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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________

FORM 10-Q

(Mark One)

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the first quarterly period ended September 30, 2024

OR

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

 

Commission file number 0-27408

SPAR GROUP, INC.
(Exact name of Registrant as specified in its charter)

 

Delaware

33-0684451

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

  

  

1910 Opdyke Court, Auburn Hills, Michigan

48326

(Address of principal executive offices)

(Zip Code)

 

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

 

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

 

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

 

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

 

Large Accelerated Filer ☐    Accelerated Filer ☐ 
  
Non-Accelerated Filer  ☒ Smaller reporting company ☒
  
Emerging Growth Company ☐ 

 

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

 

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

 

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

 

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

SGRP

The NASDAQ Stock Market LLC

 

As of November 12, 2024, the Registrant had 23,449,701 shares of common stock, par value $0.01 per share, outstanding.

 

 
Table of Contents
 

 

 

SPAR Group, Inc.

 

Index

 

PART I: FINANCIAL INFORMATION  
     

Item 1

Condensed Consolidated Financial Statements (Unaudited)

  
     
 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2024 and 2023 (Unaudited)

2
     
 

Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 (Unaudited)

3

 

    
 

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023 (Unaudited)

4
     
 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (Unaudited)

6
     

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

7
     

Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

18

 

    

Item 3

Quantitative and Qualitative Disclosures about Market Risk

24
     

Item 4

Controls and Procedures

24
     
PART II: OTHER INFORMATION  
     

Item 1

Legal Proceedings

25
     

Item 1A

Risk Factors

 25
     

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

 25
     

Item 3

Defaults Upon Senior Securities

 25
     

Item 4

Mine Safety Disclosures

 25
     

Item 5

Other Information

 25
     

Item 6

Exhibits

 26
     

SIGNATURES

 27

 

1
Table of Contents

 

PART I:

FINANCIAL INFORMATION

 

Item 1.

 Condensed Consolidated Financial Statements (Unaudited)

 

 

 SPAR Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(In thousands, except per share amounts)

 

 

   

Three Months Ended

    

Nine Months Ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  
                                 

Net revenues

   $ 37,788     $ 67,333     $ 163,771     $ 197,649  

Related party - cost of revenues

     -       1,628       -       4,807  

Cost of revenues

     29,346       52,332       131,801       152,235  

Gross profit

     8,442       13,373       31,970       40,607  

Selling, general and administrative expense

     8,558       11,284       27,707       32,345  

(Gain) Loss on sale of businesses

     922       -       (11,154 )     -  

Depreciation and amortization

     454       548       1,443       1,574  

Operating (loss) income

     (1,492 )     1,541       13,974       6,688  

Interest expense

     582       380       1,678       1,248  

Other expense (income), net

     472       (164 )     184       (347 )

(Loss) Income before income tax expense

     (2,546 )     1,325       12,112       5,787  
                                 

Income tax (benefit) expense

     (2,314 )     227       1,088       1,806  

Net (loss) income

     (232 )     1,098       11,024       3,981  

Net loss (income) attributable to non-controlling interest

     88       (839 )     (914 )     (2,217 )

Net (loss) income attributable to SPAR Group, Inc.

   $ (144 )   $ 259     $ 10,110     $ 1,764  

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

   $ (0.01 )   $ 0.01     $ 0.43     $ 0.08  

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

   $ (0.01 )   $ 0.01     $ 0.43     $ 0.08  

Weighted-average common shares outstanding – basic

     23,435       23,237       23,591       23,201  

Weighted-average common shares outstanding – diluted

     23,435       23,376       23,768       23,350  
                                 

Net (loss) income

   $ (232 )   $ 1,098     $ 11,024     $ 3,981  

Other comprehensive loss

                                

Foreign currency translation adjustments

     (72 )     (497 )     (1,220 )     (359 )

Comprehensive (loss) income

     (304 )     601       9,804       3,622  

Comprehensive (income) loss attributable to non-controlling interest

     45       (688 )     142       (1,788 )

Comprehensive (loss) income attributable to SPAR Group, Inc.

   $ (259 )   $ (87 )   $ 9,946     $ 1,834  

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

2
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SPAR Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share data) 

 

 

  

September 30,

  

December 31,

 
  

2024

  

2023

 
         

Assets

        

Current assets:

        

Cash and cash equivalents

 $19,652  $10,719 

Accounts receivable, net

  37,777   59,776 

Prepaid expenses and other current assets

  3,078   5,614 

Total current assets

  60,507   76,109 

Property and equipment, net

  2,142   2,871 

Operating lease right-of-use assets

  838   2,323 

Goodwill

  1,238   1,382 

Intangible assets, net

  693   1,180 

Deferred income taxes, net

  -   4,687 

Other assets

  1,978   1,729 

Total assets

 $67,396  $90,281 

Liabilities and stockholders' equity

        

Current liabilities:

        

Accounts payable

 $9,220  $9,488 

Accrued expenses and other current liabilities

  3,713   15,274 

Due to affiliates

  623   3,205 

Customer incentives and deposits

  1,678   1,905 

Lines of credit and short-term loans

  18,538   17,530 

Current portion of operating lease liabilities

  508   1,163 

Total current liabilities

  34,280   48,565 

Operating lease liabilities, net of current portion

  330   1,160 

Long-term debt

  1,707   310 

Deferred income taxes, net

  1,538   - 

Total liabilities

  37,855   50,035 

Commitments and contingencies – See Note 4

          

Stockholders' equity:

        

Series B convertible preferred stock, $0.01 par value per share: Authorized and available shares 3,000,000. Issued and outstanding shares 0 at September 30, 2024 and 650,000 at December 31, 2023

  -   7 

Common stock, $0.01 par value per share: 47,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 23,448,675 and 23,446,444 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

  234   232 

Treasury stock, at cost, 1,205,485 shares as of September 30, 2024 and 205,485 as of December 31, 2023

  (2,075)  (285)

Additional paid-in capital

  13,151   21,004 

Accumulated other comprehensive loss

  (2,022)  (3,341)

Retained earnings

  20,007   10,609 

Total stockholders' equity attributable to SPAR Group, Inc.

  29,295   28,226 

Non-controlling interest

  246   12,020 

Total stockholders’ equity

  29,541   40,246 

Total liabilities and stockholders’ equity

 $67,396  $90,281 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

3
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SPAR Group, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited) 

(In thousands)

 

 

   

Common Stock

    

Series B Convertible Preferred Stock

    

Treasury Stock

    

Additional

    

Accumulated Other

            

Non-

          
   

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Paid-In Capital

    

Comprehensive Loss

    

Retained Earnings

    

Controlling Interest

    

Total Stockholders’ Equity

  

Balance at January 1, 2024

     23,241     $ 232       650     $ 7       205     $ (285 )   $ 21,004     $ (3,341 )   $ 10,609     $ 12,020     $ 40,246  

Share-based compensation

     -       -       -       -       -       -       128       -       -       -       128  

Conversion of preferred stock to common stock

     975       10       (650 )     (7 )     -       -       (1 )     -       -       -       2  

Sale of joint ventures

     -       -       -       -       -       -       -       712       (712 )     (4,981 )     (4,981 )

Other comprehensive loss

     -       -       -       -       -       -       -       (2,030 )     -       (490 )     (2,520 )

Net income

     -       -       -       -       -       -       -       -       6,627       554       7,181  

Balance at March 31, 2024

     24,216     $ 242       -     $ -       205     $ (285 )   $ 21,131     $ (4,659 )   $ 16,524     $ 7,103     $ 40,056  

Share-based compensation

     -       -       -       -       -       -       128       -       -       -       128  

Exercise of stock options

     204       2       -       -       -       -       (403 )     -       -       -       (401 )

Sale of joint ventures

     -       -       -       -       -       -       (7,518 )     1,412       -       (4,509 )     (10,615 )

Purchase of non-controlling interest

     -       -       -       -       -       -       -       -       -       (2,115 )     (2,115 )

Purchase of treasury shares

     (1,000 )     (10 )     -       -       1,000       (1,790 )     -       -       -       -       (1,800 )

Other comprehensive income

     -       -       -       -       -       -       -       979       -       393       1,372  

Net income

     -       -       -       -       -       -       -       -       3,627       448       4,075  

Balance at June 30, 2024

     23,420     $ 234       -     $ -       1,205     $ (2,075 )   $ 13,338     $ (2,268 )   $ 20,151     $ 1,320     $ 30,700  

Share-based compensation

     -       -       -       -       -       -       (149 )     -       -       -       (149 )

Exercise of stock options

     28       -       -       -       -       -       -       -       -       -       -  

Sale of joint ventures

     -       -       -       -       -       -       (38 )     273       -       (941 )     (706 )

Other comprehensive income

     -       -       -       -       -       -       -       (27 )     -       (45 )     (72 )

Net loss

     -       -       -       -       -       -       -       -       (144 )     (88 )     (232 )

Balance at September 30, 2024

     23,448     $ 234       -     $ -       1,205     $ (2,075 )   $ 13,151     $ (2,022 )   $ 20,007     $ 246     $ 29,541  

 

4
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SPAR Group, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity (Continued)

(Unaudited) 

(In thousands)

 

 

 

  

Common Stock

  

Series B Preferred Stock

  

Treasury Stock

  

Additional

  

Accumulated Other

      

Non-

     
  

Shares

  

Amount

  

Shares

  

Amount

  

Shares

  

Amount

  

Paid-In Capital

  

Comprehensive Loss

  

Retained Earnings

  

Controlling Interest

  

Total Stockholders’ Equity

 

Balance at January 1, 2023

  22,961  $229   855  $9   205  $(285) $20,708  $(4,941) $6,707  $15,634  $38,061 

Share-based compensation expense

  -   -   -   -   -   -   173   -   -   -   173 

Conversion of preferred stock to common stock

  307   4   (205)  (2)  -   -   3   -   -   -   5 

Dividend to NCI

  -   -   -   -   -   -   -   -   -   (334)  (334)

Other comprehensive income (loss)

  -   -   -   -   -   -   -   85   -   92   177 

Net income

  -   -   -   -   -   -   -   -   866   911   1,777 

Balance at March 31, 2023

  23,268  $233   650  $7   205  $(285) $20,884  $(4,856) $7,573  $16,303  $39,859 

Share-based compensation

  -   -   -   -   -   -   (39)  -   -   -   (39)

Dividend to NCI

  -   -   -   -   -   -   -   -   -   (850)  (850)

Payments to acquire noncontrolling interests

  -   -   -   -   -   -   -   -   -   (460)  (460)

Retirement of shares

  (35)  -   -   -   -   -   -   -   -   -   - 

Other comprehensive income (loss)

  -   -   -   -   -   -   -   331   -   (370)  (39)

Net income

  -   -   -   -   -   -   -   -   639   467   1,106 

Balance at June 30, 2023

  23,233  $233   650  $7   205  $(285) $20,845  $(4,525) $8,212  $15,090  $39,577 

Share-based compensation

  -   -   -   -   -   -   83   -   -   -   83 

Exercise of stock options

  8   (1)  -   -   -   -   -   -   -   -   (1)

Distribution to NCI

  -   -   -   -   -   -   -   -   -   (490)  (490)

Other comprehensive income (loss)

      -   -   -   -   -   -   (346)  -   (151)  (497)

Net income

  -   -   -   -   -   -   -   -   259   839   1,098 

Balance at September 30, 2023

  23,241  $232   650  $7   205  $(285) $20,928  $(4,871) $8,471  $15,288  $39,770 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

5
Table of Contents

 

 

SPAR Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

  

Nine Months Ended September 30,

 
  

2024

  

2023

 

Cash flows from operating activities:

        

Net income

 $11,024  $3,981 

Adjustments to reconcile net income to net cash (used in) provided by operating activities

        

Depreciation and amortization

  1,443   1,574 

Amortization of operating lease right-of-use assets

  415   433 

Provision for expected credit losses

  133   138 

Deferred income tax expense

  4,577   (15)

Gain on sale of businesses

  (11,154)  - 

Share-based compensation expense

  107   217 

Changes in operating assets and liabilities:

        

Accounts receivable, net

  (5,843)  (1,963)

Prepaid expenses and other current assets

  (2,383)  1,635 

Accounts payable

  3,832   409 

Operating lease liabilities

  (415)  (433)

Accrued expenses, other current liabilities, due to affiliates and customer incentives and deposits

  (2,466)  (4,336)

Net cash (used in) provided by operating activities

 $(730) $1,640 
         

Cash flows from investing activities

        

Purchases of property and equipment

  (908)  (1,083)

Cash transferred in the sale of a business

  (7,658)  - 

Proceeds from the sale of joint ventures

  18,094   - 

Net cash provided by (used in) investing activities

 $9,528  $(1,083)
         

Cash flows from financing activities

        

Borrowings under line of credit

  103,184   80,151 

Repayments under line of credit

  (97,782)  (79,520)

Proceeds from term debt

  16   - 

Repurchases of common stock

  (1,800)  - 

Payments of notes to seller

  (1,843)  - 

Payments to acquire noncontrolling interests

  (250)  (473)

Dividend on noncontrolling interest

  (1,315)  (1,674)

Net cash provided by (used in) financing activities

 $210  $(1,516)
         

Effect of foreign exchange rate changes on cash

 $(75) $(426)

Net change in cash, cash equivalents and restricted cash

  8,933   (1,385)

Cash, cash equivalents at beginning of period

  10,719   9,345 

Cash, cash equivalents at end of period

 $19,652  $7,960 
         

Supplemental disclosure of cash flows information:

        

Cash paid for interest

 $1,640  $1,302 

Cash paid for income taxes

 $277  $1,945 
         
         
         

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

 

6
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SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

 

 

1.

Nature of the Business

 

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

 
 

2.

Summary of Significant Accounting Policies

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the 2023 Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on April 1, 2024.

 

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the included disclosures are adequate, and the accompanying unaudited condensed consolidated financial statements contain all adjustments which are necessary for a fair presentation of the Company’s consolidated financial position as of September 30, 2024, consolidated results of operations and comprehensive income for the three and nine months ended  September 30, 2024 and 2023, and consolidated cash flows for the nine months ended  September 30, 2024 and 2023. Such adjustments are of a normal and recurring nature. The consolidated results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the consolidated results of operations that may be expected for the year ending December 31, 2024.

 

Principles of Consolidation 

 

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

 

Use of Estimates

 

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

 

Segment Reporting

 

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

 

The Company provides similar merchandising, marketing and business services and has three reportable regional segments: (i) Americas, which is comprised of United States, Canada, Brazil and Mexico; (ii) Asia-Pacific ("APAC”), which is comprised of Japan, China, and India; and (iii) Europe, Middle East and Africa ("EMEA”), which is comprised of South Africa. Certain corporate expenses have been allocated to segments based on each segment’s revenue as a percentage of total company revenue.

 

7
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Recently Adopted Accounting Pronouncements 

 

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

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

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

 

In  December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740):Improvements to Income Tax Disclosures, which will require Companies to report specific categories of rate-reconciliation, certain details of income taxes paid and of certain information by tax jurisdictions. The guidance will be effective for the Company’s fiscal year beginning  January 1, 2025. The Company is currently evaluating the impact adoption will have on its consolidated financial statements and related disclosures.

 
 

3.

 Debt

 

North Mill Capital Credit Facility

 

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

 

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

 

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

 

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

 

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

 

As of September 30, 2024, the aggregate interest rate was 9.90% per annum and the aggregate outstanding loan balance was approximately $17.8 million, which is included within lines of credit and short-term loans in the unaudited condensed 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 $16.3 million; and (ii) the outstanding loan balance under the Canada Revolving Credit Facility was approximately $1.5 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, capital expenditures and certain other investments. The NM Loan Parties were in compliance with such covenants as of  September 30, 2024. The obligations of the NM Borrowers are secured by the receivables and other assets of the NM Borrowers and substantially all of the assets of the other NM Loan Parties.

 

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

 

  

Interest Rate

  

Balance

  

Interest Rate

  

Balance

 
  

as of

  

as of

  

as of

  

as of

 
  

September 30, 2024

  

September 30, 2024

  

December 31, 2023

  

December 31, 2023

 

USA / Canada North Mill Capital

  9.90% $17,788   10.40% $12,475 

USA - Resource Plus Seller Notes

  4.30%  750   1.85%  1,120 

China- Industrial Bank

  N/A   -   3.56%  283 

China - Industrial and Commercial Bank of China

  N/A   -   4.00%  283 

South Africa - Investec Bank Ltd.

