SGRP · Read the filing

Item 1A. Risk Factors

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

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

Those Risks reflect our expectations, views and assumptions only as of the date of this Annual Report, and the Company does not intend, assume any obligation, or promise to publicly update or revise any such Risk or information (in whole or in part), whether as a result of new information, new or worsening Risks or uncertainties, changed circumstances, future events, recognition, or otherwise.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We rely on our systems and third-party vendors.

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

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

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

Our stock is subject to volatility and general market risk.

The market price of SGRP Common Stock has historically experienced and may continue to experience significant volatility. During the year ended December 31, 2025, the sale price of SGRP Common Stock fluctuated from $0.768 to $2.04 per share. The Company believes that its Common Stock is subject to wide price fluctuations due to (among other things) the following:

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

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

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

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

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

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

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

The Company devoted significant resources to the remediation efforts to address the identified material weaknesses and prevent additional material weaknesses from occurring. The Company concluded that, as of December 31, 2025, the previously identified material weaknesses had been remediated following the completion of the remediation plan, however it cannot be assured that the measures we have taken will be sufficient to avoid potential future material weaknesses. Accordingly, if the remedial measures are insufficient to address the material weaknesses or if additional material weaknesses or significant deficiencies in the internal controls are discovered or occur in the future, the consolidated financial statements may contain material misstatements and the Company could be required to restate its financial results, which could materially and adversely affect the Company's business and results of operations or financial condition, restrict its ability to access the capital markets, require the Company to expend significant resources to correct the weaknesses or deficiencies, subject it to fines, lawsuits, penalties, judgements or other legal expenses, harm its reputation, create delays or the inability to meet future SEC reporting obligations or otherwise cause a decline in investor confidence.

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

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

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

The timing, size and success of litigation settlement efforts and any associated capital commitments cannot be readily predicted. Future litigation settlements may be financed by issuing shares of the SGRP Common Stock (directly or through convertible securities), cash or a combination thereof. If the SGRP Common Stock does not maintain a sufficient market value, or if potential litigants are otherwise unwilling to accept the SGRP Common Stock as part of the consideration for the settlement of their litigation, the Company may be required to obtain additional capital through debt or equity financings. To the extent the SGRP Common Stock is used for all or a portion of the consideration to be paid for legal settlements, dilution may be experienced by existing stockholders. In addition, there can be no assurance that the Company will be able to obtain the additional financing it may need for litigation settlements on terms that the Company deems acceptable. Failure to obtain such capital would materially and adversely affect the Company or its performance or condition. There also can be no assurance that the other parties in any settlement will abide by the terms or any settlement or any related releases. See Item 3 -- Legal Proceedings, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations; Overview and Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below.

Our leadership transition in 2025 may result in operational disruptions or changes in our strategic direction.

During the fiscal year ended December 31, 2025, the Company appointed a new Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). These transitions involve changes in management style and strategic priorities that could result in operational disruptions if not managed effectively.

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

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

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

The Company's co-founders, Mr. Robert G. Brown and Mr. William H. Bartels, are significant stockholders ("Significant Stockholders”) and together with certain related parties (collectively, the "Majority Stockholders") beneficially own approximately 46.2% of the SGRP Common Stock and could acquire more. That amount was calculated using their respective individual beneficial ownership, on December 31, 2025, which includes the amounts they represented in the CIC Agreement and subsequent Form 4 filings, the total outstanding ownership (24,129,991 shares) of the SGRP Common Stock on a non-diluted basis as of December 31, 2025. See Security Ownership of Certain Beneficial Owners and Management, in Part III below, Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, and Item 13. Certain Relationships and Related Transactions, and Director Independence, and Note 10 to the Company's Consolidated Financial Statements- Related Party Transactions, below. Although the CIC Agreement currently requires arbitration and prohibits the Majority Stockholders from using written stockholder consents, calling for special stockholder meetings, commencing certain litigation, and taking other specified actions, the CIC Agreement expires in January 2027.

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.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

SPAR Group Inc. recognizes the increased 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 Technology Officer (“CTO”), who is directly responsible for establishing cybersecurity strategies and structures and managing ongoing cybersecurity risk management activities. Our CTO is part of the executive management team, and updates our CEO and executive management periodically on the cybersecurity enhancement and the development and implementation of our roadmap.

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 CTO and a managed services provider with expertise in mitigating cyber risk. The CTO works closely with our executive management to continuously evaluate and address cybersecurity risks in alignment with our business and operational needs.

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

● On-going testing and evaluation of backup processes,

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

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

● Detection of a security incident,

● Identification and containment,

● Response, eradication and recovery,

● Post-incident analysis and future preparations.

The plan also provides the process and workflow of communication for escalation of incidents to executive leadership to determine incident classification, impact severity, and if and what further actions are warranted. Incident responses are overseen by leaders from our internal Information Technology organization and third party managed services provider.

Cybersecurity Governance

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.

Our third party managed services providers offer insights and guidance to our Software, Infrastructure Engineering, and Executive teams. With backgrounds spanning: information technology, security, systems, programming, and corporate strategy, their team is equipped to oversee prevention, detection, mitigation, and remediation of cybersecurity incidents. They actively engage in managing our cybersecurity risk processes, including participating in our incident response plan, and regularly report relevant matters to the Chief Technology Officer and the Audit Committee.

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

Last year

During the last fiscal year, 2025, the Company did not encounter any material cybersecurity incidents, nor did it incur any notable expenses as a result.

Item 2. Properties

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

The Company relocated its corporate headquarters from Auburn Hills, Michigan to its existing operations office in Charlotte, North Carolina, in November of 2025. The Company also maintains its data processing center in Southfield, Michigan and its warehouse in Auburn Hills, Michigan, which was exited in January 2026 and entered a new arrangement in January of 2026 for an outsourced warehouse in Fort Lauderdale, Florida.

The following is a list of the headquarter locations for the Company subsidiaries:

Vaughan, Ontario, Canada

Item 3. Legal Proceedings

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

Item 4. Mine Safety Disclosures

Not applicable.

PART II

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

The Company's Capital Stock Generally

SGRP's Certificate of Incorporation authorizes it to issue 47,000,000 shares of SGRP Common Stock ("SGRP Shares"), each with a par value of $0.01 per share, and which all have the same voting, dividend and liquidation rights. SGRP Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP." On December 31, 2025, there were 24,129,991 SGRP Shares outstanding in the aggregate (which does not include those held as Treasury Shares), and there were approximately 11,708,769 SGRP Shares (or approximately 49%) beneficially owned by non-affiliates of SGRP in the aggregate on a non-diluted basis (i.e., SGRP's public float). See Item IA - Risk Factors - Our significant stockholders may take actions, subject to the restrictions of the Change of Control, Voting and Restricted Stock Agreement ("CIC Agreement") and our By-Laws, Security Ownership of Certain Beneficial Owners and Management, in Part III below, and Note 10 to the Company's Consolidated Financial Statements- Related Party Transactions, below.

