View Filing Data

Basis of Accounting [Text Block]

1.	Basis of Presentation

The unaudited, interim condensed consolidated financial statements of SPAR Group, Inc., a Delaware corporation ("SGRP"), and its subsidiaries (together with SGRP, collectively, the "Company" or the "SPAR Group"), accompanying this Quarterly Report on Form

-Q for the

second

quarter ended

June 30, 2019 (

this "Quarterly Report"), have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form

-Q and Article

of Regulation S-

Accordingly, they do

not

include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The consolidated balance sheet as of

December 31, 2018,

has been prepared from the Company's audited consolidated balance sheet as of such date. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation have been included in these interim financial statements. However, these interim financial statements should be read in conjunction with the annual consolidated financial statements and notes thereto for the Company as contained in the SGRP's Annual Report on Form

-K/A for the year ended

December 31, 2018,

as filed with the Securities and Exchange Commission (the "SEC") on

April 24, 2019 (

the

"2018

Annual Report"), and SGRP's Proxy Statement for its

2019

Annual Meeting of Stockholders as filed with the SEC on

April 29, 2019 (

and Additional Definitive Materials filed with the SEC on

May 3, 2019,

collectively the

"2019

Proxy Statement"). Particular attention should be given to Items

and

of the

2018

Annual Report respecting the Company's Business and Risk Factors, respectively, and the following parts of SGRP's

2019

Proxy Statement: (i)

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

, (ii)

CORPORATE GOVERNANCE

, (iii)

EXECUTIVE COMPENSATION, DIRECTORS AND OTHER INFORMATION

and (iv)

EXECUTIVE COMPENSATION, EQUITY AWARDS AND OPTIONS.

The Company's results of operations for the interim period are

not

necessarily indicative of its operating results for the entire year. Except for the change noted below, the Company has consistently applied the accounting policies to all periods presented in these condensed consolidated financial statements. The Company adopted ASC

842

January 1, 2019.

As a result, the Company changed its accounting policy for accounting for leases as detailed in Notes

and

11.

Note 2 - Business and Organization

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

2.	Business and Organization

The Company is a supplier of merchandising and other marketing services throughout the United States and internationally. The Company provides merchandising and other marketing services to manufacturers, distributors and retailers worldwide, primarily in mass merchandiser, office supply, grocery, drug, dollar, independent, convenience, home improvement and electronics stores, as well as providing furniture and other product assembly services, audit services, in-store events, technology services and marketing research.

Merchandising services primarily consist of regularly scheduled, special project and other product services provided at the store level, and the Company

may

be engaged by either the retailer or the manufacturer. Those services

may

include restocking and adding new products, removing spoiled or outdated products, resetting categories in accordance with client or store schematics, confirming and replacing shelf tags, setting new sale or promotional product displays and advertising, replenishing kiosks, providing in-store event staffing and providing assembly services in stores, homes and offices. Other merchandising services include whole store or departmental product sets or resets, including new store openings, new product launches and in-store demonstrations, audit services, special seasonal or promotional merchandising, focused product support and product recalls. The Company also provides technology services and marketing research services.

As of

June 30, 2019,

the Company operates in

countries and divides its operations into

two

reportable segments: its Domestic Division, which has provided services in the United States of America since certain of its predecessors were formed in

1979,

and its International Division, which began operations in

May 2001

and provides similar merchandising, marketing, audit and in-store event staffing services in Australia, Brazil, Canada, China, India, Japan, Mexico, South Africa, and Turkey.

Note 3 - Earnings Per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Text Block]

3.	Earnings Per Share

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

	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
Numerator:
Net income (loss) attributable to SPAR Group, Inc.	$	1,523	$	(1,763	)	$	2,139	$	(1,638	)

Denominator:
Weighted average shares used in basic net income per share calculation		20,816		20,649			20,796		20,649

Weighted average shares used in diluted net income per share calculation		21,104		20,649			21,080		20,649

Basic and diluted net income (loss) per common share	$	0.07	$	(0.09	)	$	0.10	$	(0.08	)

Note 4 - Credit Facilities and Other Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Text Block]

4.	Credit Facilities and Other Debt

Domestic Credit Facilities

North Mill Capital Credit Facility

April 10, 2019,

the Company repaid and replaced its

2018

credit facility with PNC Bank, National Association ("PNC"), with a new secured revolving credit facility in the United States and Canada (the "NM Credit Facility") with North Mill Capital, LLC ("NM").

In order to obtain, document and govern the NM Credit Facility: SGRP and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force ("SMF"), Inc., and SPAR Canada Company ("SCC") (each, a "NM Borrower" and collectively, the "NM Borrowers"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors), entered into

eighteen

(

) month individual Loan and Security Agreements with NM dated as of

April 10, 2019 (

the "NM Loan Agreements"), which governs the obligations of the NM Loan Parties to NM and secures them with pledges of substantially all of the assets of the NM Loan Parties (other than SGRP's foreign subsidiaries, certain designated domestic subsidiaries, and their respective equity and assets); the SMF Borrower issued its

$10.5

million Revolving Credit Master Promissory Note to NM dated

April 10, 2019,

and the SCC Borrower issued its

$1.5

million Revolving Credit Master Promissory Note to NM dated

April 10, 2019 (

the "NM Notes"), which evidences the NM Borrowers' loans and other obligations to NM; the NM Guarantors entered into a Guaranty Agreement with NM dated as of

April 10, 2019 (

the "NM Guaranty"), which guaranties the NM Borrowers' loans and other obligations to NM. The NM Loan Agreements have an approved maximum borrowing capacity of

$12.5

million for the SMF Borrower and

$2.5

million for the SCC Borrower. As of

June 30, 2019,

the SMF Borrower requested and was granted an increase in its NM Laon Agreement from

$10.5

million to

$12.5

million.

April 10, 2019,

the Company drew down an initial advance under the NM Credit Facility of approximately

$9.8

million, which was used to repay the Company's existing credit facility with PNC.

The NM Note currently requires the NM Borrowers to pay interest on the loans thereunder equal to (A) Prime Rate designated by Wells Fargo Bank, plus (B)

one hundred twenty

five

basis points (

1.25%

). In addition, the Company is paying a fee to NM in the amount of

1.5%

of the Promissory Notes or

$180,000

payable at

$10,000

per month over the term of the agreement. The Company utilized a broker to assist in this financing and has paid a fee of

$120,000

for their services. On

June 30, 2019,

the aggregate interest rate under that formula was

6.75%

per annum, and the outstanding loan balance was

$12.2

million. Outstanding amounts are classified as short-term debt.

Revolving loans are available to the Borrowers under the NM Credit Facility based upon the borrowing base formula defined in the NM Loan Agreement (principally

85%

of "eligible" accounts receivable less certain reserves and

60%

of eligible unbilled accounts receivable at a maximum limit of

$4.5

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 Borrower and limits on capital expenditures and other investments.

PNC Credit Facility

In order to obtain, document and govern the PNC Credit Facility: SGRP and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force ("SMF"), Inc., SPAR Assembly & Installation, Inc., and SPAR Canada Company (each, a "PNC Borrower" and collectively, the "PNC Borrowers"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Group International, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "PNC Guarantor" and collectively, the "PNC Guarantors), entered into a Loan Agreement with PNC dated as of

January 16, 2018 (

the "PNC Loan Agreement"); the PNC Borrowers issued their

million Committed Line Of Credit Note to PNC dated

January 16, 2018 (

the "Original PNC Note"), which evidences the PNC Borrowers' loans and other obligations to PNC; the PNC Guarantors entered into a Guaranty and Suretyship Agreement with PNC dated as of

January 16, 2018 (

the "PNC Guaranty"), which guaranties the PNC Borrowers' loans and other obligations to PNC; and the PNC Borrowers and PNC Guarantors (each, a "PNC Loan Party" and collectively, the "PNC Loan Parties") entered into a Security Agreement with PNC dated as of

January 16, 2018 (

the "PNC Security Agreement"), which secures the obligations of the PNC Loan Parties to PNC with pledges of substantially all of the assets of the PNC Loan Parties (other than SGRP's foreign subsidiaries, certain designated domestic subsidiaries, and their respective equity and assets).

An amendment to the PNC Credit Facility dated as of

July 3, 2018,

among other things, increased the maximum principal amount of the Revolving Loans to

$9.5

million.

January 2018,

the Company repaid and replaced its credit facility with Sterling Bank with a secured revolving credit facility in the United States and Canada (as amended the "PNC Credit Facility") with PNC Bank, National Association.

Fifth Third Credit Facility

January 9, 2018,

the Company completed its acquisition of a

51%

interest in its new subsidiaries, Resource Plus of North Florida, Inc., and related companies (collectively, "Resource Plus"). When acquired, Resource Plus was a party to a revolving line of credit facility it secured on

May 23, 2016, (

the "Fifth Third Credit Facility") from Fifth Third Bank for

$3.5

million, which was scheduled to expire on

May 23, 2018.

Effective

April 11, 2018,

the term of the Fifth Third Credit Facility was extended and is currently scheduled to become due on

April 23, 2020.

As there are

provisions (other than defaults) requiring the pay down of the loan until

April 23, 2020,

any amounts outstanding are classified as short-term debt.

Revolving loans of up to

$3.5

million are available to Resource Plus under the Fifth Third Credit Facility based upon the borrowing base formula defined in the agreement (principally

80%

of "eligible" accounts receivable less certain reserves). As of

June 30, 2019,

there was

outstanding balance. The Fifth Third Credit Facility is secured by substantially all assets of Resource Plus.

The Fifth Third Credit Facility currently requires Resource Plus to pay interest on the loans thereunder equal to (A) the Daily LIBOR Rate (as defined in the agreement) per annum, plus (B)

two hundred fifty

basis points (

2.50%

). On

June 30, 2019,

the aggregate interest rate under that formula was

5.23%

per annum.

Other Debt

Effective with the closing of the Resource Plus acquisition, the Company entered into promissory notes with the sellers totaling

$2.3

million. The notes are payable in annual installments at various amounts due on

December

31st

of each year starting with

December 31, 2018

and continuing through

December 31, 2023.

As such these notes are classified as both short term and long term for the appropriate amounts. The total balance owed at

June 30, 2019

was approximately

$2.0

million.

International Credit Facilities:

SPARFACTS Australia Pty. Ltd. has a secured line of credit facility with National Australia Bank, effective

October 31, 2017,

for

$800,000

(Australian) or approximately

$562,000

USD (based upon the exchange rate at

June 30, 2019).

The facility provides for borrowing based upon a formula, as defined in the agreement (principally

80%

of eligible accounts receivable less certain deductions). The outstanding balance with National Australia Bank as of

June 30, 2019

was

$258,000

(Australian) or

$181,000

USD and is due on demand.

SPAR Todopromo has secured a line of credit facility with BBVA Bancomer Bank for

5.0

million Mexican Pesos or approximately

$261,000

USD (based upon the exchange rate at

June 30, 2019).

The revolving line of credit was secured on

March 15, 2016,

and originally expired

March 2018.

The facility has been amended to extend the terms to

April 2020.

The variable interest rate is TIIE (Interbank Interest Rate) +

4%,

which resulted in an annual interest rate of

12.5%

as of

June 30, 2019.

There was

outstanding balance as of

June 30, 2019.

May 29, 2018,

SPAR Brazil established a line of credit facility with Banco Bradesco for

1.2

million Brazilian Real or approximately

$312,000

USD (based upon the exchange rate at

June 30, 2019).

The facility provides for borrowing with

formal guarantees. The agreement expires on

November 29, 2019.

The outstanding balance at

June 30, 2019,

was approximately

68,000

Brazilian Real or approximately

$18,000

USD.

October 5, 2018

SPAR Brazil secured a line of credit facility with Branco Bradesco for approximately

3.5

million Brazilian Real or approximately

$917,000

USD (based upon the exchange rate at

June 30, 2019).

The outstanding balance as of

June 30, 2019

was approximately

1.6

million Brazilian Real or approximately

$419,000

USD. The note is due

December 19, 2019,

with varying monthly payments.

October 5, 2018

SPAR Brazil secured a line of credit facility with Branco Santander for approximately

381,000

Brazilian Real or approximately

$99,000

USD (based upon the exchange rate at

June 30, 2019).

The outstanding balance as of

June 30, 2019

was approximately

293,000

Brazilian Real or approximately

$76,000

USD.

	Interest Rate as of June 30, 2019				2019		2020		2021		2022		2023		2024
Brazil – Bradesco			16.56%		$	437	$	–	$	–	$	–	$	–	$	–
Brazil - Santander		4.45	-	10.99%		76		–		–		–		–		–
USA – North Mill Capital			6.75%			12,155		–		–		–		–		–
USA – Fifth Third Bank			5.23%			–		–		–		–		–		–
USA – Resource Plus Seller Notes			1.85%			333		334		300		300		700		–
Australia - National Australia Bank			6.56%			181		–		–		–		–		–
Mexico – BBVA Shareholder			12.5%			–		–		–		–		–		–
Total					$	13,182	$	334	$	300	$	300	$	700	$	–

Summary of

Unused

Company Credit and Other Debt Facilities (in thousands):

	June 30, 2019		December 31, 2018
Unused Availability:
United States	$	4,788	$	4,253
Australia		381		238
Brazil		294		304
Mexico		261		102
Total Unused Availability	$	5,724	$	4,897

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

Note 5 - Related-party Transactions

6 Months Ended

Jun. 30, 2019

5.	Related-Party Transactions

SGRP's policy respecting approval of transactions with related persons, promoters and control persons is contained in the SPAR Group Code of Ethical Conduct for its Directors, Executives, Officers, Employees, Consultants and other Representatives Amended and Restated (as of)

March 15, 2018 (

the "Ethics Code"). The Ethics Code is intended to promote and reward honest, ethical, respectful and professional conduct by each director, executive, officer, employee, consultant and other representative of any of SGRP and its subsidiaries (together with SGRP, the "Company") and each other Covered Person (as defined in the Ethics Code) in his or her position with the Company anywhere in the world, including (among other things) serving each customer, dealing with each vendor and treating each other with integrity and respect, and behaving honestly, ethically and professionally with each customer, each vendor, each other and the Company. Article II of the Ethics Code specifically prohibits various forms of self-dealing (including dealing with relatives) and collusion and Article V of the Ethics Code generally prohibits each "Covered Person" (including SGRP's officers and directors) from using or disclosing the Confidential Information of the Company or any of its customers or vendors, seeking or accepting anything of value from any competitor, customer, vendor, or other person relating to doing business with the Company, or engaging in any business activity that conflicts with his or her duties to the Company, and directs each "Covered Person" to avoid any activity or interest that is inconsistent with the best interests of the SPAR Group, in each case except for any "Approved Activity" (as such terms are defined in the Ethics Code). Examples of violations include (among other things) having any ownership interest in, acting as a director or officer of or otherwise personally benefiting from business with any competitor, customer or vendor of the Company other than pursuant to any Approved Activity. Approved Activities include (among other things) any contract with an affiliated person (each an "Approved Affiliate Contract") or anything else disclosed to and approved by SGRP's Board of Directors (the "Board"), its Governance Committee or its Audit Committee, as the case

may

be, as well as the ownership, board, executive and other positions held in and services and other contributions to affiliates of SGRP and its subsidiaries by certain directors, officers or employees of SGRP, any of its subsidiaries or any of their respective family members. The Company's senior management is generally responsible for monitoring compliance with the Ethics Code and establishing and maintaining compliance systems, including those related to the oversight and approval of conflicting relationships and transactions, subject to the review and oversight of SGRP's Governance Committee as provided in clause

IV.11

of the Governance Committee's Charter, and SGRP's Audit Committee as provided in clause

I.2

(l) of the Audit Committee's Charter. The Governance Committee and Audit Committee each consist solely of independent outside directors (see

Domestic Related Party Services, International Related Party Services, Related Party Transaction Summary, Related Party Transaction Summary, Affinity Insurance, and Other Related Party Transactions and Arrangements

, below).

SGRP's Audit Committee has the specific duty and responsibility to review and approve the overall fairness and terms of all material related-party transactions. The Audit Committee receives affiliate contracts and amendments thereto for its review and approval (to the extent approval is given), and these contracts are periodically (often annually) again reviewed, in accordance with the Audit Committee Charter, the Ethics Code, the rules of the Nasdaq Stock Market LLC ("Nasdaq"), and other applicable law to ensure that the overall economic and other terms will be (or continue to be)

less favorable to the Company than would be the case in an arms-length contract with an unrelated provider of similar services (i.e., its overall fairness to the Company, including pricing, payments to related parties, and the ability to provide services at comparable performance levels). The Audit Committee periodically reviews all related party relationships and transactions described below.

The Special Committee also has been involved in the review of the Proposed Amendments to SGRP's By-Laws and the By-Laws Action and

225

Action (see Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies

Settled Delaware Litigations

, below).

Domestic Related Party Services:

SPAR Business Services, Inc. ("SBS"), SPAR Administrative Services, Inc. ("SAS"), and SPAR InfoTech, Inc. ("Infotech"), have provided services from time to time to the Company and are related parties and affiliates of SGRP, but are

not

under the control or part of the consolidated Company. SBS is an affiliate because it is owned by Robert G. Brown and prior to

December 2018

was owned by William H. Bartels. SAS is an affiliate because it is owned by William H. Bartels and certain relatives of Robert G. Brown or entities controlled by them (each of whom are considered affiliates of the Company for related party purposes). Infotech is an affiliate because it is owned by Robert G. Brown. Mr. Brown and Mr. Bartels are the Majority Stockholders (see below) and founders of SGRP, Mr. Brown was Chairman and an officer and director of SGRP through

May 3, 2018 (

when he retired), and Mr. Bartels was and continues to be Vice Chairman and a director and officer of SGRP. Mr. Brown and Mr. Bartels also have been and are stockholders, directors and executive officers of various other affiliates of SGRP. See Note

RELATED PARTIES AND RELATED PARTY LITIGATION, below.

