-** | **-** | **-** | **(1315)** | **(1315)** |
| Net cash provided by financing activities | **210** | **-** | **210** | **-** | **210** |
| Effect of foreign exchange rate changes on cash | **(75)** | **-** | **(75)** | **-** | **(75)** |
| Net change in cash, cash equivalents and restricted cash | **8933** | **-** | **8933** | **-** | **8933** |
| Cash, cash equivalents at beginning of period | **10719** | **-** | **10719** | **-** | **10719** |
| Cash, cash equivalents at end of period | $**19652** | $**-** | $**19652** | $**-** | $**19652** |

---

&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *75*

------

**SPAR Group, Inc. and Subsidiaries** 

**Condensed Consolidated Statements of Cash Flows**

*(In thousands)*

---

| | | | |
|:---|:---|:---|:---|
|  | ***Nine months ended September 30, 2023*** | ***Nine months ended September 30, 2023*** | ***Nine months ended September 30, 2023*** |
|  | ***As Previously Reported*** | ***Adjustment*** | ***Restated*** |
| **Cash flows from operating activities:** |  |  |  |
| Net income | $**3981** | $**-** | $**3981** |
| Adjustments to reconcile net income to net cash provided by operating activities |  |  |  |
| Depreciation and amortization | **1574** | **(136)** | **1438** |
| Amortization of operating lease right-of-use assets | **433** | **-** | **433** |
| Provision for expected credit losses | **138** | **-** | **138** |
| Deferred income tax expense | **(15)** | **(623)** | **(638)** |
| Share-based compensation | **217** | **-** | **217** |
| Changes in operating assets and liabilities: |  |  |  |
| Accounts receivable, net | **(1963)** | **(15)** | **(1978)** |
| Prepaid expenses and other current assets | **1635** | **(3265)** | **(1630)** |
| Accounts payable | **409** | **275** | **684** |
| Operating lease liabilities | **(433)** | **-** | **(433)** |
| Accrued expenses, other current liabilities, due to affiliates and customer incentives and deposits | **(4336)** | **2814** | **(1522)** |
| Net cash provided by (used in) operating activities of continuing operations | **1640** | **(950)** | **690** |
| Net cash provided by operating activities of discontinued operations |  | **950** | **950** |
| Net cash provided by operating activities | **1640** | **-** | **1640** |
| **Cash flows from investing activities** |  |  |  |
| Purchases of property and equipment | **(1083)** | **46** | **(1037)** |
| Net cash provided by (used in) investing activities of continuing operations | **(1083)** | **46** | **(1037)** |
| Net cash used in investing activities of discontinued operations | **-** | **(46)** | **(46)** |
| Net cash used in investing activities | **(1083)** | **-** | **(1083)** |
| **Cash flows from financing activities** |  |  |  |
| Borrowings under line of credit | **80151** | **-** | **80151** |
| Repayments under line of credit | **(79520)** | **-** | **(79520)** |
| Payments to acquire noncontrolling interests | **(473)** | **-** | **(473)** |
| Dividend on noncontrolling interest | **(1674)** | **1247** | **(427)** |
| Net cash used in financing activities of continuing operations | **(1516)** | **1247** | **(269)** |
| Net cash used in financing activities of discontinued operations | **-** | **(1247**) | **(1247**) |
| Net cash used in financing activities | **(1516)** | **-** | **(1516)** |
| Effect of foreign exchange rate changes on cash | **(426)** | **-** | **(426)** |
| Net change in cash, cash equivalents and restricted cash | **(1385)** | **-** | **(1385)** |
| Cash, cash equivalents at beginning of period | **9345** |  | **9345** |
| Reclass to discontinued operations | **-** | **(3081)** | **(3081)** |
| Cash, cash equivalents at end of period | $**7960** | $**-** | $**4879** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 76

## Exhibit 10.69

Exhibit 10.69

**SEVENTH MODIFICATION AGREEMENT**

**THIS SEVENTH MODIFICATION AGREEMENT** (this ***"Modification Agreement")*** is entered into as of March <u>28t</u> 2024, by and among **NORTH MILL CAPITAL LLC,** a Delaware limited liability company, d/b/a SLR Business Credit **("Lender"),** with a place of business at 821 Alexander Road, Suite 130, Princeton, New Jersey 08540, **SPAR MARKETING FORCE, INC.,** a Nevada corporation("***US Borrower"),*** with its chief executive office located at 1910 Opdyke Court, Auburn Hills, Michigan 48326, and **SPAR CANADA COMPANY,** an unlimited company organized under the laws of Nova Scotia ***('Canadian Borrower''),*** with its chief executive office located at 10 Planchet Road, Unit 21, Vaughan, Ontario L4K 2C8.

**<u>RECITALS</u>**

**WHEREAS,** Lender, US Borrower and Canadian Borrower entered into a Loan and Security Agreement dated as of April 10, 2019 (as amended, modified, supplemented, substituted, extended or renewed from time to time, the ***"Loan Agreement")*** which sets forth the terms and conditions of a US Revolving Credit Facility by Lender to US Borrower and a Canadian Revolving Credit Facility by Lender to Canadian Borrower; and

**WHEREAS,** Borrowers have requested and Lender has agreed to, among other things, (i) amend the terms and conditions of the Loan Documents, and (ii) waiver certain "Specified Defaults" (as defined herein), each pursuant to the terms and conditions of this Modification Agreement.