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

The Corporation filed a "Certificate of Designation of Series "B" Preferred Stock of SPAR Group, Inc.” (the "Preferred Designation") with the Secretary of State of Delaware, which designation had been approved by the Board on January 25, 2022. The Preferred Designation created a series of 2,000,000 shares of Preferred Stock designated as "Series B Preferred Stock” with a par value of $.01 per share (the "Preferred Stock"). The Preferred Stock shares do not carry any voting or dividend rights and automatically convert on vesting into the SGRP Common Stock on a 1 for 1.5 basis. See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below. However, the holders of the Series B Preferred Stock have a liquidation preference over the SGRP Common Stock and vote together for matters pertaining only to the Series B Preferred Stock (such as amending SGRP's Certificate of Designation of Series B Preferred Stock) where only the holders of the Series B Preferred Stock are entitled to vote. The holders of outstanding Series A Preferred Stock do not have the right to vote for directors or other matters submitted to the holders of the SGRP Common Stock.

On January 28, 2022, pursuant to the CIC Agreement, SGRP issued to the Majority Stockholders 2,000,000 restricted shares of Series B Preferred Stock, which have all vested and automatically converted into 3,000,000 SGRP Shares pursuant to the 1:1.5 conversion ratio set forth in the Preferred Designation and the CIC Agreement. The CIC Agreement expires on January 28, 2027. See Note 10 to the Company's Consolidated Financial Statements - Related Party Transactions, below. All of the Preferred Stock issued under the CIC Agreement have been converted into SGRP Shares as of December 31, 2024, and there are no shares of Preferred Stock currently outstanding. Since there are no more shares of Series B Preferred Stock outstanding, SGRP may change or cancel the authorized Series B Preferred Stock, and to the extent it reduces such authorization without issuance, it can create other series of Preferred Stock with potentially different dividends, preferences and other terms.

Market Information

SGRP's Common Stock is traded on the Nasdaq Capital Market under the symbol "SGRP". As of December 31, 2025, there were approximately 148 stockholders of record, which includes DTC (on behalf of all street holders). The Corporation estimates that there are currently a total of 1,600 holders of SGRP Shares, which includes the aggregate of those held of record and those held in street name through DTC. SGRP is currently under a Nasdaq notice respecting a potential delisting of the SGRP Shares that was received on January 12, 2026 (see below).

Failure to Maintain the Minimum Bid Price under Nasdaq Rules and Potential Delisting

On January 12, 2026, SGRP received a notification letter from Nasdaq that SGRP's common stock failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by the Listing Rules of Nasdaq. The Company has been given a compliance period of 180 calendar days in which to regain compliance. Specifically, if at any time during this 180 day period the closing bid price of SGRP’s Shares security is at least $1 for a minimum of ten consecutive business days, Nasdaq will provide SGRP written confirmation of compliance and this matter will be closed by Nasdaq. See Item 1A - Risk Factors - As a small company with stock price volatility, our stock may be delisted from Nasdaq.

Dividends

The Corporation has never declared or paid any cash dividends on the SGRP Shares and does not currently anticipate paying cash dividends on SGRP Shares in the foreseeable future. The Corporation historically has retained earnings to finance its operations and fund future growth of the business. Any payment of future dividends will be at the discretion of the Board and will depend upon, among other things, the Corporation's earnings, financial condition, capital requirements, cash flow, level of indebtedness, contractual restrictions in respect to the payment of dividends and other factors that the Board deems relevant.

Equity Compensation

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

Stock Repurchase Program

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

SGRP Common Stock Issuances

During 2024 the Corporation issued 1,208,742 SGRP Shares (including Treasury Shares and new shares of SGRP Common Stock) in support of its requirement to satisfy the conversion of vested and surrendered Series B Preferred Stock (see above), benefit awards and stock purchase plans, including employee Restricted Stock Units that vested and settled with stock, and the exercise of vested employee stock options. See The Company's Capital Stock Generally, in Item 5 above, and Note 11 to the Company's Consolidated Financial Statements – Share Based Compensation, below.

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

Overview of Our Business

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

As of December 31, 2025, the Company operated in the U.S. and Canada. During 2024, the Company strategically exited international operations in Mexico, Brazil, South Africa, China, Japan and India.

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

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

The Company’s business is led and operated from its headquarters in Charlotte, North Carolina, with local leadership and offices in the U.S. and Canada.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA is a non-GAAP measure of our operating performance and should not be considered as an alternative to net income as a measure of financial performance or any other performance measure derived in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). "EBITDA" is defined as net income before (i) depreciation and amortization, (ii) interest expense, net, and (iii) income tax expense. "Adjusted EBITDA" is defined as net (loss) income before (i) depreciation and amortization of long-lived assets, (ii) interest expense (iii) income tax expense, (iv) restructuring expenses, (v) impairment, (vi) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations, (vii) special items as determined by management, and (viii) review of strategic alternatives, which includes primarily legal, consulting, and investment bank fees. This metric is a supplemental measure of our operating performance that is neither required by, nor presented in accordance with, U.S. GAAP.

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

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

Adjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations include:

Our loss from continuing operations was approximately $24.6 million and $1.8 million for the years ended December 31, 2025, and December 31, 2024. Our Consolidated EBITDA loss was approximately $16.5 million and income of $3.6 million for the years ended December 31, 2025 and 2024 respectively. The following is a reconciliation of our net income to Adjusted EBITDA for the periods presented:

Year Ended December 31,

Loss from continuing operations $ (24,626 ) $ (1,806 )

Depreciation and amortization 1,634 1,553

EBITDA of discontinued operations - 1,475

Subtotal of adjustments to loss from continuing operations 8,122 5,363

Review of strategic alternatives 525 5,221

Gain on sale of businesses - (2,536 )

Restructuring costs and severance 4,765 -

Legal costs / settlements - non-recurring 1,277 100

Share-based compensation 140 137

Consolidated Adjusted EBITDA $ (8,562 ) $ 6,650

Adjusted EBITDA attributable to non-controlling interest - (1,034 )

Adjusted EBITDA attributable to SPAR Group, Inc. $ (8,562 ) $ 5,616

Results of Operations

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

Year Ended December 31,

Selling, general and administrative expense 32.2 23.7 33.9 20.7

Restructuring costs and severance 4.8 3.5 - -

Gain on sale of business - - (2.5 ) (1.5 )

Depreciation and amortization 1.6 1.2 1.5 0.9

Net loss from continuing operations (24.6 ) (18.1 ) (1.8 ) (1.1 )

Net loss from discontinued operations - - (0.9 ) (0.6 )

Net income attributable to non-controlling interest - - (0.5 ) (0.3 )

Net loss attributable to SPAR Group, Inc. $ (24.6 ) (18.1 %) $ (3.2 ) (2.0 %)

Results of operations for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Net Revenues

Consolidated net revenues for the year ended December 31, 2025, were $136.1 million compared to $163.6 million for the year ended December 31, 2024, a decrease of $27.5 million or 16.8%. This decrease in revenue was primarily driven by the sale of all international operations, except Canada, during various times throughout 2024.