The Company executes its domestic field services through the services of field merchandising, auditing, assembly and other field personnel (each a "Field Specialist"), substantially all of whom are provided to the Company and engaged by independent

third

parties and located, scheduled, deployed and administered domestically through the services of local, regional, district and other personnel (each a "Field Administrator"), and substantially all of the Field Administrators are in turn are employed by other independent

third

parties.

SBS provided substantially all of the Field Specialist services in the U.S.A. to the Company from

January 1

through

July 27, 2018,

and an independent vendor and licensee provided them for the balance of

2018.

The Company paid

$13.3

million during the

six

months ended

June 30, 2018,

to SBS for its provision as needed of the services of approximately

4,500

of SBS's available Field Specialists in the U.S.A. (which amounted to approximately

43%

of the Company's total domestic Field Specialist service expense for the

six

months ended

June 30, 2018).

Since the termination of the Amended and Restated Field Service Agreement with SBS on

December 1, 2014 (

as amended, the "Prior SBS Agreement"), the Company and SBS agreed to an arrangement where the Company reimbursed SBS for the Field Specialist service costs and certain other approved reimbursable expenses incurred by SBS in performing services for the Company and paid SBS a revised fixed percentage of such reimbursable expenses (the "Cost Plus Fee") equal to

2.96%

of those reimbursable expenses, subject to certain offsetting credits. The Company had offered a new agreement to SBS confirming that reimbursable expenses were subject to review and approval by the Company, but SBS rejected that proposal.

Due to (among other things) the Clothier Determination and the ongoing proceedings against SBS (which could have had a material adverse effect on SBS's ability to provide future services needed by the Company), SBS' continued higher charges and expense reimbursement disputes, and the Company's identification of an experienced independent

third

party company (the "Independent Field Vendor") who would provide comparable services on substantially better terms, the Company terminated the services of SBS effective

July 27, 2018,

and the Company has engaged that Independent Field Vendor to replace those field services previously provided by SBS (other than in California). The Company similarly terminated SAS and has engaged another independent

third

party company on substantially better terms to replace those administrative services formerly provided by SAS, effective

August 1, 2018.

Even though the Company believes it had paid SBS for all services provided through

July 27, 2018,

the Company received notice that there

may

not

have been sufficient funds in SBS' bank accounts to honor all payments SBS had made by check to their Field Specialists. Based on this notice, the Company withheld approximately

$112,000

of final mark-up compensation due SBS and had made payments, on a daily basis, into the SBS bank account designated for Field Specialist payments to ensure all SBS Field Specialists that had provided services to the Company were properly compensated for those services. The

$112,000

had been completely exhausted and the Company was required to fund an additional

$13,000

to cover these duplicate Field Specialist payments.

The Company has reached a non-exclusive agreement on substantially better terms than SBS with an experienced independent

third

-party vendor to provide substantially all of the domestic Field Specialist services used by the Company. The Company has also reached a separate non-exclusive agreement on substantially better terms than with SAS with another independent

third

-party vendor to provide substantially all of the domestic Field Administrator services used by the Company. The Company transitioned to such new vendors during

July 2018,

and such transition was virtually unnoticeable to the Company's clients

SAS provided substantially all of the Field Administrators in the U.S.A. to the Company from

January 1

through

June 30, 2018.

The Company paid

$2.3

million to SAS for its provision of its

full-time regional and district administrators (which amounted to approximately

91%

of the Company's total domestic field administrative service cost for the

six

month period ended

June 30, 2018.

In addition to these field service and administration expenses, SAS also incurred other administrative expenses related to benefit and employment tax expenses of SAS and payroll processing, and other administrative expenses and SBS incurred expenses for processing vendor payments, legal defense and other administrative expenses (but those expenses were only reimbursed by SGRP to the extent approved by the Company as described below).

SAS compensation to any officer, director or other related party (other than to Mr. Peter W. Brown, a related party as noted below, pursuant to previously approved budgets) had been reimbursed by the Company. This was

not

a restriction on SAS since SAS is

not

controlled by the Company and could have paid any compensation to any person that SAS desires out of its own funds. Since SAS is a "Subchapter S" corporation, all income from SAS is allocated to its stockholders (see above).

May 7, 2018,

the Company gave a termination notice to SAS specifying

July 31, 2018,

as the end of the Service Term under (and as defined in) SAS Agreement signed in

2016.

The Company has reached a non-exclusive agreement with an independent

third

party vendor to provide substantially all of the domestic Field Administrators used by the Company. The Company transitioned to such new vendor during

July 2018,

and it was virtually unnoticeable to the Company's clients.

Although SAS has

not

provided or been authorized to perform any services to the Company after their terminations described above effective on or before

July 31, 2018,

SAS has apparently continued to operate and claim that the Company owes them for all of their post-termination expenses for the foreseeable future. For the period from

August, 2018

through

June 30, 2019,

SAS has invoiced the Company over

$200,000.

All such invoices have been rejected by the Company. The Company has determined that it is

not

obligated to reimburse any such post-termination expense (other than for potentially reimbursing SAS for mutually approved reasonable short term ordinary course transition expenses in previously allowed categories needed by SAS to wind down its business, if any), and that such a payment would be an impermissible gift to a related party under applicable law, which determinations have been supported by SGRP's Audit Committee. See Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies -- Legal Matters,

below.

The Company expects that SBS and SAS

may

use every available means to attempt to collect reimbursement from the Company for the foreseeable future for all of their post-termination expense, including repeated litigation. See Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies -- Legal Matters

, below.

November 23, 2018,

SBS petitioned for bankruptcy protection under chapter

of the United States Bankruptcy Code in the U.S. District for Nevada (the "SBS Chapter

Case"). On

August 6, 2019,

with the support of (among others, the Clothier and Rodgers plaintiffs and the Company, the Court approved the Settlement Agreement and the SBS Reorganization pursuant to the SBS Plan (as all such terms are defined below). See Note

to the Company's Consolidated Financial Statements,

Commitments and Contingencies

Legal Matters

SBS Bankruptcy and Settlement,

below).

Any claim by Robert G. Brown, William H. Bartels, SAS, any other related party or any

third

party that the Company is somehow liable for any judgment or similar amount imposed against SBS or SAS or any other related party, any judicial determination that the Company is somehow liable for any judgment or similar amount imposed against SBS or SAS or any other related party, or any increase in the Company's use of employees (rather than the services of independent contractors provided by

third

parties) to perform Field Specialist services domestically, in each case in whole or in part, could have a material adverse effect on the Company or its performance or condition (including its 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), whether actual or as planned, intended, anticipated, estimated or otherwise expected. See Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies

Legal Matters,

below.

Current material and potentially material legal proceedings impacting the Company are described in Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies

Legal Matters,

below. These descriptions are based on an independent review by the Company and do

not

reflect the views of SBS, its management or its counsel. Furthermore, even though SBS was solely responsible for its operations, methods and legal compliance, in connection with any proceedings against SBS, SBS continues to claim that the Company is somehow liable to reimburse SBS for its expenses in those proceedings. The Company does

not

believe there is any basis for such claims and would defend them vigorously.

Infotech is currently suing the Company in New York seeking reimbursement for approximately

$190,000

respecting alleged lost tax benefits and other expenses it claims to have incurred in connection with SGRP's acquisition of its Brazilian subsidiary and previously denied by both management and SGRP's Audit Committee, who had jurisdiction because Infotech is a related party. Infotech also is threatening to sue the Company in Romania for approximately

$900,000

for programming services allegedly owed to the Company's former Romanian subsidiary (sold at book value to Infotech in

2013

) and

not

provided to Infotech, for which the Company vigorously denies liability. See Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies -- Legal Matters -- Related Party Litigation

, below.

Peter W. Brown was appointed as a Director on the SGRP Board as of

May 3, 2018,

replacing Mr. Robert G. Brown upon his retirement from the Board and Company at that date. He is

not

considered independent because Peter Brown an affiliate and related party in respect of SGRP and was proposed by Mr. Robert G. Brown to represent the Brown family interests. He worked for and is a stockholder of SAS (see above) and certain of its affiliates, he is the nephew of Mr. Robert G. Brown (a current significant stockholder of SGRP and SGRP's former Chairman and director), he is a director of SPAR Brasil Serviços de Merchandising e Tecnologia S.A., a Brazilian corporation and SGRP subsidiary ("SPAR BSMT") and owns Earth Investments LLC, ("EILLC"), which owns

10%

interest in the SGRP's Brazilian subsidiary.

National Merchandising Services, LLC ("NMS"), is a consolidated domestic subsidiary of the Company and is owned jointly by SGRP through its indirect ownership of

51%

of the NMS membership interests and by National Merchandising of America, Inc. ("NMA"), through its ownership of the other

49%

of the NMS membership interests. Mr. Edward Burdekin is the Chief Executive Officer and President and a director of NMS and also is an executive officer and director of NMA. Ms. Andrea Burdekin, Mr. Burdekin's wife, is the sole stockholder and a director of NMA and a director of NMS. NMA is an affiliate of the Company but is

not

under the control of or consolidated with the Company. Mr. Burdekin also owns

100%

of National Store Retail Services ("NSRS"). Since

September 2018,

NSRS provided substantially all of the domestic merchandising specialist field force used by NMS. For those services, NMS agrees to reimburse NSRS the total costs for providing those services and to pay NSRS a premium equal to

1.0%

of its total cost.

August 10, 2019,

NMS, to protect continuity of its Field Specialist nationwide, petitioned for bankruptcy protection under chapter

of the United States Bankruptcy Code in the U.S. District for Nevada (the "

NMS Chapter

Case

"), and as a result, the claims of NMS' creditors must now generally be pursued in the NMS Chapter

Case. On

August 11, 2019,

NSRS and Mr. Burdekin also filed for reorganization in the NMS Chapter

Case NMS is part of the consolidated Company. Currently the Company believes that the NMS Chapter

Case is

not

likely to have a material adverse effect on the Company, and the Company's ownership of and involvement in NMS is

not

likely to change as a result of the NMS Chapter

Case or any resulting NMS reorganization.

Resource Plus of North Florida, Inc. ("RPI"), is a consolidated domestic subsidiary of the Company and is owned jointly by SGRP through its indirect ownership of

51%

of the RPI membership interests and by Mr. Richard Justus through his ownership of the other

49%

of the RPI membership interests. Mr. Justus has a

50%

ownership interest in RJ Holdings which owns the buildings where RPI is headquartered and operates. Both buildings are subleased to RPI at local market rates.

International Related Party Services:

SGRP Meridian (Pty), Ltd. ("Meridian") is a consolidated international subsidiary of the Company and is owned

51%

by SGRP and

23%

by FRIEDSHELF

401

Proprietary Limited (owned by Mr. Brian Mason and Mr. Garry Bristow) and

26%

by Lindicom Proprietary Limited. Mr. Mason is President and a director and Mr. Bristow is an officer and director of Meridian. Mr. Mason is also an officer and director and

50%

shareholder of Merhold Property Trust ("MPT"). Mr. Mason and Mr. Bristow are both officers and directors and both own

50%

of Merhold Cape Property Trust ("MCPT"). Mr. Mason and Mr. Bristow are officers and owners of Merhold Holding Trust ("MHT") which provides similar services like MPT. MPT owns the building where Meridian is headquartered and also owns

vehicles, all of which are subleased to Meridian. MCPT provides a fleet of

172

vehicles to Meridian under a

year lease program. These leases are provided to Meridian at local market rates included in the summary table below.

SPAR Todopromo is a consolidated international subsidiary of the Company and is owned

51%

by SGRP and

49%

by the following individuals: Mr. Juan F. Medina Domenzain, Juan Medina Staines, Julia Cesar Hernandez Vanegas, and Jorge Medina Staines. Mr. Juan F. Medina Domenzain is an officer and director of SPAR Todopromo and is also majority shareholder (

90%

) of CONAPAD ("CON") which supplied administrative and operational consulting support to SPAR Todopromo in

2016.

Mr. Juan F. Medina Domenzain ("JFMD"), partner in SPAR Todopromo, leased a warehouse to SPAR Todopromo. The lease expires on

December 31, 2020.

SPAR Brasil Serviços de Merchandising e Tecnologia S.A., a Brazilian corporation ("SPAR BSMT is owned

51%

by the Company,

39%

by JK Consultoria Empresarial Ltda.-ME, a Brazilian limitada ("JKC"), and

10%

by Earth Investments, LLC, a Nevada limited liability company ("EILLC").

JKC is owned by Mr. Jonathan Dagues Martins, a Brazilian citizen and resident ("JDM") and his sister, Ms. Karla Dagues Martins, a Brazilian citizen and resident. JDM is the Chief Executive Officer and President of each SPAR Brazil company pursuant to a Management Agreement between JDM and SPAR BSMT dated

September 13, 2016.

JDM also is a director of SPAR BSMT. Accordingly, JKC and JDM are each a related party in respect of the Company. EILLC is owned by Mr. Peter W. Brown, a citizen and resident of the USA ("PWB") and a director of SPAR BSMT and SGRP and nephew of SGRP"s largest shareholder, Robert G. Brown. Accordingly, PWB and EILLC are each a related party in respect of the Company.

SPAR BSMT has contracted with Ms. Karla Dagues Martins, a Brazilian citizen and resident and JDM's sister and a part owner of SPAR BSMT, to handle the labor litigation cases for SPAR BSMT and its subsidiaries. These legal services are being provided to them at local market rates by Ms. Martins' company, Karla Martins Sociedade de Advogados ("KMSA"). Accordingly, Mr. Jonathan Dagues Martins and Ms. Karla Dagues Martins are each an affiliate and a related party in respect of the Company.

Summary of Certain Related Party Transactions:

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

	Three Months Ended June 30 ,				Six Months Ended June 30 ,
	201 9		201 8		201 9		201 8
Services provided by affiliates:
Field merchandiser and other expenses (SBS)*	$	-	$	6,561	$	-	$	13,290
Field administration and other expenses (SAS)*		-		1,113		-		2,262
National Store Retail Services (NSRS)		260		-		385		-
Office lease expenses (RJ Holdings)		97		143		199		285
Office and vehicle lease expenses (MPT)		16		6		32		25
Vehicle rental expenses (MCPT)		297		118		587		457
Office and vehicle rental expenses (MHT)		68		9		132		62
Consulting and administrative services (CON)		37		56		74		115
Legal Services (KMSA)		21		28		43		54
Warehousing rental (JFMD)		12		12		24		24

Total services provided by affiliates	$	808	$	8,046	$	1,476	$	16,574

*	Includes substantially all overhead (in the case of SAS and SBS), or related overhead, plus any applicable markup. The services provided by SAS and SBS were terminated as of July 2018.

Due to affiliates consists of the following (in thousands):	June 30 ,		December 31,
	201 9		201 8
Loans from local investors:(1)
Australia	$	428	$	226
Mexico		1,001		1,001
Brazil		139		139
China		1,803		2,130
South Africa		618		618
Resource Plus		531		531
Total due to affiliates	$	4,520	$	4,645

(

)

Represent loans from the local investors into the Company's subsidiaries (representing their proportionate share of working capital loans). The loans have

payment terms and are due on demand and as such have been classified as current liabilities in the Company's consolidated financial statements.

Affinity Insurance:

In addition to the above, through

August 1, 2018,

SAS purchased insurance coverage from Affinity Insurance, Ltd. ("Affinity") for worker compensation, casualty and property insurance risk for itself, for SBS on behalf of Field Specialists that require such insurance coverage (if they do

not

provide their own), and for the Company. SAS owns a minority (less than

) of the common stock in Affinity. Based on informal arrangements between the parties, the Affinity insurance premiums for such coverage were ultimately charged (through SAS) for their fair share of the costs of that insurance to SMF, SAS (which then charges the Company) and SBS. Since

August 1, 2018,

the new independent vendor providing the Company's Field Administrators also is a member of and provided such insurance through Affinity for itself and on behalf of the Field Specialists that require such insurance coverage (if they do

not

provide their own), and the Company is obtaining its own such insurance through Affinity (in which the Company is also now a member).

In addition to those required periodic premiums, Affinity also requires payment of cash collateral deposits ("Cash Collateral"), and Cash Collateral amounts are initially determined and from time to time re-determined (upward or downward) by Affinity. From

2013

through

August 1, 2018,

SAS deposited Cash Collateral with Affinity that now totals approximately

$965,000;

approximately

$379,000

of that Cash Collateral was allocable to SBS and approximately

$296,000

of that Cash Collateral was allocable to SMF and the balance of approximately

$290,000

was allocated to other affiliates of the Company. The

$379,000

Cash Collateral deposits allocable to SBS were paid by SAS on behalf of SBS, SAS received advances to make such payments from SBS, and SBS in turn received advances to make such payments from SMF. The SGRP Claims for this debt in the SBS Chapter

Case were settled at a substantial discount as part of the overall Settlement Agreement. See Note

to the Company's Consolidated Financial Statements,

Commitments and Contingencies

Legal Matters

SBS Bankruptcy and Settlement

Settlement Agreement

below) The Cash Collateral deposits allocable to SMF have been paid by SAS on behalf of SMF, and SAS received advances to make such payments from SMF. At the time those advances were requested by Mr. Brown be made by the Company to SAS and SBS, they were

not

specifically disclosed by Mr. Robert G. Brown (then SGRP executive Chairman), Mr. William H. Bartels (SGRP Vice Chairman then and now) or Mr. James R. Segreto (Chief Financial Officer), to or approved by the Audit Committee or Board (as a related party transaction or otherwise), and at the time Mr. Brown and Mr. Bartels were the sole owners and executives of SAS and SBS. In addition to funding such Cash Collateral, the Company believes that it has provided (after

1999

) all of the funds for all premium payments to and equity investments in Affinity and that the Company

may

be owed related amounts by SAS, SBS and their affiliates.