**NOW, THEREFORE,** in consideration of the premises and other good and valuable consideration, the parties hereto adopt the above recitals and agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;1.  **<u>Definitions.</u>** Capitalized terms used herein, but not defined herein, shall have the same meanings ascribed to such terms in the Loan Agreement. The term "Modification Agreement," as defined in the preamble to this Modification Agreement, is incorporated by reference into the Loan Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;2.  **<u>Estoppel; Release.</u>** To induce Lender to enter into this Modification Agreement, each Borrower represents and warrants to Lender that it has no defenses, offsets or counterclaims regarding its Obligations under the Loan Agreement and the other Loan Documents to which it is a party. To induce Lender to enter into this Modification Agreement, each Borrower waives and releases and forever discharges Lender and its officers, directors, investors, bank group members, attorneys, agents, and employees from any liability, damage, claim, loss or expense of any kind that it may have against Lender or any of them arising out of or relating to the Obligations. Each Borrower further agrees to indemnify and hold Lender and its officers, directors, investors, bank group members, attorneys, agents and employees harmless from any loss, damage, judgment, liability or expense (including reasonable attorneys' fees) suffered by or rendered against Lender or any of them on account of any claims arising out of or relating to the Obligations, in each case, except to the extent caused by the gross negligence or willful misconduct of the indemnitee or any of its representatives.

&nbsp;&nbsp;&nbsp;&nbsp;3.  **<u>Specific Amendments to the Loan Agreement.</u>** Effective as of the date hereof, the Loan Agreement is amended in the following particulars:

&nbsp;&nbsp;&nbsp;&nbsp;a. The definition of  ***Termination Date*** in Section 1.1 (Terms) of the Loan Agreement is hereby modified to read as follows:

*"****Termination Date*** means (a) October 10, 2025 (which represents a twelve-month extension/renewal of the initial term which would have ended on October 10, 2024 but for such extension with such extended period now being, the ***Initial Term)*** unless such date is extended pursuant to Section 3.1 hereof, and if so extended on one or more occasions, the last date of the last such extension, or (b) if earlier terminated by Lender pursuant to Section 9.1 hereof, the date of such termination."

&nbsp;&nbsp;&nbsp;&nbsp;b. Section 1.1 (Terms) of the Loan Agreement is hereby modified to add the following new defined term thereto in appropriate alphabetical order:

*"****Seventh Modification Agreement*** means that certain Seventh Modification Agreement, dated as of March <u>28th</u>, 2024, among US Borrower, Canadian Borrower and Lender."

&nbsp;&nbsp;&nbsp;&nbsp;c. The first sentence of Section 2.l(a) (Revolving Advances; Advance Limit) of the Loan Agreement is hereby modified **effective as of October 10, 2024,** to read as follows:

"Upon the request of US Borrower made at any time from and after the date hereof until the Termination Date, and so long as no Event of Default has occurred and is continuing, Lender may, in its Good Faith discretion, make Advances in Dollars to US Borrower under a revolving credit facility (the US Revolving Credit Facility) in an amount up to, so long as Dilution is less than three percent (3%), the sum of (a) up to ninety percent (90%) of the aggregate outstanding amount of Eligible Accounts of US Borrower plus (b) (i) up to eighty percent (80%) of Eligible Unbilled Accounts of US Borrower or (ii) Seven Million Dollars ($7,000,000), whichever is less, minus (c) an availability reserve in the amount of $500,000; provided, however, in no event at any time shall the maximum aggregate principal amount outstanding under the US Revolving Credit Facility exceed Twenty-Four Million Five Hundred Thousand Dollars ($24,500,000) (said Dollar limit being, the US Advance Limit)."

------

&nbsp;&nbsp;&nbsp;&nbsp;d. Section 2.7(a) (Facility Fee) of the Loan Agreement is hereby modified to read as follows: "(a)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) For the contract (loan) year commencing October 10, 2023, US Borrower shall pay to Lender a Facility Fee equal to eight tenths of one percent (0.80%) of Twenty-One Million Dollars ($21,000,000). One twelfth (1/12) of such Facility Fee shall be paid on October 10, 2023, and the remaining amount shall be paid in installments of like amount on the first (1st) day of each month thereafter until paid in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. In addition, if the amount owed under the US Revolving Credit Facility during the contract (loan) year commencing October 10, 2023, (A) exceeds Twenty-one Million Dollars ($21,000,000), but is less than or equal to Twenty-Two Million Dollars ($22,000,000), an additional Facility Fee of Fifteen Thousand Dollars ($15,000) will be charged at the initial occurrence thereof, (B) exceeds Twenty-Two Million Dollars ($22,000,000), but is less than or equal to Twenty-Three Million Dollars ($23,000,000), an additional Facility Fee of Fifteen Thousand Dollars ($15,000) will be charged at the initial occurrence thereof, (C) exceeds Twenty-Three Million Dollars ($23,000,000), but is less than or equal to Twenty-Four Million Dollars ($24,000,000), an additional Facility Fee of Fifteen Thousand Dollars ($15,000) will be charged at the initial occurrence thereof, (D) exceeds Twenty-Four Million Dollars ($24,000,000), but is less than or equal to Twenty-Five Million Dollars ($25,000,000), an additional Facility Fee of Fifteen Thousand Dollars ($15,000) will be charged at the initial occurrence thereof, or (E) exceeds Twenty-Five Million Dollars ($25,000,000), but is less than or equal to Twenty-Six Million Dollars ($26,000,000), an additional Facility Fee of Fifteen Thousand Dollars ($15,000) will be charged at the initial occurrence thereof, or (F) exceeds Twenty-Six Million Dollars ($26,000,000), but is less than or equal to Twenty-Seven Million Dollars ($27,000,000), an additional Facility Fee of Fifteen Thousand Dollars ($15,000) will be charged at the initial occurrence thereof, or (G) exceeds Twenty-Seven Million Dollars ($27,000,000), but is less than or equal to Twenty-Eight Million Dollars ($28,000,000), an additional Facility Fee of Fifteen Thousand Dollars ($15,000) will be charged at the initial occurrence thereof (each such $1,000,000 increment in clause (A), (B), (C), (D) (E) (F) and (G) above, being hereinafter referred to as an  ***Increment).*** The highest Daily Balance of the US Revolving Credit Facility during the contract (loan) year commencing October 10, 2023 (rounded upward to the next $1,000,000 unless such amount is a multiple of $1,000,000, in which case, such amount need not be rounded upward), but in no event less than Seventeen Million Five Hundred Thousand Dollars ($17,500,000), shall hereinafter be referred to as the  ***2023-2024 Benchmark Advance Amount.*** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. For the contract (loan) year commencing October 10, 2024, US Borrower shall pay to Lender a Facility Fee equal to eight tenths of one percent (0.80%) of the sum of (x) the 2023-2024 Benchmark Advance Amount <u>plus</u> (y) any Advances other than under the US Revolving Credit Facility. One twelfth (1/12) of such Facility Fee shall be paid on October 10, 2023, and the remaining amount shall be paid in installments of like amount on the first (1st) day of each month thereafter until paid in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. In addition, Borrower shall pay to Lender an additional Facility Fee of Fifteen Thousand Dollars ($15,000) at the initial occurrence that the amount owed under the US Revolving Credit Facility during the contract (loan) year commencing October 10, 2024 exceeds the 2023-2024 Benchmark Advance Amount by each applicable Increment (up to the US Advance Limit). The highest Daily Balance of the US Revolving Credit Facility during the contract (loan) year commencing October 10, 2024 (rounded upward to the next $1,000,000 unless such amount is a multiple of$1,000,000, in which case, such amount need not be rounded upward), but in no event less than the 2022-2023 Benchmark Advance Amount, shall hereinafter be referred to as the  ***2024-2025 Benchmark Advance Amount."*** 