  N/A   -   11.75%  3,369 

Total

     $18,538      $17,530 

 

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

 

  

September 30,

  

December 31,

 
  

2024

  

2023

 

Unused Availability:

        

United States / Canada

 $11,692  $6,525 

South Africa

  -   2,064 

Total Unused Availability

 $11,692  $8,589 

 

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

 

  

Interest Rate

  

Balance

  

Interest Rate

  

Balance

 
  

as of

  

as of

  

as of

  

as of

 
  

September 30, 2024

  

September 30, 2024

  

December 31, 2023

  

December 31, 2023

 

USA - Resource Plus Seller Notes

  4.30% $1,707   N/A  $- 

South Africa - Investec Bank Ltd.

  N/A   -   11.75%  310 
      $1,707      $310 

 
 

4.

Commitments and Contingencies

 

Legal Matters

 

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

 
 

5.

Common Stock

 

As of September 30, 2024, the Corporation’s certificate of incorporation authorized the Corporation to issue 47,000,000 shares of common stock, par value $0.01 per share.  

 

The voting, dividend and liquidation rights of the holders of the Corporation’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the Corporation’s Series B convertible preferred stock. Each share of the Corporation’s common stock is entitled to one vote on all matters submitted to a vote of the Corporation’s stockholders. Holders of the Corporation’s common stock are entitled to receive dividends as may be declared by the Corporation’s board of directors (the "Board"), if any, subject to the preferential dividend rights of the Corporation’s Series B convertible preferred stock. No cash dividends had been declared or paid during the periods presented.

 

2024 Stock Repurchase Program

 

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

 
 

6.

Preferred Stock

 

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

 

In  January 2022, the Corporation filed a Certificate of Elimination for its "Certificate of Designation of Series "A” Preferred Stock of SPAR Group, Inc.” (the "Certificate of Elimination”). Pursuant to the Certificate of Elimination, the previous Series A convertible preferred stock designation was cancelled and withdrawn. As a result, all 3,000,000 shares of the previously authorized Series A convertible preferred stock were returned to the Corporation's authorized "blank check” preferred stock. There were no shares of Series A convertible preferred stock outstanding at the time of the cancellation.

 

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

 

The Series B convertible preferred stock do not carry any voting or dividend rights and upon vesting converted into the Corporation's common stock at a ratio of 1-to-1.5. See Note 8. The holders of the Series B convertible preferred stock had a liquidation preference over the Corporation's common stock and voted together for matters pertaining only to the Series B convertible preferred stock where only the holders of the Series B convertible preferred stock are entitled to vote. The holders of outstanding Series B Preferred Stock do not have the right to vote for directors or other matters submitted to the holders of the Corporation's common stock.

 

In  January 2022, 2,000,000 shares of Series B convertible preferred stock were issued to the majority stockholders and related parties pursuant to the Change of Control, Voting and Restricted Stock Agreement. See Note 8.

 

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

 

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

 
 

7.

Share-Based Compensation

 

Stock Options

 

For the three months ended  September 30, 2024 and 2023, the Company recognized share-based compensation expense related to stock options of approximately $(20) thousand and $15 thousand, respectively.  For the nine months ended  September 30, 2024 and 2023, the Company recognized share-based compensation expense related to stock options of approximately $14 thousand and $45 thousand, respectively.

 

Restricted Stock Units

 

For the three months ended September 30, 2024 and 2023, the Company recognized share-based compensation expense related to restricted stock units of approximately $(129) thousand and $68 thousand, respectively.  For the nine months ended September 30, 2024 and 2023, the Company recognized share-based compensation expense related to restricted stock units of approximately $93 thousand and $172 thousand, respectively.

 

2023 and 2022 Executive Deferred Compensation Agreements

 

The Corporation prepared a 2022 Stock Compensation Plan that would have included Awards for NQSOs and RSUs (as defined below), but that plan was never submitted to its shareholders for approval. However, the Board had previously approved, for certain key executives, incentive stock-based awards for 2023 and 2022 using RSUs or cash. Since there were no plan based RSUs available, those executives instead received deferred compensation in the form of Phantom Stock Units ("PSUs"), which correspond to an equal number of shares of the Corporation's Common Stock ("SGRP Shares"). The number of PSUs received equals the dollar value of the incentive award divided by the per share market price of SGRP shares on the date of award. Each PSU represents the right of the grantee to receive cash payments based on the fair market value of SGRP Shares at the time of vesting, but not to receive SGRP Shares themselves. The number of the Grantee's PSUs will be automatically adjusted to reflect the specified events respecting the SGRP Shares as provided in the applicable Phantom Stock Agreement.  The PSUs do not possess the rights of common stockholders of the Corporation, including any voting or dividend rights, and cannot be exercised or traded for SGRP Shares. 

 

Effective as of March 24, 2022 (the "2022 Grant Date"), the Corporation issued an award of 111,111 PSUs to each of its Executives: Kori G. Belzer; William Linnane; and Ron Lutz.  Vesting will occur in three tranches of one-third each over the three (3) year period following the 2022 Grant Date, provided that: (i) the Grantee is an employee of the Company at the time; and (ii) the Corporation achieved 90% of the agreed upon financial target for 2022.  As of December 31, 2023, the Company had determined that the 2022 performance target had not been met and the first tranche of those PSUs did not vest. The Board approved in October 2023 that the second and third tranches of those PSUs will respectively vest on the second and third anniversary of the 2022 Grant Date with no additional vesting criteria.

 

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Effective as of April 3, 2023 (the "2023 Grant Date"), the Corporation granted an award of 181,818 PSUs to each of its Executives: Kori G. Belzer; William Linnane; and Ron Lutz. The PSUs granted and issued to each such grantee shall vest over the three-year period following the Grant Date provided that the Grantee is an employee of the Company on the applicable vesting date; and the first tranche of those PSUs was to have vested upon the achievement by the Company of 70% or greater of the budgeted 2023 Global EBIT. If the first-year metrics are achieved, the second and third tranches will respectively vest on the second and third anniversary of the 2023 Grant Date with no additional vesting criteria.  As of March 31, 2024, the Company determined that the 2023 performance target had been met, the first tranche of those PSUs had vested, and the second and third tranches of those PSUs will respectively vest on the second and third anniversary of the 2023 Grant Date with no additional vesting criteria.

 

Effective as of the 2023 Grant Date, the Corporation also granted an award of 378,788 PSUs to Michael R. Matacunas, the Chief Executive Officer and President of the Corporation. All of the PSUs granted and issued to him will vest over a one-year period following the 2023 Grant Date provided that the Grantee is an employee of the Company on April 3, 2024, upon the achievement by the Company of 70% or greater of the budgeted 2023 Global EBIT.  As of March 31, 2024, the Company had determined that the 2023 performance target had been met, and all of those PSUs have vested.

 

Effective as of the 2023 Grant Date, the Corporation also granted an award of 75,758 PSUs to Antonio Calisto Pato, the Chief Financial Officer, Secretary and Treasurer of the Corporation. All of the PSUs granted and issued to him will vest over the one-year period following the 2023 Grant Date provided that the Grantee is an employee of the Company on April 3, 2024, upon the achievement by the Company of 70% or greater of the budgeted 2023 Global EBIT.  As of March 31, 2024, the Company had determined that the 2023 performance target had been met, and all of those PSUs have vested.

 
 

8.

Related Party Transactions

 

Domestic Related Party Transactions

 

Change of Control, Voting and Restricted Stock Agreement

 

The Change of Control, Voting and Restricted Stock Agreement (the "CIC Agreement") became effective on January 28, 2022, when signed by the Company and Mr. Robert G. Brown, ("Mr. Brown"), Mr. William H. Bartels ("Mr. Bartels"), SPAR Administrative Services, Inc. ("SAS"), and SPAR Business Service, Inc. ("SBS"). Mr. Brown, Mr. Bartels, SAS and SBS may be referred to collectively as the "Majority Stockholders".

 

Pursuant to the CIC Agreement, the Corporation issued to the Majority Stockholders 2,000,000 restricted shares of Series B Preferred Stock, which converted into 3,000,000 SGRP Shares pursuant to the 1:1.5 conversion ratio set forth in the CIC Agreement. The final shares under the CIC Agreement vested on November 10, 2023, and all of the corresponding SGRP Shares had been issued or were in the process of being issued by December 31, 2023.

 

Pursuant to the CIC Agreement, all actions, claims and demands between the Majority Stockholders and the Corporation were resolved; and the Majority Stockholders and their affiliates during the five-year term of the CIC Agreement, ending on June 25, 2027, have agreed to give up certain rights with respect to the management of the Corporation.  

 

Bartels' Retirement and Director Compensation

 

Mr. William H. Bartels retired as an employee of the Company as of January 1, 2020 but continues to serve as a member of SPAR's Board. Mr. Bartels is also one of the founders and a significant stockholder of SGRP. Effective January 18, 2020, SPAR's Governance Committee proposed and unanimously approved retirement benefits for the five-year period commencing January 1, 2020, and ending December 31, 2024 (the "Five-Year Period"), for Mr. Bartels. The aggregate value of benefits payable to Mr. Bartels is approximately $0.2 million per year and a total of $1.1 million for the Five-Year Period.

 

As of September 30, 2024, there are approximately $58 thousand of benefits payable, which are included in accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheets.

 

Other Related Party Transactions and Arrangements 

 

On  April 18, 2024, the Company entered into a Securities Purchase Agreement to buy from Mr. Richard Justus the remaining minority joint venture interests of Resource Plus and its sister companies, Mobex of North Florida, Inc., and Leasex, LLC. Based on the terms set in the original joint venture agreement, the Company will pay a total of $3 million in annual payments over a  five-year period. $250,000 was paid within  five business days of closing, and the remaining $2,750,000 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 September 30, 2024, $250,000 has been paid and the remaining $2,750,000 Promissory Note is outstanding.

 

On  December 1, 2021, the Corporation entered into the Agreement for Marketing and Advertising Services (the "WB Agreement") with WB Marketing, Inc. (the "Agent", and together with the Company, the "Parties"). The Agent is an entity owned and controlled by Mrs. Jean Matacunas who is the wife of President and Chief Executive Officer, Michael R. Matacunas.  During the first nine months of 2024, the company his recognized approximately $101,000 in expenses under this agreement.

 

SBS and Infotech are related parties and affiliates of SGRP, but are not under the control or part of the consolidated Company. See Change of Controls, Voting and Restricted Stock Agreement, above. In July 1999 the Company, SBS and Infotech entered into a perpetual software ownership agreement providing that each party independently owned an undivided share of and has the right to unilaterally license and exploit certain portions of the Company's proprietary scheduling, tracking, coordination, reporting and expense software are co-owned with SBS and Infotech, and each entered into a non-exclusive royalty-free license from the Company to use certain "SPAR" trademarks in the United States. 

 

On May 13, 2024, SGRP privately repurchased 1,000,000 shares of SGRP's Common Stock from William H. Bartels, effective as of April 30, 2024, at a purchase price of $1.80 per share (the Nasdaq closing price on April 29, 2024). 

 

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International Joint Venture Transactions

 

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

 

Prior to  March 31, 2024, SGRP Meridian Proprietary Limited ("Meridian") was a consolidated international subsidiary of the Company and was owned 51% by the Company and 49% by Friedshelf (Pty) Ltd., Lindicom Proprietary Limited, and Lindicom Empowerment Holdings Proprietary Limited ("Local Owners"). 

 

On   February 7, 2024, the Company entered into an agreement to sell its 51% ownership interest in Meridian to the Local Owners for 180,700,000 South African Rand, 80% of which would be paid upon closing. 

 

The closing conditions under that agreement were satisfied in all material respects by  March 31, 2024. and on  April 29, the Company received 144,560,000 South African Rand from the Local Buyers (or approximately $7.7 million). The remaining purchase price will be paid on  December 31, 2024 or 2025, depending on certain financial triggers, and its payment is secured by an irrevocable unconditional guarantee from Investec Bank Limited.  The Company has also licensed certain technology (including SPARView) and trademarks to Meridian in connection with the sale.  The Company has recognized a gain of $7.2 million in the first quarter of 2024 as a result of this transaction.

 

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

 

On  February 23, 2024, the Company entered into an agreement to sell its 51% ownership interest in SPAR (Shanghai) Marketing Management Co., Ltd. to Shanghai Jingbo Enterprise Consulting Co., Ltd. and Shanghai Wedone Marketing Management Co. Ltd.  The total price to be paid to the Company is $200,000.  The sale was completed in of  April 2024.

 

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

 

On   March 26, 2024, the Company signed a share purchase agreement with JK Consultoria Empresarial Ltda. ("JKC") for JKC to acquire the Company's Brazilian holding company (which in turn owns the Company's 51 percent interest in its Brazilian joint venture subsidiary) for BRL 58.9 million or approximately $11.8 million.  Closing of the sale occurred in June 2024.

 

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

 

On July 23, 2024, the Company entered into an agreement to sell its 100% ownership interest in SPAR Japan for $500,000.  The sale closed on August 30, 2024.

 

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

 

On September 25, 2024, the Company closed on an agreement to sell its 51% ownership interest in its Indian Joint venture for $500,000, effective as of August 31, 2024.

 

Summary of Certain Related Party Transactions

 

Due to related parties consists of the following as of the periods presented (in thousands):

 

Due to affiliates consists of the following (in thousands):

 September 30,  December 31, 
  

2024

  

2023

 

Loans from local investors:(1)

        

Mexico

 $623  $623 

China

  -   2,316 

Resource Plus

  -   266 

Total due to affiliates

 $623  $3,205 

 

(1)

Represent loans due from the local investors into the Company's subsidiaries (representing their proportionate share of working capital loans). The loans have no payment terms, are due on demand, and are classified as current liabilities in the unaudited condensed consolidated balance sheets.

 

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9.

Segment Information

 

Select statement of operations activity of the Company’s reportable segments for the periods presented were (in thousands):

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Net revenues:

                

Americas

 $35,494  $53,796  $144,189  $154,457 

APAC

  2,294   5,674   11,305   17,432 

EMEA

  -   7,863   8,277   25,760 

Total net revenues

 $37,788  $67,333  $163,771  $197,649 
                 

Operating (loss) income:

                

Americas

 $(1,089) $1,328  $14,569  $5,894 

APAC

  (403)  (218)  (822)  (510)

EMEA

  -   431   227   1,304 

Total operating (loss) income

 $(1,492) $1,541  $13,974  $6,688 
                 

Interest expense

                

Americas

 $581  $264  $1,577  $895 

APAC

  1   31   24   47 

EMEA

  -   85   77   306 

Total interest expense

 $582  $380  $1,678  $1,248 
                 

Other expense (income), net:

                

Americas

 $(807) $5  $(1,101) $22 

APAC

  556   (59) $572   (69)

EMEA

  723   (110)  713   (300)

Total other expense (income), net

 $472  $(164) $184  $(347)
                 

(Loss) Income before income tax expense:

                

Americas

 $(82) $1,059  $13,666  $4,977 

APAC

  (1,752)  (190)  209   (488)

EMEA

  (712)  456   (1,763)  1,298 

Total (loss) income before income tax expense

 $(2,546) $1,325  $12,112  $5,787 
                 

Income tax (benefit) expense:

                

Americas

 $(1,827) $(163) $1,220  $1,068 

APAC

  (166)  45   (126)  8 

EMEA

  (321)  345   (6)  730 

Total income tax (benefit) expense

 $(2,314) $227  $1,088  $1,806 

 

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Net (loss) income, depreciation and amortization expense, and capital expenditures of the Company’s reportable segments for the periods presented were (in thousands):

 

  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2024  2023  2024  2023 

Net (loss) income:

                

Americas

 $1,745  $1,222  $12,446  $3,909 

APAC

  (1,586)  (235)  335   (496)

EMEA

  (391)  111   (1,757)  568 

Total net (loss) income

 $(232) $1,098  $11,024  $3,981 
                 

Net loss (income) attributable to non-controlling interest

                

Americas

 $104  $(604) $(658) $(1,484)

APAC

  (16)  5   30   (11)

EMEA

  -   (240)  (286)  (722)

Total net loss (income) attributable to non-controlling interest

 $88  $(839) $(914) $(2,217)
                 

Net (loss) income attributable to SPAR Group, Inc.

                

Americas

 $1,849  $618  $11,788  $2,425 

APAC

  (1,602)  (230)  365   (507)

EMEA

  (391)  (129)  (2,043)  (154)

Total net (loss) income attributable to SPAR Group, Inc.

 $(144) $259  $10,110  $1,764 
                 

Depreciation and amortization

                

Americas

 $445  $472  $1,348  $1,402 

APAC

  9   36   64   60 

EMEA

  -   40   31   112 

Total depreciation and amortization

 $454  $548  $1,443  $1,574 
                 

Capital expenditures:

                

Americas

 $127  $286  $903  $946 

APAC

  –   30   –   37 

EMEA

  –   49   5   100 

Total capital expenditures

 $127  $365  $908  $1,083 

 

There were no intercompany sales for the three and nine months ended September 30, 2024 and 2023.