The Company also has advanced money to SAS to prepay Affinity insurance premiums (which in the case of workers compensation insurance are a percentage of payroll). The Company had advanced approximately

$226,000

to SAS for the

2019

2020

Affinity plan year based on estimates that assumed SBS and SAS would be providing services to the Company for the full plan year. However, the Company terminated their services at the end of

July 2018

therefore, that insurance was required for only

one

month's payroll. Upon completion of the Affinity audit for the Affinity

2018

2019

plan year, the Company anticipates that SAS will receive a premium refund from Affinity of approximately

$150,000

and will be obligated to repay that amount to the Company.

Affinity from time to time

may (

in the case of a downward adjustment in such periodic premiums or the Cash Collateral) make refunds, rebates or other returns of such periodic premiums and Cash Collateral deposits to SAS for the benefit of itself, SBS and SMF (including any premium refund, as returned or returnable, "Affinity Returns"). The Company believes that SAS is obligated to return to SMF any and all Affinity Returns allocable to SMF in repayment of the corresponding advances from SMF and allocable to SAS in repayment of the corresponding advances from SMF. The Company also believes that SAS is obligated to return to SBS, and SBS is obligated to return to SMF, any and all Affinity Returns allocable to SBS in repayment of the corresponding advances. The Company believes that SBS and SAS will have limited operations after

August 1, 2018,

that the litigation and likely resulting financial difficulties facing SBS are significant, and that without adequate security, those circumstances puts such repayments to the Company at a material risk.

SMF had been in negotiations with SBS and SAS (respectively represented by Robert G. Brown and William H. Bartels, who together own over

59%

of SGRP's common stock) since

November 2017

for reimbursement and security agreements to document and secure those advances and repayment obligations, which advances total approximately

$901,000

(

$675,000

Cash Collateral and

$226,000

for insurance premium advance) . Although SBS and SAS had orally accepted those agreements in principal, the negotiations have recently broken down over their refusal to allow enforceable

first

priority security interests in the Cash Collateral and SAS's policies with and equity interests in Affinity, as well as their demands for post-termination payments and offsets potentially larger than the Cash Collateral. As a result the Company has recorded a reserve for the full

$901,000

in such receivables in

2018.

The Company is exploring its legal options for recovering the Affinity Returns from SAS and SBS. See Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies

, below.

The SGRP Claims for this debt in the SBS Chapter

Case were settled at a substantial discount as part of the overall Settlement Agreement. See Note

to the Company's Consolidated Financial Statements,

Commitments and Contingencies

Legal Matters

SBS Bankruptcy and Settlement

Settlement Agreement

below).

Other Related Party Transactions and Arrangements

July 1999,

SMF, SBS and SIT 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 (the "Co-Owned 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 (the "Licensed Marks"). As a result of the SBS Chapter

Case, SBS' rights in the Co-Owned Software and Licensed Marks are assets of SBS' estate, subject to sale or transfer in any court approved reorganization or liquidation. See Note

to the Company's Consolidated Financial Statements - Commitments and Contingencies --

Legal Matters, Related Party Litigation

and

SBS Bankruptcy

, below.

Through arrangements with the Company, SBS (owned by Mr. Brown and prior to

December 2018

was owned by Mr. Bartels), SAS (owned by Mr. Bartels and family members of Mr. Brown), and other companies owned by Mr. Brown participate in various benefit plans, insurance policies and similar group purchases by the Company, for which the Company charges them their allocable shares of the costs of those group items and the actual costs of all items paid specifically for them. All such transactions between the Company and the above affiliates are paid and/or collected by the Company in the normal course of business.

Note 6 - Preferred Stock

6 Months Ended

Jun. 30, 2019

Preferred Stock [Text Block]

6.	Preferred Stock

SGRP's certificate of incorporation authorizes it to issue

3,000,000

shares of preferred stock with a par value of

$0.01

per share (the "SGRP Preferred Stock"), which

may

have such preferences and priorities over the SGRP Common Stock and other rights, powers and privileges as the Company's Board of Directors

may

establish in its discretion from time to time. The Company has created and authorized the issuance of a maximum of

3,000,000

shares of Series A Preferred Stock pursuant to SGRP's Certificate of Designation of Series "A" Preferred Stock (the "SGRP Series A Preferred Stock"), which have dividend and liquidation preferences, have a cumulative dividend of

10%

per year, are redeemable at the Company's option and are convertible at the holder's option (and without further consideration) on a

one

-to-

one

basis into SGRP Common Stock. The Company issued

554,402

of SGRP shares to affiliated retirement plans, which were all converted into common shares in

2011

(including dividends earned thereon), leaving

2,445,598

shares of remaining authorized preferred stock. At

June 30, 2019,

shares of SGRP Series A Preferred Stock were issued and outstanding.

Note 7 - Stock-based Compensation and Other Plans

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Text Block]

7.	Stock-Based Compensation and Other Plans

At the

2019

Annual Meeting, the Corporation's stockholders were asked to ratify and approve the

2019

Amendment to the

2018

Stock Compensation Plan of SPAR Group, Inc. (the

"2019

Plan Amendment") in order to amend and extend the Original

2018

Plan (as so amended and extended, the

"2018

Plan") to (i) extend the term of the Original

2018

Plan from the

2019

Plan Amendment Effective Date through

May 31, 2020 (

the

"19

Period"), and (ii) provide for a total of

500,000

shares of SGRP's common stock available for future Awards during the

Period (the

"19

Maximum") under the

2018

Plan (as amended and extended). The

2019

Plan Amendment would

not

have otherwise changed the Original

2018

Plan. Under the

2018

Original Plan as amended and extended (

"2018

Plan"), the Corporation (through its Compensation Committee)

may

from time to time grant restricted SGRP Shares, stock options to purchase SGRP Shares (either incentive or nonqualified), and restricted stock units, stock appreciation rights and other awards based on SGRP Shares (collectively, "Awards") to SGRP Directors and the Company's specified executives, employees and consultants providing services to the Company. A copy of the

2019

Plan Amendment was attached to this Proxy Statement and incorporated therein by reference.

The Corporation's Board of Directors (the "Board") on

April 22, 2019,

authorized and approved the

2019

Plan Amendment to be submitted to the Corporation's stockholders for ratification and approval.

However, the following votes were received at the

2019

Annual Meeting from the stockholders by ballot for the proposal to approve the

2019

Amendment to the

2018

Stock Compensation Plan, and accordingly such amendment (i.e., the

2019

Plan) was

not

approved:

For	Against		Abstain

315,359		13,987,924		3,712

As of

April 22, 2019,

there were Awards representing

585,000

shares of SGRP's Common Stock that had been granted under the Original

2018

Plan (

565,000

of which remained outstanding), and Awards representing

3,044,927

shares of SGRP's Common Stock outstanding under the

2008

Plan. Awards representing

15,000

shares of SGRP's Common Stock remained available for grant under the Original

2018

Plan prior to the

2019

Plan Amendment Effective Date. After

May 31, 2019,

the

2018

Plan ended and

further grants can be made under the

2018

Plan respecting such

15,000

shares of SGRP's Common Stock.

The Company recognized

$66,000

and

$36,000

in stock-based compensation expense relating to stock option awards during the

three

month periods ended

June 30, 2019

and

2018,

respectively. The tax benefit available from stock based compensation expense related to stock option during both the

three

months ended

June 30, 2019

and

2018

was approximately

$17,000

and

$14,000

respectively. The Company recognized

$96,000

and

$52,000

in stock-based compensation expense relating to stock option awards during the

six

month periods ended

June 30, 2019

and

2018,

respectively. The tax benefit available from stock based compensation expense related to stock option during both the

six

months ended

June 30, 2019

and

2018

was approximately

$24,000

and

$30,000

respectively. As of

June 30, 2019,

total unrecognized stock-based compensation expense related to stock options was

$399,000.

During the

three

months ended

June 30, 2019

and

2018,

the Company recognized approximately

$3,000

and

$6,000,

respectively of stock based compensation expense related to restricted stock. The tax benefit available to the Company from stock based compensation expense related to restricted stock during the

three

months ended

June 30, 2019

and

2018

was approximately

$1,000

and

$12,000,

respectively. During the

six

months ended

June 30, 2019

and

2018,

the Company recognized approximately

$4,000

and

$12,000,

respectively of stock based compensation expense related to restricted stock. The tax benefit available to the Company from stock based compensation expense related to restricted stock during the

three

months ended

June 30, 2019

and

2018

was approximately

$1,000

and

$5,000,

respectively. As of

June 30, 2019,

total unrecognized stock-based compensation expense related to unvested restricted stock Awards was

$1,000.

Note 8 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Text Block]

8.	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.

RELATED PARTIES AND RELATED PARTY LITIGATION:

SPAR Business Services, Inc., f/k/a SPAR Marketing Services, Inc. ("SBS"), SPAR Administrative Services, Inc. ("SAS"), and SPAR InfoTech, Inc. (" Infotech "), have provided services from time to time to the Company and are related parties and affiliates of SGRP, but are

not

under the control or part of the consolidated Company. SBS is an affiliate because it is owned by Robert G. Brown and William H. Bartels. SAS is an affiliate because it is owned by William H. Bartels and certain relatives of Robert G. Brown or entities controlled by them (each of whom are considered affiliates of the Company for related party purposes). Infotech is an affiliate because it is owned by Robert G. Brown. See Note

to the Company's Consolidated Financial Statements -

Related Party Transactions – Domestic Transactions,

above. Mr. Brown and Mr. Bartels are the Majority Stockholders (see below) and founders of SGRP, Mr. Brown was Chairman and an officer and director of SGRP through

May 3, 2018 (

Delaware Litigation Settlement

January 18, 2019,

SGRP, Robert G. Brown, a substantial stockholder of SGRP and former Executive Chairman and director of SGRP, William H. Bartels, a substantial stockholder of SGRP and current Vice Chairman and director and officer of SGRP (together with Robert G. Brown, the "Majority Stockholders"), and Christiaan Olivier, Chief Executive Officer, President and a Director of SGRP, and all

four

of the members of the Governance Committee, namely Lorrence T. Kellar, Chairman, and Jack W. Partridge, Arthur B. Drogue and R. Eric McCarthey (together with Mr. Olivier, the

"225

Defendants"), reached a settlement (the "Settlement") in the By-Laws Action and the

225

Action as such terms are defined below (collectively, the "Actions) and had the Actions then dismissed.

September 4, 2018,

SGRP filed in the Court of Chancery of the State of Delaware (the "Court") a claim, C.A.

No.

2018

0650,

which it amended on

September 21, 2018 (

the "By-Laws Action "), in a Verified Complaint Seeking Declaratory Judgment and Injunctive Relief against the Majority Stockholders. SGRP sought to invalidate the proposed amendments to SGRP's By-Laws put forth in a written consent by the Majority Stockholders (the "Proposed Amendments") because the Board's Governance Committee believed that the Proposed Amendments would have negatively impacted all stockholders (particularly minority stockholders) by (among other things) weakening the independence of the Board through new supermajority requirements, eliminating the Board's independent majority requirement, and subjecting various functions of the Board respecting vacancies on the Board to the prior approval of the holders of a majority of the Common Stock (i.e., the Majority Stockholders), and thus also potentially reducing the representation of SGRP's minority stockholders.

September 18, 2018,

Robert G Brown (

one

of the Majority Stockholders) commenced an action in the Court pursuant to

Del. C.

§225

(a) from (C.A.

No.

2018

00687

-TMR) (the

"225

Action") against the

225

Defendants seeking to remove Lorrence T. Kellar from the Board and add Jeffrey Mayer to the Board.

September 20, 2018,

the Court issued a Status Quo Order in the

225

Action (the "Status Quo Order") that (among other things) seated Jeffrey Mayer on the Board, provided for Lorrence T. Kellar to remain seated on the Board, and effectively increased the Board size from

seven

eight

for the duration of the order.

The By-Laws Action was dismissed upon the filing of the Stipulation of Dismissal. On

January 23, 2019,

the Court granted the dismissal of the

225

Action and vacated its previously entered Status Quo Order entered in that action.

As part of the Settlement, on

January 18, 2019,

the Board of Directors of the Corporation (the "Board") appointed Jeffrey Mayer to the Board and accepted Lorrence T. Kellar's retirement from the Board. The Board also appointed Mr. Mayer to the Board's Compensation Committee on the recommendation of its Governance Committee.

Mr. Mayer was

first

seated on the Board on

November 20, 2018,

pursuant to the Status Quo Order (see Settled Actions above), which order has now been vacated. Mr. Mayer had previously been determined

not

to be independent because he was unilaterally chosen by the Majority Stockholders, so as a result of the Status Quo Order and resulting change in Board composition, SGRP received a notification letter from Nasdaq dated

December 13, 2018,

stating that SGRP

longer satisfies Nasdaq's majority independent director requirement (the "Nasdaq Board Independence Deficiency"), as set forth in Nasdaq Listing Rule

5605

(b)(

In connection with the Settlement, the Governance Committee re-evaluated the independence of Mr. Mayer, based on (among other things) Mr. Mayer's independent business skills and contribution to the Settlement process, determined that he has the requisite independence from the management of the Corporation except for the Related Party Matters (as defined below), and accordingly Mr. Mayer: (a) will be an independent director for all purposes other than any Related Party Matter; (b) will be a non-independent director respecting any Related Party Matter; and (c)

may

participate in discussions but will be excluded and shall recuse himself from any and all decisions of the Board and applicable Board Committees respecting any Related Party Matter. "Related Party Matter" shall mean any payment to or for, or any transaction or litigation with, Robert G. Brown, William H. Bartels, any of their respective family members, or any company or other business or entity directly or indirectly owned or controlled by any

one

or more of Mr. Brown, Mr. Bartels or their respective family members.

The Governance Committee and the Board believe that such re-evaluation and redetermination (together with the

2019

Restated By-Laws described below) will help the Corporation maintain the independent Board desired by the Governance Committee and the Board and required under Nasdaq rules, and correct the Nasdaq Board Independence Deficiency.

In the Settlement the parties agreed to amend and restate SGRP's By-Laws (the

"2019

Restated By-Laws") with negotiated changes to the Proposed Amendments that preserve the current roles of the Governance Committee and Board in the location, evaluation, and selection of candidates for director and in the nominations of those candidates for the annual stockholders meeting and appointment of those candidates to fill Board vacancies (other than those under a stockholder written consent making a removal and appointment, which is unchanged). The Board approved and adopted the

2019

Restated By-Laws on

January 18, 2018.

The Governance Committee and the Board believe that those changes in the

2019

Restated By-Laws will help the Corporation maintain the independent Board desired by them.

In addition to the compromise provisions described above in Settlement Terms above, the Governance Committee and Board accepted certain of the Proposed Amendments with negotiated changes and clarifications that are now contained in the

2019

Restated By-Laws, including the following:

●

Any vacancy that results from the death, retirement or resignation of a director that remains unfilled by the directors for more than

days

may

be filled by the stockholders.

●

Certain stockholder proposals

may

now be made up to the

90th

day prior to the

first

anniversary of the preceding year's Annual Meeting.

●

The Board size has been fixed at

seven

and can only be changed by the stockholders (as provided in the Proposed Amendments).

●

The section requiring majority Board independence has been removed (as provided in the Proposed Amendments).

●

The By-Laws now require that each candidate for director sign a written irrevocable letter of resignation and retirement effective upon such person failing to be re-elected by the required majority stockholder vote.

●

A "super majority" vote of at least

75%

of all directors is now required for (and any

two

directors can block) any of the following (as provided in the Proposed Amendments):

Issuance of more than

500,000

shares of stock (other than under the Corporation's stock compensation plans);

Issuance of any preferred stock;

Declaration of any non-cash dividend on the shares of capital stock of the Corporation;

By-Laws modification;

Formation or expansion of the authority of any Committee or subcommittee; or

Appointment or removal of any Committee director.

The descriptions of the negotiated compromise

2019

Restated By-Laws above are qualified in their entirety by reference to the copy of the

2019

Restated By-Laws.

As part of the Settlement of the Actions, the parties to the Actions executed a Limited Mutual Release Agreement limited to the Actions and subject to specific exclusions (the "Delaware Releases") and the parties to the Actions mutually agreed upon Stipulations of Dismissal ending those actions without prejudice and without admission or retraction of any fact cited therein, and the parties caused them to be filed with the Court on

January 18, 2019.

The Delaware Releases are limited to matters related to those actions described therein and subject to specific exclusions, and the parties expressly preserved all unrelated actions and claims. Accordingly, there remain a number of unresolved claims and actions (each a "Non-Settled Matter") between the Company and the following Related Parties (as defined below), including (without limitation), post termination claims by and against SPAR Business Services, Inc. (which is now in a voluntary bankruptcy proceeding in Nevada), and SPAR Administrative Services, Inc., the lawsuit by SPAR InfoTech, Inc., against the Company, and the Bartels Advancement Claim and the claim by Mr. Brown for a similar advancement (see

Advancement Claims

, below).

Post-Settlement Disputes Involving Board Independence.