&nbsp;&nbsp;&nbsp;&nbsp;e. Section 2.7(b) (Facility Fee) of the Loan Agreement is hereby modified to read as follows: "(b)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) For the Initial Term, Canadian Borrower shall pay to Lender a Facility Fee equal to eight tenths of one percent (0.80%) of Two Million Canadian Dollars (CDN$2,000,000) on October 10, 2023 and on October 10, 2024. Such Facility Fee is fully earned on the date of this Seventh Modification Agreement but as an accommodation to Borrower, such fee may paid in equal monthly installments of $1,333.33 payable monthly on the first day of each month for each contract (loan) year until paid in full."

&nbsp;&nbsp;&nbsp;&nbsp;(t) Section 7.8 Compensation is deleted in its entirety and that section is now "Reserved."

&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Notice of Events of Default and Limited Waiver.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;a. Borrower acknowledges the existence of the following Events of Default under the Loan Agreement (the **"Specified Defaults"):** (i) failure of the Borrower to comply with <u>Section 6.4(a)</u> of the Loan Agreement with respect to Borrower's delivery of the month end :financial statements for the month ending January 31, 2024 and quarter end :financial statements for the quarter ending December 31, 2023; and (ii) failure of the Borrower to furnish to Lender, Borrowers' fiscal year projections prior to January 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;b. Subject to the conditions set forth below, Lender hereby waives compliance by the Borrower with respect to the Specified Defaults only. Lender's waiver of non-compliance is limited to the specific instance of the Specified Defaults and shall not be deemed a waiver of or consent to any other failure to comply. Such waiver shall not prejudice or constitute a waiver of any right or remedies, which Lender may have or be entitled to with respect to any other breach of any of the foregoing Sections or any other provision of the Loan Agreement. The waiver is for this particular instance and shall not be construed as a waiver of any other presently existing or future Event of Default.

------

&nbsp;&nbsp;&nbsp;&nbsp;**5.**  **<u>Fifth Amended and Restated Revolving Credit Master Promissory Notes.</u>** To evidence the increase in each of the US Revolving Credit Facility and the Applicable Rate, US Borrower shall execute and deliver to Lender a Fifth Amended and Restated Revolving Credit Master Promissory Note (the  ***"Amended and Restated US Note"),*** which Amended and Restated US Note shall amend and restate and supersede and replace the Fourth Amended and Restated Revolving Credit Master Promissory Note dated as of February 1, 2023 made by US Borrower and payable to the order of Lender and shall not be considered a novation and shall be a Note under the Loan Agreement. To evidence the increase in each of the Canadian Revolving Credit Facility and the Applicable Rate, Canadian Borrower shall execute and deliver to Lender a Fifth Amended and Restated Revolving Credit Master Promissory Note (the  ***"Amended and Restated Canadian Note"),*** which Amended and Restated Canadian Note shall amend and restate and supersede and replace the Fourth Amended and Restated Revolving Credit Master Promissory Note dated as of February 1, 2023 made by Canadian Borrower and payable to the order of Lender and shall not be considered a novation and shall be a Note under the Loan Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;6.  **<u>Conditions to Effectiveness of this Modification Agreement.</u>** As conditions precedent to this Modification Agreement, Borrowers shall deliver, or cause to be delivered to Lender, or Lender shall have received the following, all in form and substance satisfactory to Lender, on or before the date hereof:

&nbsp;&nbsp;&nbsp;&nbsp;a. This Modification Agreement, duly executed by Borrowers, together with the consent of the Guarantors attached hereto; and

&nbsp;&nbsp;&nbsp;&nbsp;b. The Amended and Restated US Note, duly executed by US Borrower, and the Amended and Restated Canadian Note, duly executed by Canadian Borrower.