U.S. net revenues totaled $122.1 million and $117.5 million for the years ended December 31, 2025 and 2024, respectively. The increase of $4.6 million or 3.9% is driven by continued growth in the U.S. market.

Canada net revenues totaled $14.0 million and $14.3 million for the years ended December 31, 2025 and 2024, respectively, a decrease of $0.3 million or 2.1%.

All Other net revenues totaled $31.8 million for the year ended December 31, 2024. The Company exited all international operations, except Canada, in 2024.

Cost of Revenue

The Company's cost of revenue consists of its in-store labor and field management wages, related benefits, travel and other direct labor-related expenses and was 84.1% of net revenue for the year ended December 31, 2025 compared to 79.5% of net revenues for the year ended December 31, 2024. The decline in margin in 2025 was driven by significant growth in revenue from the remodel business, which is lower margin than the traditional merchandising business.

U.S. cost of revenue as a percent of net revenue was 85.6% and 79.5% for the years ended December 31, 2025 and 2024, respectively. The increase in cost of 6.1% was the result of higher costs in our U.S. business related to the high proportion of revenue growth in the remodel business.

The Canada cost of revenue as a percent of net revenue was 70.9% and 68.8% for the years ended December 31, 2025 and 2024, respectively. This increase in cost of 2.1% was the result of increased merchandising business with a large client which has a lower profit margin.

All Other cost of revenue as a percent of net revenues was 84.2% for the year ended December 31, 2024. The Company exited all international operations, except Canada in 2024.

Selling, General and Administrative Expense

Selling, general and administrative expense ("SG&A") for the Company include its corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expenses. SG&A expenses were approximately

$32.2 million, or

23.7% of net revenue, and approximately

$33.9 million, or

20.7% of net revenue for the years ended

December 31, 2025 and

2024, respectively. SG&A expenses for the year-ended

December 31, 2025 includes expenses of approximately $2.0 million related to strategic initiatives, legal costs, expenses incurred to resolve prior year restatements, and shareholder matters. For the year-ended December 31, 2024, includes expenses of approximately $5.5 million related to costs to execute sales of international operations and transaction costs associated with strategic initiatives.

U.S. SG&A expenses totaled $29.5 million and $25.2 million for the years ended December 31, 2025 and 2024, respectively. The increase in expense of 17.1% was the result of strategic initiatives, legal costs, expenses incurred to resolve prior year restatements, and shareholder matters.

Canada SG&A expenses totaled $2.7 million and $2.7 million for the years ended December 31, 2025 and 2024, respectively.

All Other SG&A expenses totaled $6.0 million for the year ended December 31, 2024. The Company exited all international operations, except Canada in 2024.

Restructuring Costs and Severance

Restructuring costs and severance for the Company include costs related to relocating its corporate headquarters from Auburn Hills, Michigan to its existing operations office in Charlotte, North Carolina, in November of 2025 and the severance of certain Executives during this move. Restructuring costs and severance were approximately $4.8 million and $0.0 million for the year ended December 31, 2025 and 2024, respectively.

Depreciation and Amortization

Depreciation and amortization expense was approximately $1.6 million and $1.5 million for the years ended December 31, 2025 and 2024, respectively.

Interest Expense

The Company's interest expense was $2.4 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively.

Other Expenses, Net

Other expenses, net was $1.2 and $0.2 million for the years ended December 31, 2025 and 2024, respectively.

Income Tax Expense

The Company had income tax expense of $4.1 million, with an effective tax rate of (19.8%), and $0.1 million, with an effective rate of (8.7%) for the years ended December 31, 2025 and 2024, respectively. For the year ended December 31, 2025, our effective income tax rate varied from the U.S. federal statutory rate of 21.0% primarily as a result of the valuation allowance, executive compensation disallowed pursuant to Section 162(m), adjustments in tax credits, foreign rate differential and other permanent differences. For the year ended December 31, 2024, our effective income tax rate varied from the U.S. federal statutory rate of 21.0% primarily as a result of Brazilian withholding taxes, foreign disregarded income, and permanent differences.

Net Income Attributable to Non-Controlling Interest

Net income attributable to noncontrolling interest was $0.0 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively.

Critical Accounting Policies and Estimates

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

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

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

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

Goodwill is subject to annual impairment tests and interim impairment tests if impairment indicators are present. The Company performs the annual impairment test on October 31 each year. The impairment tests require the Company to first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. The Company is not required to calculate the fair value of a reporting unit unless it determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. If it is determined that it is more likely than not, or if the Company elects not to perform a qualitative assessment, the Company proceeds with the quantitative assessment. Under the quantitative test, if the fair value of a reporting unit exceeds its carrying amount, then goodwill of the reporting unit is considered to not be impaired. If the carrying amount of the reporting unit exceeds its fair value, then an impairment loss is recognized in an amount equal to the excess, up to the value of the goodwill.

Revenue Recognition

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

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 the allowance for credit losses 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 $0.0 million and $0.4 million as of December 31, 2025 and 2024, respectively. Credit loss expense was $0.1 million and $0.4 million for the years ended December 31, 2025 and 2024, respectively.

Internal Use Software

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

The Company capitalized approximately $2.4 million and $1.0 million of costs related to software developed for internal use for the years ended December 31, 2025 and 2024, respectively, and recognized approximately $1.4 million and $1.4 million of amortization of capitalized software for the years ended December 31, 2025 and 2024

Income Taxes

The Company records deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determinations, the Company considers all available evidence, including future reversals of existing deferred tax liabilities, projected future taxable income, feasible and prudent tax planning strategies, and recent financial operating results. If the Company determines that it will not be able to realize deferred income tax assets in the future, a valuation allowance is recorded. If sufficient positive evidence arises in the future indicating that all or a portion of the deferred tax assets meet the more likely than not standard for realization, the valuation allowance would be reduced accordingly in the period that such a conclusion is reached.

Valuation allowances of $7.6 million and $0.0 million at December 31, 2025 and 2024, respectively, related principally to deferred tax assets for net operating losses ("NOLs"), disallowed interest expense and tax credits that are uncertain as to realizability.

An income tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on its technical merits. The unrecognized tax reserves at December 31, 2025 and 2024 were $0.16 million and $0.11 million respectively, excluding accrued interest and penalties.