 

Total assets of the Company’s reportable segments as of the periods presented were (in thousands):

 

  

September 30,

  

December 31,

 
  

2024

  

2023

 

Assets:

        

Americas

 $62,634  $71,372 

APAC

  4,762   13,361 

EMEA

  –   5,548 

Total assets

 $67,396  $90,281 

 

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Long-lived assets of the Company’s reportable segments as of the periods presented were (in thousands):

 

  

September 30,

  

December 31,

 
  

2024

  

2023

 

Long lived assets:

        

Americas

 $4,073  $4,585 

APAC

  –   1,015 

EMEA

  –   745 

Total long lived assets

 $4,073  $6,345 

 

Geographic Data (in thousands)

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 
      

% of

      

% of

      

% of

      

% of

 
      

consolidated

      

consolidated

      

consolidated

      

consolidated

 
      

net revenue

      

net revenue

      

net revenue

      

net revenue

 

United States

 $28,768   76.1% $28,722   42.7% $90,583   55.3% $81,004   41.0%

Brazil

  -   0.0%  18,619   27.7%  33,185   20.3%  56,717   28.7%

South Africa

  -   0.0%  7,863   11.7%  8,277   5.1%  25,759   13.0%

Mexico

  3,196   8.5%  3,033   4.5%  9,723   5.9%  8,065   4.1%

China

  -   0.0%  2,205   3.3%  2,698   1.6%  7,106   3.6%

Japan

  908   2.4%  1,489   2.2%  3,778   2.3%  4,533   2.3%

Canada

  3,529   9.3%  3,421   5.1%  10,698   6.5%  8,671   4.4%

India

  1,387   3.7%  1,577   2.3%  4,829   3.0%  4,420   2.2%

Australia

  -   0.0%  404   0.6%  -   0.0%  1,374   0.7%

Total net revenue

 $37,788   100.0% $67,333   100.0% $163,771   100.0% $197,649   100.0%

 
 

10.

Leases

 

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

 

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

 

    

Three Months Ended

  

Nine Months Ended

 
    

September 30,

  

September 30,

 

Lease Costs

 

Classification

 

2024

  

2023

  

2024

  

2023

 

Operating lease cost

 

Selling, General and Administrative Expense

 $147  $71  $415  $212 

Short-term lease cost

 

Selling, General and Administrative Expense

  22   19   277   130 

Variable costs

 

Selling, General and Administrative Expense

  -   13   -   44 

Total lease cost

 $169  $103  $692  $386 

 

(1) Variable lease expense consists primarily of property taxes, property insurance, and common area or other maintenance costs for the Company’s leases of office space.

 

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

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 
                 

Operating cash flows from operating leases

 $105  $233  $415  $489 
                 

Right-of-use assets obtained in exchange for lease obligations

                

Operating lease

 $-  $386  $-  $1,497 

 

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

 

  

September 30, 2024

  

December 31, 2023

 

Assets:

        

Operating lease right-of-use assets

 $838  $2,323 

Liabilities:

        

Current portion of operating lease liabilities

  508   1,163 

Non-current portion of operating lease liabilities

  330   1,160 

Total operating lease liabilities

 $838  $2,323 
         

Weighted-average remaining lease term - operating leases (in years)

  3.56   2.64 

Weighted-average discount rate - operating leases

  7.6

%

  8.8

%

 

The following table summarizes the maturities of lease liabilities as of September 30, 2024 (in thousands):

 

Period Ending December 31,

 

Amount

 

2024

 $134 

2025

  438 

2026

  144 

2027

  114 

2028

  73 

Total Lease Payments

  903 

Less: imputed interest

  (65)

Total

 $838 

 

 

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11.

Earnings Per Share

 

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

 

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Numerator:

                

Net (loss) income attributable to SPAR Group, Inc.

 $(144) $259  $10,110  $1,764 
                 

Denominator:

                

Shares used in basic net income per share calculation

  23,435   23,237   23,591   23,201 

Effect of diluted securities:

                

Stock options and unvested restricted shares

  -   139   177   149 

Shares used in diluted net income per share calculations

  23,435   23,376   23,768   23,350 
                 

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

 $(0.01) $0.01  $0.43  $0.08 

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

 $(0.01) $0.01  $0.43  $0.08 

 

 

 
 

12.

Subsequent Events

 

Potential Going Private Transaction

 

As previously announced, on August 30, 2024, the Corporation entered into an Agreement and Plan of Merger (the "Merger Agreement"), with Highwire Capital, LLC, a Texas limited liability company ("Highwire"), and Highwire Merger Co. I, Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), pursuant to which Highwire, in a cash merger following approval by the Corporation's stockholders and the closing of the transaction, will acquire all of the stock of the Corporation for $2.50 per fully diluted share in cash, representing an aggregate purchase price of $58,000,000 (subject to certain adjustments).  All outstanding stock options, restricted stock units and phantom stock units will vest and their holders will receive comparable compensation net of exercise prices (if any).

 

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

 

The Special Committee and Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby ("Merger Transactions") are advisable, fair to and in the best interests of the Corporation and its stockholders, (ii) determined that it is advisable and in the best interests of the Corporation and its stockholders to enter into the Merger Transactions, (iii) approved the execution, delivery and performance by the Corporation of the Merger Transactions and (iv) recommend that the stockholders of the Corporation approve the Merger Transactions. 

 

On October 2, 2024, the Corporation filed with the SEC and mailed to its stockholders its definitive Proxy Statement containing notification of the special meeting of SGRP's stockholders on October 25, 2024, to approve the Merger Agreement and the related transactions, which its stockholders approved at that meeting..  The parties to the Merger Agreement are working to finalize the closing of the Merger Transactions, which is expected in the fourth quarter of 2024.

 

South Africa Consent

 

On October 8, 2024, SGRP provided its consent to Friedshelf 401 Ltd, Lindicom Empowerment Holdings LTD and Lindicom, the acquirer of SGRP’s 51% ownership in the South African joint venture, to allow the acquirer to add additional subscribers to their business.  The Sale of Shares Agreement required SGRP to provide this consent as long as the second installment is outstanding.  In return for this consent, SGRP received terms that provide for receipt of the second installment six months earlier upon achievement of agreed to performance criteria.

 

 

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SPAR Group, Inc. and Subsidiaries

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains "forward-looking statements" within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, made by, or respecting, SPAR Group, Inc. ("SGRP" or the "Corporation",) and its subsidiaries (and SGRP together with its subsidiaries may be referred to as "SPAR Group" or the "Company"). There also are forward-looking statements contained in: (a) SGRP's 2023 Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the "SEC") on April 1, 2024, and SGRP's First Amendment to the 2023 Annual Report on Form 10-K/A for the year ended December 31, 2023, as filed with the SEC on April 30, 2024 (as so amended, the "Annual Report");  and (b) SGRP's Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and statements as and when filed with the SEC (including this Quarterly Report and the Annual Report, each a "SEC Report"). "Forward-looking statements" are defined in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and other applicable federal and state securities laws, rules and regulations, as amended (together with the Securities Act and Exchange Act, the "Securities Laws").

 

Readers can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Words such as "may," "will," "expect," "intend," "believe," "estimate," "anticipate," "continue," "plan," "project," or the negative of these terms or other similar expressions also identify forward-looking statements. Forward-looking statements made by the Company in this Quarterly Report and the Annual Report may include (without limitation) statements regarding: risks, uncertainties, cautions, circumstances and other factors ("Risks").  Those Risks include (without limitation): the impact of the Company's strategic review process or any resulting action or inaction; the impact of selling certain of the Company's subsidiaries or any resulting impact on revenues, earnings or cash; the impact of adding new directors or new finance team members; the potential negative effects of any stock repurchase and/or payment; the potential continuing negative effects of the COVID pandemic on the Company's business; the Company's potential non-compliance with applicable Nasdaq director independence, bid price or other rules; the Company's cash flow or financial condition; and plans, intentions, expectations, guidance or other information respecting the pursuit or achievement of the Company's corporate objectives. The Company's forward-looking statements also include (without limitation) those made (as applicable) in this Quarterly Report and the Annual Report in "Business", "Risk Factors", "Legal Proceedings", "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Directors, Executive Officers and Corporate Governance", "Executive Compensation", "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters", and "Certain Relationships and Related Transactions, and Director Independence".

 

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

 

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

 

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SPAR Group, Inc. and Subsidiaries

 

Overview of Our Business

 

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

 

As of September 30, 2024, the Company operated in three countries: the United States, Canada, and Mexico. Across all of these countries, the Company executes programs through its multi-lingual logistics, reporting and communication technology, which provides clients value through real-time insight on store/product conditions.

 

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

 

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

 

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

 

Adjusted EBITDA

 

Adjusted EBITDA is a non-GAAP measure of our operating performance and should not be considered as an alternative to net income as a measure of financial performance or any other performance measure derived in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). "Adjusted EBITDA" is defined as net income before (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense, (iv) Board of Directors incremental compensation expense, (v) restructuring, (vi) goodwill impairment, (vii) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations, and (viii) special items as determined by management. 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 to supplement U.S. GAAP measures of performance in the evaluation of the effectiveness of our business strategies and to make budgeting decisions.

 

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

 

 

●

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

●

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

●

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

●

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

●

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

●

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

●

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

 

The following is a reconciliation of our net income to Adjusted EBITDA for the periods presented:

 

 

   

Three Months Ended September 30,

  

Nine Months Ended September 30,

(in thousands)

  

2024

  

2023

  

2024

  

2023

Consolidated net (loss) income

  

$ (232)

  

$ 1,098

  

$ 11,024

  

$ 3,981

Depreciation and amortization

  

454

  

548

  

1,443

  

1,574

Interest expense

  

582

  

380

  

1,678

  

1,248

Income tax (benefit) expense

  

(2,314)

  

227

  

1,088

  

1,806

Other (income) expense

  

472

  

(164)

  

184

  

(347)

Subtotal of Adjustments to Consolidated Net Income

  

(806)

  

991

  

4,393

  

4,281

Consolidated EBITDA

  

$ (1,038)

  

$ 2,089

  

$ 15,417

  

$ 8,262

Review of Strategic Alternatives

  

952

  

143

  

1,607

  

571

Loss (gain) on Sale of Businesses

  

922

  

-

  

(11,154)

  

-

Share based compensation

  

(149)

  

83

  

107

  

217

Legal costs / settlements - non recurring

  

-

  

140

  

-

  

140

Restructuring costs

  

-

  

28

  

256

  

28

Consolidated Adjusted EBITDA

  

$ 687

  

$ 2,483

  

$ 6,233

  

$ 9,218

Adjusted EBITDA attributable to non-controlling interest

  

(466)

  

(977)

  

(1,909)

  

(3,211)

Adjusted EBITDA attributable to SPAR Group, Inc.

  

$ 221

  

$ 1,506

  

$ 4,324

  

$ 6,007

 

RESULTS OF OPERATIONS

 

The following table sets forth selected financial data and data as a percentage of Net revenues for the periods indicated (in thousands):

 

For the three months ended September 30, 2024, compared to the three months ended September 30, 2023

 

   

Three Months Ended September 30,

  
   

2024

    

2023

  
   

$

    

%

    

$

    

%

  

Net revenues

   $ 37,788       100.0 %   $ 67,333       100.0 %

Cost of revenues

     29,346       77.7       53,960       80.1  

Gross profit

     8,442       22.3       13,373       19.9  

Selling, general & administrative expense

     8,558       22.6       11,284       16.8  

Loss on sale of business

     922       2.4       -       -  

Depreciation & amortization

     454       1.2       548       0.8  

Operating (loss) income

     (1,492 )     (1.5 )     1,541       2.3  

Interest expense, net

     582       1.5       380       0.6  

Other expense (income), net

     472       1.2       (164 )     (0.2 )

(Loss) income before income taxes

     (2,546 )     (4.3 )     1,325       2.0  

Income tax (benefit) expense

     (2,314 )     (6.1 )     227       0.3  

Net (loss) income

     (232 )     1.8       1,098       1.6  

Net (loss) income attributable to non-controlling interest

     88       0.2       (839 )     (1.2 )

Net income (loss) attributable to SPAR Group, Inc.

   $ (144 )     (0.4 )%   $ 259       0.4 %

 

Net Revenues

 

Net revenues for three months ended September 30, 2024 were $ 37.8 million, compared to $ 67.3 million for the three months ended September 30, 2023, a decrease of $ 29.5 , or 43.8%  The decrease is primarily due to the exit of South Africa, Australia, Brazil, China, and the US NMS JV (which revenues are included within the 2023 numbers but not in current period) and having a partial quarter of results in 2024 for Japan and India, compared to prior year.

 

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For the three months ended September 30, 2024 and 2023, the Americas net revenue was $ 35.5 million and $ 53.8 million, respectively, a decrease of $ 18.3 million, or 34.0%.  The Americas 2024 second quarter revenue decline reflects the sale of Brazil in the second quarter.  The US and Canada businesses experienced 18% and 3% growth in the current quarter, respectively, when compared to last year.

 

For the three months ended September 30, 2024 and 2023, APAC net revenue was $ 2.3 million and $ 5.7 million, respectively, a decrease of $ 3.4 million, or 59.6%.  The lower 2024 results are driven by the exit of China and a partial quarter of revenues from Japan.

 

For the three months ended September 30, 2024 and 2023, EMEA net revenue was $0 and $ 7.9 million, respectively, a decrease of $ 7.9 million, or 100.0% driven by the sale of South Africa. 

  

Cost of Revenues

 

The Company's cost of revenues consists of its in-store labor and field management wages, related benefits, travel and other direct labor-related expenses and was 77.5% of net revenue for the three months ended September 30, 2024 compared to 80.1% of net revenues for the three months ended September 30, 2023.

 

Cost of revenues for the three months ended September 30, 2024 were $ 29.3 million, compared to $ 54.0 million for the three months ended September 30, 2023, a decrease of $ 24.7 million, or 45.7%.

 

For the three months ended September 30, 2024 and 2023, the Americas cost of revenues were $ 27.4 million and $ 43.9 million, respectively, a decrease of $ 16.5 million, or 37.6%. The Americas cost of revenue as a percent of net revenue was 77.2% for the quarter ended September 30, 2024 and 81.6% for the quarter ended September 30, 2023, a decrease of 5.4%.  

 

For the three months ended September 30, 2024 and 2023, APAC cost of revenues were $ 2.0 million and $ 4.1 million, respectively, a decrease of $ 2.1 million, or 51.2%. The APAC cost of revenue as a percent of net revenue was 87.0% and 71.9% for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023. The decrease in cost of revenues is due to the sale of China and Australia and a partial quarter for Japan and India.

 

For the three months ended September 30, 2024 and 2023, EMEA cost of revenues were $0 and $ 5.9 million, respectively a decrease of $ 5.9 million, or 100.0%.   The EMEA cost of revenue as a percent of net revenue was 0.0% and 74.7% for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023. EMEA division was made up entirely of South Africa, which was sold at the end of the first quarter of 2024. 

 

Selling, General, and Administrative Expenses

 

Selling, general and administrative expenses of the Company include its corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expenses. Selling, general and administrative expenses were approximately $ 8.6 million, or 22.6% of net revenue, and approximately $ 11.3 million, or 16.8% of net revenue for the three months ended September 30, 2024 and 2023, respectively. 

 

For the three months ended September 30, 2024 and 2023, Americas selling, general and administrative expenses were approximately $ 7.8 million and $ 8.1 million, respectively, a decrease of $ 0.3 or 3.7%.  Americas selling, general, and administrative expenses were 22.0% of net revenues for the three months ended September 30, 2024 , compared to 15.1% for the three months ended September 30, 2023.

 

For the three months ended September 30, 2024 and 2023, APAC selling, general and administrative expenses were approximately $ 0.7 million and $ 1.7 million, respectively, a decrease of $ 1.0 million, or 58.8%.  As a percentage of net revenues, selling, general, and administrative expenses for APAC were 30.4% and 29.8% for the three months ended September 30, 2024 and September 30, 2023, respectively.

 

For the three months ended September 30, 2024 and 2023, EMEA selling, general and administrative expenses were $0 and $ 1.4 million, respectively, a decrease of $ 1.4 million, or 100.0%.  EMEA division was made up entirely of South Africa, which was sold at the end of the first quarter of 2024.

 

Depreciation and Amortization

 

For the three months ended September 30, 2024 and 2023, depreciation and amortization was approximately $ 0.5 million and $ 0.5 million, respectively. 

 

Interest Expense

 

For the three months ended September 30, 2024 and 2023, interest expense was approximately $ 0.6 million and $ 0.4 million, respectively.