&nbsp;&nbsp;&nbsp;&nbsp;c. Borrower shall provide to Lender month end financial statements for January 31, 2024, quarter end financial statements for December 31, 2023 and fiscal year projections as indicated in Section 4(a) by March 31, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;7.  **<u>Reaffirmation of Representations and Warranties.</u>** Each Borrower hereby reaffirms the representations and warranties made by it in the Loan Agreement and all of the other Loan Documents as fully and completely as if set forth herein at length and made anew. All of such representations and warranties are true, correct and complete as of the date hereof (except as to such representations and warranties which are made as of a specified date, in which case such representations and warranties remain true as of such date, and except as to the matters expressly waived hereunder). In addition, each Borrower represents and warrants to Lender that:

&nbsp;&nbsp;&nbsp;&nbsp;a. No consent or approval of, or exemption by any person is required to authorize, or is otherwise required in connection with the execution and delivery of this Modification Agreement, which has not been obtained and which remains in full force and effect;

&nbsp;&nbsp;&nbsp;&nbsp;b. Such Borrower has the power to execute, deliver and carry out this Modification Agreement and all documents executed in connection herewith, and this Modification Agreement and such other Loan Documents have been duly authorized by all requisite organizational action and are valid, binding and enforceable as against such Borrower in accordance with their terms;

&nbsp;&nbsp;&nbsp;&nbsp;c. No material adverse change in the financial condition of such Borrower has occurred since the date of the most recent financial statements of such Borrower submitted to Lender, and the information contained in said statements and reports is true and correctly reflects the financial condition of such Borrower as of the dates of the statements and reports, and such statements and reports have been prepared in accordance with GAAP and do not contain any material misstatement of fact or omit to state any facts necessary to make the statements contained therein not misleading; and

&nbsp;&nbsp;&nbsp;&nbsp;d. Except with respect to the "Specified Defaults" referred to and defined in Section 4 hereof, no Event of Default has occurred and is continuing under the Loan Agreement or any of the other Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;7.  **<u>Reaffirmation of Covenants.</u>** Each Borrower hereby reaffirms the affirmative and negative covenants set forth in the Loan Agreement and the other Loan Documents as fully and completely as if set forth herein at length (except as otherwise revised herein), and agrees that such covenants shall remain in full force and effect until payment in full of the Obligations.

&nbsp;&nbsp;&nbsp;&nbsp;8.  **<u>Reaffirmation of Security Interests and Liens.</u>** Each Borrower hereby confirms the security interests and liens granted by such Borrower to Lender in, to and under the Collateral in accordance with the Loan Agreement and other Loan Documents as security for its Obligations to Lender and acknowledges that such security interests shall continue unimpaired and in full force and effect. Each Borrower represents and warrants that, as of the date hereof, there are no claims, setoffs or defenses to Lender's exercise of any rights or remedies available to it as a creditor in realizing upon such assets under the terms and conditions of the Loan Agreement and the other Loan Documents and the security interests and liens in favor of Lender on such assets shall cover and secure all of such Borrower's existing and future Obligations to Lender, as increased and modified by this Modification Agreement.

------

&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Miscellaneous.</u> 

&nbsp;&nbsp;&nbsp;&nbsp;a. Each Borrower agrees to pay any and all fees and expenses, including reasonable counsel fees (including allocated fees of in-house counsel) incurred by Lender in connection with the preparation and execution of this Modification Agreement and all other documents executed in connection herewith.

&nbsp;&nbsp;&nbsp;&nbsp;b. This Modification Agreement is intended to supplement and modify the Loan Agreement and the rights and obligations of the parties under the Loan Agreement shall not in any way be vacated, modified or terminated except as herein provided. All terms and conditions contained in each and every agreement or promissory note or other evidence of indebtedness of Borrowers to Lender are incorporated herein by reference. If there is a conflict between any of the provisions heretofore entered into and the provisions of this Modification Agreement, then the provisions of this Modification Agreement shall govern. By entering into this Modification Agreement, Lender is not waiving any Event of Default, if any so exists, or any of its rights and remedies as a consequence thereof. **Each Borrower expressly ratifies and confirms the confession of judgment and waiver of jury trial provisions contained in the Loan Documents.** 

&nbsp;&nbsp;&nbsp;&nbsp;c. This Modification Agreement will be binding upon an inure to the benefit of each Borrower and Lender and their respective successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;d. This Modification Agreement may be executed and delivered in counterparts and by facsimile or other electronic delivery means, with each such counterpart and facsimile or other electronic delivery means constituting a valid, effective and enforceable agreement.

&nbsp;&nbsp;&nbsp;&nbsp;10.  **<u>CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER.</u>** THE VALIDITY OF THIS MODIFICATION AGREEMENT, ITS CONSTRUCTION, INTERPRETATION AND ENFORCEMENT AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS MODIFICATION AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE COURTS LOCATED IN THE COUNTY OF MERCER, STATE OF NEW JERSEY, THE FEDERAL COURTS WHOSE VENUE INCLUDES THE STATE OF NEW JERSEY OR AT THE SOLE OPTION OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THEMATTERINCONTROVERSY. **EACH LOAN PARTY ANDLENDEREACHWAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY** IN ANY PROCEEDING UNDER THIS MODIFICATION AGREEMENT OR RELATING TO THE DEALINGS OF LOAN PARTIES AND LENDER AND ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF "FORUM NON CONVENIENS" OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 10.

***[signature page follows]***

------

IN **WITNESS WHEREOF,** the parties hereto have caused this Modification Agreement to be executed and delivered as of the day and year first above written.