The Company has historically calculated its quarterly tax provision based on its best estimate of the full year tax rate applicable to the quarter. The Company did not significantly change the methodology for calculating income tax expenses, deferred tax assets and liabilities and reserves for uncertain tax positions for the years presented. See Note 5, Income Taxes in the Notes to Consolidated Financial Statements for additional information."

Recent Accounting Pronouncements

See the sections titled "Summary of Significant Accounting Policies— Recently Adopted Accounting Pronouncements” and "—Recently issued accounting pronouncements not yet adopted” in Note 2 to the Company's Consolidated Financial Statements, Summary of Significant Accounting Policies, included elsewhere in this Annual Report on Form 10‐K.

Liquidity and Capital Resources

Funding Requirements

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

The Company is a party to both U.S. and Canada credit facilities. These credit facilities require compliance with their respective financial covenants. For the year ended December 31, 2025, the Company was in compliance with all financial covenants under these arrangements. See Note 4 to the Company's Consolidated Financial Statements, Debt, included elsewhere in this Annual Report on Form 10-K.

Cash Flows for the Years Ended December 31, 2025 and 2024

Net cash used in operating activities was $18.4 million for the year ended December 31, 2025 and net cash used in operating activities was $0.7 million for the year ended December 31, 2024. The year-over-year increase in net cash used by operating activities was mainly driven by lower operating income and unfavorable changes in working capital, largely due to the timing of customer collections, partially offset by favorable timing of payments to suppliers.

Net cash used in investing activities was $1.1 million for the year ended December 31, 2025 compared to cash provided by investing activities of $9.9 million for the year ended December 31, 2024. The net use of cash for investing activities was primarily attributable to the costs associated with software developed for internal use, implementation of a new enterprise resource planning system, and expenditures related to outfitting the new corporate headquarters.

Net cash provided by financing activities was $4.5 million for the year ended December 31, 2025 compared to cash used in financing activities of $1.7 million for the year ended December 31, 2024. The year-over-year increase in cash from financing activities was driven by borrowings under the line of credits and sale of treasury shares.

For the year ended December 31, 2025, the Company experienced a net decrease in cash and cash equivalents amounting to approximately $15.0 million, net of the impact of foreign exchange rate fluctuations of $0.0 million. The year-over-year decrease in cash and cash equivalents was due to lower operating income and unfavorable changes in working capital, largely due to the timing of customer collections, the costs associated with software developed for internal use, expenditures related to outfitting the new corporate headquarters, offset by favorable timing of payments to suppliers.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

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

Item 8. Financial Statements and Supplementary Data

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

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

None

Item 9A. Controls and Procedures

Management's Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The Chief Executive Officer and the Chief Financial Officer, as our principal financial and accounting officer, have reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.

Management’s Report on Internal Control Over Financial Reporting

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

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

Management utilized the criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to conduct an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2025.

Remediation of Previously Reported Material Weaknesses in Internal Control over Financial Reporting

As previously described in the Explanatory Note to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2024, as amended and filed on July 17, 2025, the Company identified material weaknesses in internal control over financial reporting related to the financial statement close process (i) to ensure the completeness and accuracy of certain amounts and disclosures, specifically related to the preparation and review of balance sheet account reconciliations and presentation of segment disclosures; and (ii) over non-recurring transactions, including accounting for the deconsolidation and sale of the international components. The Company subsequently devoted significant resources to implementing remediation measures. During the fourth quarter of 2025, the Company concluded that, as of December 31, 2025, the previously identified material weaknesses had been remediated following the completion of its remediation plan. The remediation plan included the following: (i) implementing a modern and more efficient ERP system, (ii) hiring a new Corporate Controller and Chief Financial Officer, (iii) consolidating the finance team into a single office, and (iv) simplifying the organizational structure through the divesture of all international operations except Canada.

Changes in Internal Controls Over Financial Reporting

Other than remediation measures discussed above, there were no changes in internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control system over financial reporting.

Item 9B. Other Information

a. During the fourth quarter of 2025,none of our directors or executive officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Regulation S-K).

b. As previously disclosed in the Current Report on Form 8-K filed with the U.S. SEC on March 19, 2026, SPAR Marketing Force, Inc. ("SMF"), a wholly owned subsidiary of the Company, issued a Senior Unsecured Promissory Note (the "Original Note") to PC Group, Inc. ("PC Group") evidencing a $4,000,000 unsecured loan arrangement.

On March 27, 2026, SMF issued an Amended and Restated Senior Unsecured Promissory Note (the "New Note") to PC Group, which amends, restates and replaces, in its entirety, the Original Note. The New Note has substantially identical terms and conditions to the Original Note, except as follows: (a) the New Note is effective as of March 17, 2026 (the "Effective Date"); (b) at the maturity date of the New Note, $800,000, subject to adjustment as described in the New Note, will be credited against the outstanding loan amount; and (c) SMF will be required to make cash payments to maintain the value of the equity consideration issued pursuant to the New Note, up to a maximum of $800,000, if (x) the Company issues or sells common stock (or convertible equity securities) at a price below $0.80 per share and (y) on each anniversary of the Effective Date, if on such date the Company's common stock is trading at less than $0.80 per share.

The foregoing description of the New Note does not purport to be complete and is qualified in its entirety by the terms and conditions of the New Note, which is filed as Exhibits 10.77, to this Annual Report on Form 10-K and incorporated herein by reference.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

"Reference is made below to SGRP’s definitive Proxy Statement for its 2026 Annual Meeting of Stockholders, which SGRP plans to file pursuant to Regulation 14A on or about April 30, 2026, with the meeting scheduled to be held on or before June 11, 2026. For clarity (and without limitation), information appearing in the sections of such Proxy Statement entitled (a) "PROPOSAL 3 – TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE NAMED EXECUSTIVE OFFICERS, AS DISCLOSED IN THE PROXY STATEMENT (I.E. "SAY ON PAY")”, (b) "PROPOSAL 4 – TO SELECT, ON AN ADVISORY BASIS, WHETHER THE CORPORATION SHOULD REQUEST AN ADVISORY VOTE FROM ITS STOCKHOLDERS RESPECTING COMPENSATION OF THE NAMED EXECUTIVE OFFICERS EVERY ONE, TWO OR THREE YEARS(I.E. "SAY ON FREQUENCY")", and (c) "REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS” shall not be deemed to be incorporated by reference in this Annual Report.