 

Other Expense (Income), Net

 

For the three months ended September 30, 2024 and 2023, other expense (income), net was approximately $ 0.5 million and $ (0.2) million, respectively. 

 

Income Tax Expense

 

For the three months ended September 30, 2024 and 2023, income tax expense was approximately $ (2.3) million with an effective rate of 90.9% and $ 0.2 million with an effective rate of 17.1%, respectively. 

 

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For the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023

 

   

Nine Months Ended September 30,

  
   

2024

    

2023

  
   

$

    

%

    

$

    

%

  

Net revenues

   $ 163,771       100.0 %   $ 197,649       100.0 %

Cost of revenues

     131,801       80.5       157,042       79.5  

Gross profit

     31,970       19.5       40,607       20.5  

Selling, general & administrative expense

     27,707       16.9       32,345       16.4  

Gain on sale of business

     (11,154 )     (6.8 )     -       -  

Depreciation & amortization

     1,443       0.9       1,574       0.8  

Operating income

     13,974       1.7       6,688       3.4  

Interest expense, net

     1,678       1.0       1,248       0.6  

Other expense (income), net

     184       0.1       (347 )     (0.2 )

Income before income taxes

     12,112       0.6       5,787       2.9  

Income tax expense

     1,088       0.7       1,806       0.9  

Net income

     11,024       (0.1 )     3,981       2.0  

Net income attributable to non-controlling interest

     (914 )     (0.6 )     (2,217 )     (1.1 )

Net income attributable to SPAR Group, Inc.

   $ 10,110       6.2 %   $ 1,764       0.9 %

 

Net Revenues

 

Net revenues for nine months ended September 30, 2024 were $ 163.8 million, compared to $ 197.6 million for the nine months ended September 30, 2023, a decrease of $ 33.8 million, or 17.1%.  The decline in consolidated revenues is driven by the exit of Australia and the US NMS JV as of the end of 2023 and having exited South Africa, Brazil, India, Japan, and China at various points during the first three quarters of 2024 (for which revenues are included within the 2023).

 

For the nine months ended September 30, 2024 and 2023, the Americas net revenue was $ 144.2 million and $ 154.5 million, respectively, a decrease of $ 10.3 million, or 6.7% reflecting strong growth in revenues in our US and Canadian operations, partially offset by lower revenues caused by the sale of Brazil in 2024.

 

For the nine months ended September 30, 2024 and 2023, APAC net revenue was $ 11.3 million and $ 17.4 million, respectively, a decrease of $ 6.1 million, or 35.1%. 

 

For the nine months ended September 30, 2024 and 2023, EMEA net revenue was $ 8.3 million and $ 25.8 million, respectively, a decrease of $ 17.5 million, or 67.8%.  The decline in EMEA net revenues compared to 2023 reflects the sale of the joint venture as of March 31, 2024.

  

Cost of Revenues

 

The Company's cost of revenues consists of its in-store labor and field management wages, related benefits, travel and other direct labor-related expenses and was 80.5% of net revenue for the nine months ended September 30, 2024 compared to 79.5% of net revenues for the nine months ended September 30, 2023. The decrease in gross margin is mainly due to the revenue mix in the US (see hereunder in Americas); and (ii) a material decrease in margin in South Africa (see hereunder in EMEA) during the first quarter when SPAR owned that business. 

 

Cost of revenues for the nine months ended September 30, 2024 were $ 131.8 million, compared to $ 157.0 million for the nine months ended September 30, 2023, a decrease of $ 25.2 million, or 16.1%.

 

For the nine months ended September 30, 2024 and 2023, the Americas cost of revenues were $ 115.7 million and $ 123.9 million, respectively, a decrease of $ 8.2 million, or 6.6%. The Americas cost of revenue as a percent of net revenue was 80.2% for the nine months ended September 30, 2024 and 80.2% for the nine months ended September 30, 2023, an increase of 0.0%.  

 

For the nine months ended September 30, 2024 and 2023, APAC cost of revenues were $ 9.1 million and $ 12.9 million, respectively, a decrease of $ 3.8 million, or 29.5%. The APAC cost of revenue as a percent of net revenue was 80.5% and 74.1% for nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.  The change in cost of revenue at APAC was driven primarily by the exit of China and Australia. 

 

For the nine months ended September 30, 2024 and 2023, EMEA cost of revenues were $ 7.0 million and $ 20.2 million, respectively a decrease of $ 13.2 million, or 65.3%. The EMEA cost of revenue as a percent of net revenue was 0.0% and 78.3% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The decline in EMEA cost of revenues compared to 2023 reflects the sale of the South African joint venture as of March 31, 2024. 

 

Selling, General, and Administrative Expenses

 

Selling, general and administrative expenses of the Company include its corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expenses. Selling, general and administrative expenses were approximately $ 27.7 million, or 16.9% of net revenue, and approximately $ 32.3 million, or 16.4% of net revenue for the nine months ended September 30, 2024 and 2023, respectively. 

 

For the nine months ended September 30, 2024 and 2023, Americas selling, general and administrative expenses were approximately $ 23.8 million and $ 23.2 million, respectively, an increase of 2.6%.  Americas selling, general and administrative expenses were 16.5% of net revenues and 15.0% for the nine months ended September 30, 2024 and 2023, respectively.

 

22
Table of Contents

 

For the nine months ended September 30, 2024 and 2023, APAC selling, general and administrative expenses were approximately $ 2.9 million and $ 5.0 million, respectively, a decrease of $ 2.1 million, or 42.0%. 

 

For the nine months ended September 30, 2024 and 2023, EMEA selling, general and administrative expenses were approximately $ 1.0 million and $ 4.2 million, respectively, a decrease of $ 3.2 million, or 76.2%. The decline in EMEA SG&A compared to 2023 reflects the sale of the South African joint venture as of March 31, 2024.

 

Depreciation and Amortization

 

For the nine months ended September 30, 2024 and 2023, depreciation and amortization was approximately $ 1.4 million and $ 1.6 million, respectively. 

 

Interest Expense

 

For the nine months ended September 30, 2024 and 2023, interest expense was approximately $ 1.7 million and $ 1.2 million, respectively.

 

Other Expense (Income), Net

 

For the nine months ended September 30, 2024 and 2023, other expense (income), net was approximately $ 0.2 million and $ (0.3) million, respectively. 

 

Income Tax Expense

 

For the nine months ended September 30, 2024 and 2023, income tax expense was approximately $ 1.1  million with an effective rate of 9.0% and $ 1.8 million with an effective rate of 31.2%, respectively.

 

Critical Accounting Estimates

 

The preparation of our consolidated financial statements in conformity with US GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and related notes thereto. However, we believe we have used reasonable estimates and assumptions in preparing the unaudited condensed consolidated financial statements. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

 

The significant accounting policies and estimates used in preparation of the unaudited condensed consolidated financial statements are described in our audited consolidated financial statements as of and for the fiscal year ended December 31, 2023, and the notes thereto, which are included in the 2023 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 1, 2024. Except as detailed in Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no material changes to our significant accounting policies during the nine months ended September 30, 2024.

 

Liquidity and Capital Resources

 

Funding Requirements

 

Cash from operations could be affected by various risks and uncertainties, including, but not limited to risks detailed in the section titled "Risk Factors" included elsewhere in our 2023 Annual Report on Form 10-K.  The Company 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 working capital and capital expenditure requirements over the next 12 months. 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.

 

23
Table of Contents

 

The Company is a party to various domestic and international credit facilities. These various domestic and international credit facilities require compliance with their respective financial covenants. See Note 3 to the Company's unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

 

Cash Flows for the For the Nine months ended September 30, 2024 and 2023

 

Net cash provided by (used in) operating activities was $(0.7)  million and $1.6  million for the nine months ended September 30, 2024 and 2023, respectively. 

 

Net cash provided by (used in) investing activities was approximately $9.5  million and $(1.0)  million for the nine months ended September 30, 2024 and 2023, respectively. 

 

Net cash provided by (used in) financing activities was approximately $ 210 thousand and $(1.5)  million for the nine months ended September 30, 2024 and 2023, respectively. 

 

Reflecting the impact of foreign exchange rate changes on the activity above resulted in a decrease in cash, cash equivalents and restricted cash for the nine months ended September 30, 2024 and 2023 of approximately $ (75) thousand and $ (426) thousand, respectively. 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

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

 

Item 4.

Controls and Procedures

 

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

 

Changes in Internal Controls 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 March 31, 2024. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of September 30, 2024.

 

Changes in Internal Controls Over Financial Reporting

 

There were no changes in the Company's internal controls over financial reporting that occurred during the three months ended September 30, 2024, that materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

 

24
Table of Contents

 

SPAR Group, Inc. and Subsidiaries

 

PART II: OTHER INFORMATION

 

Item 1.

Legal Proceedings 

 

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

 

For further discussion of certain legal proceedings, see Note 8 – Related Party Transactions and Note 4 - Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the three months ended September 30, 2024, which is incorporated herein by reference, and Note 6 - Commitments and Contingencies of the Notes to the Consolidated Financial Statements included in Part IV, Item 15 on the 2023 Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission on April 1, 2024.

 

Item 1A.

Risk Factors

 

Existing Risk Factors

 

Various risk factors applicable to the Company and its businesses are described in Item 1A under the caption "Risk Factors" in the 2023 Annual Report on Form 10-K for the year ended December 31, 2023, which Risk Factors are incorporated by reference into this Quarterly Report on Form 10-Q for the three months ended September 30, 2024.

 

There have been no material changes in the Company's risk factors since the 2023 Annual Report on Form 10-K for the year ended December 31, 2023.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

Not applicable.

 

Item 3.

Defaults upon Senior Securities

 

Not applicable.

 

Item 4.

Mine Safety Disclosures

 

Not applicable. 

 

 

Item 5.

Other Information

 

Not applicable.
 

 

25
Table of Contents

 

SPAR Group, Inc. and Subsidiaries

 

 

Item 6.

Exhibits

 

 

31.1

Certification of the CEO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed herewith.

  
       
 

31.2

Certification of the CFO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed herewith.

  
       
 

32.1

Certification of the CEO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as filed herewith.

  
       
 

32.2

Certification of the CFO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as filed herewith.

  

 

 

101.INS

Inline XBRL Instance Document - the instance document does not appear in the interactive Inline XBRL document.
     
 

101.SCH

Inline XBRL Taxonomy Extension Schema Document
     
 

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
 

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document
     
 

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document
     
 

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
  104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

26
Table of Contents

 

SPAR Group, Inc. and Subsidiaries

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

Date: November [  ], 2024

SPAR Group, Inc., Registrant
 

 

 

 

 

 

By:  /s/ Antonio Calisto Pato

 

Antonio Calisto Pato
Chief Financial Officer, Treasurer and Secretary 

 

27

SPAR Group, Inc. and Subsidiaries

 

EXHIBIT 31.1

 

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

 

I, Michael R. Matacunas, certify that:

 

1.     I have reviewed this Quarterly Report on Form 10-Q for the three-month period ended September 30, 2024 of SPAR Group, Inc.;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Date: November 14, 2024

/s/ Michael R. Matacunas

Michael R. Matacunas

President and Chief Executive Officer

 

Ex-1

 

SPAR Group, Inc. and Subsidiaries

 

EXHIBIT 31.2

 

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

 

I, Antonio Calisto Pato, certify that:

 

1.     I have reviewed this Quarterly Report on Form 10-Q for the three-month period ended September 30, 2024 of SPAR Group, Inc.;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Date: November 14, 2024

/s/ Antonio Calisto Pato

Antonio Calisto Pato

Chief Financial Officer, Treasurer and Secretary

 

Ex-2

 

SPAR Group, Inc. and Subsidiaries

 

EXHIBIT 32.1

 

Certification of the Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report on Form 10-Q for the three-month period ended September 30, 2024 of SPAR Group, Inc., the undersigned hereby certifies that, to his knowledge:

 

1.

The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

 

2.

The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

 

 

/s/ Michael R. Matacunas
Michael R. Matacunas
President and Chief Executive Officer

November 14, 2024

 

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

 

Ex-3

 

SPAR Group, Inc. and Subsidiaries

 

EXHIBIT 32.2

 

Certification of the Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

 

In connection with the Quarterly Report on Form 10-Q for the three-month period ended September 30, 2024 of SPAR Group, Inc., the undersigned hereby certifies that, to his knowledge:

 

1.

The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

 

2.

The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

 

/s/ Antonio Calisto Pato
Antonio Calisto Pato
Chief Financial Officer, Treasurer and
Secretary

November 14, 2024

 

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

 

Ex-4

 