SPAR MARKETING FORCE, INC., a Nevada corporation,<br> as US Borrower<br> Name Michael Matacunas<br> Title: CEO

SPAR CANADA COMPANY, an unlimited company<br> organized under the laws of Nova Scotia, as Canadian Borrower

Name Michael Matacunas<br> Title: CEO

NORTH MILL CAPITAL LLC<br> Name: Beatriz Hernandez

Title: Executive Vice President

------

**<u>CONSENT OF GUARANTORS</u>**

Each of the undersigned guarantors (collectively, the **"Guarantors")** consents to the provisions of the foregoing Modification Agreement and all prior amendments (if any) to the Loan Agreement and confirms and agrees that: (a) such Guarantor's obligations under its respective guaranty dated April 10, 2019 (as amended, modified, supplemented, substituted, extended or renewed, from time to time, each a **"Guaranty")** relating to the Obligations mentioned in the Loan Agreement, as increased and modified by the Modification Agreement shall be unimpaired by the Modification Agreement; (b) such Guarantor has no defenses or setoffs, counterclaims, discounts, or charges of any kind against Lender, its officers, directors, investors, bank group members, employees, agents or attorneys with respect to its Guaranty; and (c) all of the terms, conditions, and covenants in its Guaranty remain unaltered and in full force and effect and are hereby ratified and confirmed and apply to the Obligations, as amended by the Modification Agreement. Each Guarantor certifies that all representations and warranties made in its Guaranty are true and correct on the date hereof (except as to such representations and warranties which are made as of a specified date, in which case such representations and warranties remain true as of such date). Each Guarantor acknowledges and agrees that its obligations under its Guaranty include, without limitation, its guaranty of the payment and performance obligations of Borrowers under the Loan Agreement, as modified, and the Notes evidencing the same. Each Guarantor acknowledges and confirms the cross-default and cross-collateralization provisions of the Loan Agreement, as increased and modified by the Modification Agreement. **Each Guarantor expressly ratifies and confirms the confession of judgment and waiver of jury trial provisions contained in the Guaranty.**

[signature page follows]

------

**WITNESS** the due execution hereof as a document under seal, as of the date of this Modification Agreement, intending to be legally bound hereby.

**SPAR GROUP, INC.,** a Delaware corporation, as a Guarantor

Name: Michael Matacunas<br> Title: CEO

**SPAR ACQUISITION, INC**., a Nevada corporation,<br> as a Guarantor

Name: Michael Matacunas<br> Title: CEO

**SPAR CANADA, INC.**, a Nevada corporation,<br> as a Guarantor

Name: Michael Matacunas<br> Title: CEO

**SPAR TRADEMARKS, INC**., a Nevada corporation,<br> as a Guarantor

Name: Michael Matacunas<br> Title: CEO

**SPAR ASSEMBLY & INSTALLATION, INC**., a<br> Nevada corporation, as a Guarantor

Name: Michael Matacunas<br> Title: CEO

## Exhibit 10.70

Exhibit 10.70

Fifth Amended and Restated Revolving Credit Master Promissory Note (US Borrower)<br> FIFTH AMENDED AND RESTATED REVOLVING CREDIT MASTER<br> PROMISSORY NOTE

$24,500,000.00 Princeton, New Jersey

October 10, 2024

FOR VALUE RECEIVED, the undersigned SPAR MARKETING FORCE, INC., a Nevada corporation ("Borrower"), promises to pay to the order of NORTH MILL CAPITAL LLC, a Delaware limited liability company, d/b/a SLR Business Credit ("Lender"), at 821 Alexander Road, Suite 130, Princeton, New Jersey 08540, or such other address as Lender may notify Borrower, such sum up to Twenty-Four Million Five Hundred Thousand and 00/100 Dollars ($24,500,000.00), together with interest as hereinafter provided, as may be outstanding on Advances by Lender to Borrower under Section 2.1(a) of the Loan and Security Agreement dated April 10, 2019, by and among Lender, Borrower and SPAR CANADA COMPANY, an unlimited company organized under the laws of Nova Scotia (as amended, modified, supplemented, substituted, extended or renewed from time to time, the "Loan Agreement"). This instrument, as amended, modified, supplemented, substituted, extended or renewed from time to time, may be referred to as the "Note". Capitalized terms not otherwise defined herein have the meanings set forth in the Loan Agreement. The Loan Agreement is incorporated herein as though fully set forth, and Borrower acknowledges its reading and execution thereof. In the event of any conflict or inconsistency between this Note and the Loan Agreement, the applicable provision of the Loan Agreement shall control, govern and be given effect. The principal amount owing hereunder shall be paid to Lender on the Termination Date, which is currently October 10, 2025, or as may otherwise be provided for in the Loan Agreement.

<br> On the first day of each calendar month hereafter, Borrower shall pay to Lender accrued interest, computed on the basis of a 360-day year for the actual number of days elapsed, on the Daily Balance, at the per annum rate of one and nine tenths percentage points (1.90%) above the Prime Rate in effect from time to time, but not less than six and three-quarters percent (6.75%) per annum. If there is a change in the Prime Rate, the rate of interest on the Daily Balance shall be changed accordingly as of the date of the change in the Prime Rate, without notice to Borrower.

<br> To secure the payment of this Note and the Obligations, Borrower has granted to Lender a continuing security interest in and lien on the Collateral.

<br> In addition to all remedies provided by law upon default on payment of this Note, or upon an Event of Default, Lender may, at its option:

<br> (1) declare this Note and the Obligations immediately due and payable;<br> (2) collect interest on this Note at the Default Rate set forth in the Loan Agreement from the date of such Event of Default, and if this Note is referred to an attorney for collection, collect reasonable attorneys' fees; and<br> (3) exercise any and all remedies provided for in the Loan Agreement.