Robert G. Brown Demands Directors Either Support His Positions or Resign

The co-founders of SPAR Group, Inc. ("

SGRP

" and, together with its subsidiaries, the "

Company

"), Mr. Robert G. Brown and Mr. William H. Bartels, are significant stockholders of SGRP. Mr. Brown was Chairman and an officer and director of SGRP through

May 3, 2018 (

when he retired), and Mr. Bartels is Vice Chairman and a director and officer of SGRP. Together Mr. Brown and Mr. Bartels (the "

Majority Stockholders

") beneficially own as a group a total of approximately

57.6%

(or

12.0

million shares) of SGRP's common stock (the "

SGRP Common Stock

").

July 10, 2019,

Mr. Robert G Brown wrote in an email communication to Arthur B. Drogue, an independent director and Chairman of the SGRP Board, to which he copied Mr. Bartels, Mr. Peter W. Brown and Mr. Jeffery Mayer (each a director), expressing Mr. Brown's concerns with the positions of certain of SGRP's directors (the "

July 10

"), including the independent directors. The concerns listed in the

July 10

Email include SGRP's: (

) initiation of the legal proceedings to maintain the independence of the Board and which lead to the Delaware Settlement (as defined below); (

) opposition to the terms and conditions of the reorganization of SPAR Business Services, Inc., a Nevada corporation formerly known as SPAR Marketing Services, Inc. ("SBS"), that the Board and management of SGRP deemed to be unfavorable to SGRP and its stockholders without appropriate settlement terms and releases (See SGRP's Current Report on Form

-K as filed with the SEC on

August 8, 2019,

respecting the negotiated SBS bankruptcy settlement); (

) opposition to the election or appointment of director candidates to the Board whom the independent directors deemed

not

independent under applicable NASDAQ and SEC rules, including opposing the nomination of Mr. Panos Lazaretos, a long-time associate of the Majority Stockholders and the Majority Stockholders' preferred director candidate (see

Search for a Replacement Independent Director

, below); and (

) refusal to reimburse the alleged expenses of entities owned by, or affiliated with, the Majority Stockholders, that have

not

been approved by the Audit Committee and SGRP's management (collectively, the "

Brown Demands

"). Mr. Bartels has since repeated several of the Brown Demands. Mr. Brown further demanded in the

July 10

Email that the directors change their positions and accept the Brown Demands or resign. The Company believes that neither the acquiescence to the Brown Demands nor the resignations of directors who oppose the Brown Demands would be in the best interests of SGRP and all of its stockholders. The foregoing description of the

July 10

Email is qualified in its entirety by reference to the

July 10

Email filed with this Current Report on Form

-K (this "

Report

") as Exhibit

99.1,

which is incorporated herein by reference.

Background: Recent Actions of the Majority Stockholders and their Control Group

June 1, 2018,

June 29, 2018,

July 5, 2018,

August 6, 2018

and

January 25, 2019,

the Majority Stockholders each filed an amended Schedule

13D

with the Securities and Exchange Commission (the "SEC"), in which they each acknowledged that they

"may

be deemed to comprise a 'group' within the meaning of [the Securities Exchange Act of

1934]"

and

"may

act in concert with respect to certain matters", including various listed items. Pursuant to those Schedule

13D

filings, the Majority Stockholders have acted as a control group and adopted written consents to unilaterally, and without the participation of SGRP's Board of Directors (the "

Board

"), Governance Committee or other stockholders, endeavoring to: approve the selection, appointment and election of Mr. Jeffrey A. Mayer as a director of SGRP; remove Lorrence T. Kellar as an independent director of SGRP; and change SGRP's By-Laws in order to (among other things) remove authority from the Board through new supermajority requirements and stockholder only approvals (the "

Proposed Amendments

"), which the Governance Committee believed weakened the Board's independence, and which were contested by SGRP and ultimately concluded in a negotiated settlement that included Mayer's appointment, Mr. Kellar's forced retirement, and the adoption of SGRP's Amended and Restated By-Laws on

January 18, 2019 (

the "

Delaware Settlement

"). See PART II, Item

Legal Proceedings

RELATED PARTIES AND RELATED PARTY LITIGATION

in SGRP's Quarterly Report on Form

-Q as filed with the SEC on

May 15, 2019.

In the Delaware Settlement, the parties agreed to amend and restate SGRP's By-Laws (the "

2019

Restated By-Laws

") with negotiated changes to the Proposed Amendments that preserved the current roles of the Governance Committee and Board in the location, evaluation, and selection of candidates for director and in the nominations of those candidates for the annual stockholders' meeting and appointment of those candidates to fill Board vacancies (the "

Nomination Process

") other than those under a stockholder written consent making a removal and appointment, which is unchanged).

Prior to SGRP's

2019

annual stockholders' meeting (the "

2019

Annual Meeting

"), Jack Partridge, an independent director of SGRP, retired effective as of the close of business on

May 15, 2019.

Mr. Partridge indicated that he was prepared to serve on the Board for another year, but based on Mr. Partridge's discussions with Mr. Bartels and the preliminary vote totals (including Mr. Brown's votes), Mr. Partridge believed that the Majority Stockholders would vote "against" him, so he elected to retire before the

2019

Annual Meeting. Following the departure of Messrs. Kellar and Partridge, SGRP had

two

fully independent directors, Arthur B. Drogue and R. Eric McCarthey. Jeffery Mayer is also considered independent except for related party matters.

Threatened Removal of Arthur B. Drogue as a Director

July 12,

Mr. Brown sent in an email communication to Mr. Drogue, with a copy to Mr. Bartels, a draft Amendment

No.

to Schedule

13D

from Mr. Brown (the "

Draft Schedule

13D

")that indicated the Majority Stockholders intended to deliver a written consent action to SGRP resolving to remove Mr. Drogue from the Board. The foregoing description of the Draft Schedule

13D

is qualified in its entirety by reference to the Draft Schedule

13D

filed with this Report as Exhibit

99.2,

which is incorporated herein by reference. In addition to the

July 10

Email and the Draft Schedule

13D,

Mr. Drogue engaged in various telephonic conversations with the Majority Stockholders in connection with the matters described in the

July 10

Email and the Draft Schedule

13D

where he reiterated his position and the position of the independent directors that the Board was acting, and would continue to act, in the best interests of SGRP and all of its stockholders, including by maintaining a majority independent Board, as required by applicable NASDAQ and SEC rules and by refusing to pay expenses for affiliates of the Majority Stockholders when the payment of those expenses were

not

approved by management and the Audit Committee and were

not

in the best interests of SGRP and its stockholders.

During such conversations, the Majority Stockholders said that Mr. Drogue and any other directors of SGRP who have

not

been complying with the Brown Demands would need to acquiesce to the Brown Demands or resign from the Board.

In response to the

July 10

Email, the Brown Demands and the Draft Schedule

13D,

Mr. Drogue sent an email, dated

July 24, 2019,

to Mr. Bartels (the "

Response to Brown Demands

") outlining the reasons the recent actions taken, and proposed to be taken, by the Majority Stockholders are

not

in the best interests of all SGRP stockholders, and Mr. Drogue further indicated that he would

not

comply with the Brown Demands and would

not

resign. The foregoing description of the Response to Brown Demands is qualified in its entirety by reference to the Response to Brown Demands filed with this Report as Exhibit

99.3,

which is incorporated herein by reference.

After Mr. Drogue sent the Response to Brown Demands, he received an email correspondence from Mr. Bartels on

August 5, 2019,

dated

August 3, 2019,

in which Mr. Bartels reiterated certain of the Brown Demands and that the Majority Stockholders have the right to remove any director (the "

August 3

"). The

August 3

Email: (

) erroneously indicates that certain NASDAQ independence and director nomination rules do

not

apply to SGRP (incorrectly citing an exception applicable to underwritings, senior debt and the like); (

) reiterates the view of the Majority Stockholders that Mr. Lazaretos meets NASDAQ and SEC independence requirements and should be immediately appointed to the Board (see

Search for a Replacement Independent Director

, below); and (

) reminds Mr. Drogue of the right of the Majority Stockholders to remove directors at any time and for any reason. The foregoing description of the

August 3

Email is qualified in its entirety by reference to the

August 3

Email filed with this Report as Exhibit

99.4,

which is incorporated herein by reference.

Failure to Maintain a Majority of Independent Directors on the Board; Failure to Comply with NASDAQ Audit Committee Composition Requirements

The Board currently has only

two

independent directors and

one

director classified as independent on all but related party matters out of

six

(resulting from Jack W. Partridge's

May 2019

forced retirement), which is less than a majority of the current Board. If Mr. Drogue is removed or resigns, the Board would only have

one

independent director out of five. SGRP's Audit Committee, Compensation Committee, Governance Committee and Special Committee would continue to consist of

one

independent director until the Governance Committee and the Board secure duly qualified independent director candidates to replace Messrs. Partridge and Drogue. The current composition of the Board and its Audit Committee, Compensation Committee and Governance Committee is in violation of the NASDAQ rules and such committees' respective charters.

Despite the actions of the Majority Stockholders, the Board and the Governance Committee have determined that the Board should always have a majority of independent directors as required by NASDAQ and the SEC. The Board and Governance Committee have continued to follow the Nomination Process and search for an independent director replacement for Mr. Partridge. SGRP's Statement of Policy Regarding Director Qualifications and Nominations dated as of

May 18, 2004,

requires that (among other things) that a majority of the directors of the Board, and all of the members of its Audit Committee, Compensation Committee and Governance Committee, be independent directors.

Additionally, NASDAQ Listing Rule

5605

(b)(

) requires a majority of the board of directors of a listed company to consist of independent directors, as defined in Rule

5605

(a)(

), and NASDAQ Listing Rule

5605

(c)(

) requires the audit committee of a listed company to be composed of at least

three

members, all of whom must be independent (together, the "

Board Independence Rules

"). When similar circumstances occurred last year in connection with the forced retirement of Lorrence Kellar, SGRP received a notification letter from NASDAQ dated

December 13, 2018,

stating that SGRP

longer complied with NASDAQ's Board Independence Rule and had approximately

days to regain compliance with the NASDAQ Listing Rules.

July 24, 2019,

SGRP received a phone call from a NASDAQ representative expressing concern with respect to (

) the Board's lack of independence following Mr. Partridge's forced retirement; (

) the number of independent directors serving on the Audit Committee, Compensation Committee and Governance Committee (which, as of

July 24, 2019,

was

two

members on each such committee); and (

) the independence of Mr. Lazaretos, who, along with several other director candidates, is currently under review by the Governance Committee.

July 25, 2019,

SGRP received a letter from NASDAQ notifying SGRP that it was

not

in compliance with the Board Independence Rules and that SGRP has until the earlier of: (

) the next annual stockholders' meeting of SGRP or

May 15, 2020,

or (

)

November 11, 2019,

if the next annual stockholders' meeting is held before

November 11, 2019 (

the "

Board Independence Deadline

"). Accordingly, the forced retirement of Mr. Partridge and the threatened removal of Mr. Drogue, in each case directly resulting from the actions of the Majority Stockholders,

may

cause SGRP to be delisted by NASDAQ for failing to adhere to the Board Independence Rules.

The independent directors of the Board and the management of SGRP believe that if Mr. Drogue is ultimately removed from the Board and the directors selected for nomination and election by the Majority Stockholders comprise a majority of the Board, the newly constituted and potentially non-independent Board

may

cause NASDAQ to reconsider and escalate its deadline for corrective action by the Company and proceed with delisting SGRP for failure to comply with the Board Independence Rules (as defined below).

Search for a Replacement Independent Director

Even before Mr. Partridge's forced retirement, the Majority Stockholders lobbied (and have continued to lobby) the Board to add Mr. Lazaretos, a resident of Greece, as a director of SGRP. Mr. Lazaretos has been associated with the Majority Stockholders since

2000

when he

first

worked for SGRP. He has since provided services to SPAR Infotech, Inc. ("

Infotech

"), which is owned by Mr. Brown, and the costs of those services were included in Infotech's lawsuit against SGRP respecting "alleged" unreimbursed expenses in the acquisition of a Brazil subsidiary.

At and since the

May

Board meeting, SGRP's Governance Committee has insisted on following the Nomination Process agreed to in the Delaware Settlement to fill the vacancy created by Mr. Partridge's forced retirement. Mr. Brown and Mr. Bartels have repeatedly tried to circumvent the agreed upon Nomination Process to immediately put Mr. Lazaretos on the Board. Mr. Bartels unilaterally invited Mr. Lazaretos to the

May

Board meeting before Mr. Partridge's forced retirement and sought to have Mr. Lazaretos appointed to the Board immediately. Additionally, Mr. Brown generally has been copying Mr. Lazaretos on his emails to the Board and its committees.

Complying with the stockholder approved Nomination Process, SGRP's Governance Committee has recently conducted a search and evaluation for a new independent director to replace Mr. Partridge. Of the

four

finalists,

two

candidates were recommended by the Majority Stockholders (including Mr. Lazaretos), and

two

candidates were identified by an independent,

third

-party executive search firm (the "

Independent Search Firm

"). An outside evaluation conducted by the Independent Search Firm found Mr. Lazaretos to be unqualified to be a public company director and that other identified director candidates under consideration by the Governance Committee were better qualified to serve as directors of SGRP. An independent Delaware law firm (the "

Delaware Law Firm

") has determined that Mr. Lazaretos does

not

satisfy the NASDAQ, SEC and Delaware independence requirements. Pursuant to its authority under SGRP's governing documents, SGRP's Governance Committee has determined that Mr. Lazaretos does

not

qualify as an independent director, based on feedback from references, Management, the Delaware Law Firm, and its own evaluations and determinations respecting compliance with applicable SEC and NASDAQ independence and other standards.

However, the Majority Stockholders continue to insist upon the immediate appointment of Mr. Lazaretos as a director. In fact, on

August 8, 2019,

Mr. Bartels sent an email to Mr. Drogue attaching an unauthorized and unsolicited draft press release announcing the appointment of Mr. Lazaretos as a director, which has

not

happened (the "

Draft Press Release

"). The Draft Press Release repeatedly refers to Mr. Lazaretos as an independent director, despite (

) the contrary determinations made by the Delaware Law Firm and the Governance Committee and (

) the initial verbal indications from SGRP's contact person at NASDAQ that Mr. Lazaretos

may

not

be viewed by NASDAQ as independent.

SGRP's Governance Committee believes that if the Majority Stockholders put Mr. Lazaretos on the Board through a written consent action (which is within their rights), the Board size would have to be increased (requiring stockholder approval) and additional independent directors would need to be added to satisfy the Board Independence Rules.

Although the Majority Stockholders can eventually appoint a director on the Board through their right to act by written consent, they cannot determine independence. Only the Governance Committee can determine independence under the NASDAQ rules and SGRP's governing documents. The most recent amendments to SGRP's governing documents were agreed to by the Majority Stockholders in the Delaware Settlement and continued the Nomination Process (including the continuation of the Governance Committee's authority to identify, select and nominate qualified director candidates).

SGRP's Governance Committee currently plans to submit a final nominee to the full Board later this month, and it will be arranging candidate interviews at its upcoming meeting on

August 15, 2019.

SGRP intends to submit to NASDAQ documentation, including biographies of any new directors, evidencing compliance with the Board Independence Rules

later than the Board Independence Deadline.

In the event SGRP does

not

regain compliance with the Board Independence Rules by the Board Independence Deadline, or if more independent directors are removed, or if more non-independent directors are added, NASDAQ

may

delist SGRP's securities before the Board Independence Deadline. Repeated violations or intentional violations by the Majority Stockholders could lead to an accelerated or immediate delisting by NASDAQ.

Risks of a NASDAQ Delisting and Penny Stock Trading

There can be

assurance that SGRP will be able to correct the current or any future NASDAQ rule deficiencies described herein, or that if timely corrected, SGRP will be able to comply in the future with such NASDAQ rules. If SGRP fails to gain compliance with or further breaches such NASDAQ rules, NASDAQ

may

commence delisting procedures against SGRP (during which SGRP

may

appeal the delisting determination based on the current breach to a NASDAQ hearings panel). Repeated violations or intentional violations by the Majority Stockholders could lead to an accelerated or immediate delisting. If shares of SGRP Common Stock are ultimately delisted by NASDAQ, the market liquidity of the SGRP Common Stock could be adversely affected and its market price could decrease, even though such shares

may

continue to be traded over-the-counter, due to (among other things) the potential for increased spreads between bids and asks, lower trading volumes and reporting delays in over-the-counter trades and the negative implications and perceptions that could arise from such a delisting.

In addition to the foregoing, if the SGRP Common Stock is delisted from NASDAQ and is traded on the over-the-counter market, the application of the "penny stock" rules could adversely affect the market price of the SGRP Common Stock and increase the transaction costs to sell those shares. The SEC has adopted regulations which generally define a "penny stock" as any equity security

not

listed on a national securities exchange or quoted on NASDAQ that has a market price of less than

$5.00

per share, subject to certain exceptions. If the SGRP Common Stock is delisted from NASDAQ and is traded on the over-the-counter market at a price of less than

$5.00

per share, the SGRP Common Stock would be considered a penny stock. Unless otherwise exempted, the SEC's penny stock rules require a broker-dealer, before a transaction in a penny stock, to deliver a standardized risk disclosure document that provides information about penny stock and the risks in the penny stock market, the current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. Further, prior to a transaction in a penny stock occurs, the penny stock rules require the broker-dealer to provide a written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's agreement to the transaction. If applicable in the future, the penny stock rules

may

restrict the ability of brokers-dealers to sell the SGRP Common Stock and

may

affect the ability of investors to sell their shares, until the SGRP Common Stock is

longer a penny stock.

Advancement Claims

In an email to Arthur Drogue, SGRP's Chairman, on

October 3, 2018,

and in subsequent calls with him, William H. Bartels, a substantial stockholder of SGRP and current Vice Chairman and director and officer of SGRP (and

one

of the Majority Stockholders), requested indemnification for his legal fees and expenses incurred in his defense of the By-Laws Case brought by SGRP against him and Mr. Brown.