Item 10. Directors, Executive Officers and Corporate Governance

Reference is made to the information set forth in the 2026 Proxy Statement under the captions: "DIRECTORS AND EXECUTIVE OFFICERS", INCLUDING (WITHOUT LIMITATION) "The Board of Directors of the Corporation”, and "Executives and Officers of the Corporation”, and "Corporate Governance”, including (without limitation) "Board Structure, Leadership and Risk Oversight", "Board Meetings", "Board Size, Quorum and Voting", "Board Committees", "Audit Committee", "Compensation Committee", "Governance Committee", "Director Nominations: Experience, Integrity, Diversity and other Criteria", "Director Independence", "Contractually Dedicated Seats", "2026 By-Laws", "significant Stockholder Governance Limitations", " Limitation of Liability and Indemnification Matters", and "Ethics Codes"; and "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS", including (without limitation) "Security Ownership of Certain Beneficial Owners and Management:, "Section 16(a) Beneficial Ownership Reporting Compliance"; and "Audit and Compensation Committee Interlocks and Insider Participation".

Item 11. Executive Compensation

Reference is made to the information set forth in the 2026 Proxy Statement under the captions: "COMPENSATION OF EXECUTIVES AND DIRECTORS", including (without limitation) "Executive Compensation Summary", "Summary Compensation Table", "Narrative to Summary Compensation Table", "Chief Executive Officer (PEO) Pay Versus Performance Table", "2025,2024,2023 and 2022 Deferred Compensation Agreements", "Outstanding Equity Awards at Fiscal Year-End", "Compensation of Directors", and "Discussion of Directors' Compensation"; "COMPENSATION PLANS", including (without limitation) "Inducement Stock Based Award Summary", "2020,2018 and 2008 Plans", "Share Based Compensation", "2008 Plan Summary", "2018 Plan Summary", "2020 Plan Summary", "CEO Inducement Award Summary", "CEO Inducement Award RSU Summary", "Share-Based Compensation Expense", and "Employee Stock Purchase Plans"; and "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS", including (without limitation) "Security Ownership of Certain Beneficial Owners and Management", "Section 16(a) Beneficial Ownership Reporting Compliance"; and "Audit and Compensation Committee Interlocks and Insider Participation".

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

Reference is made to the information set forth in the 2026 Proxy Statement under the captions: "COMPENSATION OF EXECUTIVES AND DIRECTORS", including (without limitation) "Executive Compensation Summary", "Summary Compensation Table", "Narrative to Summary Compensation Table", "Chief Executive Officer (PEO) Pay Versus Performance Table", "2025, 2024, 2023 and 2022 Deferred Compensation Agreements", "Outstanding Equity Awards at Fiscal Year-End", "Compensation of Directors", and "Discussion of Directors' Compensation"; "COMPENSATION PLANS", including (without limitation) "Inducement Stock Based Award Summary", "2020, 2018 and 2008 Plans", "Share Based Compensation", "2008 Plan Summary", "2018 Plan Summary", "2020 Plan Summary", "CEO Inducement Award Summary", "CEO Inducement Award RSU Summary", "Share-Based Compensation Expense", and "Employee Stock Purchase Plans"; and "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters", including (without limitation) "Security Ownership of Certain Beneficial Owners and Management", "Section 16(a) Beneficial Ownership Reporting Compliance"; and "Audit and Compensation Committee Interlocks and Insider Participation".

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

Reference is made to the information set forth in the 2026 Proxy Statement under the captions: "CORPORATE GOVERNANCE", including (without limitation) "Director Independence", "Contractually Dedicated Seats", "2026 By-Laws", "Significant Stockholder Governance Limitations"; and "TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS", including (without limitation) "Related Party Transactions", "Change of Control, Voting and Restricted Stock Agreement", "Other Domestic Related Party Transactions", "International Joint Venture Transactions to Sell the Company’s Ownership Interests to Related JV Parties", "Agreement to sell the Company’s ownership interest in its South African Joint Venture", "Agreement to sell the Company’s ownership interest in its Chinese Joint Venture", "Agreement to sell the Company’s Brazilian subsidiary that owns its interest in its Brazilian Joint Venture", "Agreement to sell SPAR's 100% ownership interest in SPAR Japan", "Agreement to sell SPAR's 51% ownership interest in its Indian Joint Venture", "Agreement to sell SPAR's 51% ownership interest in its Mexican Joint Venture", "Summary of Certain Related Party Transactions", and "Other Related Party Transactions and Arrangements".

Item 14. Principal Accountant Fees and Services

BDO USA, P.C. ("BDO"), an independent registered accounting firm, has served as the Company's principal independent registered accounting firm since October 2013 to audit the consolidated financial statements of the Company, including the Company’s consolidated financial statements for its year ending December 31, 2025, for the Company's business in the United States and Canada.

In the past, BDO audited certain foreign subsidiaries of SGRP through BDO's affiliates in those countries, but the Company has disposed of most of its foreign operating joint venture subsidiaries as described in the 2025 Annual Report and other SEC reports.

Audit Fees

The aggregate fees billed to the Company for professional accounting services by BDO, including the audit of the Company's annual financial statements for the years ended December 31, 2025 and 2024, are set forth in the table below (amounts in thousands):

Audit-related fees 34 30

For purposes of the preceding table professional fees are classified as follows:

Since the Audit Committee's formation in 2003, as required by applicable law and Nasdaq rules, each audit-related or tax or other non-audit service performed by the Company's independent registered accounting firm either: (i) was approved in advance on a case-by-case basis by SGRP's Audit Committee; or (ii) fit within a pre-approved "basket" of audit-related or tax and other non-audit services of limited amount, scope and duration established in advance by SGRP's Audit Committee. In connection with the standards for independence of the Company's independent registered accounting firm promulgated by the SEC, the Audit Committee considers (among other things) whether the provision of such services would be compatible with maintaining the independence of the Company's registered independent accounting firm.

PART IV

Item 15. Exhibits and Financial Statement Schedules

Index to Financial Statements filed as part of this report:

Consolidated Balance Sheets as of December 31, 2025 and 2024 30

Notes to Consolidated Financial Statements 33

Exhibits

Exhibit Number Description

21.1 List of Subsidiaries (as filed herewith).

23.1 Consent of BDO USA, P.C. (as filed herewith).

97 Spar Group, Inc. Compensation Recovery Policy

101.INS* Inline XBRL Instance

101.SCH* Inline XBRL Taxonomy Extension Schema

101.CAL* Inline XBRL Taxonomy Extension Calculation

101.DEF* Inline XBRL Taxonomy Extension Definition

101.LAB* Inline XBRL Taxonomy Extension Labels

101.PRE* Inline XBRL Taxonomy Extension Presentation

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

Item 16. Form 10-K Summary

None.

SIGNATURES

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

SPAR Group, Inc.

By: /s/ William Linnane

William Linnane

President and Chief Executive Officer

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

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

SIGNATURE TITLE

/s/ William Linnane President, Chief Executive Officer and Director,

William Linnane (Principal Executive Officer)

/s/ James R. Gillis Director

James R. Gillis

/s/ John Bode Director

John Bode

/s/ Linda Houston Director

Linda Houston

/s/ Tim Cook Director

Tim Cook

/s/ James R. Brown, Sr Director

James R. Brown, Sr

/s/ Panagiotis Lazaretos Director

Panagiotis Lazaretos

/s/ Steven Hennen Chief Financial Officer,

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

SPAR Group, Inc.