<br> BORROWER WAIVES PRESENTMENT FOR PAYMENT, PROTEST AND NOTICE OF PROTEST FOR NON-PAYMENT OF THIS NOTE AND TRIAL BY JURY IN ANY ACTION UNDER OR RELATING TO THIS NOTE AND THE ADVANCES EVIDENCED HEREBY. THIS NOTE IS GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

<br> This Note amends and restates in its entirety that certain Fourth Amended and Restated Revolving Credit Master Promissory Note dated as of February 1, 2023, executed by Borrower in favor of Lender (the "Original Note"). The execution and delivery of this Note is not intended to be a repayment, settlement or other novation of the indebtedness evidenced by the Original Note, or release or otherwise adversely affect any lien or security interest securing such indebtedness.

[signature page follows]

------

Fifth Amended and Restated Revolving Credit Master Promissory Note (US Borrower)<br> SPAR MARKETING FORCE, INC.<br> By:<br> Name: Michael Matacunas<br> Title: CEO

## Exhibit 21.1

Exhibit 21.1

**SPAR Group, Inc.<br> List of Subsidiaries at December 31 2024**

---

| | | |
|:---|:---|:---|
| <u>**Owned Subsidiaries**</u>  |  | <u>**State**</u><u>**or**</u> <u>**Country of Incorporation**</u>  |
| SPAR Acquisition, Inc. | 100.0% | Nevada |
| SPAR Assembly & Installation, Inc. (f/k/a SPAR National Assembly Services, Inc.) | 100.0% | Nevada |
| SPAR Canada Company | 100.0% | Nova Scotia, Canada |
| SPAR Canada, Inc. | 100.0% | Nevada |
| SPAR Group International, Inc. | 100.0% | Nevada |
| SPAR, Inc. | 100.0% | Nevada |
| SPAR International Ltd. | 100.0% | Cayman Islands |
| SPAR Marketing Force, Inc. | 100.0% | Nevada |
| SPAR Trademarks, Inc. | 100.0% | Nevada |
| SPAR China Ltd. | 100.0% | China |
| SPAR NMS Holdings, Inc. (inactive) | 100.0% | Nevada |
| NMS Retail Services, ULC (inactive) | 100.0% | Nova Scotia, Canada |
| Resource Plus of North Florida, Inc. (RPI") | 100.0% | Florida |
| BDA Resources, LLC<sup>1</sup> | 70.0% | Florida |
| Leasex, LLC. (Operated by and with RPI) | 100.0% | Florida |
| Mobex of North Florida, Inc. (Operated by and with RPI) | 100.0% | Florida |
| SPAR Merchandising Romania, Ltd. (inactive and dissolved effective March 2025) | 100.0% | Romania |

---

<sup>1</sup> RPI owns a 70% interest in BDA Resource, LLC, a Florida limited liability company.

------

**SPAR Group, Inc.**<br> **List of Former Subsidiaries included in the Company's Financial Statements for the Periods Owned by the Company** 

---

| | | |
|:---|:---|:---|
| <u>**Formerly Owned Subsidiaries**</u>  |  | <u>**State**</u><u>**or**</u> <u>**Country of Incorporation**</u>  |
| National Merchandising Services, LLC<sup>2</sup> | 51.0% | Nevada |
| SGRP Meridian Proprietary Limited ("Meridian")<sup>3</sup> | 51.0% | South Africa |
| CMR-Meridian Proprietary Limited<sup>4</sup> | 51.0% | South Africa |
| &nbsp;&nbsp;&nbsp;Bordax Retail Services (Pty) Ltd <sup>4</sup> | 51.0% | South Africa |
| &nbsp;&nbsp;&nbsp;Bordax Retail Services Gauteng (Pty) Ltd <sup>4</sup> | 51.0% | South Africa |
| SPARFACTS Australia (Pty), Ltd.<sup>5</sup> | 51.0% | Australia |
| SPAR (Shanghai) Marketing Management Company Ltd.<sup>6</sup> | 51.0% | China |
| Unilink<sup>7A</sup> | 51.0% | China |
| SPAR DSI Human Resource Company<sup>7B</sup> | 38.5% | China |
| SPAR TODOPROMO, SAPI, de CV<sup>8</sup> | 51.0% | Mexico |
| SPAR NDS Tanitim Ve Danismanlik A.S. <sup>9</sup> | 51.0% | Turkey |
| SPAR KROGNOS Marketing Private Limited <sup>10</sup> | 51.0% | India |
| Preceptor Marketing Services Private Limited <sup>10</sup> | 51.0% | India |
| SGRP Brasil Participações Ltda. ("Brazil Holdings")<sup>11A</sup> | 100.0% | Brazil |
| SPAR Brasil Serviços de Merchandising e Tecnologia S.A. ("SPAR Brazil")<sup>11B</sup> | 51.0% | Brazil |
| SPAR Brasil Serviços Ltda. (f/k/a New Momentum Ltda.)<sup>11C</sup> | 51.0% | Brazil |
| SPAR Brasil Serviços Temporários Ltda. (f/k/a New Momentum Serviços Temporários Ltda.)<sup>11C</sup>  | 51.0% | Brazil |
| Plus Trade Do Brasil Prestacao De Servicos Ltda<sup>12</sup> | 51.0% | Brazil |
| SPAR Brasil Servicos Ltda <sup>12</sup> | 51.0% | Brazil |
| SGRP Servicos Ltda<sup>12</sup> | 51.0% | Brazil |
| SPAR FM Japan, Inc.<sup>13</sup> | 100.0% | Japan |

---

<sup>2</sup> The Company sold its 51% interest in this joint venture effective December 31, 2023.

<sup>3</sup> The Company sold its 51% interest in this joint venture effective March 31, 2024

<sup>4</sup> Owned by and being sold with Meridian.

<sup>6</sup> The Company sold its 51% interest in this joint venture effective December 31, 2023.