 
v3.24.3
Document And Entity Information - shares
 9 Months Ended
Sep. 30, 2024
Nov. 12, 2024
Document Information [Line Items]    
Entity Central Index Key 0001004989  
Entity Registrant Name SPAR GROUP, Inc.  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2024  
Document Transition Report false  
Entity File Number 0-27408  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 33-0684451  
Entity Address, Address Line One 1910 Opdyke Court  
Entity Address, City or Town Auburn Hills  
Entity Address, State or Province MI  
Entity Address, Postal Zip Code 48326  
City Area Code 248  
Local Phone Number 364-7727  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Title of 12(b) Security Common stock, par value $0.01 per share  
Trading Symbol SGRP  
Security Exchange Name NASDAQ  
Entity Common Stock, Shares Outstanding   23,449,701
v3.24.3
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Net revenues $ 37,788 $ 67,333 $ 163,771 $ 197,649
Related party - cost of revenues 0 1,628 0 4,807
Cost of revenues 29,346 52,332 131,801 152,235
Gross profit 8,442 13,373 31,970 40,607
Selling, general and administrative expense 8,558 11,284 27,707 32,345
Gain on sale of businesses 922 0 (11,154) 0
Depreciation and amortization 454 548 1,443 1,574
Operating (loss) income (1,492) 1,541 13,974 6,688
Interest expense 582 380 1,678 1,248
Other expense (income), net 472 (164) 184 (347)
(Loss) Income before income tax expense (2,546) 1,325 12,112 5,787
Income tax (benefit) expense (2,314) 227 1,088 1,806
Net (loss) income (232) 1,098 11,024 3,981
Net loss (income) attributable to non-controlling interest 88 (839) (914) (2,217)
Net (loss) income attributable to SPAR Group, Inc. $ (144) $ 259 $ 10,110 $ 1,764
Basic (loss) income per common share attributable to SPAR Group, Inc. (in dollars per share) $ (0.01) $ 0.01 $ 0.43 $ 0.08
Diluted (loss) income per common share attributable to SPAR Group, Inc. (in dollars per share) $ (0.01) $ 0.01 $ 0.43 $ 0.08
Weighted-average common shares outstanding – basic (in shares) 23,435 23,237 23,591 23,201
Weighted-average common shares outstanding – diluted (in shares) 23,435 23,376 23,768 23,350
Net income $ (232) $ 1,098 $ 11,024 $ 3,981
Other comprehensive loss        
Foreign currency translation adjustments (72) (497) (1,220) (359)
Comprehensive (loss) income (304) 601 9,804 3,622
Comprehensive (income) loss attributable to non-controlling interest 45 (688) 142 (1,788)
Comprehensive (loss) income attributable to SPAR Group, Inc. $ (259) $ (87) $ 9,946 $ 1,834
v3.24.3
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Assets    
Cash and cash equivalents $ 19,652 $ 10,719
Accounts receivable, net 37,777 59,776
Prepaid expenses and other current assets 3,078 5,614
Total current assets 60,507 76,109
Property and equipment, net 2,142 2,871
Operating lease right-of-use assets 838 2,323
Goodwill 1,238 1,382
Intangible assets, net 693 1,180
Deferred income taxes, net 0 4,687
Other assets 1,978 1,729
Total assets 67,396 90,281
Accrued expenses and other current liabilities 3,713 15,274
Customer incentives and deposits 1,678 1,905
Lines of credit and short-term loans 18,538 17,530
Current portion of operating lease liabilities 508 1,163
Total current liabilities 34,280 48,565
Operating lease liabilities, net of current portion 330 1,160
Long-term debt 1,707 310
Deferred income taxes, net 1,538 0
Total liabilities 37,855 50,035
Commitments and contingencies – See Note 4
Stockholders' equity:    
Common stock, $0.01 par value per share: 47,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 23,448,675 and 23,446,444 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively 234 232
Treasury stock, at cost, 1,205,485 shares as of September 30, 2024 and 205,485 as of December 31, 2023 (2,075) (285)
Additional paid-in capital 13,151 21,004
Accumulated other comprehensive loss (2,022) (3,341)
Retained earnings 20,007 10,609
Total stockholders' equity attributable to SPAR Group, Inc. 29,295 28,226
Non-controlling interest 246 12,020
Total stockholders’ equity 29,541 40,246
Total liabilities and stockholders’ equity 67,396 90,281
Series B Preferred Stock [Member]    
Stockholders' equity:    
Convertible preferred stock 0 7
Nonrelated Parties [Member]    
Assets    
Accounts payable 9,220 9,488
Related Parties [Member]    
Assets    
Accounts payable $ 623 $ 3,205
v3.24.3
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares
Sep. 30, 2024
Dec. 31, 2023
Preferred Stock, Par or Stated Value Per Share (in dollars per share) $ 0.01  
Preferred Stock, Shares Authorized (in shares) 3,000,000  
Common Stock, Par or Stated Value Per Share (in dollars per share) $ 0.01 $ 0.01
Common Stock, Shares Authorized (in shares) 47,000,000 47,000,000
Common Stock, Shares, Issued (in shares) 23,448,675 23,446,444
Common Stock, Shares, Outstanding (in shares) 23,448,675 23,446,444
Treasury Stock, Common and Preferred, Shares (in shares) 1,205,485 205,485
Series B Preferred Stock [Member]    
Preferred Stock, Par or Stated Value Per Share (in dollars per share) $ 0.01 $ 0.01
Preferred Stock, Shares Authorized (in shares) 3,000,000 3,000,000
Preferred Stock, Shares Issued (in shares) 0 650,000
Preferred Stock, Shares Outstanding (in shares) 0 650,000
v3.24.3
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
Common Stock, Outstanding [Member]
Preferred Stock [Member]
Treasury Stock, Common and Preferred [Member]
Additional Paid-in Capital [Member]
AOCI Attributable to Parent [Member]
Retained Earnings [Member]
Noncontrolling Interest [Member]
Total
Balance (in shares) at Dec. 31, 2022 22,961 855 205          
Balance at Dec. 31, 2022 $ 229 $ 9 $ (285) $ 20,708 $ (4,941) $ 6,707 $ 15,634 $ 38,061
Share-based compensation       173       173
Conversion of preferred stock to common stock (in shares) 307 (205) 0          
Conversion of preferred stock to common stock $ 4 $ (2) $ 0 3 0 0 0 5
Other comprehensive income (loss) 0 0 0 0 85 0 92 177
Net income 0 0 0 0 0 866 911 1,777
Dividend to NCI $ 0 $ 0 $ 0 0 0 0 (334) (334)
Balance (in shares) at Mar. 31, 2023 23,268 650 205          
Balance at Mar. 31, 2023 $ 233 $ 7 $ (285) 20,884 (4,856) 7,573 16,303 39,859
Balance (in shares) at Dec. 31, 2022 22,961 855 205          
Balance at Dec. 31, 2022 $ 229 $ 9 $ (285) 20,708 (4,941) 6,707 15,634 38,061
Net income               3,981
Balance (in shares) at Sep. 30, 2023 23,241 650 205          
Balance at Sep. 30, 2023 $ 232 $ 7 $ (285) 20,928 (4,871) 8,471 15,288 39,770
Balance (in shares) at Dec. 31, 2022 22,961 855 205          
Balance at Dec. 31, 2022 $ 229 $ 9 $ (285) 20,708 (4,941) 6,707 15,634 38,061
Balance (in shares) at Dec. 31, 2023 23,241 650 205          
Balance at Dec. 31, 2023 $ 232 $ 7 $ (285) 21,004 (3,341) 10,609 12,020 40,246
Balance (in shares) at Mar. 31, 2023 23,268 650 205          
Balance at Mar. 31, 2023 $ 233 $ 7 $ (285) 20,884 (4,856) 7,573 16,303 39,859
Share-based compensation       (39)       (39)
Other comprehensive income (loss) 0 0 0 0 331 0 (370) (39)
Net income 0 0 0 0 0 639 467 1,106
Purchase of non-controlling interest 0 0 0 0 0 0 (460) (460)
Dividend to NCI $ 0 $ 0 $ 0 0 0 0 (850) (850)
Retirement of shares (in shares) (35) 0 0          
Balance (in shares) at Jun. 30, 2023 23,233 650 205          
Balance at Jun. 30, 2023 $ 233 $ 7 $ (285) 20,845 (4,525) 8,212 15,090 39,577
Share-based compensation       83       83
Other comprehensive income (loss) 0 0 0 0 (346) 0 (151) (497)
Net income $ 0 $ 0 $ 0 0 0 259 839 1,098
Exercise of stock options (in shares) 8 0 0          
Exercise of stock options $ (1) $ 0 $ 0 0 0 0 0 (1)
Dividend to NCI $ 0 $ 0 $ 0 0 0 0 (490) (490)
Balance (in shares) at Sep. 30, 2023 23,241 650 205          
Balance at Sep. 30, 2023 $ 232 $ 7 $ (285) 20,928 (4,871) 8,471 15,288 39,770
Balance (in shares) at Dec. 31, 2023 23,241 650 205          
Balance at Dec. 31, 2023 $ 232 $ 7 $ (285) 21,004 (3,341) 10,609 12,020 40,246
Share-based compensation       128       128
Conversion of preferred stock to common stock (in shares) 975 (650) 0          
Conversion of preferred stock to common stock $ 10 $ (7) $ 0 (1) 0 0 0 2
Sale of joint ventures 0 0 0 0 712 (712) (4,981) (4,981)
Other comprehensive income (loss) 0 0 0 0 (2,030) 0 (490) (2,520)
Net income $ 0 $ 0 $ 0 0 0 6,627 554 7,181
Balance (in shares) at Mar. 31, 2024 24,216 0 205          
Balance at Mar. 31, 2024 $ 242 $ 0 $ (285) 21,131 (4,659) 16,524 7,103 40,056
Balance (in shares) at Dec. 31, 2023 23,241 650 205          
Balance at Dec. 31, 2023 $ 232 $ 7 $ (285) 21,004 (3,341) 10,609 12,020 40,246
Net income               11,024
Balance (in shares) at Sep. 30, 2024 23,448 0 1,205          
Balance at Sep. 30, 2024 $ 234 $ 0 $ (2,075) 13,151 (2,022) 20,007 246 29,541
Balance (in shares) at Mar. 31, 2024 24,216 0 205          
Balance at Mar. 31, 2024 $ 242 $ 0 $ (285) 21,131 (4,659) 16,524 7,103 40,056
Share-based compensation       128       128
Sale of joint ventures 0 0 0 (7,518) 1,412 0 (4,509) (10,615)
Other comprehensive income (loss) 0 0 0 0 979 0 393 1,372
Net income $ 0 $ 0 $ 0 0 0 3,627 448 4,075
Exercise of stock options (in shares) 204 0 0          
Exercise of stock options $ 2 $ 0 $ 0 (403) 0 0 0 (401)
Purchase of non-controlling interest 0 0 0 0 0 0 (2,115) (2,115)
Purchase of treasury shares $ (10) $ 0 $ (1,790) 0 0 0 0 (1,800)
Balance (in shares) at Jun. 30, 2024 23,420 0 1,205          
Balance at Jun. 30, 2024 $ 234 $ 0 $ (2,075) 13,338 (2,268) 20,151 1,320 30,700
Purchase of treasury shares (in shares) (1,000) 0 1,000          
Share-based compensation $ 0 $ 0   (149)       (149)
Sale of joint ventures 0 0 $ 0 (38) 273 0 (941) (706)
Other comprehensive income (loss) 0 0 0 0 (27) 0 (45) (72)
Net income $ 0 $ 0 $ 0 0 0 (144) (88) (232)
Exercise of stock options (in shares) 28 0 0          
Exercise of stock options $ 0 $ 0 $ 0 0 0 0 0 0
Balance (in shares) at Sep. 30, 2024 23,448 0 1,205          
Balance at Sep. 30, 2024 $ 234 $ 0 $ (2,075) $ 13,151 $ (2,022) $ 20,007 $ 246 $ 29,541
v3.24.3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Cash flows from operating activities:    
Net income $ 11,024 $ 3,981
Adjustments to reconcile net income to net cash (used in) provided by operating activities    
Depreciation and amortization 1,443 1,574
Amortization of operating lease right-of-use assets 415 433
Provision for expected credit losses 133 138
Deferred income tax expense 4,577 (15)
Gain on sale of businesses (11,154) 0
Share-based compensation expense 107 217
Changes in operating assets and liabilities:    
Accounts receivable, net (5,843) (1,963)
Prepaid expenses and other current assets (2,383) 1,635
Accounts payable 3,832 409
Operating lease liabilities (415) (433)
Accrued expenses, other current liabilities, due to affiliates and customer incentives and deposits (2,466) (4,336)
Net cash (used in) provided by operating activities (730) 1,640
Cash flows from investing activities    
Purchases of property and equipment (908) (1,083)
Cash transferred in the sale of a business (7,658) 0
Proceeds from the sale of joint ventures 18,094 0
Net cash provided by (used in) investing activities 9,528 (1,083)
Cash flows from financing activities    
Borrowings under line of credit 103,184 80,151
Repayments under line of credit (97,782) (79,520)
Proceeds from term debt 16 0
Repurchases of common stock (1,800) 0
Payments of notes to seller (1,843) 0
Payments to acquire noncontrolling interests (250) (473)
Dividend on noncontrolling interest (1,315) (1,674)
Net cash provided by (used in) financing activities 210 (1,516)
Effect of foreign exchange rate changes on cash (75) (426)
Net change in cash, cash equivalents and restricted cash 8,933 (1,385)
Cash, cash equivalents at beginning of period 10,719 9,345
Cash, cash equivalents at end of period 19,652 7,960
Supplemental disclosure of cash flows information:    
Cash paid for interest 1,640 1,302
Cash paid for income taxes $ 277 $ 1,945
v3.24.3
Note 1 - Nature of the Business
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1.

Nature of the Business

 

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

 
v3.24.3
Note 2 - Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Significant Accounting Policies [Text Block]

2.

Summary of Significant Accounting Policies

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the 2023 Annual Report on Form 10-K that was filed with the Securities and Exchange Commission on April 1, 2024.

 

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the included disclosures are adequate, and the accompanying unaudited condensed consolidated financial statements contain all adjustments which are necessary for a fair presentation of the Company’s consolidated financial position as of September 30, 2024, consolidated results of operations and comprehensive income for the three and nine months ended  September 30, 2024 and 2023, and consolidated cash flows for the nine months ended  September 30, 2024 and 2023. Such adjustments are of a normal and recurring nature. The consolidated results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the consolidated results of operations that may be expected for the year ending December 31, 2024.

 

Principles of Consolidation 

 

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

 

Use of Estimates

 

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

 

Segment Reporting

 

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

 

The Company provides similar merchandising, marketing and business services and has three reportable regional segments: (i) Americas, which is comprised of United States, Canada, Brazil and Mexico; (ii) Asia-Pacific ("APAC”), which is comprised of Japan, China, and India; and (iii) Europe, Middle East and Africa ("EMEA”), which is comprised of South Africa. Certain corporate expenses have been allocated to segments based on each segment’s revenue as a percentage of total company revenue.

 

Recently Adopted Accounting Pronouncements 

 

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

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

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

 

In  December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740):Improvements to Income Tax Disclosures, which will require Companies to report specific categories of rate-reconciliation, certain details of income taxes paid and of certain information by tax jurisdictions. The guidance will be effective for the Company’s fiscal year beginning  January 1, 2025. The Company is currently evaluating the impact adoption will have on its consolidated financial statements and related disclosures.

 
v3.24.3
Note 3 - Debt
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

3.

 Debt

 

North Mill Capital Credit Facility

 

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

 

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

 

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

 

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

 

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

 

As of September 30, 2024, the aggregate interest rate was 9.90% per annum and the aggregate outstanding loan balance was approximately $17.8 million, which is included within lines of credit and short-term loans in the unaudited condensed 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 $16.3 million; and (ii) the outstanding loan balance under the Canada Revolving Credit Facility was approximately $1.5 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, capital expenditures and certain other investments. The NM Loan Parties were in compliance with such covenants as of  September 30, 2024. The obligations of the NM Borrowers are secured by the receivables and other assets of the NM Borrowers and substantially all of the assets of the other NM Loan Parties.

 

 

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

 

  

Interest Rate

  

Balance

  

Interest Rate

  

Balance

 
  

as of

  

as of

  

as of

  

as of

 
  

September 30, 2024

  

September 30, 2024

  

December 31, 2023

  

December 31, 2023

 

USA / Canada North Mill Capital

  9.90% $17,788   10.40% $12,475 

USA - Resource Plus Seller Notes

  4.30%  750   1.85%  1,120 

China- Industrial Bank

  N/A   -   3.56%  283 

China - Industrial and Commercial Bank of China

  N/A   -   4.00%  283 

South Africa - Investec Bank Ltd.

  N/A   -   11.75%  3,369 

Total

     $18,538      $17,530 

 

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

 

  

September 30,

  

December 31,

 
  

2024

  

2023

 

Unused Availability:

        

United States / Canada

 $11,692  $6,525 

South Africa

  -   2,064 

Total Unused Availability

 $11,692  $8,589 

 

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

 

  

Interest Rate

  

Balance

  

Interest Rate

  

Balance

 
  

as of

  

as of

  

as of

  

as of

 
  

September 30, 2024

  

September 30, 2024

  

December 31, 2023

  

December 31, 2023

 

USA - Resource Plus Seller Notes

  4.30% $1,707   N/A  $- 

South Africa - Investec Bank Ltd.

  N/A   -   11.75%  310 
      $1,707      $310 

 
v3.24.3
Note 4 - Commitments and Contingencies
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

4.

Commitments and Contingencies

 

Legal Matters

 

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

 
v3.24.3
Note 5 - Common Stock
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Common Stock [Text Block]

5.

Common Stock

 

As of September 30, 2024, the Corporation’s certificate of incorporation authorized the Corporation to issue 47,000,000 shares of common stock, par value $0.01 per share.  

 

The voting, dividend and liquidation rights of the holders of the Corporation’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the Corporation’s Series B convertible preferred stock. Each share of the Corporation’s common stock is entitled to one vote on all matters submitted to a vote of the Corporation’s stockholders. Holders of the Corporation’s common stock are entitled to receive dividends as may be declared by the Corporation’s board of directors (the "Board"), if any, subject to the preferential dividend rights of the Corporation’s Series B convertible preferred stock. No cash dividends had been declared or paid during the periods presented.

 

2024 Stock Repurchase Program

 

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

 
v3.24.3
Note 6 - Preferred Stock
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Preferred Stock [Text Block]

6.

Preferred Stock

 

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

 

In  January 2022, the Corporation filed a Certificate of Elimination for its "Certificate of Designation of Series "A” Preferred Stock of SPAR Group, Inc.” (the "Certificate of Elimination”). Pursuant to the Certificate of Elimination, the previous Series A convertible preferred stock designation was cancelled and withdrawn. As a result, all 3,000,000 shares of the previously authorized Series A convertible preferred stock were returned to the Corporation's authorized "blank check” preferred stock. There were no shares of Series A convertible preferred stock outstanding at the time of the cancellation.

 

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

 

The Series B convertible preferred stock do not carry any voting or dividend rights and upon vesting converted into the Corporation's common stock at a ratio of 1-to-1.5. See Note 8. The holders of the Series B convertible preferred stock had a liquidation preference over the Corporation's common stock and voted together for matters pertaining only to the Series B convertible preferred stock where only the holders of the Series B convertible preferred stock are entitled to vote. The holders of outstanding Series B Preferred Stock do not have the right to vote for directors or other matters submitted to the holders of the Corporation's common stock.

 

In  January 2022, 2,000,000 shares of Series B convertible preferred stock were issued to the majority stockholders and related parties pursuant to the Change of Control, Voting and Restricted Stock Agreement. See Note 8.

 

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

 

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

 
v3.24.3
Note 7 - Share-based Compensation
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

7.

Share-Based Compensation

 

Stock Options

 

For the three months ended  September 30, 2024 and 2023, the Company recognized share-based compensation expense related to stock options of approximately $(20) thousand and $15 thousand, respectively.  For the nine months ended  September 30, 2024 and 2023, the Company recognized share-based compensation expense related to stock options of approximately $14 thousand and $45 thousand, respectively.

 

Restricted Stock Units

 

For the three months ended September 30, 2024 and 2023, the Company recognized share-based compensation expense related to restricted stock units of approximately $(129) thousand and $68 thousand, respectively.  For the nine months ended September 30, 2024 and 2023, the Company recognized share-based compensation expense related to restricted stock units of approximately $93 thousand and $172 thousand, respectively.

