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Note 6 - Commitments and Contingencies
 12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]
6.
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:
 
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 an entity controlled by Robert G. Brown and prior to
November 2018
was owned by Robert G. Brown and William H. Bartels. SAS is an affiliate because it is owned by William H. Bartels, Peter W. Brown and certain other 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. Messrs. Brown and Bartels (including, as applicable, certain related parties, the "
Majority Stockholders
") collectively own approximately
53.2%
of SGRP's common stock and are the founders of SGRP.  Mr. Brown was Chairman and an officer and director of SGRP through
May 3, 2018 (
when he retired) and will automatically again become a director of SGRP, as discussed below, and Mr. Bartels is Vice Chairman and a director of SGRP.  Mr. Bartels retired as an employee of the Company as of
January 1, 2020 (
in accordance with the actions of SGRP's Compensation Committee on
January 22, 2020).
See
Bartels' Retirement and Director Compensation,
 in Note
16
to the Company's Consolidated Financial Statements --
Subsequent Events
, below.  Messrs. Brown and Bartels also are stockholders, directors and/or executive officers of various affiliates of SGRP.
 
Delaware Litigation Settlement
 
On
September 4, 2018,
SGRP filed in the Court of Chancery of the State of Delaware (the "
Chancery Court
") a claim, 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.
 
On
September 18, 2018,
Robert G. Brown (
one
of the Majority Stockholders) commenced an action in the Chancery Court pursuant to
8
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.
 
On
January 18, 2019,
SGRP, Messrs. Brown and Bartels, Christiaan Olivier (Chief Executive Officer, President and a Director of SGRP), and all
four
of the members of the Governance Committee at that time, namely Lorrence T. Kellar (Chairman), Jack W. Partridge, Arthur B. Drogue and R. Eric McCarthey (together with Mr. Olivier, the "
225
Defendants
"), reached a settlement (the "
Delaware Settlement
") in the By-Laws Action and the
225
Action (together, the "
Delaware Actions
") and had the Delaware Actions then dismissed.
 
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 (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, 2019. 
The Governance Committee and the Board intended that those changes in the
2019
Restated By-Laws will help the Corporation maintain the independent Board desired by them.
 
Additionally, as part of the Delaware Settlement, the parties to the Delaware Actions executed a Limited Mutual Release Agreement limited to the Actions and subject to specific exclusions (the "
Delaware Releases
"), and the parties to the Delaware 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 Chancery 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 certain related parties, including (without limitation) post termination claims by and against SBS (which has been resolved in a voluntary bankruptcy proceeding in Nevada by SBS -- see
SBS Bankruptcy, Settlement, and
March 2020
Claim,
below) and SAS and the lawsuit by Infotech against the Company (which has been resolved in a settlement – see 
Infotech Litigation and Settlement
, below), and the claims by Messrs. Brown and Bartels for advancement and indemnification of legal fees and expenses in connection with the Delaware Actions and certain related party claims (see
Advancement Claims
, below).
 
Advancement Claims
 
From
October 2018
through
January 2019,
the Majority Stockholders, in a series of correspondence, demanded from SGRP advancement and indemnification of their respective shares of legal fees and expenses incurred by them in connection with the By-Laws Action and the
225
Action and other related party litigation matters.
 
On
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 Action 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 Action because (among other things) Mr. Bartels was sued predominately as a stockholder in the By-Laws Action and
not
as a director and the By-Laws Action alleged numerous instances of improper conduct by Mr. Bartels that could preclude indemnification under the Corporation's By-Laws. However, the Audit Committee made
no
determination regarding improper conduct or the issue of advancement.
 
On
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.
 
In
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 paid in
April 2019. 
If Mr. Bartels is ultimately determined to
not
be entitled to indemnification, he could still be obligated to return all amounts advanced to him by SGRP.
 
On
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 Action 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.
 
On
January 27, 2019,
Mr. Robert G. 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.
On
March 21, 2020,
Mr. Robert G. Brown repeated the Brown Advancement Demand and sent a slightly revised draft complaint that would purportedly change the contemplated litigation jurisdiction from Delaware to Massachusetts. 
No
explanation was given for this change and SGRP believes that Mr. Robert G. Brown does
not
live or work in Massachusetts, but Mr. Robert G. Brown's brother, James S. Brown, is a Massachusetts lawyer and a candidate for election as a SGRP director at the
April 23, 2020,
special stockholder meeting at the unilateral direction of Mr. Robert G. Brown and related parties. 
No
such complaint has been filed by Mr. Brown through
April
TBD,
2020,
and SGRP continues to deny the Brown Advancement Demand.  In addition, SGRP believes that the Delaware Court has exclusive jurisdiction pursuant to SGRP's
2019
Restated By-Laws and the Settlement.
 
SBS Bankruptcy, Settlement and
March 2020
Claim
 
On
November 23, 2018,
SBS petitioned for bankruptcy protection under chapter
11
of the United States Bankruptcy Code in the U.S. District for Nevada (the "
SBS Chapter
11
Case
").  On
March 18, 2019,
the Company filed claims in the SBS Chapter
11
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 its settlement (see below) of the Clothier class action case in California ("
Clothier"
) and legal costs and an unspecified amount for indemnification of SGRP for the Hogan action (see below) and other to be discovered indemnified claims.
 