November 2, 2018,

in a letter from his counsel, Mr. Bartels demanded advancement of his proportionate share of the legal fees and expenses incurred in his defense of the By-Laws Case against him.

SGRP's Audit Committee determined on

November 5, 2018,

that Mr. Bartels was

not

entitled to indemnification by SGRP for his fees and expenses incurred in his defense of the By-Laws Case because (among other things) Mr. Bartels was sued predominately as a stockholder in the By-Laws Case and

not

as a director and the By-Laws Case alleged numerous instances of improper conduct by Mr. Bartels that could preclude indemnification under the Corporation's By-Laws. However, the Audit Committee made

determination regarding improper conduct or the issue of advancement.

November 28, 2018,

Mr. Bartels filed with the Court a Verified Complaint For Advancement against SGRP (the "Bartels Advancement Complaint") seeking advancement of his proportionate share of the legal fees and expenses incurred in the By-Laws Case against him ("Allocated By-Laws Expenses"). In evaluating the Bartels Advancement Complaint, counsel advised SGRP that generally advancement was somewhat different than indemnification in that money was advanced on the condition (which Bartels have accepted in writing) that the advances be repaid if indemnification was determined to be improper on the grounds of improper conduct or otherwise.

December 2018

SGRP reached agreement with Mr. Bartels through counsel to conditionally make his reasonably documented Allocated By-Laws Expenses (the "Bartels Advancement Settlement"), pursuant to which payment to Mr. Bartels of the accepted Allocated By-Laws Expenses was made in

April 2019.

If Mr. Bartels is ultimately determined

not

to be entitled to indemnification, he could still be obligated to return all amounts advanced to him by SGRP.

December 3, 2018,

Robert G. Brown sent an email to Mr. McCarthey, Chairman of SGRP's Audit Committee, demanding advancement from SGRP for his proportionate share of the legal fees and expenses incurred by him in the By-Laws Case against him (the "Brown Advancement Demand").

Counsel advised that Brown had been sued as a stockholder and conspirator in the By-Laws Action against him, and

not

as a director, and they didn't believe Brown could reasonably and successfully bring or wage a lawsuit for advancement. SGRP, with the support of its Audit Committee, rejected the Brown Advancement Demand, stating that "The bylaw action does

not

sue you in your capacity as an officer or director of the company. Section

6.02

of the bylaws requires the proceeding subject to advancement to be brought "by /reason of the Indemnitee's position with the Corporation or any of its subsidiaries … at the request of the Corporation …." This provision does

not,

and was

not

intended to, cover shareholders for advancement.

January 27, 2019,

Mr. Brown sent a draft of his proposed Delaware litigation complaint in an email to Arthur Drogue, SGRP's Chairman, threatening to sue SGRP respecting the Brown Advancement Demand, which he repeated in an email to Mr. McCarthey on

February 2, 2019.

such complaint has been filed by Mr. Brown through

May 6, 2019,

and SGRP continues to deny the Brown Advancement Demand.

SBS Bankruptcy and Settlement

August 6, 2019,

SPAR Group, Inc. ("SGRP", the "Corporation" or the "Registrant"), and its subsidiaries SPAR Marketing Force, Inc., a Nevada corporation ("SMF"), and SPAR Assembly & Installation, Inc., f/k/a SPAR National Assembly Services, Inc., a Nevada corporation ("SAI", and collectively with SGRP and SMF, the "SGRP Parties"), submitted in the SBS Chapter

Case (as defined below) in the U.S. District for Nevada their Compromise and Settlement Agreement with SPAR Business Services, Inc., a Nevada corporation formerly known as SPAR Marketing Services, Inc., debtor and debtor-in-possession ("SBS"), and SBS, LLC, a Nevada limited liability company "SBS LLC" and together with SBS, the "SBS Parties"). SGRP and its subsidiaries

may

be referred to as the "Company" and file reports on a consolidated basis with the Securities and Exchange Commission ("SEC").

August 6, 2019,

with the support of (among others, the Clothier and Rodgers plaintiffs and the Company), the Court approved the Settlement Agreement and the SBS Reorganization pursuant to the SBS Plan (as all such terms are defined below).

Background: Recent Actions of the Majority Stockholders and their Control Group

The co-founders of SGRP, Mr. Robert G. Brown and Mr. William H. Bartels, are significant stockholders of SGRP. Mr. Brown was Chairman and an officer and director of SGRP through

May 3, 2018 (

when he retired), and Mr. Bartels is Vice Chairman and a director and officer of SGRP. Together Mr. Brown and Mr. Bartels (the "Majority Stockholders") beneficially own, as a group, a total of approximately

57.6%

(or

12.0

million shares) of SGRP''s common stock (the "SGRP Common Stock"). On

June 1, 2018,

June 29, 2018,

July 5, 2018,

August 6, 2018

and

January 25, 2019,

the Majority Stockholders each filed an amended Schedule

13D

with the SEC, in which they each acknowledged that they

"may

be deemed to comprise a ''group'' within the meaning of [the Securities Exchange Act of

1934]"

and

"may

act in concert with respect to certain matters", including various listed items. See Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies -- Related Parties and Related Party Litigation

and

SBS Bankruptcy,

in SGRP's Quarterly Report on Form

-Q as filed with the SEC on

May 15, 2019.

third

parties. The Company believes that high quality Field Administrator performances are essential to the effective delivery and performance of their services by the Field Specialists.

SBS provided the services of Field Specialists from time to time to the SMF and SAI, and SBS is an affiliate of and related party to the Company, but SBS is

not

under the control of or part of the consolidated Company and has

not

provided services or been a vendor to the Company Parties since

August 2018 (

when SBS' termination by the Company took effect). SBS is an affiliate of and a related party to the Company because it is owned by an entity owned and controlled by Robert G. Brown and prior to

December 2018

was owned by Robert G. Brown and William H. Bartels.

SPAR Administrative Services, Inc. ("SAS"), provided under contract the services of Field Administrators from time to time to SMF and SAI, and SAS is an affiliate of and related party to the Company, but SAS is

not

under the control or part of the consolidated Company and has

not

provided services or been a vendor to the SGRP Parties since

August 2018 (

when SAS' termination by the Company took effect). SAS is an affiliate of and a related party to the Company because it is owned by William H. Bartels and entities owned and controlled by family members of Robert G. Brown and prior to

January 1, 2015,

was owned by Robert G. Brown and William H. Bartels.

In terminating SBS and SAS and engaging a new independent vendor to provide the same services, the Company has saved approximately

$900,000

per year. For services previously provided by SBS and SAS to SMF and SAI, see Note

to the Company's Consolidated Financial Statements -

Related Party Transactions – Domestic Related Party Services,

in SGRP's Quarterly Report on Form

-Q as filed with the SEC on

May 15, 2019.

SBS Bankruptcy

The Company received

services from SBS after the Company's termination of SBS' services took effect in

August 2018.

Furthermore, even though SBS was solely responsible for its operations, methods and legal compliance, SBS continued to claim that the Company was somehow liable to reimburse SBS for its expenses in those proceedings. The Company does

not

believe there is any basis for such claims and would defend them vigorously. The Company anticipated that SBS would use every available means to attempt to collect reimbursement from the Company for the foreseeable future for all of its post-termination expense and other claims ("SBS Claims").

November 23, 2018,

SBS petitioned for bankruptcy protection under chapter

of the United States Bankruptcy Code in the U.S. District for Nevada (the "SBS Chapter

Case"), so the pre-petition claims of SBS' creditors then had to be made in the SBS Chapter

Case. See Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies -- SBS Bankruptcy,

in SGRP's Quarterly Report on Form

-Q as filed with the SEC on

May 15, 2019.

Accordingly, the Company’s management ("Management") recommended, and the Audit Committee agreed, that it would be in the best interest of all stockholders of the Company to submit the SGRP and SMF claims against SBS in the SBS Chapter

Case in order to preserve their value (including as an offset against the SBS Claims), particularly since those claims against SBS exceed amounts potentially owed to SBS.

A review of SBS' previous filings in the SBS Chapter

Case shows that SBS has listed the Company as a contingent, unliquidated, disputed creditor, but in its most recently filed amended reorganization plan in the SBS Chapter

Case, SBS reflected an unspecified receivable in the amount of

$300,000

due from the Company, which alleged claim was to be excluded from the assets available to creditors and retained by SBS to pursue after plan confirmation.

March 18, 2019,

the Company filed claims in the SBS Chapter

Case seeking reimbursement for

$378,838

for SMF's funding of the Affinity Security Deposits and

$12,963

for SMF's funding of the field payment checks that would have otherwise bounced, and

$1,839,459

for indemnification of SGRP for the Clothier settlement (see below) and legal costs and an unspecified amount for indemnification of SGRP for the Hogan action (see Note

to the Company's Consolidated Financial Statements,

Commitments and Contingencies

Legal Matters

SBS Clothier Litigation

, below) in SGRP's Quarterly Report on Form

-Q as filed with the SEC on

May 15, 2019,

and other to be discovered and identified claims (the "SGRP Claims").

Settlement Agreement

Management recommended, and the Audit Committee agreed, that it would be in the best interest of all stockholders to oppose SBS's proposed reorganization unless a reasonable settlement could be reached, and that any settlement should include a reasonable disposition of the SGRP Claims and mutual releases of all other claims. After extensive negotiation between the SBS Parties and the SGRP Parties, the SBS Parties and the SGRP Parties entered into the Compromise and Settlement Agreement dated as of

July 26, 2019,

and signed and released over the succeeding weekend (the "Settlement Agreement").

The Settlement Agreement provides for a mutual release of claims (including the SBS Claims and the SGRP Claims), except for the following:

(i)

Subject to plan confirmation, SBS will pay to the applicable SGRP Parties the SGRP Claims (before discount,

$2,231,260

) discounted to their pro rata share (among all creditors of the same class) of the New Value Contribution (after discount, est.

$111,563

) and of the Settlement Contribution in

twenty-four

(

) equal monthly amounts (after discount, est.

$61,370

), starting

January 2020

and without any interest (collectively, the "Discounted Claim Payments").

(ii)	SMF will pay to SBS the Proven Unpaid A/R upon its determination (as described below).

The Discounted Claim Payments reflect a substantial discount (

92%

) over the total SGRP Claims, do

not

bear interest, are unsecured, and are dependent on the success of the reorganized SBS business (as to which the Company expresses

opinion),

In the Settlement Agreement, the parties agreed to have Rehmann Robison, a financial and accounting services firm, independently determine, based on parameters set forth in the Settlement Agreement: (i) whether SMF paid all amounts for allowable reimbursable expenses (net of all applicable credits) that were properly invoiced to SMF and the amounts of allowable reimbursable expenses that (

) were paid to vendors for expenses by SBS in

2018

for allowable reimbursable expenses (net of all applicable credits) and

not

paid to SBS by SMF and (y) should have been invoiced but were

not

invoiced to SMF and (ii) the amount put into the SBS payroll accounts, including the payments for the amounts due to SBS for the independent contractors ("IC's") (which, following the

2017

methodology of the SBS controller, includes both the net amount to be paid by SBS to the IC's and the amount to be withheld by SBS from the payments to the IC's for workman's compensation and liability insurance), plus the mark-up of

2.9638%

to SBS for

2018.

Rehmann Robison will use the parameters identified in Schedule

to the Company's Consolidated Financial Statements -

Related Party Transactions – Domestic Related Party Services,

in SGRP's Quarterly Report on Form

-Q as filed with the SEC on

May 15, 2019.

To the extent Rehmann Robison determines that any such net allowable reimbursable expenses were

not

paid and are still owed to SBS ("Proven Unpaid AR"), the parties will accept the determination of Rehmann Robison as final and binding.

In the Settlement Agreement, the SGRP Parties agreed to withdraw their opposition to the SBS reorganization and vote in favor of SBS' First Amended Chapter

Plan of Reorganization, as amended by the Settlement Agreement (the "SBS Plan").

The Company believes the financial impact of the Settlement Agreement is immaterial since the SGRP Claims already have been all expensed or reserved, and there can be

assurance that the Discounted Claim Payments will ever be received by the Company (particularly if the reorganized SBS business does

not

succeed). However, the Company believes that the mutual releases in the Settlement Agreement provide valuable relief from potential future claims and litigation by SBS respecting the Company's past involvement with SBS.

SBS Reorganization

The SBS Plan generally does

not

describe the intended business of how, or manner in which, SBS intends to operate after its reorganization (if approved) (the "SBS Reorganization"). Those descriptions are contained in various disclosure documents, the most recent of which is Robert G. Brown's sworn Declaration of Robert G. Brown In Support of Debtor's Brief In Support Of Confirmation Of First Amended Chapter

Plan Of Reorganization And Final Approval Of Accompanying Disclosure Statement; And Omnibus Reply To Objections dated

July 29, 2019 (

the "Declaration").

August 6, 2019,

with the support of (among others, the Clothier and Rodgers plaintiffs and the Company, the Court approved the Settlement Agreement and the SBS Reorganization pursuant to the SBS Plan.

In paragraphs

and

of his Declaration cited below, Robert G. Brown, under penalty of perjury, described key elements of his plan for the intended business of how, and manner in which, SBS intends to operate after the SBS Reorganization.

Potential Competition from and Confusion respecting SBS

Business segment. SBS is a business to business company using Independent Contractors ("IC's"). The SBS services are referred to as merchandising and the IC's, merchandisers. SGRP was a customer of SBS obtaining clients (e.g.,

Client names omitted by the Company due to

SGRP's c

onfidentiality obligations to such Clients

) and then SGRP subcontracted client work to SBS. SGRP as the customer was responsible for administrating the IC's (which they did through SPAR Administrative Services, Inc. ("SAS") instead of hiring their own employees), handling payroll, obtaining clients, providing working capital and recruiting merchandisers. SBS will continue to provide the services SBS offered to SGRP and SBS's customers will be responsible for what SGRP was responsible for."

The Declaration indicates that SBS' clients will provide their own Field Administrators to schedule and administer the SBS' Field Specialists, but does

not

specify who would provide the Field Administrators to SBS' clients if

not

internally provided by the client. Internal provision by the ultimate clients of Field Administrators was

not

SBS' previous model and is

not

industry practice. The Company believes that SAS has had

Field Administrators since

August 2018

and was

not

named by SBS as a possible supplier. However, SAS is a member of Affinity Insurance Ltd. ("Affinity"), while SBS is

not

an Affinity member, and the Declaration implies that the necessary workers compensation and liability insurance will be provided by SBS through SAS and Affinity to SBS' Field Specialists, which

may

put the Affinity security deposit repayments owed to SMF by SAS at further risk. See Note

to the Company's Consolidated Financial Statements -

Related Party Transactions –

Affinity Insurance

in SGRP's Quarterly Report on Form

-Q as filed with the SEC on

May 15, 2019.

Assuming SBS is successful in its reorganized business model (as to which the Company expresses

opinion), SBS will likely be competing (at least in part) with the Company respecting (i) the provision of field merchandising services directly to the Company's clients and (ii) the provision of Field Specialists to competitors of the Company to use in the provision of field merchandising services in competition against the Company.

SBS has the unlimited right to use the SPAR name in the United States under a perpetual royalty free license, whether or

not

in competition with the Company. See Note

to the Company's Consolidated Financial Statements -

Related Party Transactions –

Other Related Party Transactions and Arrangements

in SGRP's Quarterly Report on Form

-Q as filed with the SEC on

May 15, 2019.

Assuming SBS continues to use the SPAR name in its reorganized business (and the Company believes it will do so), there will be great potential for confusion with the services marketed and provided by the Company's domestic subsidiary "SPAR Marketing Force, Inc." In at least

places in the Declaration, Mr. Brown implies a relationship with the SPAR Group (SGRP) or its people, know how or technology. This potential for confusion will be even greater if any of SBS' directors are involved with SBS (see below) after its reorganization.

Potential Involvement of SGRP Directors in Reorganized SBS

“

15.

Management

. In addition to me (who will work without compensation) SBS will work with experienced executives in IT, sales, field operations and administration for a share of profits and/or equity. These include Brown, Pat Franco, Bill Bartels, Peter Brown and the others with similar experience. Franco has over

years' experience in technology and merchandising. . . . Bartels is Vice Chairman and most senior sales person at SGRP responsible for over

70%

of the current SGRP US revenue from clients and acquisitions. Bartels will help with the initial customer contacts while keeping the SGRP board fully apprised of his work and the work of SBS. Peter Brown worked for SPAR Administrative Service for a number of years and negotiated the acquisition of a subsidiary in Brazil for SGRP which is now SGRP's biggest international subsidiary. He is on the board of SPAR Brazil LLC, SGRP and Affinity insurance company. All management have agreed to work for equity or a share of the profits and PM AM is included in the budget.”

In an email to William H. Bartels and Peter Brown, James R. Segreto, the Company's Chief Financial Officer, asked each of them if either would have any involvement with the reorganized SBS, as sworn by Robert G. Brown in the Declaration.

Bartels responded as follows:

•

I have

ownership in SBS or any related party.

•

I am

not

receiving and will

not

receive any salary, sales commission, or finder's fee from or share of sales, revenues or profits of SBS or any related party.

•

"I do

not

consider myself part of SBS "management team". "

•

"I don’t believe anything above is in conflict with the statements made by [Robert G.] Brown."

•

"In my view my potential involvement was supplying a list for initial customer."

•

"Being fully aware of my fiduciary responsibilities to SGRP I will always act in the best interest of all SGRP shareholders."