 

2023 and 2022 Executive Deferred Compensation Agreements

 

The Corporation prepared a 2022 Stock Compensation Plan that would have included Awards for NQSOs and RSUs (as defined below), but that plan was never submitted to its shareholders for approval. However, the Board had previously approved, for certain key executives, incentive stock-based awards for 2023 and 2022 using RSUs or cash. Since there were no plan based RSUs available, those executives instead received deferred compensation in the form of Phantom Stock Units ("PSUs"), which correspond to an equal number of shares of the Corporation's Common Stock ("SGRP Shares"). The number of PSUs received equals the dollar value of the incentive award divided by the per share market price of SGRP shares on the date of award. Each PSU represents the right of the grantee to receive cash payments based on the fair market value of SGRP Shares at the time of vesting, but not to receive SGRP Shares themselves. The number of the Grantee's PSUs will be automatically adjusted to reflect the specified events respecting the SGRP Shares as provided in the applicable Phantom Stock Agreement.  The PSUs do not possess the rights of common stockholders of the Corporation, including any voting or dividend rights, and cannot be exercised or traded for SGRP Shares. 

 

Effective as of March 24, 2022 (the "2022 Grant Date"), the Corporation issued an award of 111,111 PSUs to each of its Executives: Kori G. Belzer; William Linnane; and Ron Lutz.  Vesting will occur in three tranches of one-third each over the three (3) year period following the 2022 Grant Date, provided that: (i) the Grantee is an employee of the Company at the time; and (ii) the Corporation achieved 90% of the agreed upon financial target for 2022.  As of December 31, 2023, the Company had determined that the 2022 performance target had not been met and the first tranche of those PSUs did not vest. The Board approved in October 2023 that the second and third tranches of those PSUs will respectively vest on the second and third anniversary of the 2022 Grant Date with no additional vesting criteria.

 

Effective as of April 3, 2023 (the "2023 Grant Date"), the Corporation granted an award of 181,818 PSUs to each of its Executives: Kori G. Belzer; William Linnane; and Ron Lutz. The PSUs granted and issued to each such grantee shall vest over the three-year period following the Grant Date provided that the Grantee is an employee of the Company on the applicable vesting date; and the first tranche of those PSUs was to have vested upon the achievement by the Company of 70% or greater of the budgeted 2023 Global EBIT. If the first-year metrics are achieved, the second and third tranches will respectively vest on the second and third anniversary of the 2023 Grant Date with no additional vesting criteria.  As of March 31, 2024, the Company determined that the 2023 performance target had been met, the first tranche of those PSUs had vested, and the second and third tranches of those PSUs will respectively vest on the second and third anniversary of the 2023 Grant Date with no additional vesting criteria.

 

Effective as of the 2023 Grant Date, the Corporation also granted an award of 378,788 PSUs to Michael R. Matacunas, the Chief Executive Officer and President of the Corporation. All of the PSUs granted and issued to him will vest over a one-year period following the 2023 Grant Date provided that the Grantee is an employee of the Company on April 3, 2024, upon the achievement by the Company of 70% or greater of the budgeted 2023 Global EBIT.  As of March 31, 2024, the Company had determined that the 2023 performance target had been met, and all of those PSUs have vested.

 

Effective as of the 2023 Grant Date, the Corporation also granted an award of 75,758 PSUs to Antonio Calisto Pato, the Chief Financial Officer, Secretary and Treasurer of the Corporation. All of the PSUs granted and issued to him will vest over the one-year period following the 2023 Grant Date provided that the Grantee is an employee of the Company on April 3, 2024, upon the achievement by the Company of 70% or greater of the budgeted 2023 Global EBIT.  As of March 31, 2024, the Company had determined that the 2023 performance target had been met, and all of those PSUs have vested.

 
v3.24.3
Note 8 - Related Party Transactions
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]

8.

Related Party Transactions

 

Domestic Related Party Transactions

 

Change of Control, Voting and Restricted Stock Agreement

 

The Change of Control, Voting and Restricted Stock Agreement (the "CIC Agreement") became effective on January 28, 2022, when signed by the Company and Mr. Robert G. Brown, ("Mr. Brown"), Mr. William H. Bartels ("Mr. Bartels"), SPAR Administrative Services, Inc. ("SAS"), and SPAR Business Service, Inc. ("SBS"). Mr. Brown, Mr. Bartels, SAS and SBS may be referred to collectively as the "Majority Stockholders".

 

Pursuant to the CIC Agreement, the Corporation issued to the Majority Stockholders 2,000,000 restricted shares of Series B Preferred Stock, which converted into 3,000,000 SGRP Shares pursuant to the 1:1.5 conversion ratio set forth in the CIC Agreement. The final shares under the CIC Agreement vested on November 10, 2023, and all of the corresponding SGRP Shares had been issued or were in the process of being issued by December 31, 2023.

 

Pursuant to the CIC Agreement, all actions, claims and demands between the Majority Stockholders and the Corporation were resolved; and the Majority Stockholders and their affiliates during the five-year term of the CIC Agreement, ending on June 25, 2027, have agreed to give up certain rights with respect to the management of the Corporation.  

 

Bartels' Retirement and Director Compensation

 

Mr. William H. Bartels retired as an employee of the Company as of January 1, 2020 but continues to serve as a member of SPAR's Board. Mr. Bartels is also one of the founders and a significant stockholder of SGRP. Effective January 18, 2020, SPAR's Governance Committee proposed and unanimously approved retirement benefits for the five-year period commencing January 1, 2020, and ending December 31, 2024 (the "Five-Year Period"), for Mr. Bartels. The aggregate value of benefits payable to Mr. Bartels is approximately $0.2 million per year and a total of $1.1 million for the Five-Year Period.

 

As of September 30, 2024, there are approximately $58 thousand of benefits payable, which are included in accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheets.

 

Other Related Party Transactions and Arrangements 

 

On  April 18, 2024, the Company entered into a Securities Purchase Agreement to buy from Mr. Richard Justus the remaining minority joint venture interests of Resource Plus and its sister companies, Mobex of North Florida, Inc., and Leasex, LLC. Based on the terms set in the original joint venture agreement, the Company will pay a total of $3 million in annual payments over a  five-year period. $250,000 was paid within  five business days of closing, and the remaining $2,750,000 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 September 30, 2024, $250,000 has been paid and the remaining $2,750,000 Promissory Note is outstanding.

 

On  December 1, 2021, the Corporation entered into the Agreement for Marketing and Advertising Services (the "WB Agreement") with WB Marketing, Inc. (the "Agent", and together with the Company, the "Parties"). The Agent is an entity owned and controlled by Mrs. Jean Matacunas who is the wife of President and Chief Executive Officer, Michael R. Matacunas.  During the first nine months of 2024, the company his recognized approximately $101,000 in expenses under this agreement.

 

SBS and Infotech are related parties and affiliates of SGRP, but are not under the control or part of the consolidated Company. See Change of Controls, Voting and Restricted Stock Agreement, above. In July 1999 the Company, SBS and Infotech entered into a perpetual software ownership agreement providing that each party independently owned an undivided share of and has the right to unilaterally license and exploit certain portions of the Company's proprietary scheduling, tracking, coordination, reporting and expense software are co-owned with SBS and Infotech, and each entered into a non-exclusive royalty-free license from the Company to use certain "SPAR" trademarks in the United States. 

 

On May 13, 2024, SGRP privately repurchased 1,000,000 shares of SGRP's Common Stock from William H. Bartels, effective as of April 30, 2024, at a purchase price of $1.80 per share (the Nasdaq closing price on April 29, 2024). 

 

International Joint Venture Transactions

 

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

 

Prior to  March 31, 2024, SGRP Meridian Proprietary Limited ("Meridian") was a consolidated international subsidiary of the Company and was owned 51% by the Company and 49% by Friedshelf (Pty) Ltd., Lindicom Proprietary Limited, and Lindicom Empowerment Holdings Proprietary Limited ("Local Owners"). 

 

On   February 7, 2024, the Company entered into an agreement to sell its 51% ownership interest in Meridian to the Local Owners for 180,700,000 South African Rand, 80% of which would be paid upon closing. 

 

The closing conditions under that agreement were satisfied in all material respects by  March 31, 2024. and on  April 29, the Company received 144,560,000 South African Rand from the Local Buyers (or approximately $7.7 million). The remaining purchase price will be paid on  December 31, 2024 or 2025, depending on certain financial triggers, and its payment is secured by an irrevocable unconditional guarantee from Investec Bank Limited.  The Company has also licensed certain technology (including SPARView) and trademarks to Meridian in connection with the sale.  The Company has recognized a gain of $7.2 million in the first quarter of 2024 as a result of this transaction.

 

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

 

On  February 23, 2024, the Company entered into an agreement to sell its 51% ownership interest in SPAR (Shanghai) Marketing Management Co., Ltd. to Shanghai Jingbo Enterprise Consulting Co., Ltd. and Shanghai Wedone Marketing Management Co. Ltd.  The total price to be paid to the Company is $200,000.  The sale was completed in of  April 2024.

 

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

 

On   March 26, 2024, the Company signed a share purchase agreement with JK Consultoria Empresarial Ltda. ("JKC") for JKC to acquire the Company's Brazilian holding company (which in turn owns the Company's 51 percent interest in its Brazilian joint venture subsidiary) for BRL 58.9 million or approximately $11.8 million.  Closing of the sale occurred in June 2024.

 

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

 

On July 23, 2024, the Company entered into an agreement to sell its 100% ownership interest in SPAR Japan for $500,000.  The sale closed on August 30, 2024.

 

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

 

On September 25, 2024, the Company closed on an agreement to sell its 51% ownership interest in its Indian Joint venture for $500,000, effective as of August 31, 2024.

 

Summary of Certain Related Party Transactions

 

Due to related parties consists of the following as of the periods presented (in thousands):

 

Due to affiliates consists of the following (in thousands):

 September 30,  December 31, 
  

2024

  

2023

 

Loans from local investors:(1)

        

Mexico

 $623  $623 

China

  -   2,316 

Resource Plus

  -   266 

Total due to affiliates

 $623  $3,205 

 

(1)

Represent loans due from the local investors into the Company's subsidiaries (representing their proportionate share of working capital loans). The loans have no payment terms, are due on demand, and are classified as current liabilities in the unaudited condensed consolidated balance sheets.

 
v3.24.3
Note 9 - Segment Information
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

9.

Segment Information

 

Select statement of operations activity of the Company’s reportable segments for the periods presented were (in thousands):

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Net revenues:

                

Americas

 $35,494  $53,796  $144,189  $154,457 

APAC

  2,294   5,674   11,305   17,432 

EMEA

  -   7,863   8,277   25,760 

Total net revenues

 $37,788  $67,333  $163,771  $197,649 
                 

Operating (loss) income:

                

Americas

 $(1,089) $1,328  $14,569  $5,894 

APAC

  (403)  (218)  (822)  (510)

EMEA

  -   431   227   1,304 

Total operating (loss) income

 $(1,492) $1,541  $13,974  $6,688 
                 

Interest expense

                

Americas

 $581  $264  $1,577  $895 

APAC

  1   31   24   47 

EMEA

  -   85   77   306 

Total interest expense

 $582  $380  $1,678  $1,248 
                 

Other expense (income), net:

                

Americas

 $(807) $5  $(1,101) $22 

APAC

  556   (59) $572   (69)

EMEA

  723   (110)  713   (300)

Total other expense (income), net

 $472  $(164) $184  $(347)
                 

(Loss) Income before income tax expense:

                

Americas

 $(82) $1,059  $13,666  $4,977 

APAC

  (1,752)  (190)  209   (488)

EMEA

  (712)  456   (1,763)  1,298 

Total (loss) income before income tax expense

 $(2,546) $1,325  $12,112  $5,787 
                 

Income tax (benefit) expense:

                

Americas

 $(1,827) $(163) $1,220  $1,068 

APAC

  (166)  45   (126)  8 

EMEA

  (321)  345   (6)  730 

Total income tax (benefit) expense

 $(2,314) $227  $1,088  $1,806 

 

Net (loss) income, depreciation and amortization expense, and capital expenditures of the Company’s reportable segments for the periods presented were (in thousands):

 

  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2024  2023  2024  2023 

Net (loss) income:

                

Americas

 $1,745  $1,222  $12,446  $3,909 

APAC

  (1,586)  (235)  335   (496)

EMEA

  (391)  111   (1,757)  568 

Total net (loss) income

 $(232) $1,098  $11,024  $3,981 
                 

Net loss (income) attributable to non-controlling interest

                

Americas

 $104  $(604) $(658) $(1,484)

APAC

  (16)  5   30   (11)

EMEA

  -   (240)  (286)  (722)

Total net loss (income) attributable to non-controlling interest

 $88  $(839) $(914) $(2,217)
                 

Net (loss) income attributable to SPAR Group, Inc.

                

Americas

 $1,849  $618  $11,788  $2,425 

APAC

  (1,602)  (230)  365   (507)

EMEA

  (391)  (129)  (2,043)  (154)

Total net (loss) income attributable to SPAR Group, Inc.

 $(144) $259  $10,110  $1,764 
                 

Depreciation and amortization

                

Americas

 $445  $472  $1,348  $1,402 

APAC

  9   36   64   60 

EMEA

  -   40   31   112 

Total depreciation and amortization

 $454  $548  $1,443  $1,574 
                 

Capital expenditures:

                

Americas

 $127  $286  $903  $946 

APAC

  –   30   –   37 

EMEA

  –   49   5   100 

Total capital expenditures

 $127  $365  $908  $1,083 

 

There were no intercompany sales for the three and nine months ended September 30, 2024 and 2023.

 

Total assets of the Company’s reportable segments as of the periods presented were (in thousands):

 

  

September 30,

  

December 31,

 
  

2024

  

2023

 

Assets:

        

Americas

 $62,634  $71,372 

APAC

  4,762   13,361 

EMEA

  –   5,548 

Total assets

 $67,396  $90,281 

 

Long-lived assets of the Company’s reportable segments as of the periods presented were (in thousands):

 

  

September 30,

  

December 31,

 
  

2024

  

2023

 

Long lived assets:

        

Americas

 $4,073  $4,585 

APAC

  –   1,015 

EMEA

  –   745 

Total long lived assets

 $4,073  $6,345 

 

Geographic Data (in thousands)

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 
      

% of

      

% of

      

% of

      

% of

 
      

consolidated

      

consolidated

      

consolidated

      

consolidated

 
      

net revenue

      

net revenue

      

net revenue

      

net revenue

 

United States

 $28,768   76.1% $28,722   42.7% $90,583   55.3% $81,004   41.0%

Brazil

  -   0.0%  18,619   27.7%  33,185   20.3%  56,717   28.7%

South Africa

  -   0.0%  7,863   11.7%  8,277   5.1%  25,759   13.0%

Mexico

  3,196   8.5%  3,033   4.5%  9,723   5.9%  8,065   4.1%

China

  -   0.0%  2,205   3.3%  2,698   1.6%  7,106   3.6%

Japan

  908   2.4%  1,489   2.2%  3,778   2.3%  4,533   2.3%

Canada

  3,529   9.3%  3,421   5.1%  10,698   6.5%  8,671   4.4%

India

  1,387   3.7%  1,577   2.3%  4,829   3.0%  4,420   2.2%

Australia

  -   0.0%  404   0.6%  -   0.0%  1,374   0.7%

Total net revenue

 $37,788   100.0% $67,333   100.0% $163,771   100.0% $197,649   100.0%

 
v3.24.3
Note 10 - Leases
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

10.

Leases

 

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

 

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

 

    

Three Months Ended

  

Nine Months Ended

 
    

September 30,

  

September 30,

 

Lease Costs

 

Classification

 

2024

  

2023

  

2024

  

2023

 

Operating lease cost

 

Selling, General and Administrative Expense

 $147  $71  $415  $212 

Short-term lease cost

 

Selling, General and Administrative Expense

  22   19   277   130 

Variable costs

 

Selling, General and Administrative Expense

  -   13   -   44 

Total lease cost

 $169  $103  $692  $386 

 

(1) Variable lease expense consists primarily of property taxes, property insurance, and common area or other maintenance costs for the Company’s leases of office space.

 

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

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 
                 

Operating cash flows from operating leases

 $105  $233  $415  $489 
                 

Right-of-use assets obtained in exchange for lease obligations

                

Operating lease

 $-  $386  $-  $1,497 

 

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

 

  

September 30, 2024

  

December 31, 2023

 

Assets:

        

Operating lease right-of-use assets

 $838  $2,323 

Liabilities:

        

Current portion of operating lease liabilities

  508   1,163 

Non-current portion of operating lease liabilities

  330   1,160 

Total operating lease liabilities

 $838  $2,323 
         

Weighted-average remaining lease term - operating leases (in years)

  3.56   2.64 

Weighted-average discount rate - operating leases

  7.6

%

  8.8

%

 

The following table summarizes the maturities of lease liabilities as of September 30, 2024 (in thousands):

 

Period Ending December 31,

 

Amount

 

2024

 $134 

2025

  438 

2026

  144 

2027

  114 

2028

  73 

Total Lease Payments

  903 

Less: imputed interest

  (65)

Total

 $838 

 

 
v3.24.3
Note 11 - Earnings Per Share
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Earnings Per Share [Text Block]

11.