Charlotte, NC

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of SPAR Group, Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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

Critical Audit Matter

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

Revenue recognition

As indicated in Note 2 to the consolidated financial statements, the Company generates revenues by providing merchandising services to its customers, generally on a daily, weekly, or monthly basis. The Company recognizes revenues as the services are performed based on the contractually-specified rate-per-driver metric (i.e., rate per hour, rate per store visit, rate per item assembled, or rate by task). For the year ended December 31, 2025, the Company’s net revenues were $136.1 million.

We identified revenue recognition from merchandising services as a critical audit matter due to the large volume of customer contracts and transactions. Auditing merchandising services revenue was especially challenging due to the extent of audit effort required to address the matter.

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

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2013

Troy, Michigan

March 31, 2026

SPAR Group, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

Year Ended December 31,

Selling, general and administrative expense 32,197 33,880

Restructuring costs and severance 4,765 -

Gain on sale of business - (2,536 )

Depreciation and amortization 1,634 1,553

Loss before income tax expense (20,553 ) (1,662 )

Loss from continuing operations (24,626 ) (1,806 )

Discontinued Operations

Income from discontinued operations - 1,381

Loss on disposal of business - (1,188 )

Income tax expense - (1,074 )

Net loss from discontinued operations - (881 )

Net income attributable to non-controlling interest - (463 )

Net loss attributable to SPAR Group, Inc. $ (24,626 ) $ (3,150 )

Basic loss per common share attributable to SPAR Group, Inc. (1.04 ) (0.13 )

Diluted loss per common share attributable to SPAR Group, Inc. (1.04 ) (0.13 )

Weighted average common shares – basic 23,619 23,555

Weighted average common shares – diluted 23,619 23,555

Other comprehensive loss:

Foreign currency translation adjustments 44 (1,553 )

Comprehensive income attributable to non-controlling interest - (172 )

Comprehensive loss attributable to SPAR Group, Inc. $ (24,582 ) $ (4,412 )

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

SPAR Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

Assets

Current assets:

Prepaid expenses and other current assets 1,168 3,009

Operating lease right-of-use assets 4,861 630

Liabilities and equity

Current liabilities:

Accrued expenses and other current liabilities 5,576 3,533

Customer incentives and deposits 1,221 892

Current portion of long-term debt 500 500

Current operating lease liabilities 643 276

Operating lease liabilities, less current portion 4,395 353

Deferred income taxes 34 –

Commitments and contingencies – See Note 6

Equity:

SPAR Group, Inc. equity

Preferred stock, Series - B. $.01 par value:

Common stock, $.01 par value:

Accumulated other comprehensive loss (1,154 ) (1,198 )

(Accumulated deficit)/Retained earnings (17,167 ) 7,459

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

SPAR Group, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

(In thousands)

Share-based compensation – – – – – – 137 – – – 137

Exercise of stock options 233 2 – – – – (398 ) – – – (396 )

Sale of international operations – – – – – – – 3,524 – (10,616 ) (7,092 )

Purchase of non-controlling interest – – – – – – (856 ) – – (1,695 ) (2,551 )

Share-based compensation – – – – – – 140 – – – 140

Issuance of shares for restricted stock units 107 2 – – – – – – – – 2

Other comprehensive income, net of tax – – – – – – – 44 – – 44

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

SPAR Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

Year Ended December 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used by operating activities

Depreciation and amortization 1,634 1,553

Loss on property, plant and equipment disposal 47 -

Amortization of operating lease assets 476 545

Amortization of debt issuance cost 62 -

Provision for expected credit losses - 128

Deferred income tax expense (benefit) 3,819 (1,500 )

Share based compensation 140 137

Gain on disposal of business - (2,536 )

Changes in operating assets and liabilities, net of business disposals:

Prepaid expenses and other assets 1,099 416

Operating lease liabilities (408 ) (541 )

Net cash used in continuing operations (18,443 ) (239 )

Net cash used in discontinued operations - (426 )

Net cash used in operating activities (18,443 ) (665 )

Cash flows from investing activities:

Purchases of property and equipment and internal use software (2,978 ) (1,129 )

Net cash provided by investing activities of discontinued operations - 3,751

Net cash (used in) provided by investing activities (1,060 ) 9,881

Cash flows from financing activities:

Payment of notes to seller (500 ) (1,843 )

Proceeds from the sale of treasury shares 756 -

Repurchase of common stock - (1,800 )

Payments to acquire noncontrolling interests - (500 )

Proceeds from long-term debt - 15

Net cash used in financing activities of discontinued operations - (1,315 )

Net cash provided by (used in) financing activities 4,526 (1,656 )

Effect of foreign exchange rate changes on cash 18 (58 )

Net (decrease)/increase in cash and cash equivalents (14,959 ) 7,502

Cash and cash equivalents at beginning of year 18,221 10,719

Cash and cash equivalents at end of year $ 3,262 $ 18,221

Supplemental disclosure of cash flows information

Promissory notes issued to Resource Plus non-controlling interest $ - $ 2,500

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

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of theBusiness

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

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Company consolidates its 100%-owned subsidiaries. All significant intercompany transactions have been eliminated in the consolidated financial statements.

Use of Estimates

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

Segment Reporting

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

In November 2025, the Company appointed a new CEO, William Linnane. During the fourth quarter of 2025, revised internal reporting began to be provided to and reviewed by the CODM. The Company provides similar merchandising, marketing, and business services in the United States ("U.S.") and Canada, and the CODM now reviews financial information by two geographic components: (i) U.S. and (ii) Canada, for purposes of allocating resources and assessing performance. As a result, beginning in the fourth quarter of 2025, the Company determined that it has two reportable segments: U.S. and Canada. For the firstthree quarters of 2025, the previous CODM managed all business activities on a consolidated basis (as the Company exited substantially all of its international operations during the year ended December 31, 2024), and as a result, the Company had one reportable segment. Segment information for the year ended December 31, 2024 has been recast to reflect this reportable segment structure.

For the year ended December 31, 2024, the Company operated in three reportable geographic segments: (i) Americas, comprised of U.S., Canada, and Mexico; (ii) Asia-Pacific ("APAC”), comprised of Japan, China, and India; and (iii) Europe, Middle East and Africa ("EMEA”), comprised of South Africa. Brazil was previously included in the Americas segment; however, as a result of the reclassification of the Brazilian joint venture as discontinued operations in 2024, Brazil was excluded from the Company’s segment reporting for the year ended December 31, 2024.