<sup>7</sup> The Company sold its 51% interest in this joint venture effective April 8, 2024

<sup>7A</sup> Owned by and being sold with SPAR (Shanghai) Marketing Management Company Ltd.

<sup>7B</sup> Inactive and being liquidated. It is 75.5% Owned by and being sold with SPAR (Shanghai) Marketing Management Company Ltd.

<sup>8</sup> The Company sold its 51% interest in this joint venture effective December 19, 2024

<sup>9</sup> The Company assigned its 51% interest in this joint venture effective August 13, 2024

<sup>10</sup> The Company sold its 51% interest in this joint venture effective August 31, 2024

<sup>11A</sup> The Company sold 100% interest in SGRP Brasil Participações Ltda. effective June 2024

<sup>11B</sup> Brazil Holdings owns 51% of SPAR Brasil Serviços de Merchandising e Tecnologia S.A. ("<u>SPAR Brazil</u>"), and Brazil Holdings will continue to own those interests after the Brazil Holdings Sale.

<sup>11C</sup> Brazil Holdings effectively owns slightly more than 51% of this subsidiary since SPAR Brazil owns 99% and Brazil Holdings owns 1% of the equity in this subsidiary, and SPAR Brazil and Brazil Holdings will continue to own those equity interests after the Brazil Holdings Sale.

<sup>12</sup> The Company believes SPAR Brazil owned and will continue to own those interest after the Brazil Holdings Sale

<sup>13</sup> The Company sold its 51% interest in this joint venture effective August 30, 2024.

## Exhibit 23.1

Exhibit 23.1

**Consent of Independent Registered Public Accounting Firm** 

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-152706, 333-189964, 333-228185, and 333-254991) of SPAR Group, Inc. of our report dated May 16, 2025, except for the effects of the restatement discussed in Notes 2 and 3 as to which the date is July 17, 2025, relating to the consolidated financial statements, which appears in this Annual Report on Form 10-K/A for the year ended December 31, 2024.

/s/ BDO USA, P.C.<br>

Troy, Michigan

July 17, 2025

## Exhibit 31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO<br> SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael R. Matacunas, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 10-K/A for the year ended December 31, 2024, of SPAR Group, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: July 17, 2025 | <u>/s/</u> <u>Michael R. Matacunas</u> |
|  | Michael R. Matacunas, President and Chief Executive Officer |

---

## Exhibit 31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO<br> SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Antonio Calisto Pato, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 10-K/A for the year ended December 31, 2024 of SPAR Group, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: July 17, 2025 | <u>/s/ Antonio Calisto Pato</u> |
|  | Antonio Calisto Pato, Chief Financial Officer,<br> Treasurer and Secretary |

---

## Exhibit 32.1

EXHIBIT 32.1

**Certification of Chief Executive Officer Pursuant to<br> Section 906 of the Sarbanes-Oxley Act of 2002**

In connection with the annual report on Form 10-K/A for the year ended December 31, 2024 (this "<u>Report</u>"), of SPAR Group, Inc. (the "<u>Registrant</u>"), the undersigned hereby certifies that, to his knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

---

| |
|:---|
| /s/ Michael R. Matacunas |
| Michael R. Matacunas |
| President and Chief Executive Officer |
| July 17, 2025 |

---

**A signed original of this written statement required by Section 906 has been provided to SPAR Group, Inc. and will be retained by SPAR Group, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.**

## Exhibit 32.2

EXHIBIT 32.2

**Certification of Chief Financial Officer Pursuant to<br> Section 906 of the Sarbanes-Oxley Act of 2002** 

In connection with the annual report on Form 10-K/A for the year ended December 31, 2024 (this "<u>Report</u>"), of SPAR Group, Inc. (the "<u>Registrant</u>"), the undersigned hereby certifies that, to her knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

---

| |
|:---|
| /s/ Antonio Calisto Pato |
| Antonio Calisto Pato |
| Chief Financial Officer, Treasurer and Secretary |
| July 17, 2025 |

---

**A signed original of this written statement required by Section 906 has been provided to SPAR Group, Inc. and will be retained by SPAR Group, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.**