Earnings Per Share

 

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

 

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Numerator:

                

Net (loss) income attributable to SPAR Group, Inc.

 $(144) $259  $10,110  $1,764 
                 

Denominator:

                

Shares used in basic net income per share calculation

  23,435   23,237   23,591   23,201 

Effect of diluted securities:

                

Stock options and unvested restricted shares

  -   139   177   149 

Shares used in diluted net income per share calculations

  23,435   23,376   23,768   23,350 
                 

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

 $(0.01) $0.01  $0.43  $0.08 

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

 $(0.01) $0.01  $0.43  $0.08 

 

 

 
v3.24.3
Note 12 - Subsequent Events
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Subsequent Events [Text Block]

12.

Subsequent Events

 

Potential Going Private Transaction

 

As previously announced, on August 30, 2024, the Corporation entered into an Agreement and Plan of Merger (the "Merger Agreement"), with Highwire Capital, LLC, a Texas limited liability company ("Highwire"), and Highwire Merger Co. I, Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), pursuant to which Highwire, in a cash merger following approval by the Corporation's stockholders and the closing of the transaction, will acquire all of the stock of the Corporation for $2.50 per fully diluted share in cash, representing an aggregate purchase price of $58,000,000 (subject to certain adjustments).  All outstanding stock options, restricted stock units and phantom stock units will vest and their holders will receive comparable compensation net of exercise prices (if any).

 

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

 

The Special Committee and Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby ("Merger Transactions") are advisable, fair to and in the best interests of the Corporation and its stockholders, (ii) determined that it is advisable and in the best interests of the Corporation and its stockholders to enter into the Merger Transactions, (iii) approved the execution, delivery and performance by the Corporation of the Merger Transactions and (iv) recommend that the stockholders of the Corporation approve the Merger Transactions. 

 

On October 2, 2024, the Corporation filed with the SEC and mailed to its stockholders its definitive Proxy Statement containing notification of the special meeting of SGRP's stockholders on October 25, 2024, to approve the Merger Agreement and the related transactions, which its stockholders approved at that meeting..  The parties to the Merger Agreement are working to finalize the closing of the Merger Transactions, which is expected in the fourth quarter of 2024.

 

South Africa Consent

 

On October 8, 2024, SGRP provided its consent to Friedshelf 401 Ltd, Lindicom Empowerment Holdings LTD and Lindicom, the acquirer of SGRP’s 51% ownership in the South African joint venture, to allow the acquirer to add additional subscribers to their business.  The Sale of Shares Agreement required SGRP to provide this consent as long as the second installment is outstanding.  In return for this consent, SGRP received terms that provide for receipt of the second installment six months earlier upon achievement of agreed to performance criteria.

 

 
v3.24.3
Insider Trading Arrangements
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2024
Insider Trading Arr Line Items    
Material Terms of Trading Arrangement [Text Block]  

Item 5.

Other Information

 

Not applicable.
Rule 10b5-1 Arrangement Adopted [Flag] false  
Non-Rule 10b5-1 Arrangement Adopted [Flag] false  
Rule 10b5-1 Arrangement Terminated [Flag] false  
Non-Rule 10b5-1 Arrangement Terminated [Flag] false  
v3.24.3
Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Consolidation, Policy [Policy Text Block]

Principles of Consolidation 

 

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

 
Use of Estimates, Policy [Policy Text Block]

Use of Estimates

 

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

 
Segment Reporting, Policy [Policy Text Block]

Segment Reporting

 

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

 

The Company provides similar merchandising, marketing and business services and has three reportable regional segments: (i) Americas, which is comprised of United States, Canada, Brazil and Mexico; (ii) Asia-Pacific ("APAC”), which is comprised of Japan, China, and India; and (iii) Europe, Middle East and Africa ("EMEA”), which is comprised of South Africa. Certain corporate expenses have been allocated to segments based on each segment’s revenue as a percentage of total company revenue.

 
New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements 

 

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

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

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

 

In  December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740):Improvements to Income Tax Disclosures, which will require Companies to report specific categories of rate-reconciliation, certain details of income taxes paid and of certain information by tax jurisdictions. The guidance will be effective for the Company’s fiscal year beginning  January 1, 2025. The Company is currently evaluating the impact adoption will have on its consolidated financial statements and related disclosures.

 
v3.24.3
Note 3 - Debt (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Schedule of Debt [Table Text Block]
  

Interest Rate

  

Balance

  

Interest Rate

  

Balance

 
  

as of

  

as of

  

as of

  

as of

 
  

September 30, 2024

  

September 30, 2024

  

December 31, 2023

  

December 31, 2023

 

USA / Canada North Mill Capital

  9.90% $17,788   10.40% $12,475 

USA - Resource Plus Seller Notes

  4.30%  750   1.85%  1,120 

China- Industrial Bank

  N/A   -   3.56%  283 

China - Industrial and Commercial Bank of China

  N/A   -   4.00%  283 

South Africa - Investec Bank Ltd.

  N/A   -   11.75%  3,369 

Total

     $18,538      $17,530 
  

Interest Rate

  

Balance

  

Interest Rate

  

Balance

 
  

as of

  

as of

  

as of

  

as of

 
  

September 30, 2024

  

September 30, 2024

  

December 31, 2023

  

December 31, 2023

 

USA - Resource Plus Seller Notes

  4.30% $1,707   N/A  $- 

South Africa - Investec Bank Ltd.

  N/A   -   11.75%  310 
      $1,707      $310 
Credit And Debt Facilities Unused Availability [Table Text Block]
  

September 30,

  

December 31,

 
  

2024

  

2023

 

Unused Availability:

        

United States / Canada

 $11,692  $6,525 

South Africa

  -   2,064 

Total Unused Availability

 $11,692  $8,589 
v3.24.3
Note 8 - Related Party Transactions (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Schedule of Related Party Transactions [Table Text Block]

Due to affiliates consists of the following (in thousands):

 September 30,  December 31, 
  

2024

  

2023

 

Loans from local investors:(1)

        

Mexico

 $623  $623 

China

  -   2,316 

Resource Plus

  -   266 

Total due to affiliates

 $623  $3,205 
v3.24.3
Note 9 - Segment Information (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Schedule of Segment Reporting Information, by Segment [Table Text Block]
  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Net revenues:

                

Americas

 $35,494  $53,796  $144,189  $154,457 

APAC

  2,294   5,674   11,305   17,432 

EMEA

  -   7,863   8,277   25,760 

Total net revenues

 $37,788  $67,333  $163,771  $197,649 
                 

Operating (loss) income:

                

Americas

 $(1,089) $1,328  $14,569  $5,894 

APAC

  (403)  (218)  (822)  (510)

EMEA

  -   431   227   1,304 

Total operating (loss) income

 $(1,492) $1,541  $13,974  $6,688 
                 

Interest expense

                

Americas

 $581  $264  $1,577  $895 

APAC

  1   31   24   47 

EMEA

  -   85   77   306 

Total interest expense

 $582  $380  $1,678  $1,248 
                 

Other expense (income), net:

                

Americas

 $(807) $5  $(1,101) $22 

APAC

  556   (59) $572   (69)

EMEA

  723   (110)  713   (300)

Total other expense (income), net

 $472  $(164) $184  $(347)
                 

(Loss) Income before income tax expense:

                

Americas

 $(82) $1,059  $13,666  $4,977 

APAC

  (1,752)  (190)  209   (488)

EMEA

  (712)  456   (1,763)  1,298 

Total (loss) income before income tax expense

 $(2,546) $1,325  $12,112  $5,787 
                 

Income tax (benefit) expense:

                

Americas

 $(1,827) $(163) $1,220  $1,068 

APAC

  (166)  45   (126)  8 

EMEA

  (321)  345   (6)  730 

Total income tax (benefit) expense

 $(2,314) $227  $1,088  $1,806 
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2024  2023  2024  2023 

Net (loss) income:

                

Americas

 $1,745  $1,222  $12,446  $3,909 

APAC

  (1,586)  (235)  335   (496)

EMEA

  (391)  111   (1,757)  568 

Total net (loss) income

 $(232) $1,098  $11,024  $3,981 
                 

Net loss (income) attributable to non-controlling interest

                

Americas

 $104  $(604) $(658) $(1,484)

APAC

  (16)  5   30   (11)

EMEA

  -   (240)  (286)  (722)

Total net loss (income) attributable to non-controlling interest

 $88  $(839) $(914) $(2,217)
                 

Net (loss) income attributable to SPAR Group, Inc.

                

Americas

 $1,849  $618  $11,788  $2,425 

APAC

  (1,602)  (230)  365   (507)

EMEA

  (391)  (129)  (2,043)  (154)

Total net (loss) income attributable to SPAR Group, Inc.

 $(144) $259  $10,110  $1,764 
                 

Depreciation and amortization

                

Americas

 $445  $472  $1,348  $1,402 

APAC

  9   36   64   60 

EMEA

  -   40   31   112 

Total depreciation and amortization

 $454  $548  $1,443  $1,574 
                 

Capital expenditures:

                

Americas

 $127  $286  $903  $946 

APAC

  –   30   –   37 

EMEA

  –   49   5   100 

Total capital expenditures

 $127  $365  $908  $1,083 
Reconciliation of Assets from Segment to Consolidated [Table Text Block]
  

September 30,

  

December 31,

 
  

2024

  

2023

 

Assets:

        

Americas

 $62,634  $71,372 

APAC

  4,762   13,361 

EMEA

  –   5,548 

Total assets

 $67,396  $90,281 
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]
  

September 30,

  

December 31,

 
  

2024

  

2023

 

Long lived assets:

        

Americas

 $4,073  $4,585 

APAC

  –   1,015 

EMEA

  –   745 

Total long lived assets

 $4,073  $6,345 
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]
  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 
      

% of

      

% of

      

% of

      

% of

 
      

consolidated

      

consolidated

      

consolidated

      

consolidated

 
      

net revenue

      

net revenue

      

net revenue

      

net revenue

 

United States

 $28,768   76.1% $28,722   42.7% $90,583   55.3% $81,004   41.0%

Brazil

  -   0.0%  18,619   27.7%  33,185   20.3%  56,717   28.7%

South Africa

  -   0.0%  7,863   11.7%  8,277   5.1%  25,759   13.0%

Mexico

  3,196   8.5%  3,033   4.5%  9,723   5.9%  8,065   4.1%

China

  -   0.0%  2,205   3.3%  2,698   1.6%  7,106   3.6%

Japan

  908   2.4%  1,489   2.2%  3,778   2.3%  4,533   2.3%

Canada

  3,529   9.3%  3,421   5.1%  10,698   6.5%  8,671   4.4%

India

  1,387   3.7%  1,577   2.3%  4,829   3.0%  4,420   2.2%

Australia

  -   0.0%  404   0.6%  -   0.0%  1,374   0.7%

Total net revenue

 $37,788   100.0% $67,333   100.0% $163,771   100.0% $197,649   100.0%
v3.24.3
Note 10 - Leases (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Lease, Cost [Table Text Block]
    

Three Months Ended

  

Nine Months Ended

 
    

September 30,

  

September 30,

 

Lease Costs

 

Classification

 

2024

  

2023

  

2024

  

2023

 

Operating lease cost

 

Selling, General and Administrative Expense

 $147  $71  $415  $212 

Short-term lease cost

 

Selling, General and Administrative Expense

  22   19   277   130 

Variable costs

 

Selling, General and Administrative Expense

  -   13   -   44 

Total lease cost

 $169  $103  $692  $386 
Lessee, Operating Lease, Cash Flows [Table Text Block]
  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 
                 

Operating cash flows from operating leases

 $105  $233  $415  $489 
                 

Right-of-use assets obtained in exchange for lease obligations

                

Operating lease

 $-  $386  $-  $1,497 
Operating Lease, Leases Asset and Liability [Table Text Block]
  

September 30, 2024

  

December 31, 2023

 

Assets:

        

Operating lease right-of-use assets

 $838  $2,323 

Liabilities:

        

Current portion of operating lease liabilities

  508   1,163 

Non-current portion of operating lease liabilities

  330   1,160 

Total operating lease liabilities

 $838  $2,323 
         

Weighted-average remaining lease term - operating leases (in years)

  3.56   2.64 

Weighted-average discount rate - operating leases

  7.6

%

  8.8

%
Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

Period Ending December 31,

 

Amount

 

2024

 $134 

2025

  438 

2026

  144 

2027

  114 

2028

  73 

Total Lease Payments

  903 

Less: imputed interest

  (65)

Total

 $838 
v3.24.3
Note 11 - Earnings Per Share (Tables)
 9 Months Ended
Sep. 30, 2024
Notes Tables  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Numerator:

                

Net (loss) income attributable to SPAR Group, Inc.

 $(144) $259  $10,110  $1,764 
                 

Denominator:

                

Shares used in basic net income per share calculation

  23,435   23,237   23,591   23,201 

Effect of diluted securities:

                