Peter Brown responded:

•

"I am

not

going to be attempting to represent the accuracy of Bob's statement in any way and will

not

respond to Jim at this time."

•

"I will serve all SGRP shareholders to the best of my ability."

Accordingly, the Company believes that Mr. Bartels does

not

intend to be directly involved with the reorganized SBS. It is unclear how much involvement his Company, SAS, will have with the reorganized SBS.

Peter Brown has

not

disclaimed any involvement with the reorganized SBS.

Outside counsel have advised that any involvement with SBS by any SGRP director

may

be a violation of Delaware law and SGRP's Ethics Code, could put SGRP at substantial risk for liability for future potential SBS litigation, and could possibly make SGRP a liability shield for SBS, which involvement they advised was very unlikely to benefit the Company and all its shareholders.

The order confirming the SBS Plan expressly preserves the Companies rights as follows: "The SGRP Stipulations do

not

seek Bankruptcy Court’s approval of, and the parties thereto have

not

agreed to, any direct or indirect waiver or violation of any applicable State or Federal Law or the governing documents, codes or policies of any entity party to the SGRP Stipulations."

In Summary:

The Company and certain other significant SBS creditors have settled and agreed to vote (and on

August 6, 2019,

voted) in favor of the SBS Plan to enable SBS to independently operate its reorganized business, but according to the SBS Plan and disclosure documents ,

none

are taking any equity in SBS or providing any financing or credit to SBS. A vote in favor of the SBS Plan was

not

a vote to support any of the SBS business plan specifics or to change or waive any of the governing documents or policies of SGRP or any other party.

SBS is

not

and will never be part of the Company, the Company will never in any way use or support (financially or otherwise) SBS' reorganized business, and the Company will caution its clients and others accordingly.

The Company believes SBS will continue to imply a connection either thought use of the SPAR name and or common management or affiliations, potentially leading SBS' customers, Field Specialists, and governmental regulators to wrongly look to the Company to fulfill unsatisfied SBS liabilities. This risk increases as SBS becomes more unsuccessful in its reorganized business (as to which the Company expresses

opinion). The Company had been named in numerous prior proceedings involving SBS because of (among other things) the common use of the name "SPAR". Although defensible on the merits (since there is

legal connection), correcting these matters could consume significant management time, working capital and other Company resources and negatively impact the Company's client relationships and business reputation.

Non-Settled Matters:

The Settlement Agreement and its releases are limited to the SBS matters described therein and subject to specific exclusions. Accordingly, there remain a number of unresolved claims and actions (each a "Non-Settled Matter") between the Company and SAS and SPAR Infotech, Inc. (including the lawsuit and other claims against the Company), and the claims, rights and liabilities of Robert G. Brown and William H Bartels respecting the Company. See Part II, Item IA -

Risk Factors -Dependence Upon and Cost of Services Provided by Affiliates and Use of Independent Contractors

Risk Factors -

Risks Related to the Company's Significant Stockholders: Potential Voting Control and Conflicts

, and Note

to the Company's Condensed Consolidated Financial Statements –

Commitments and Contingencies -- Legal Matters

, in the Corporation's Quarterly Report on Form

-Q as filed with the SEC on

May 15, 2019,

the Corporation's Current Report on Form

-K as filed with the SEC on

September 28, 2018,

the Corporation's Current Report on Form

-K as filed with the SEC on

December 4, 2018

Infotech Litigation Against SGRP

September 19, 2018,

SGRP was served with a Summons and Complaint by SPAR InfoTech, Inc. ("Infotech"), an affiliate of SGRP that is owned principally by Robert G. Brown (

one

of the Majority Stockholders, a defendant in the By-Laws Action, and the plaintiff in the

225

Action) as plaintiff commencing a case against SGRP entitled SPAR InfoTech, Inc. v. SPAR Group, Inc., et al., Index

no.

64452/2018

(Supreme Court, Westchester County) (the "Infotech Action"). The Infotech Action seeks payment from SGRP of approximately

$190,000

for alleged lost tax benefits and other expenses that it claims to have incurred in connection with SGRP's acquisition of its Brazilian subsidiary and that were previously denied by both management and SGRP's Audit Committee (which had jurisdiction because Infotech is a related party).

2016,

SGRP acquired SPAR Brasil Serviços de Merchandising e Tecnologia S.A. ("SPAR BSMT"), its Brazilian subsidiary, with the assistance of Robert G. Brown ("Mr. Brown"), who retired as Chairman and an officer and director on

May 3, 2018,

and his nephew, Peter W. Brown, who became a director on

May 3, 2018.

Mr. Brown used his private company, Infotech and undisclosed Irish companies to structure the acquisition for SGRP.

Mr. Brown also ran his alleged expenses associated with the transaction through Infotech, including large salary allocations for unauthorized personnel and claims for his "lost tax breaks." One of those unauthorized personnel had agreed in her severance agreement with SGRP to never directly or indirectly perform any services for SGRP or any services that could be directly or indirectly billed to SGRP, which restriction was fully disclosed to and known by Mr. Brown and, therefore, Infotech. Mr. Brown submitted his unauthorized and unsubstantiated "expenses" to SGRP, and SGRP's Audit Committee allowed approximately

$50,000

of them and disallowed approximately

$150,000

of them. Mr. Brown has repeatedly sought payment of the disallowed expenses, and on

August 4, 2018,

counsel for Infotech (also counsel for SBS and Mr. Brown) sent SGRP a draft complaint for a proposed action by Infotech against SGRP to be filed in the Supreme Court, Westchester County, New York seeking to obtain the disallowed expenses.

September 18, 2018,

Infotech commenced the Infotech Action seeking to obtain those previously disallowed unauthorized expenses, now totaling approximately

$190,000,

to circumvent the adverse determination and objection of SGRP's Audit Committee (whose approval is required by applicable law for such a related party payment).

The parties are now engaged in pretrial settlement discussions and management has accrued for

$75,000

with estimated total liability between

$75,000

$90,000.

SGRP will vigorously contest the Infotech Action.

Infotech also is threatening to sue the Company in Romania for approximately

$900,000

for programming services allegedly owed to

he Company's former Romanian subsidiary (sold at book value to Infotech in

2013

) and

not

provided to Infotech, for which the Company vigorously denies liability. Infotech has given a draft complaint to the Company.

SBS Field Specialist Litigation

The Company's merchandising, audit, assembly and other services for its domestic clients are performed by field merchandising, auditing, assembly and other field personnel (each a "Field Specialist") substantially all of whose services were provided to the Company prior to

August 2018

by SBS, the Company's affiliate. SBS is

not

a subsidiary or in any way under the control of SGRP, SBS is

not

consolidated in the Company's financial statements, SGRP does

not

manage, direct or control SBS, and SGRP does

not

participate in or control the defense by SBS of any litigation against it. The Company terminated its relationship with SBS and received

services from SBS after

July 27, 2018.

For affiliation, termination, contractual details and payment amounts, see Note

to the Company's Consolidated Financial Statements -

Related Party Transactions

Domestic Related Party Services

, above.

The appropriateness of SBS' treatment of Field Specialists as independent contractors has been periodically subject to legal challenge (both currently and historically) by various states and others. SBS' expenses of defending those challenges and other proceedings have historically been reimbursed by the Company under SBS' Prior Agreement, and SBS' expenses of defending those challenges and other proceedings were reimbursed by the Company through the termination of the contract in

July 2018,

in the amount of

$50,000,

after determination (on a case by case basis) that those defense expenses were costs of providing services to the Company.

March 2017,

the Company advised SBS that, since there was

currently effective comprehensive written services agreement with SBS, the Company would continue to review and decide each request by SBS for reimbursement of its legal defense expenses (including appeals) on a case-by-case basis in its discretion, including the relative costs and benefits to the Company. See

Related Party Transactions

Domestic Related Party Services

, above. SBS has disputed the right of the Company and SGRP's Audit Committee to review and decide the appropriateness of the reimbursement of any of those related party defense and other expense reimbursements. As provided in SBS' Prior Agreement, the Company is

not

obligated or liable, and the Company has

not

otherwise agreed and does

not

currently intend, to reimburse SBS for any judgment or similar amount (including any damages, settlement, or related tax, penalty, or interest) in any legal challenge or other proceeding against or involving SBS, and the Company does

not

believe it has ever done so (other than in insignificant nuisance amounts).

As a result of the SBS Chapter

Case (see above), there can be

assurance that SBS will ever be able to satisfy any such judgment or similar claim or amount resulting from any adverse legal determination See

Commitments and Contingencies --

SBS Bankruptcy,

above.

As the Company had utilized the services of SBS' Field Specialists to support its in-store merchandising needs in California and SBS' independent contractor classifications had been held invalid in the Clothier Determination (see below), management of the Company determined, with the support of SGRP's Audit Committee and Board of Directors, and began in

May

2018

to shift to an all employee servicing model for Field Specialists to support the performance of the Company's services in California for clients in this critical market. As previously noted, management currently estimates that the potential incremental annual cost of this change in California from

third

party independent contractors to Company employees could be substantial.

Due to (among other things) the Clothier Determination and the ongoing proceedings against SBS, which could have had a material adverse effect on SBS' ability to provide future services needed by the Company, and the Company's identification of an independent

third

party company who would provide comparable services on substantially better terms, the Company terminated the services of SBS effective

July 27, 2018,

and the Company has engaged that independent

third

party company to provide the Field Specialist services formerly provided by SBS.

Current material and potentially material proceedings against SBS and, in

one

instance, the Company are described below. These descriptions are based on an independent review by the Company and do

not

reflect the views of SBS, its management or its counsel.

SBS Clothier Litigation

Melissa Clothier was engaged by SBS (then known as SPAR Marketing Services, Inc.) and provided services pursuant to the terms of an "Independent Merchandiser Agreement" with SBS (prepared solely by SBS) acknowledging her engagement as an independent contractor. On

June 30, 2014,

Ms. Clothier filed suit against SBS and the Company styled Case

No.

RG12

639317,

in the Superior Court in Alameda County, California (the "Clothier Case"), in which Ms. Clothier asserted claims on behalf of herself and a putative class of similarly situated merchandisers in California who are or were classified by SBS as independent contractors at any time between

July 16, 2008,

and

June 30, 2014.

Ms. Clothier alleged that she and other class members were misclassified by SBS as independent contractors and that, as a result of this misclassification, the defendants improperly underpaid them in violation of various California minimum wage and overtime laws. The Company was originally a defendant in the Clothier Case but was subsequently dismissed from the action without prejudice (meaning it could have joined back into the case).

The court ordered that the case be heard in

two

phases. Phase

one

was limited to the determination of whether members of the class were misclassified as independent contractors. After hearing evidence, receiving post-trial briefings and considering the issues, the Court issued its Statement of Decision on

September 9, 2016,

finding that the class members had been misclassified by SBS as independent contractors rather than employees (the "Clothier Determination"). The plaintiffs and SBS have now moved into phase

two

to determine damages (if any), which has included discovery as to the measure of damages in this case.

The plaintiffs and SBS are still proceeding with the damages phase of the Clothier Case, which trial was scheduled for

December

2018

but was temporarily stayed as a result of the SBS Chapter

Case (see above and below).

Facing significant potential damages in the Clothier Case, SGRP chose, and on

June 7, 2018,

entered into mediation with the plaintiffs and plaintiff's counsel in the Clothier Case to try to settle any potential future liability for any possible judgment against SGRP in that case. SGRP asked SBS to participate financially and provide its knowledge in that mediation, but SBS and its stockholders wanted SGRP to bear the full cost of any settlement and on several occasions they declined or failed to participate in that mediation. SGRP disagreed, insisting on the Majority Stockholders' and SBS' economic participation. After extensive discussions, SGRP reached a settlement and entered into a memorandum of settlement agreement, which is subject to court approval and

not

likely to become final until several months into

2019

if and when the settlement is approved by the court. If approved, SGRP will pay a maximum settlement amount of

$1.3

million, payable in

four

equal annual installments that commence

days after the settlement becomes final, and the Company will be released by plaintiff and the settlement class from all other liability under the Clothier Case (the "Clothier Settlement"). SBS did

not

participate in the Clothier Settlement and will

not

be released. The Company has recorded a

$1.3

million charge for the Clothier Settlement during

2018.

March 21, 2019,

the court issued a tentative ruling preliminarily approving the Clothier settlement.

Since SGRP has

further involvement in the Clothier Case, SGRP stopped paying (as of

June 7, 2018)

for SBS' legal expenses (defense and appeal) in the Clothier Case and notified SBS. Defendants continue to demand that those expenses be reimbursed by SGRP.

As a result of the SBS Chapter

Case (see above), the claims of SBS' creditors must now generally be pursued in the SBS Chapter

Case. On

March 11, 2019,

the Bankruptcy Court entered an order modifying the automatic stay in the SBS Chapter

Case to permit the plaintiffs in the Clothier Case to proceed with the

second

part of the case to determine damages against SBS in the same California Court that rendered the Clothier Determination. However, the Bankruptcy Court did

not

modify the automatic stay to permit collection from SBS of any resulting damage award against it absent further Bankruptcy Court order, and therefore and absent such further order, any such damage award will have to be pursued against SBS in the SBS Chapter

Case. Accordingly, the Company believes there can be

assurance that SBS will ever be able to fully pay any such damage award resulting from any determination in the Clothier Case or any other judgment or similar amount resulting from any legal determination adverse to SBS. See Note

to the Company's Consolidated Financial Statements -

Commitments and Contingencies --

SBS Bankruptcy,

above.

SGRP Hogan Litigation

Paradise Hogan was engaged by and provided services to SBS as an independent contractor pursuant to the terms of an "Independent Contractor Master Agreement" with SBS (prepared solely by SBS) acknowledging his engagement as an independent contractor. On

January 6, 2017,

Hogan filed suit against SBS and SGRP (and part of the Company), styled Civil Action

No.

1:17

-cv-

10024

-LTS, in the U.S. District Court for District of Massachusetts. Hogan initially asserted claims on behalf of himself and an alleged nationwide class of similarly situated individuals who provided services to SBS and SGRP as independent contractors. Hogan alleged that he and other alleged class members were misclassified as independent contractors, and as a result of this purported misclassification, Hogan asserted claims on behalf of himself and the alleged Massachusetts class members under the Massachusetts Wage Act and Minimum Wage Law for failure to pay overtime and minimum wages, as well as state law claims for breach of contract, unjust enrichment, quantum meruit, and breach of the covenant of good faith and fair dealing. In addition, Hogan asserted claims on behalf of himself and the nationwide class for violation of the Fair Labor Standards Act's overtime and minimum wage provisions. On

March 28, 2017,

the Company moved to refer Hogan's claim to arbitration pursuant to his agreement, to dismiss or stay Hogan's case pending arbitration, and to dismiss Hogan's case for failure to state a specific claim upon which relief could be granted.

March 12, 2018,

the Court denied both defendants' Motion to Dismiss for failure to state a claim, denied the Motion to Compel Arbitration as to SGRP (because as drafted by SBS, the arbitration clause did

not

reference or protect SGRP), denied the Motion to Stay as to SGRP, and allowed the Motion to Stay as to SBS pending the outcome of the Supreme Court's decision in Epic Systems Corp. v. Lewis. In

May 2018,

the Supreme Court decided arbitration clauses that include an express waiver of a worker's right to bring or participate in a class action did

not

violate the National Labor Relations Act, which resulted in all SBS disputes (but

not

any SGRP disputes) being sent to arbitration. On

April 24, 2018,

SGRP filed a notice of appeal with the First Circuit of the District Court's decision that the arbitration clause (as written by SBS) did

not

protect SGRP. SGRP and Hogan agreed to stay the District Court litigation pending the First Circuit's decision on SGRP's appeal. Briefing on SGRP's appeal closed on

August 8, 2018

and the appeal hearing was heard by the First Circuit on

September 11, 2018.

January 25, 2019,

the First Circuit issued a judgment affirming the District Court's decision that the arbitration clause (as written by SBS) did

not

protect SGRP and remanding the case back to the District Court for further proceedings. As a result, SGRP would have been required to go to trial without SBS.

Facing lengthy and costly litigation and significant potential damages in the Hogan Case, on

March 27, 2019,

SGRP entered into mediation with the plaintiffs and plaintiff's counsel in the Hogan Case to try to settle any potential future liability for any possible judgment against SGRP in that case. SBS and its stockholders were

longer involved in that case and so were

not

involved in that mediation. After extensive discussions, SGRP reached a settlement and entered into a memorandum of settlement agreement, which is subject to court approval and

not

likely to become final until later in

2019

if and when the settlement is approved by the court. If approved, SGRP will pay a maximum settlement amount of

$250,000

(in

three

installments)

one hundred eighty

(

180

) days after the settlement becomes final, and the Company will be released by plaintiff and the settlement class from all other liability under the Hogan Case (the "Hogan Settlement"). The Company has recorded

$250,000

liability as a result of the settlement.

SBS and SGRP Litigation Generally

As a result of the SBS Chapter

Case (see above), the claims of SBS' creditors must now generally be pursued in the SBS Chapter

Case. On

March 11, 2019,

the Bankruptcy Court entered an order modifying the automatic stay in the SBS Chapter

Case to permit the plaintiffs in the Clothier Case to proceed with the

second

part of the case to determine damages against SBS in the same California Court that rendered the Clothier Determination. However, the Bankruptcy Court did

not

Case. Accordingly, the Company believes there can be

to the Company's Consolidated Financial Statements -

Commitments and Contingencies --

SBS Bankruptcy,

above.

Note 9 - Segment Information

6 Months Ended

Jun. 30, 2019

Segment Reporting Disclosure [Text Block]

9.	Segment Information

The Company reports net revenues from operating income by reportable segment. 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 in deciding how to allocate resources and in assessing performance.