## Ex-97

EXHIBIT 97

**SPAR Group, Inc.**

**Compensation Recovery Policy**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Purpose</u>. The purpose of this Compensation Recovery Policy (this "**Policy**") is to describe the circumstances under which SPAR Group, Inc. ()"**SGRP**" or the "**Corporation** ", and together with its subsidiaries, the "**Company**") is required to recover certain compensation paid to certain employees. Any references in compensation plans, agreements, equity awards or other policies to the Company's "recoupment", "clawback" or similarly-named policy shall be deemed to refer to this Policy with respect to Incentive-Based Compensation Received on or after the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Mandatory Recovery of Compensation</u>. In the event that the Corporation is required to prepare an Accounting Restatement, the Corporation shall recover reasonably promptly the amount of Erroneously Awarded Compensation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Definitions</u>. For purposes of this Policy, the following terms, when capitalized, shall have the meanings set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. "**Accounting Restatement**" shall mean any accounting restatement required by applicable U.S. accounting principles due to material noncompliance by the Corporation with any financial reporting requirement under the securities laws, including correction of an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Subject to the requirements of applicable listing standards, for clarity, Accounting Restatement does not include: (a) any proforma presentation reflecting any acquisition, disposition, merger or other transaction (however material); or (b) any other recasting of the Company's financial statements not correcting such a material noncompliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. "**Covered Officer**" shall mean the Company's president; principal financial officer; principal accounting officer (or if there is no such accounting officer, the controller); any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance); any other officer who performs a significant policy-making function; or any other person who performs similar significant policy-making functions for the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. "**Effective Date**" shall mean October 2, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. "**Erroneously Awarded Compensation**" shall mean the excess of (i) the amount of Incentive-Based Compensation Received by a person (A) after beginning service as a Covered Officer, (B) who served as a Covered Officer at any time during the performance period for that Incentive-Based Compensation, (C) while the Company has a class of securities listed on a national securities exchange or a national securities association and (D) during the Recovery Period; over (ii) the Recalculated Compensation. For the avoidance of doubt, a person who served as a Covered Officer during the periods set forth in clauses (A) and (B) of the preceding sentence shall continue to be subject to this Policy even after such person's service as a Covered Officer has ended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. "**Incentive-Based Compensation**" shall mean any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a financial reporting measure. A financial reporting measure is a measure that is determined and presented in accordance with the accounting principles used in preparing the Company's financial statements, and any measures that are derived wholly or in part from such measures, regardless of whether such measure is presented within the financial statements or included in a filing with the Securities and Exchange Commission. Each of stock price and total shareholder return is a financial reporting measure. For the avoidance of doubt, incentive-based compensation subject to this Policy does not include stock options, restricted stock, restricted stock units, phantom stock, or similar equity-based awards for which the grant is not contingent upon achieving any financial reporting measure performance goal and vesting is contingent solely upon completion of a specified employment period and/or attaining one or more non-financial reporting measures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. "**Recalculated Compensation**" shall mean the amount of Incentive-Based Compensation that otherwise would have been Received had it been determined based on the restated amounts in the Accounting Restatement, computed without regard to any taxes paid. For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of the Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement, the amount of the Recalculated Compensation must be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return, as the case may be, on the compensation Received. The Corporation must maintain documentation of the determination of that reasonable estimate and provide such documentation to the national securities exchange or association on which its securities are listed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Incentive-Based Compensation is deemed "  ***Received***" in theCorporation's fiscal period during which the financial reporting measure specified in the award of such Incentive-Based Compensation is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that period.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. "**Recovery Period**" shall mean the three completed fiscal years of the Corporation immediately preceding the date the Corporation is required to prepare an Accounting Restatement; provided that the Recovery Period shall not begin before the Effective Date. For purposes of determining the Recovery Period, the Corporation is considered to be "required to prepare an Accounting Restatement" on the earlier to occur of: (i) the date the Corporation's Super Independent Directors (as defined in the Corporation's Amended and Restated By-Laws as in effect on the Effective Date) (collectively, acting by majority vote, the "**Super Independent Directors**") conclude, or reasonably should have concluded, that the Corporation is required to prepare an Accounting Restatement, or (ii) the date a court, regulator, or other legally authorized body directs the Corporation to prepare an Accounting Restatement; <u>provided</u> <u>that</u> application and pursuit of recovery under this Policy would occur only after such conclusion or order is final and non-appealable . If the Corporation changes its fiscal year, then the transition period within or immediately following such three completed fiscal years also shall be included in the Recovery Period, <u>provided</u> <u>that</u> if the transition period between the last day of the Corporation's prior fiscal year end and the first day of its new fiscal year comprises a period of nine to 12 months, then such transition period shall instead be deemed one of the three completed fiscal years and shall not extend the length of the Recovery Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Exceptions</u>. Notwithstanding anything to the contrary in this Policy, recovery of Erroneously Awarded Compensation will not be required to the extent the Corporation's committee of independent directors responsible for executive compensation decisions (or a majority of the independent directors on the Corporation's board of directors in the absence of such a committee) has made a determination that such recovery would be impracticable and one of the following conditions have been satisfied:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. The direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered; provided that, before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation that was Incentive-Based Compensation based on the expense of enforcement, the Company must make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover, and provide that documentation to the national securities exchange or association on which its securities are listed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Recovery would violate home country law where, with respect to Incentive-Based Compensation, that law was adopted prior to November 28, 2022; provided that, before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation that was Incentive-Based Compensation based on violation of home country law, the Corporation must obtain an opinion of home country counsel, acceptable to the national securities exchange or association on which its securities are listed, that recovery would result in such a violation, and must provide such opinion to the exchange or association.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Corporation, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Manner of Recovery</u>. In addition to any other actions permitted by law or contract, the Corporation may take any or all of the following actions to recover any Erroneously Awarded Compensation: (a) require the Covered Officer to repay such amount; (b) offset such amount from any other compensation owed by the Corporation or any of its affiliates to the Covered Officer, regardless of whether the contract or other documentation governing such other compensation specifically permits or specifically prohibits such offsets; and (c) subject to Section 4(c), to the extent the Erroneously Awarded Compensation was deferred into a plan of deferred compensation, whether or not qualified, forfeit such amount (as well as the earnings on such amounts) from the Covered Officer's balance in such plan, regardless of whether the plan specifically permits or specifically prohibits such forfeiture. If the Erroneously Awarded Compensation consists of shares of the Corporation's common stock, and the Covered Officer still owns such shares, then the Corporation may satisfy its recovery obligations by requiring the Covered Officer to transfer such shares back to the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Other</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. This Policy shall be administered and interpreted, and may be amended from time to time, by the Super Independent Directors, and the determinations of the Super Independent Directors shall be binding on all Covered Officers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The Corporation shall not indemnify any Covered Officer against the loss of Erroneously Awarded Compensation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. The Corporation shall file all disclosures with respect to this Policy in accordance with the requirements of the Federal securities laws, including disclosure required by the Securities and Exchange Commission filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Any right to recovery under this Policy shall be in addition to, and not in lieu of, any other rights of recovery that may be available to the Corporation, <u>provided</u> <u>that</u> all recovery shall not exceed the amount of the Erroneously Awarded Compensation.