Stock options and unvested restricted shares

  -   139   177   149 

Shares used in diluted net income per share calculations

  23,435   23,376   23,768   23,350 
                 

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

 $(0.01) $0.01  $0.43  $0.08 

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

 $(0.01) $0.01  $0.43  $0.08 
v3.24.3
Note 2 - Summary of Significant Accounting Policies (Details Textual)
 9 Months Ended
Sep. 30, 2024
Number of Reportable Segments 3
v3.24.3
Note 3 - Debt (Details Textual)
$ in Millions
Oct. 10, 2023
USD ($)
Feb. 01, 2023
USD ($)
Sep. 30, 2024
USD ($)
Feb. 01, 2023
CAD ($)
Jul. 01, 2022
USD ($)
Debt Instrument, Variable Interest Rate, Type [Extensible Enumeration]   Prime Rate [Member]      
Revolving Credit Facility [Member] | North Mill, LLC [Member]          
Debt Related Commitment Fees and Debt Issuance Costs   $ 28,000      
Debt Instrument, Interest Rate, Stated Percentage     9.90%    
Long-Term Debt     $ 17,800,000    
Loans Payable, Current     16,300,000    
Revolving Credit Facility [Member] | North Mill, LLC [Member] | SPAR Marketing Force [Member]          
Line of Credit Facility, Maximum Borrowing Capacity   28,000,000   $ 2  
Debt Instrument, Covenant, Unbilled Cap   $ 7,000,000     $ 6,500,000
Revolving Credit Facility [Member] | North Mill, LLC [Member] | SPAR Canada Company [Member]          
Long-Term Debt     $ 1,500,000    
NM Note [Member] | North Mill, LLC [Member]          
Debt Instrument, Basis Spread on Variable Rate   1.90%      
NM Note [Member] | North Mill, LLC [Member] | Minimum [Member]          
Debt Instrument, Basis Spread on Variable Rate   6.75%      
NM Notes Commencing on 10 October 2022 [Member] | North Mill, LLC [Member]          
Debt Instrument, Fee Amount $ 200,000 $ 100,000      
Debt Instrument, Facility Fee for Any Advances Other Than Under Revolving Credit Faculty, Percentage 0.80% 0.80%      
Debt Instrument, Fee for Each Incremental 1 Million Increase in Loan Balance in Excess of $21 Million $ 15,000 $ 15,000      
v3.24.3
Note 3 - Debt - Summary of Credit and Other Debt Facilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Balance $ 18,538 $ 17,530
Balance 18,538 17,530
Balance outstanding $ 1,707 $ 310
USA/Canada [Member]    
Interest Rate 9.90% 10.40%
Balance $ 17,788 $ 12,475
Balance $ 17,788 $ 12,475
Interest Rate 9.90% 10.40%
USA - Resource Plus Sellers [Member]    
Interest Rate 4.30%  
Interest Rate 4.30%  
Balance outstanding $ 1,707 $ 0
USA - Resource Plus Sellers, Short-term [Member]    
Interest Rate 4.30% 1.85%
Balance $ 750 $ 1,120
Balance $ 750 $ 1,120
Interest Rate 4.30% 1.85%
Investec Bank Ltd. [Member]    
Interest Rate   11.75%
Balance $ 0 $ 3,369
Balance 0 $ 3,369
Interest Rate   11.75%
Balance outstanding 0 $ 310
Industrial Bank [Member]    
Interest Rate   3.56%
Balance 0 $ 283
Balance 0 $ 283
Interest Rate   3.56%
Industrial Bank and Commercial Bank of China [Member]    
Interest Rate   4.00%
Balance 0 $ 283
Balance $ 0 $ 283
Interest Rate   4.00%
v3.24.3
Note 3 - Debt - Unused Availability (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Unused Availability $ 11,692 $ 8,589
United States / Canada [Member]    
Unused Availability 11,692 6,525
SOUTH AFRICA    
Unused Availability $ 0 $ 2,064
v3.24.3
Note 5 - Common Stock (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands
 9 Months Ended
Apr. 30, 2024
Sep. 30, 2024
Apr. 29, 2024
Mar. 28, 2024
Dec. 31, 2023
Common Stock, Shares Authorized (in shares)   47,000,000     47,000,000
Common Stock, Par or Stated Value Per Share (in dollars per share)   $ 0.01     $ 0.01
Dividends, Common Stock, Cash   $ 0      
The 2024 Stock Repurchase Program [Member]          
Share Repurchase Program, Authorized, Number of Shares (in shares)       2,500,000  
The 2024 Stock Repurchase Program [Member] | William Bartels [Member]          
Treasury Stock, Shares, Acquired (in shares) 1,000,000        
Share Price (in dollars per share)     $ 1.8    
v3.24.3
Note 6 - Preferred Stock (Details Textual)
 12 Months Ended
Jan. 28, 2022
shares
Dec. 31, 2023
$ / shares
shares
Dec. 31, 2022
shares
Sep. 30, 2024
$ / shares
shares
Jan. 25, 2022
$ / shares
shares
Preferred Stock, Shares Authorized (in shares)       3,000,000  
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares       $ 0.01  
Conversion of Series B Preferred Stock into Common Stock [Member]          
Conversion of Stock, Shares Converted (in shares)   854,753 1,145,247    
Conversion of Stock, Shares Issued (in shares)   1,282,129 1,717,870    
Stock Issued During Period, Shares, Conversion of Convertible Securities (in shares)   307,129      
Series A Preferred Stock [Member] | Maximum [Member]          
Preferred Stock, Shares Authorized (in shares)         3,000,000
Series B Preferred Stock [Member]          
Preferred Stock, Shares Authorized (in shares)   3,000,000   3,000,000 2,000,000
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ / shares   $ 0.01   $ 0.01 $ 0.01
Preferred Stock, Convertible, Conversion Ratio         1.5
Stock Issued During Period, Shares, New Issues (in shares) 2,000,000        
Preferred Stock, Shares Outstanding, Ending Balance (in shares)   650,000 854,753 0  
Preferred Stock, Convertible, Shares Issuable (in shares)   975,000 1,282,129    
v3.24.3
Note 7 - Share-based Compensation (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Apr. 03, 2023
Mar. 24, 2022
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
The 2020 Plan [Member] | Share-Based Payment Arrangement, Option [Member]            
Share-Based Payment Arrangement, Expense     $ (20) $ 15 $ 14 $ 45
The 2018 Plan [Member] | Restricted Stock Units (RSUs) [Member]            
Share-Based Payment Arrangement, Expense     $ (129) $ 68 $ 93 $ 172
The 2022 Grant Date Plan [Member] | Phantom Share Units (PSUs) [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)   111,111        
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)   3 years        
The 2023 Grant Date Plan [Member] | Phantom Share Units (PSUs) [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) 181,818          
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year) 3 years          
The 2023 Grant Date Plan [Member] | Phantom Share Units (PSUs) [Member] | CEO and President [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) 378,788          
The 2023 Grant Date Plan [Member] | Phantom Share Units (PSUs) [Member] | CFO, Secretary, and Treasurer [Member]            
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) 75,758          
v3.24.3
Note 8 - Related Party Transactions (Details Textual)
$ / shares in Units, R$ in Millions
 1 Months Ended 5 Months Ended 9 Months Ended
Sep. 25, 2024
USD ($)
Apr. 30, 2024
shares
Apr. 29, 2024
USD ($)
$ / shares
Apr. 29, 2024
ZAR (R)
Apr. 18, 2024
USD ($)
Feb. 23, 2024
USD ($)
Feb. 07, 2024
ZAR (R)
Aug. 30, 2024
USD ($)
Sep. 30, 2024
USD ($)
shares
Sep. 30, 2024
USD ($)
shares
Mar. 30, 2024
Mar. 26, 2024
USD ($)
Mar. 26, 2024
BRL (R$)
SGRP Meridian [Member]                          
Disposal Group, Including Discontinued Operation, Consideration | R             R 180,700,000            
Proceeds from Sales of Business, Affiliate and Productive Assets     $ 7,700,000 R 144,560,000                  
Brazil Joint Venture [Member]                          
Disposal Group, Including Discontinued Operation, Consideration                       $ 11,800,000 R$ 58.9
SPAR Japan [Member]                          
Disposal Group, Including Discontinued Operation, Consideration               $ 500,000          
Indian Joint Venture [Member]                          
Disposal Group, Including Discontinued Operation, Consideration $ 500,000                        
SPAR BSMT [Member]                          
Subsidiary, Ownership Percentage, Parent                     51.00%    
Meridian [Member] | FRIEDSHELF 401 Proprietary Limited [Member]                          
Subsidiary, Ownership Percentage, Noncontrolling Owner                     49.00%    
SPAR Group [Member] | SGRP Meridian [Member]                          
Percent Of Ownership Interest In Subsidiary Sold By Company             51.00%            
SPAR Group [Member] | SPAR China [Member]                          
Percent Of Ownership Interest In Subsidiary Sold By Company           51.00%              
Proceeds From Sale of Ownership Interest           $ 200,000              
SPAR Group [Member] | SPAR Japan [Member]                          
Percent Of Ownership Interest In Subsidiary Sold By Company               100.00%          
SPAR Group [Member] | Indian Joint Venture [Member]                          
Percent Of Ownership Interest In Subsidiary Sold By Company 51.00%                        
SPAR Marketing Force [Member]                          
Subsidiary, Ownership Percentage, Parent                       51.00% 51.00%
Resource Plus, Inc [Member]                          
Payments to Acquire Interest in Joint Venture         $ 3,000,000                
Resource Plus Acquisition Note [Member]                          
Payments to Acquire Interest in Joint Venture         250,000       $ 250,000        
Debt Instrument, Face Amount         $ 2,750,000                
Long-Term Debt, Gross                 $ 2,750,000 $ 2,750,000      
CIC Agreement [Member]                          
Preferred Stock, Shares Issued (in shares) | shares                 2,000,000 2,000,000      
Preferred Stock, Shares Issuable (in shares) | shares                 3,000,000 3,000,000      
William Bartels [Member]                          
Liability, Pension and Other Postretirement and Postemployment Benefits, Current                 $ 58,000 $ 58,000      
William Bartels [Member] | The 2024 Stock Repurchase Program [Member]                          
Treasury Stock, Shares, Acquired (in shares) | shares   1,000,000                      
Share Price (in dollars per share) | $ / shares     $ 1.8                    
William Bartels [Member] | Premium Adjustments [Member]                          
Related Party Transaction, Amounts of Transaction                   200,000      
William Bartels [Member] | Remaining Premium Adjustments [Member]                          
Related Party Transaction, Amounts of Transaction                   1,100,000      
WB Marketing, Inc [Member] | Service Fees [Member]                          
Related Party Transaction, Amounts of Transaction                   $ 101,000      
v3.24.3
Note 8 - Related-party Transactions - Transactions Between the Company and Affiliates (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Due to affiliates [1] $ 623 $ 3,205
Loans Due to Affiliates [Member] | Local Investors in Mexico [Member]    
Due to affiliates [1] 623 623
Loans Due to Affiliates [Member] | Local Investors in China [Member]    
Due to affiliates [1] 0  
Loans Due to Affiliates [Member] | Local Investors Related to Resource Plus [Member]    
Due to affiliates [1] $ 0 266
Loans Due from Affiliates [Member] | Local Investors in China [Member]    
Due to affiliates [1]   $ 2,316
[1] Represent loans due from the local investors into the Company's subsidiaries (representing their proportionate share of working capital loans). The loans have no payment terms, are due on demand, and are classified as current liabilities in the unaudited condensed consolidated balance sheets.
v3.24.3
Note 9 - Segment Information (Details Textual) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Revenue from Contract with Customer, Including Assessed Tax $ 37,788 $ 67,333 $ 163,771 $ 197,649
Intersegment Eliminations [Member]        
Revenue from Contract with Customer, Including Assessed Tax $ 0 $ 0 $ 0 $ 0
v3.24.3
Note 9 - Segment Information - Segment Reporting Information (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Jun. 30, 2024
Mar. 31, 2024
Sep. 30, 2023
Jun. 30, 2023
Mar. 31, 2023
Sep. 30, 2024
Sep. 30, 2023
Revenue: $ 37,788     $ 67,333     $ 163,771 $ 197,649
Operating income (loss): (1,492)     1,541     13,974 6,688
Interest expense (income): 582     380     1,678 1,248
Other expense (income), net: 472     (164)     184 (347)
Income before income tax expense: (2,546)     1,325     12,112 5,787
Income tax expense: (2,314)     227     1,088 1,806
Net income (loss): (232) $ 4,075 $ 7,181 1,098 $ 1,106 $ 1,777 11,024 3,981
Net income attributable to non-controlling interest: 88     (839)     (914) (2,217)
Net (loss) income attributable to SPAR Group, Inc.: (144)     259     10,110 1,764
Depreciation and amortization: 454     548     1,443 1,574
Capital expenditures 127     365     908 1,083
Americas [Member]                
Revenue: 35,494     53,796     144,189 154,457
Operating income (loss): (1,089)     1,328     14,569 5,894
Interest expense (income): 581     264     1,577 895
Other expense (income), net: (807)     5     (1,101) 22
Income before income tax expense: (82)     1,059     13,666 4,977
Income tax expense: (1,827)     (163)     1,220 1,068
Net income (loss): 1,745     1,222     12,446 3,909
Net income attributable to non-controlling interest: 104     (604)     (658) (1,484)
Net (loss) income attributable to SPAR Group, Inc.: 1,849     618     11,788 2,425
Depreciation and amortization: 445     472     1,348 1,402
Capital expenditures 127     286     903 946
Asia Pacific [Member]                
Revenue: 2,294     5,674     11,305 17,432
Operating income (loss): (403)     (218)     (822) (510)
Interest expense (income): 1     31     24 47
Other expense (income), net: 556     (59)     572 (69)
Income before income tax expense: (1,752)     (190)     209 (488)
Income tax expense: (166)     45     (126) 8
Net income (loss): (1,586)     (235)     335 (496)
Net income attributable to non-controlling interest: (16)     5     30 (11)
Net (loss) income attributable to SPAR Group, Inc.: (1,602)     (230)     365 (507)
Depreciation and amortization: 9     36     64 60
Capital expenditures 0     30     0 37
EMEA [Member]                
Revenue: 0     7,863     8,277 25,760
Operating income (loss): 0     431     227 1,304
Interest expense (income): 0     85     77 306
Other expense (income), net: 723     (110)     713 (300)
Income before income tax expense: (712)     456     (1,763) 1,298
Income tax expense: (321)     345     (6) 730
Net income (loss): (391)     111     (1,757) 568
Net income attributable to non-controlling interest: 0     (240)     (286) (722)
Net (loss) income attributable to SPAR Group, Inc.: (391)     (129)     (2,043) (154)
Depreciation and amortization: 0     40     31 112
Capital expenditures $ 0     $ 49     $ 5 $ 100
v3.24.3
Note 9 - Segment Information - Assets (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Assets $ 67,396 $ 90,281
Americas [Member]    
Assets 62,634 71,372
Asia Pacific [Member]    
Assets 4,762 13,361
EMEA [Member]    
Assets $ 0 $ 5,548
v3.24.3
Note 9 - Segment Information - Long Lived Assets (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Long lived assets $ 4,073 $ 6,345
Americas [Member]    
Long lived assets 4,073 4,585
Asia Pacific [Member]    
Long lived assets 0 1,015
EMEA [Member]    
Long lived assets $ 0 $ 745
v3.24.3
Note 9 - Segment Information - Geographic Data (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Net revenues $ 37,788 $ 67,333 $ 163,771 $ 197,649
Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 163,771 $ 197,649
Percent of consolidated net revenue 100.00% 100.00% 100.00% 100.00%
UNITED STATES        
Net revenues $ 28,768 $ 28,722    
UNITED STATES | Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 90,583 $ 81,004
Percent of consolidated net revenue 76.10% 42.70% 55.30% 41.00%
BRAZIL        
Net revenues $ 0 $ 18,619    
BRAZIL | Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 33,185 $ 56,717
Percent of consolidated net revenue 0.00% 27.70% 20.30% 28.70%
SOUTH AFRICA        
Net revenues $ 0 $ 7,863    
SOUTH AFRICA | Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 8,277 $ 25,759
Percent of consolidated net revenue 0.00% 11.70% 5.10% 13.00%
MEXICO        
Net revenues $ 3,196 $ 3,033    
MEXICO | Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 9,723 $ 8,065
Percent of consolidated net revenue 8.50% 4.50% 5.90% 4.10%
CHINA        
Net revenues $ 0 $ 2,205    
CHINA | Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 2,698 $ 7,106
Percent of consolidated net revenue 0.00% 3.30% 1.60% 3.60%
JAPAN        
Net revenues $ 908 $ 1,489    
JAPAN | Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 3,778 $ 4,533
Percent of consolidated net revenue 2.40% 2.20% 2.30% 2.30%
CANADA        
Net revenues $ 3,529 $ 3,421    
CANADA | Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 10,698 $ 8,671
Percent of consolidated net revenue 9.30% 5.10% 6.50% 4.40%
INDIA        
Net revenues $ 1,387 $ 1,577    
INDIA | Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 4,829 $ 4,420
Percent of consolidated net revenue 3.70% 2.30% 3.00% 2.20%
AUSTRALIA        
Net revenues $ 0 $ 404    
AUSTRALIA | Geographic Concentration Risk [Member] | Revenue Benchmark [Member]        
Net revenues     $ 0 $ 1,374
Percent of consolidated net revenue 0.00% 0.60% 0.00% 0.70%
v3.24.3
Note 10 - Leases - Lease Costs (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Operating lease cost $ 147 $ 71 $ 415 $ 212
Short-term lease cost 22 19 277 130
Variable costs [1] 0 13 0 44
Total lease cost $ 169 $ 103 $ 692 $ 386
[1] Variable lease expense consists primarily of property taxes, property insurance, and common area or other maintenance costs for the Company’s leases of office space.
v3.24.3
Note 10 - Leases - Supplemental Cash Flow Information (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Operating cash flows from operating leases $ 105 $ 233 $ 415 $ 489
Operating lease $ 0 $ 386 $ 0 $ 1,497
v3.24.3
Note 10 - Leases - Leases Assets and Liabilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Operating lease right-of-use asset $ 838 $ 2,323
Current portion of operating lease liability 508 1,163
Non-current portion of operating lease liabilities 330 1,160
Total operating lease liabilities $ 838 $ 2,323
Weighted-average remaining lease term - operating leases (in years) (Year) 3 years 6 months 21 days 2 years 7 months 20 days
Weighted-average discount rate - operating leases 7.60% 8.80%
v3.24.3
Note 10 - Leases - Maturity of Lease Liability (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
2024 $ 134  
2025 438  
2026 144  
2027 114  
2028 73  
Total Lease Payments 903  
Less: imputed interest (65)  
Present value of operating lease liabilities $ 838 $ 2,323
v3.24.3
Note 11 - Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Net (loss) income attributable to SPAR Group, Inc. $ (144) $ 259 $ 10,110 $ 1,764
Weighted-average common shares outstanding – basic (in shares) 23,435 23,237 23,591 23,201
Stock options and unvested restricted shares (in shares) 0 139 177 149
Weighted-average common shares outstanding – diluted (in shares) 23,435 23,376 23,768 23,350
Basic (loss) income per common share attributable to SPAR Group, Inc. (in dollars per share) $ (0.01) $ 0.01 $ 0.43 $ 0.08
Diluted (loss) income per common share attributable to SPAR Group, Inc. (in dollars per share) $ (0.01) $ 0.01 $ 0.43 $ 0.08
v3.24.3
Note 12 - Subsequent Events (Details Textual) - USD ($)
Oct. 08, 2024
Jun. 05, 2024
South African Joint Venture [Member] | SPAR Group [Member] | Subsequent Event [Member]    
Percent Of Ownership Interest In Subsidiary Sold By Company 51.00%  
Highwire Capital Acquiring SGRP [Member]    
Business Acquisition, Share Price (in dollars per share)   $ 2.5
Business Combination, Price of Acquisition, Expected   $ 58,000,000
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