The Company provides similar merchandising, business technology and marketing services throughout the world, operating within

two

reportable segments, its Domestic Division and its International Division. The Company uses those divisions to improve its administration and operational and strategic focuses, and it tracks and reports certain financial information separately for each of those divisions. The Company measures the performance of its Domestic and International Divisions and subsidiaries using the same metrics. The primary measurement utilized by management is operating profits, historically the key indicator of long-term growth and profitability, as the Company is focused on reinvesting the operating profits of each of its international subsidiaries back into its local markets in an effort to improve market share and continued expansion efforts.

The accounting policies of each of the reportable segments are the same as those described in the Summary of Significant Accounting Policies. Management evaluates performance as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue:
United States	$	28,006		$	21,556		$	46,662		$	39,925
International		40,217			37,668			78,721			73,878
Total revenue	$	68,223		$	59,224		$	125,383		$	113,803

Operating income (loss):
United States	$	2,608		$	(1,900	)	$	3,360		$	(2,219	)
International		1,622			663			2,601			1,713
Total operating income (loss)	$	4,230		$	(1,237	)	$	5,961		$	(506	)

Interest expense:
United States	$	185		$	48		$	246		$	62
International		2			306			142			491
Total interest expense	$	187		$	354		$	388		$	553

Other (income), net:
United States	$	(1	)	$	(29	)	$	(1	)	$	–
International		(191	)		(203	)		(256	)		(304	)
Total other (income), net	$	(192	)	$	(232	)	$	(257	)	$	(304	)

Income (loss) before income tax expense:
United States	$	2,424		$	(1,919	)	$	3,115		$	(2,281	)
International		1,811			560			2,715			1,526
Total income (loss) before income tax expense	$	4,235		$	(1,359	)	$	5,830		$	(755	)

Income tax expense (benefit):
United States	$	501		$	(434	)	$	702		$	(446	)
International		927			172			1,284			362
Total income tax expense (benefit)	$	1,428		$	(262	)	$	1,986		$	(84	)

Net income (loss):
United States	$	1,923		$	(1,485	)	$	2,413		$	(1,835	)
International		884			388			1,431			1,164
Total net income (loss)	$	2,807		$	(1,097	)	$	3,844		$	(671	)

Net (loss) attributable to non-controlling interest:
United States	$	(679	)	$	(246	)	$	(775	)	$	(158	)
International		(605	)		(420	)		(930	)		(809	)
Total net (loss) attributable to non-controlling interest	$	(1,284	)	$	(666	)	$	(1,705	)	$	(967	)

Net income (loss) attributable to SPAR:
United States	$	1,244		$	(1,730	)	$	1,638		$	(1,992	)
International		279			(33	)		501			354
Total net income (loss) attributable to SPAR Group, Inc.	$	1,523		$	(1,763	)	$	2,139		$	(1,638	)

Depreciation and amortization:
United States	$	382		$	339		$	754		$	720
International		146			192			284			352
Total depreciation and amortization	$	528		$	531		$	1,038		$	1,072

Capital expenditures:
United States	$	344		$	423		$	722		$	907
International		127			40			213			44
Total capital expenditures	$	471		$	463		$	935		$	951

Note: There were

inter-company sales for the

three

and

six

months ended

June 30, 2019

2018.

	June 30,		December 31,
	2019		2018
Assets:
United States	$	35,780	$	27,280
International		51,100		41,815
Total assets	$	86,880	$	69,095

	June 30,		December 31,
	2019		2018
Long lived assets:
United States	$	4,425	$	2,560
International		5,164		1,715
Total long lived assets	$	9,589	$	4,275

Geographic Data

(in thousands)

	Three Months Ended June 30,										Six Months Ended June 30,
	2019					2018					2019					2018
International revenue:			% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue
Brazil	$	16,612		24.3	%	$	13,046		22.1	%	$	32,145		25.6	%	$	26,456		23.3	%
South Africa		6,442		9.4			7,400		12.5			12,976		10.3			14,844		13.1
Mexico		5,664		8.3			5,236		8.9			10,951		8.7			10,596		9.3
China		3,180		4.7			4,090		6.9			6,459		5.2			6,532		5.8
Japan		2,865		4.2			2,759		4.7			5,595		4.5			5,006		4.4
Canada		2,459		3.6			1,844		3.1			4,563		3.6			3,778		3.3
India		2,065		3.0			2,382		4.0			4,271		3.4			4,806		4.2
Australia		863		1.3			851		1.4			1,627		1.3			1,737		1.5
Turkey		67		0.1			60		0.1			134		0.1			123		0.1
Total international revenue	$	40,217		58.9	%	$	37,668		63.7	%	$	78,721		62.7	%	$	73,878		65.0	%

Note 10 - Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2019

Significant Accounting Policies [Text Block]

10.	Recent Accounting Pronouncements

The Company reviews new accounting pronouncements as they are issued or proposed by the Financial Accounting Standards Board (“FASB”).

Recently Implemented Pronouncements

January 1, 2019,

the Company adopted Accounting Standards Codification (“ASC”)

842,

Leases. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right of use assets and corresponding lease liabilities on the balance sheet. The new guidance requires the Company to continue to classify leases as either operating or financing, with classification affecting the pattern of expense recognition in the income statement. The Company is also required to disclose qualitative and quantitative information about leasing arrangements to enable financial statement users to assess the amount, timing and uncertainty of cash flows arising from leases. The Company adopted ASC

842

using a modified retrospective method that did

not

require the prior period information to be restated. ASC

842

also provides a number of optional provisions, known as practical expedients, which companies

may

elect to adopt to facilitate implementation. The Company elected a package of practical expedients which, among other items, precludes the Company from needing to reassess

) whether any expired or existing contracts are or contain leases,

) the lease classification of any expired or existing leases, and

) initial direct costs for any existing leases. In addition, SPAR Group elected an accounting policy to exclude from the consolidated balance sheets the right-of-use ("ROU") assets and lease liabilities related to short-term leases, which are those leases with an initial lease term of

twelve

months or less that do

not

include an option to purchase the underlying asset that SPAR Group is reasonably certain to exercise.

Due to the implementation of selected practical expedients, there was

cumulative effect adjustment to beginning retained earnings. See Note

–Leases for additional disclosures.

January 1, 2019,

the Company also adopted the following Accounting Standards Updates (“ASUs”) which had

material impact on its unaudited condensed consolidated financial statements or disclosures:

●

ASU

2018

07,

Compensation—Stock Compensation (Topic

718

): Improvements to Nonemployee Share-based payment accounting

●

ASU

2018

09,

Codification Improvement

●

ASU

2018

16,

Derivatives and Hedging—Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

During

2018,

the Company adopted the following ASU:

●

ASU

No.

2014

(Topic

606

), Revenue from Contracts with Customers - The adoption of ASC

606

did

not

have a material impact on the Company’s existing or new contracts as of

January 1, 2018;

therefore,

cumulative adjustment to beginning retained earnings was required as a result of adoption. The Company adopted using the modified retrospective transition method.

Note 11 - Leases

6 Months Ended

Jun. 30, 2019

Lessee, Operating Leases [Text Block]

11.

Leases

The Company is a lessee under certain operating leases for office space and equipment. Prior to adopting ASC

842,

SPAR followed the lease accounting guidance as issued in ASC

840.

Under ASC

840,

SPAR classified its leases as operating or capital leases based on evaluation of certain criteria of the lease agreement. For leases that contained rent escalations or rent holidays, ASC

840

requires that total rent expense during the lease term be recorded on a straight-line basis over the term of the lease and record the difference between the rents paid and the straight-line rent expense as deferred rent on the balance sheet. Any tenant improvement allowances received from the lessor would also be recorded as a reduction to rent expense over the term of the lease.

ASC

842

requires lessees to recognize leases on the balance sheet as a lease liability with a corresponding ROU, subject to certain permitted accounting policy elections.

Under ASC

842,

SPAR determines, at the inception of the contract, whether the contract is or contains a lease based on whether the contract provides SPAR the right to control the use of a physically distinct asset or substantially all of the capacity of an asset.

Many of SPAR's equipment leases are short-term or cancellable with notice. SPAR’s office space leases have remaining lease terms between

one

and approximately

eleven

years, many of which include

one

or more options to extend the term for periods thereafter. Certain leases contain options to terminate the lease early, which

may

include a penalty for exercising the option. Many of the termination options require notice within a specified period, after which the option is

longer available to SPAR if

not

exercised. The extension options and termination options

may

be exercised at SPAR’s sole discretion. SPAR does

not

consider in the measurement of ROU assets and lease liabilities an option to extend or terminate a lease if SPAR is

not

reasonably certain to exercise the option. As of

March 31, 2019,

SPAR has

not

included any options to extend or terminate in its measurement of ROU assets or lease liabilities.

The reported results for

2019

reflect the application of ASC

842

guidance, whereas comparative periods and their respective disclosures prior to the adoption of ASC

842

are presented using the legacy guidance of ASC

840.

As a result of adopting the new standard, SPAR recognized ROU assets and liability of

$5.7

million. There was

adjustment to deferred taxes as a result of SPAR’s adoption of ASC

842.

The adoption of ASC

842

did

not

have a material impact on SPAR’s results of operations or cash flows, nor did it have an impact on any of SPAR's existing debt covenants.

Certain of SPAR’s leases include covenants that oblige SPAR, at its sole expense, to repair and maintain the leased asset periodically during the lease term. SPAR is

not

a party to any leases that contain residual value guarantees nor is SPAR a party to any leases that provide an option to purchase the underlying asset.

Many of SPAR's office space leases include fixed and variable payments. Variable payments relate to real estate taxes, insurance, operating expenses, and common area maintenance, which are usually billed at actual amounts incurred proportionate to SPAR's rented square feet of the building. Variable payments that do

not

depend on an index or rate are expensed by SPAR as they are incurred and are

not

included in the measurement of the lease liability.

Some of SPAR's leases contain both lease and non-lease components. Fixed and variable payments are allocated to each component relative to observable or estimated standalone prices. SPAR measures its variable lease costs as the portion of variable payments that are allocated to lease components.

SPAR measures its lease liability for each leased asset as the present value of lease payments, as defined in ASC

842,

allocated to the lease component, discounted using an incremental borrowing rate specific to the underlying asset. SPAR's ROU assets are equal to the lease liability, SPAR estimates its incremental borrowing rate based on the interest rate SPAR would incur to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment.

The components of SPAR's lease expenses for the

three

and

six

months ended

June 30, 2019,

which are included in the condensed consolidated income statement, are as follows (in thousands):

Lease Costs	Classification	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost	Selling, General and Administrative Expense	$	534	$	1,067
Short-term lease cost	Selling, General and Administrative Expense		28		57
Variable costs	Selling, General and Administrative Expense		290		585
Total lease cost		$	852	$	1,709

Supplemental cash flow information related to SPAR’s leases for

three

and

six

months ended

June 30, 2019

is as follows (in thousands):

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	562		$	1,071

Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	5,736	(a)	$	5,736	(a)

(a) Amounts for the

six

months ended

June 30, 2019

include the translation adjustment for the adoption of ASU

2016

discussed in Note

10.

June 30, 2019,

SPAR had the following maturities of lease liabilities related to office space and equipment, all of which are under non-cancellable operating leases (in thousands):

Period Ending June 30,	Amount

2019	$	843
2020		1,974
2021		887
2022		988
2023		78
Total lease payments		4,770

As previously disclosed in the Company’s Annual Report on Form

-K/A for the year ended

December 31, 2018

and under the previous lease accounting standard, ASC

840,

Leases, the following table summarizes the future minimum lease payments due under operating leases as of

December 31, 2018 (

in thousands):

Year	Amount
2019	$	1,946
2020		1,428
2021		945
2022		682
2023		340
Total	$	5,341

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Implemented Pronouncements

January 1, 2019,

the Company adopted Accounting Standards Codification (“ASC”)

842,

842

using a modified retrospective method that did

not

require the prior period information to be restated. ASC

842

also provides a number of optional provisions, known as practical expedients, which companies

may

elect to adopt to facilitate implementation. The Company elected a package of practical expedients which, among other items, precludes the Company from needing to reassess

) whether any expired or existing contracts are or contain leases,

) the lease classification of any expired or existing leases, and

twelve

months or less that do

not

include an option to purchase the underlying asset that SPAR Group is reasonably certain to exercise.

Due to the implementation of selected practical expedients, there was

cumulative effect adjustment to beginning retained earnings. See Note

–Leases for additional disclosures.

January 1, 2019,

the Company also adopted the following Accounting Standards Updates (“ASUs”) which had

material impact on its unaudited condensed consolidated financial statements or disclosures:

●

ASU

2018

07,

Compensation—Stock Compensation (Topic

718

): Improvements to Nonemployee Share-based payment accounting

●

ASU

2018

09,

Codification Improvement

●

ASU

2018

16,

Derivatives and Hedging—Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

During

2018,

the Company adopted the following ASU:

●

ASU

No.

2014

(Topic

606

), Revenue from Contracts with Customers - The adoption of ASC

606

did

not

have a material impact on the Company’s existing or new contracts as of

January 1, 2018;

therefore,

cumulative adjustment to beginning retained earnings was required as a result of adoption. The Company adopted using the modified retrospective transition method.

Note 3 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
Numerator:
Net income (loss) attributable to SPAR Group, Inc.	$	1,523	$	(1,763	)	$	2,139	$	(1,638	)

Denominator:
Weighted average shares used in basic net income per share calculation		20,816		20,649			20,796		20,649

Weighted average shares used in diluted net income per share calculation		21,104		20,649			21,080		20,649

Basic and diluted net income (loss) per common share	$	0.07	$	(0.09	)	$	0.10	$	(0.08	)

Note 4 - Credit Facilities and Other Debt (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Debt [Table Text Block]

	Interest Rate as of June 30, 2019				2019		2020		2021		2022		2023		2024
Brazil – Bradesco			16.56%		$	437	$	–	$	–	$	–	$	–	$	–
Brazil - Santander		4.45	-	10.99%		76		–		–		–		–		–
USA – North Mill Capital			6.75%			12,155		–		–		–		–		–
USA – Fifth Third Bank			5.23%			–		–		–		–		–		–
USA – Resource Plus Seller Notes			1.85%			333		334		300		300		700		–
Australia - National Australia Bank			6.56%			181		–		–		–		–		–
Mexico – BBVA Shareholder			12.5%			–		–		–		–		–		–
Total					$	13,182	$	334	$	300	$	300	$	700	$	–

Credit And Debt Facilities Unused Availability [Table Text Block]

	June 30, 2019		December 31, 2018
Unused Availability:
United States	$	4,788	$	4,253
Australia		381		238
Brazil		294		304
Mexico		261		102
Total Unused Availability	$	5,724	$	4,897

Note 5 - Related-party Transactions (Tables)

6 Months Ended

Jun. 30, 2019

	Three Months Ended June 30 ,				Six Months Ended June 30 ,
	201 9		201 8		201 9		201 8
Services provided by affiliates:
Field merchandiser and other expenses (SBS)*	$	-	$	6,561	$	-	$	13,290
Field administration and other expenses (SAS)*		-		1,113		-		2,262
National Store Retail Services (NSRS)		260		-		385		-
Office lease expenses (RJ Holdings)		97		143		199		285
Office and vehicle lease expenses (MPT)		16		6		32		25
Vehicle rental expenses (MCPT)		297		118		587		457
Office and vehicle rental expenses (MHT)		68		9		132		62
Consulting and administrative services (CON)		37		56		74		115
Legal Services (KMSA)		21		28		43		54
Warehousing rental (JFMD)		12		12		24		24

Total services provided by affiliates	$	808	$	8,046	$	1,476	$	16,574

Due to affiliates consists of the following (in thousands):	June 30 ,		December 31,
	201 9		201 8
Loans from local investors:(1)
Australia	$	428	$	226
Mexico		1,001		1,001
Brazil		139		139
China		1,803		2,130
South Africa		618		618
Resource Plus		531		531
Total due to affiliates	$	4,520	$	4,645

Note 9 - Segment Information (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue:
United States	$	28,006		$	21,556		$	46,662		$	39,925
International		40,217			37,668			78,721			73,878
Total revenue	$	68,223		$	59,224		$	125,383		$	113,803

Operating income (loss):
United States	$	2,608		$	(1,900	)	$	3,360		$	(2,219	)
International		1,622			663			2,601			1,713
Total operating income (loss)	$	4,230		$	(1,237	)	$	5,961		$	(506	)

Interest expense:
United States	$	185		$	48		$	246		$	62
International		2			306			142			491
Total interest expense	$	187		$	354		$	388		$	553

Other (income), net:
United States	$	(1	)	$	(29	)	$	(1	)	$	–
International		(191	)		(203	)		(256	)		(304	)
Total other (income), net	$	(192	)	$	(232	)	$	(257	)	$	(304	)

Income (loss) before income tax expense:
United States	$	2,424		$	(1,919	)	$	3,115		$	(2,281	)
International		1,811			560			2,715			1,526
Total income (loss) before income tax expense	$	4,235		$	(1,359	)	$	5,830		$	(755	)

Income tax expense (benefit):
United States	$	501		$	(434	)	$	702		$	(446	)
International		927			172			1,284			362
Total income tax expense (benefit)	$	1,428		$	(262	)	$	1,986		$	(84	)

Net income (loss):
United States	$	1,923		$	(1,485	)	$	2,413		$	(1,835	)
International		884			388			1,431			1,164
Total net income (loss)	$	2,807		$	(1,097	)	$	3,844		$	(671	)