For comparative purposes, prior-period segment information has been recast to conform to the current period presentation.

Variable Interest Entities

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

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

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

Cash Equivalents

The Company considers all short-term, highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. There are no cash equivalents at December 31, 2025 or 2024.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash balances with high quality financial institutions and periodically evaluates the creditworthiness of such institutions. At times, the Company’s cash and cash equivalents balances with individual banking institutions are in excess of insured limits. The Company does not believe it is exposed to significant credit risk and the Company has not experienced any losses related to its cash and cash equivalents balances.

Two clients each individually accounted for more than 10% of the Company’s net revenue for the years ended December 31, 2025 (Client 1,16.8%, or approximately $22.8 million and Client 2,10.8%, or approximately $14.7 million, both in the U.S. segment), and one client whose revenue represented more than 10% of revenue for the year ended December 31, 2024 (10.5%, or approximately $17.3 million in the U.S. segment). No customer accounted for more than 10% of the Company’s accounts receivable, net as of December 31, 2025 and December 31, 2024.

Revenue Recognition

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

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

Unbilled Accounts Receivable

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

Allowance for Credit Losses

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 loss.

Property and Equipment, Net

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

Internal Use Software

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

Impairment of Long-Lived Assets

Intangible Assets, Net

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

Goodwill

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

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Treasury Stock

The Company records treasury stock activities under the cost method whereby the cost of the acquired stock is recorded as treasury stock. The Company’s accounting policy upon the formal retirement of treasury stock is to deduct the par value from the Company’s common stock and to reflect any excess of cost over par value as a reduction to additional paid-in capital (to the extent created by previous issuances of the shares). Upon reissuance or sale of treasury shares, any difference between the proceeds received and the cost of shares is recognized in equity. Gains are credited to additional paid-in capital and losses are first offset against any existing additional paid-in capital related to treasury shares, with any excess charged to retained earnings.

Noncontrolling Interest

The Company recognizes noncontrolling interest related to VIEs, in which the Company is the primary beneficiary, as equity in the consolidated financial statements separate from the parent entity’s equity. The amount of net income or loss attributable to noncontrolling interests is included in consolidated net income on the face of the consolidated statements of operations and comprehensive loss. Changes in the parent entity’s ownership interest in a subsidiary that do not result in deconsolidation are treated as equity transactions if the parent entity retains its controlling financial interest. In addition, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary will be initially measured at fair value and the difference between the carrying value and fair value of the retained interest will be recorded as a gain or loss. Because these transactions take place between entities under common control, any gains or losses attributable to these transactions are required to be included within additional paid-in-capital on the consolidated balance sheets. During 2024 the Company deconsolidated its entire controlling interest in all its VIEs. As of December 31, 2025, the Company has no continuing involvement in these entities.

Advertising and Promotional Expenses

Advertising and promotional expenses are included in selling, general and administrative expenses within the consolidated statements of operations and comprehensive loss and are expensed when incurred. Advertising and promotional expenses were $258,301 and $41,352 during the years ended December 31, 2025, and 2024, 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.

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

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

Fair Value Measurements

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

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

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

Restructuring Costs and Severance

The Company periodically undertakes restructuring initiatives to optimize its cost structure and operations. These activities may include employee termination benefits, facility closures, lease exit costs, and contract termination costs and other one-time expenses. The Company’s restructuring accruals require the use of significant estimates and judgments, particularly with respect to the timing and amount of expected cash outflows and the identification of costs directly associated with exit activities. These estimates are evaluated on a regular basis and may be adjusted as new information becomes available. Changes in estimates are recognized in the period in which they are identified and may result in increases or decreases to previously recorded restructuring liabilities. Actual results could differ from these estimates due to changes in market conditions, negotiations with third parties, or variations in the execution of restructuring plans.

Restructuring costs and severance costs for the Company include severance costs paid in connection with the reorganization of the Company's executive team and expenses related to the move of the Company's headquarters from Auburn Hills, Michigan to its existing operations office in Charlotte, North Carolina, in November 2025. For the year ended December 31, 2025, the Company recognized expense of $4.8 million, which consist of $4.2 million for termination and severance costs and $0.6 million for relocation expense. The costs are presented within "Restructuring costs and severance" in the Consolidated Statements of Operations and Comprehensive Loss. Liabilities of $0.4 million for employee severance is included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets as of December 31, 2025. There was no restructuring activity for the year ended December 31, 2024.

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Income Taxes

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

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

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU No.2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires companies to report specific categories of rate reconciliation, certain details of income taxes paid and certain information by tax jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company implemented this ASU prospectively for the fiscal year ending December 31, 2025.

Recently Issued Accounting Pronouncements Not Yet Adopted

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

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

3. Supplemental Balance Sheet Information

For the Year Ended December 31,

Summary of Results from Discontinued Operations: 2024

(in thousands)

Selling, general, and administrative expenses 3,385

Loss on disposal of business 1,188

Depreciation and amortization 63

Income from operations before tax 224

Income tax expense 1,074

Interest expense 31

Loss from discontinued operations, net of tax $ (881 )

December 31,

Accounts receivable, net, consists of the following: 2025 2024

(in thousands)

Less allowance for credit losses - (411 )

December 31,

Activity in allowance for credit losses 2025 2024

(in thousands)

Beginning balance in allowance for credit losses $ 411 $ 1,461

Current provision for expected credit losses - 128

Allowances associated with businesses sold - (12 )

Write-offs charged against the allowance (411 ) (1,166 )

Ending balance in allowance for credit losses $ - $ 411

December 31,

Property and equipment consist of the following: 2025 2024

(in thousands)

Capitalized internal use software costs 21,329 18,967

Capitalized software in development 92 -

Less accumulated depreciation and amortization (23,289 ) (21,987 )

Property and equipment, net $ 3,601 $ 2,015

Depreciation expense (including amortization of internal use software and intangible assets as described below) was $1.6 million and $1.6 million for the years ended December 31, 2025 and 2024, respectively. The Company capitalized $2.4 million and $1.0 million of costs related to internal use software in the years ended December 31, 2025 and 2024. The Company recognized approximately $1.4 million and $1.3 million of amortization expense related to internal use software for the years ended December 31, 2025 and 2024, respectively.

Goodwill consist of the following: U.S. All Other Total

(in thousands)

Balance at January 1, 2024

Sale of business - (438 ) (438 )

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

3. Supplemental Balance Sheet Information (continued)

December 31,

Intangible assets consist of the following: 2025 2024

(in thousands)

Less accumulated amortization (1,061 ) (929 )

Intangible assets, net $ 709 $ 841

The Company is amortizing its intangible assets over lives ranging from 5 to 25 years. Amortization expense for the years ended December 31, 2025 and 2024 was approximately $0.1 million and $0.2 million, respectively.

The annual amortization for each of the following years succeeding December 31, 2025 is summarized as follows (in thousands):

(in thousands)

Year Amount

December 31,

Accrued expenses and other current liabilities: 2025 2024

(in thousands)

Accrued third party labor 198 131

Accrued expenses and other current liabilities $ 5,576 $ 3,533

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

4. Debt

North Mill Capital Credit Facility

The Company, through SPAR Marketing Force, Inc. ("SMF") and SPAR Canada Company ULC ("SCC", and collectively with SMF, the “NM Borrowers”), has a secured revolving credit facility in the United States (the "US Revolving Credit Facility") and Canada (the "Canada Revolving Credit Facility", and collectively with the US Revolving Credit Facility, the "NM Credit Facility") with North Mill Capital, LLC, d/b/a SLR Business Credit ("NM").

In order to obtain, document and govern the NM Credit Facility, SMF, SCC, SGRP and certain of SGRP's direct and indirect subsidiaries in the United States and Canada (including SMF and SCC as borrowers and SGRP as a guarantor, collectively, the "NM Loan Parties") entered into a Loan and Security Agreement with NM dated as of April 10, 2019, which, as amended from time to time (as amended, the "NM Loan Agreement"), governs the NM Credit Facility. Pursuant to the NM Loan Agreement, the NM Borrowers agreed to reimburse NM for legal and documentation fees incurred in connection with the NM Loan Agreement and such amendments.

On July 1, 2022, the NM Loan Parties and NM executed and delivered a Fourth Modification Agreement, effective as of June 30, 2022 (the "Fourth Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to extend the NM Credit Facility from October 10, 2023, to October 10, 2024, and increased the amount of the US Revolving Credit Facility to $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.

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.

On October 9, 2025, the NM Loan Parties and NM executed and delivered an Eighth Modification Agreement, effective immediately (the "Eight Modification Agreement"), pursuant to which the NM Loan Parties and NM agreed to and extend the NM Credit Facility from October 9, 2025 to October 10, 2027, to increase the amount of the US Revolving Credit Facility to $30.0 million, and increase the Canada Revolving Credit Facility to $6.0 million. In addition, the Eight Modification Agreement increased the cap on unbilled accounts in the borrowing base for SMF to $15.0 million from $7.0 million and increased the cap on eligible unbilled accounts in the Canadian Borrower's borrowing base to $2.0 million (from the prior cap of CDN$800,000). The Eighth Modification Agreement also converted the balance to USD from CAD and modified the minimum interest charges payable under the Canadian Revolving Credit Facility, which are now based on a minimum outstanding balance of $1.0 million (increased from $0.5 million).

To evidence the increase in the US Revolving Credit Facility, SMF executed and delivered to NM a $30 million Sixth Amended and Restated Revolving Credit Master Promissory Note (the "Restated US Note"), which amends, restates, supersedes and replaces the prior US$ note. To evidence the increase in the Canadian Revolving Credit Facility, SCC executed and delivered to NM a $6 million Fifth Amended and Restated Revolving Credit Master Promissory Note (the "Restated Canadian Note"), which amends, restates, supersedes and replaces the prior CDN$ note.

The Restated US Note and Restated Canadian Note (together, the "NM Notes") and the NM Loan Agreement together require the NM Borrowers to pay interest on the loans thereunder equal to: (i) the Prime Rate designated from time to time by Wells Fargo Bank; plus (ii) one and one quarter percentage points (1.25%,) 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 US facility, for the year commencing on October 10, 2025, 0.60% of the applicable US Benchmark Advance Amount ($24.0 million), with an additional $6,000 charged at the first occurrence of each $1.0 million increment above the benchmark (up to the US advance limit) and (ii) for the Canadian Facility for the year commencing on October 10, 2025, 0.60% calculated on $2.0 million, and thereafter on the Canadian Benchmark Advance Amount ($2.0 million), with an additional $6,000 charged at the first occurrence of each $1.0 million increment above the benchmark (up to the Canadian advance limit).

As of December 31, 2025, the aggregate interest rate was 8.00% per annum and the aggregate outstanding loan balance was approximately $20.4 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 $17.3 million; and (ii) the outstanding loan balance under the Canada Revolving Credit Facility was approximately $3.1 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, 2025. The obligations of the NM Borrowers are secured by the receivables and other assets of the NM Borrowers and substantially all of the assets of the other NM Loan Parties, however, the obligations are not secured by any equity in, financial asset respecting or asset of any Excluded Subsidiary meaning each of the following direct or indirect subsidiaries of SGRP: (i) Resource Plus of North Florida, Inc. (“Resource Plus”), Mobex of North Florida, Inc., and Leasex, LLC, and their respective subsidiaries; (ii) NMS Retail Services ULC, which is an inactive Nova Scotia ULC; (iii) SPAR Group International, Inc.; (iv) SPAR FM Japan, Inc.; (v) SPAR International, Ltd.; (vi) SPAR Group International, Inc., (vii) NMS Retail Services, ULC (viii) BDA Resources, LLC, (ix) SPAR, Inc., (x) SPAR NMS Holdings, Inc,. (xi) SPAR Merchandising & Assembly, Inc. (xii) SPAR Field Administration, Inc., (xiii) each other subsidiary formed outside of the United States or Canada; and (xiv) any other entity in which any such subsidiary is a partner, joint venture or other equity investor.

Resource Plus – Seller Notes

On April 18, 2024, the Company entered into a Securities Purchase Agreement to buy from Mr. Richard Justus the remaining minority joint venture interests of Resource Plus and its sister companies, Mobex of North Florida, Inc., and Leasex, LLC. Based on the terms set in the original joint venture agreement, the Company will pay a total of $3.0 million in annual payments over a five-year period. $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, 2025, $1.0 million has been paid and the remaining $2.0 million Promissory Note is outstanding and is reported on the balance sheet (net of discount) in current portion of long-term debt and long-term debt, net of current portion.

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

4. Debt (continued)

Summary of the Company’s lines of credit (dollars in thousands):

Interest Rate as of Balance as of Interest Rate as of Balance as of

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):

Unused Availability:

Summary of the Company's Seller Notes (dollars in thousands):

Interest Rate Balance Interest Rate Balance

as of as of as of as of

USA - Resource Plus Seller Notes (Current) 4.30 % 500 4.30 % 500

SPAR Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

SGRP US Equity

SGRP · 10-K · period ended 2025-12-31

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 1C. Cybersecurity

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

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

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

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

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

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

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

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

Item 14. Principal Accountant Fees and Services

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

SGRP US Equity☆

SGRP · 10-K · period ended 2025-12-31

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 1C. Cybersecurity

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

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

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

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Financial Statements and Supplementary Data

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

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

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

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

Item 14. Principal Accountant Fees and Services

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

SGRP US Equity