Net (loss) attributable to non-controlling interest:
United States	$	(679	)	$	(246	)	$	(775	)	$	(158	)
International		(605	)		(420	)		(930	)		(809	)
Total net (loss) attributable to non-controlling interest	$	(1,284	)	$	(666	)	$	(1,705	)	$	(967	)

Net income (loss) attributable to SPAR:
United States	$	1,244		$	(1,730	)	$	1,638		$	(1,992	)
International		279			(33	)		501			354
Total net income (loss) attributable to SPAR Group, Inc.	$	1,523		$	(1,763	)	$	2,139		$	(1,638	)

Depreciation and amortization:
United States	$	382		$	339		$	754		$	720
International		146			192			284			352
Total depreciation and amortization	$	528		$	531		$	1,038		$	1,072

Capital expenditures:
United States	$	344		$	423		$	722		$	907
International		127			40			213			44
Total capital expenditures	$	471		$	463		$	935		$	951

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	June 30,		December 31,
	2019		2018
Assets:
United States	$	35,780	$	27,280
International		51,100		41,815
Total assets	$	86,880	$	69,095

Reconciliation Of Long Lived Assets From Segments To Consolidated [Table Text Block]

	June 30,		December 31,
	2019		2018
Long lived assets:
United States	$	4,425	$	2,560
International		5,164		1,715
Total long lived assets	$	9,589	$	4,275

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]

	Three Months Ended June 30,										Six Months Ended June 30,
	2019					2018					2019					2018
International revenue:			% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue
Brazil	$	16,612		24.3	%	$	13,046		22.1	%	$	32,145		25.6	%	$	26,456		23.3	%
South Africa		6,442		9.4			7,400		12.5			12,976		10.3			14,844		13.1
Mexico		5,664		8.3			5,236		8.9			10,951		8.7			10,596		9.3
China		3,180		4.7			4,090		6.9			6,459		5.2			6,532		5.8
Japan		2,865		4.2			2,759		4.7			5,595		4.5			5,006		4.4
Canada		2,459		3.6			1,844		3.1			4,563		3.6			3,778		3.3
India		2,065		3.0			2,382		4.0			4,271		3.4			4,806		4.2
Australia		863		1.3			851		1.4			1,627		1.3			1,737		1.5
Turkey		67		0.1			60		0.1			134		0.1			123		0.1
Total international revenue	$	40,217		58.9	%	$	37,668		63.7	%	$	78,721		62.7	%	$	73,878		65.0	%

Note 11 - Leases (Tables)

6 Months Ended

Jun. 30, 2019

Lease, Cost [Table Text Block]

Lease Costs	Classification	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost	Selling, General and Administrative Expense	$	534	$	1,067
Short-term lease cost	Selling, General and Administrative Expense		28		57
Variable costs	Selling, General and Administrative Expense		290		585
Total lease cost		$	852	$	1,709

Lessee, Operating Lease, Cash Flows [Table Text Block]

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	562		$	1,071

Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	5,736	(a)	$	5,736	(a)

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Period Ending June 30,	Amount

2019	$	843
2020		1,974
2021		887
2022		988
2023		78
Total lease payments		4,770

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Year	Amount
2019	$	1,946
2020		1,428
2021		945
2022		682
2023		340
Total	$	5,341

Note 2 - Business and Organization (Details Textual)	6 Months Ended
Note 2 - Business and Organization (Details Textual)	Jun. 30, 2019
Number of Countries in which Entity Operates	10
Number of Reportable Segments	2

Note 3 - Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net income (loss) attributable to SPAR Group, Inc.	$ 1,523	$ (1,763)	$ 2,139	$ (1,638)
Weighted average shares used in basic net income per share calculation (in shares)	20,816	20,649	20,796	20,649
Weighted average shares used in diluted net income per share calculation (in shares)	21,104	20,649	21,080	20,649
Basic and diluted net income (loss) per common share (in dollars per share)	$ 0.07	$ (0.09)	$ 0.10	$ (0.08)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Note 4 - Credit Facilities and Other Debt (Details Textual) $ in Millions	Apr. 10, 2019 USD ($)	Jan. 09, 2018 USD ($)	Mar. 15, 2016	Jun. 30, 2019 USD ($)	Jun. 30, 2019 MXN ($)	Jun. 30, 2019 AUD ($)	Jun. 30, 2019 BRL (R$)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Oct. 05, 2018 BRL (R$)	Jul. 03, 2018 USD ($)	May 29, 2018 BRL (R$)	Jan. 16, 2018 USD ($)	Oct. 31, 2017 AUD ($)
Resource Plus, Inc [Member]
Business Acquisition, Percentage of Voting Interests Acquired		51.00%
Resource Plus Acquisition Note [Member]
Debt Instrument, Face Amount		$ 2,300,000
Notes Payable, Total									$ 2,000,000
North Mill, LLC [Member]
Debt Instrument, Interest Rate, Effective Percentage				6.75%	6.75%	6.75%	6.75%
Fifth Third Bank [Member]
Debt Instrument, Interest Rate, Effective Percentage				5.23%	5.23%	5.23%	5.23%
National Australia Bank [Member]
Debt Instrument, Interest Rate, Effective Percentage				6.56%	6.56%	6.56%	6.56%
Branco Bradesco [Member]
Debt Instrument, Interest Rate, Effective Percentage				16.56%	16.56%	16.56%	16.56%
Branco Santander [Member]
Debt Instrument, Interest Rate, Effective Percentage
Revolving Credit Facility [Member] \| North Mill, LLC [Member]
Proceeds from Lines of Credit, Total	$ 9,800,000
Line of Credit Facility, Commitment Fee Percentage	1.50%
Debt Instrument, Face Amount	$ 180,000
Debt Instrument, Payable Per Month	10,000
Line of Credit Facility, Commitment Fee Amount	$ 120,000
Debt Instrument, Interest Rate, Effective Percentage				6.75%	6.75%	6.75%	6.75%
Long-term Line of Credit, Total				$ 12,200,000
Percent Of Eligible Domestic Accounts Receivable Less Certain Reserves To Calculate Borrowing Availability	85.00%
Percent Of Eligible Domestic Unbilled Accounts Receivable Less Certain Reserves To Calculate Borrowing Availability	60.00%
Maximum Amount of Accounts Receivable Less Certain Reserves To Calculate Borrowing Availability	$ 4,500,000
Revolving Credit Facility [Member] \| North Mill, LLC [Member] \| Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	1.25%
Revolving Credit Facility [Member] \| North Mill, LLC [Member] \| NM Loan Agreement [Member]
Debt Instrument, Term	1 year 180 days
Revolving Credit Facility [Member] \| North Mill, LLC [Member] \| NM Loan Agreement [Member] \| SPAR Marketing Force [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 12,500,000
Revolving Credit Facility [Member] \| North Mill, LLC [Member] \| NM Loan Agreement [Member] \| SPAR Canada Company [Member]
Line of Credit Facility, Maximum Borrowing Capacity	2,500,000			12,500,000
Revolving Credit Facility [Member] \| North Mill, LLC [Member] \| Original NM Notes [Member] \| SPAR Marketing Force [Member]
Line of Credit Facility, Maximum Borrowing Capacity	10,500,000
Revolving Credit Facility [Member] \| North Mill, LLC [Member] \| Original NM Notes [Member] \| SPAR Canada Company [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,500,000
Revolving Credit Facility [Member] \| PNC Bank, National Association [Member]
Line of Credit Facility, Maximum Borrowing Capacity											$ 9,500,000		$ 9,000,000
Revolving Credit Facility [Member] \| Fifth Third Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 3,500,000
Long-term Line of Credit, Total								$ 0
Percent Of Eligible Domestic Accounts Receivable Less Certain Reserves To Calculate Borrowing Availability		80.00%
Line of Credit Facility, Interest Rate at Period End								5.23%
Revolving Credit Facility [Member] \| Fifth Third Bank [Member] \| London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		2.50%
Revolving Credit Facility [Member] \| National Australia Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity				562,000										$ 800,000
Long-term Line of Credit, Total				181,000		$ 258,000
Percent Of Eligible Domestic Accounts Receivable Less Certain Reserves To Calculate Borrowing Availability														80.00%
Revolving Credit Facility [Member] \| BBVA Bancomer Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity				261,000	$ 5
Long-term Line of Credit, Total				$ 0
Line of Credit Facility, Interest Rate at Period End				12.50%	12.50%	12.50%	12.50%
Revolving Credit Facility [Member] \| BBVA Bancomer Bank [Member] \| Interbank Interest Rate [Member]
Debt Instrument, Basis Spread on Variable Rate			4.00%
Revolving Credit Facility [Member] \| Banco Bradesco [Member]
Line of Credit Facility, Maximum Borrowing Capacity \| R$												R$ 1,200,000
Revolving Credit Facility [Member] \| Banco Bradesco [Member] \| Line of Credit Facility with Banco Bradesco, One [Member]
Line of Credit Facility, Maximum Borrowing Capacity				$ 312,000
Long-term Line of Credit, Total				18,000			R$ 68,000
Percent Of Eligible Domestic Accounts Receivable Less Certain Reserves To Calculate Borrowing Availability												0.00%
Revolving Credit Facility [Member] \| Branco Bradesco [Member] \| Line of Credit Facility with Banco Bradesco, One [Member]
Line of Credit Facility, Maximum Borrowing Capacity				917,000
Long-term Line of Credit, Total				419,000			1.60
Revolving Credit Facility [Member] \| Branco Bradesco [Member] \| Line of Credit Facility with Banco Bradesco, Two [Member]
Line of Credit Facility, Maximum Borrowing Capacity \| R$										R$ 3,500,000
Revolving Credit Facility [Member] \| Branco Santander [Member]
Line of Credit Facility, Maximum Borrowing Capacity				99,000						R$ 381,000
Long-term Line of Credit, Total				$ 76,000			R$ 293,000

Note 4 - Credit Facilities and Other Debt - Summary of Credit and Other Debt Facilities (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Repayments of Principal, 2019	$ 13,182
Repayments of Principal, 2020	334
Repayments of Principal, 2021	300
Repayments of Principal, 2022	300
Repayments of Principal, 2023	$ 700
Branco Bradesco [Member]
Interest Rate	16.56%
Repayments of Principal, 2019	$ 437
Repayments of Principal, 2020
Repayments of Principal, 2021
Repayments of Principal, 2022
Repayments of Principal, 2023
Branco Santander [Member]
Interest Rate
Repayments of Principal, 2019	$ 76
Repayments of Principal, 2020
Repayments of Principal, 2021
Repayments of Principal, 2022
Repayments of Principal, 2023
Branco Santander [Member] \| Minimum [Member]
Interest Rate	4.45%
Branco Santander [Member] \| Maximum [Member]
Interest Rate	10.99%
North Mill, LLC [Member]
Interest Rate	6.75%
Repayments of Principal, 2019	$ 12,155
Repayments of Principal, 2020
Repayments of Principal, 2021
Repayments of Principal, 2022
Repayments of Principal, 2023
Fifth Third Bank [Member]
Interest Rate	5.23%
Repayments of Principal, 2019
Repayments of Principal, 2020
Repayments of Principal, 2021
Repayments of Principal, 2022
Repayments of Principal, 2023
Resource Plus Acquisition Note [Member]
Interest Rate	1.85%
Repayments of Principal, 2019	$ 333
Repayments of Principal, 2020	334
Repayments of Principal, 2021	300
Repayments of Principal, 2022	300
Repayments of Principal, 2023	$ 700
National Australia Bank [Member]
Interest Rate	6.56%
Repayments of Principal, 2019	$ 181
Repayments of Principal, 2020
Repayments of Principal, 2021
Repayments of Principal, 2022
Repayments of Principal, 2023
Bancomer Bank and Shareholder Loan [Member]
Interest Rate	12.50%
Repayments of Principal, 2019
Repayments of Principal, 2020
Repayments of Principal, 2021
Repayments of Principal, 2022
Repayments of Principal, 2023

Note 4 - Credit Facilities and Other Debt - Unused Availability (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Unused Availability	$ 5,724	$ 4,897
UNITED STATES
Unused Availability	4,788	4,253
AUSTRALIA
Unused Availability	381	238
BRAZIL
Unused Availability	294	304
MEXICO
Unused Availability	$ 261	$ 102

Note 5 - Related-party Transactions (Details Textual)				1 Months Ended	6 Months Ended		67 Months Ended
Note 5 - Related-party Transactions (Details Textual)	Sep. 18, 2018 USD ($)	Sep. 08, 2016	Dec. 01, 2014 USD ($)	Nov. 30, 2017 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Aug. 01, 2018 USD ($)	Dec. 31, 2018 USD ($)
Insurance Premium Refund Receivable					$ 150,000
Affinity Returns from SAS and SBS [Member]
Estimated Litigation Liability								$ 901,000
NMS [Member]
Percent of Reimbursement					1.00%
Merhold Property Trust [Member]
Number Of Vehicles Subleased					20
Number Of Vehicles Leased					172
Lessee, Operating Lease, Term of Contract					4 years
SGRP Holdings [Member] \| SPAR BSMT Joint Venture [Member]
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage		51.00%
JKC [Member] \| SPAR BSMT Joint Venture [Member]
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage		39.00%
EILLC [Member] \| SPAR BSMT Joint Venture [Member]
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage		10.00%
EILLC [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners					10.00%
NMS [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners					49.00%
NSRS [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners					100.00%
Resource Plus, Inc [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners					49.00%
RJ Holdings [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners					50.00%
FRIEDSHELF 401 Proprietary Limited [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners					23.00%
Lindicom Proprietary Limited [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners					26.00%
SPAR Todopromo [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners					49.00%
SBS [Member]
Number of Merchandising Specialists					4,500
Withheld Final Mark-up Compensation Due to Related Party			$ 112,000
Additional Funding for Field Specialist Payments			$ 13,000
Payments for Cash Collateral Deposits, Allocated to Related Party							$ 379,000
SBS [Member] \| Post-termination Expenses [Member]
Loss Contingency, Estimate of Possible Loss					$ 200,000
SBS [Member] \| Domestic Merchandising Specialists Field Force [Member]
Payments for Related Party Services					$ 13,300,000
Percent Of Service Provided By Related Party					43.00%
SBS [Member] \| Cost Plus Fees [Member]
Related Party Transaction, Rate			2.96%
SAS [Member]
Number of National, Regional, and District Administrators						57
Payments for Cash Collateral Deposits							965,000
SAS [Member] \| Domestic Field Management [Member]
Payments for Related Party Services						$ 2,300,000
Percent Of Service Provided By Related Party						91.00%
SAS [Member] \| Advances for Affinity Insurance Plan [Member]
Related Party Transaction, Amounts of Transaction					$ 226,000
SPAR InfoTech, Inc. [Member] \| Alleged Lost Tax Benefits and Other Expenses [Member]
Loss Contingency, Damages Sought, Value	$ 190,000
SPAR InfoTech, Inc. [Member] \| Allegedly Owed Programming Services [Member]
Loss Contingency, Damages Sought, Value	$ 900,000
NMS [Member]
Majority Interest Ownership Percentage By Parent					51.00%
Resource Plus, Inc [Member]
Majority Interest Ownership Percentage By Parent					51.00%
Meridian [Member]
Majority Interest Ownership Percentage By Parent					51.00%
Mr. Mason [Member] \| Merhold Property Trust [Member]
Related Party Ownership Percentage					50.00%
Mr. Mason and Mr. Bristow [Member] \| Merhold Cape Property Trust [Member]
Related Party Ownership Percentage					50.00%
SPAR Todopromo [Member]
Majority Interest Ownership Percentage By Parent					51.00%
Mr. Juan F. Medina Domenzain [Member] \| CON [Member]
Related Party Ownership Percentage					90.00%
SPAR Marketing Force [Member]
Payments for Cash Collateral Deposits, Allocated to Related Party							296,000
All Others [Member]
Payments for Cash Collateral Deposits, Allocated to Related Party							$ 290,000
Robert G. Brown and William H. Bartels [Member]
Related Party Ownership Percentage				59.00%
SBS And SAS [Member]
Reserve for Related-party Receivables, Amount Recorded During Period				$ 901,000
Reserve for Related-party Receivables, Amount Recorded During Period, Cash Collateral				675,000
Reserve for Related-party Receivables, Amount Recorded During Period, Insurance Premium Advance				$ 226,000

Note 5 - Related-party Transactions - Transactions Between the Company and Affiliates (Details) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2019

Jun. 30, 2018

Jun. 30, 2019

Jun. 30, 2018

Dec. 31, 2018

$ 808

$ 8,046

$ 1,476

$ 16,574

Loans Due to Affiliates [Member] | Local Investors in Australia [Member]

4,520

$ 4,645

Loans Due to Affiliates [Member] | Local Investors in Mexico [Member]

^[1]

428

226

Loans Due to Affiliates [Member] | Local Investors in Brazil [Member]

^[1]

1,001

Loans Due to Affiliates [Member] | Local Investors in China [Member]

^[1]

139

Loans Due to Affiliates [Member] | Local Investors In South Africa [Member]

^[1]

1,803

2,130

Loans Due to Affiliates [Member] | Local Investors Related to Resource Plus [Member]

^[1]

618

Field Specialist Expenses SBS [Member]

^[1]

531

$ 531

Field Administration Expenses SAS [Member]

^[2]

6,561

13,290

^[2]

1,113

2,262

NSRS [Member]

260

385

RJ Holdings [Member]

Office And Vehicle Rental MPT [Member]

143

199

285

Vehicle Rental MCPT [Member]

Office And Vehicle Rental MHT [Member]

297

118

587

457

Consulting and Administrative Services (CON) [Member]

132

Legal Services (KMSA) [Member]

115

Warehouse Rental (JFMD) [Member]