 
On
August 6, 2019,
SGRP, and its subsidiaries SPAR Marketing Force, Inc. ("
SMF
"), a Nevada corporation, and SPAR Assembly & Installation, Inc., f/k/a SPAR National Assembly Services, Inc., a Nevada corporation, submitted to the U.S. District Court in Nevada (the "
Bankruptcy Court
") their Compromise and Settlement Agreement, dated
July 26, 2019 (
the "
Settlement Agreement
"), with SBS, a Nevada corporation formerly known as SPAR Marketing Services, Inc., debtor and debtor-in-possession, and SBS, LLC, a Nevada limited liability company.  The Settlement Agreement was submitted in the SBS Chapter
11
Case.  Pursuant to the Settlement Agreement, the Company settled its claims for (among other things) indemnification from SBS in the Clothier and Rodgers cases, and SBS released all receivable and other claims against the Company.  See Note
10
to the Company's Consolidated Financial Statements – Related Party Transactions –
SBS Bankruptcy, Settlement, and
March 2020
Claim
, below.
 
On
August 6, 2019,
the Bankruptcy Court approved the Settlement Agreement and the SBS reorganization pursuant to SBS' First Amended Chapter
11
Plan of Reorganization, as amended by the Settlement Agreement (the "
Plan of Reorganization
").  Pursuant to its Plan of Reorganization, SBS also settled its potential liability in the Clothier and Rodgers cases, but Robert G. Brown and William H. Bartels were
not
released from Clothier, any related case or Rodgers.
 
On
March 6, 2020,
Robert G. Brown demanded payment in full of
$1,707,374
to SBS from SMF and SGRP pursuant to the Settlement Agreement.  The Settlement Agreement includes a specific carve out clause for the payment of specific fees for services provided by SBS to SMF.  The clause required a special review, by a
third
party prominent auditing firm, as verification that SMF actually made those payments to SBS.   The report has been completed and properly supports the Company’s position that all such fees were paid to SBS (the "
March 2020
Claim
"). The Company disagrees that such amount is owed. The Company believes that the robust and comprehensive mutual releases in the SBS Settlement Agreement provide valuable relief from potential future claims and litigation by SBS respecting the Company's past involvement with SBS, including the
March 2020
Claim.  However, Robert G. Brown, president, director and indirect owner of SBS, since and notwithstanding  the Court's approval of the SBS Settlement Agreement, has continued to allege that the claims and amounts that were fully released pursuant to the SBS Settlement Agreement and approved by the bankruptcy court are due to SBS from the Company, and the Company strongly disagrees.  Since all such SBS claims have been completely released by SBS (with Mr. Brown's approval), the Company owes nothing and will
not
accrue anything respecting Mr. Brown's renewed claims.
 
At SGRP’s
March 2020
Board meeting, Mr. William H. Bartels was requested by an independent director to compile a list of claims that he and Mr. Brown believe are owed by the Company. On
March 17, 2020,
that list was given to the Audit Committee Chairman and included additional claims, net of an anticipated reduction, totaling approximately
$1.3
million, bring their total claims to approximately
$3
million.
 
The
March 2020
Claim includes estimates for the legal defenses of Robert G. Brown and William H. Bartels in California ("
PAGA
") and Texas ("
Rodgers
") in cases that do
not
involve and never included the Company and for which the Company believes it has
no
liability.  The
March 2020
Claim also includes defense expenses for SBS' Clothier case, which expenses SBS settled for a highly discounted amount in its bankruptcy reorganization but now requests the Company to pay in full. SBS in its bankruptcy reorganization settled its potential liability in the Rodgers and Clothier cases has, and since
July 2019
had,
no
more defense expenses in those cases.  SGRP settled Clothier separately and has never been included in Rodgers.  However, the alleged willful misclassification by SBS of its ICs after the Clothier misclassification determination is the basis for the PAGA lawsuit against Brown and Bartels.  Mr. Bartels' list also includes payments of
$500,000
per year to Robert G. Brown for extended retirement and advisory fees, although the Company has never proposed, committed or agreed to them and on several occasions specifically rejected Mr. Brown's proposals in various forms for them.
 
Infotech Litigation and Settlement
 
On
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) as plaintiff commencing a case against SGRP (the "
Infotech Action
"). The Infotech Action sought 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 on multiple occasions by both management and SGRP's Audit Committee (whose approval was required because Infotech is a related party).
 
In
2016,
SGRP acquired SPAR Brasil Serviços de Merchandising e Tecnologia S.A. ("
SPAR BSMT
"), its Brazilian subsidiary, with the assistance of Robert G. Brown (while he was still Chairman and an officer and director of SGRP) and his nephew, Peter W. Brown, who became an indirect
10%
owner of SPAR BSMT, and later became a director of SGRP on
May 3, 2018.
Robert G. Brown used his private company, Infotech and undisclosed foreign companies to structure the acquisition for SGRP.
 
Robert G. Brown incurred his alleged expenses associated with the transaction through Infotech, including salary allocations for unauthorized personnel and claims for his "lost tax breaks".  Robert G. Brown submitted his unauthorized and unsubstantiated "expenses" to SGRP, and SGRP's Audit Committee allowed approximately
$50,000
of them (which was paid by the Company) and disallowed approximately
$150,000
of them.  His claim increased to over
$190,000
in the Infotech Action.  The Company vigorously denied owing any of those amounts.
 
In
2018,
Infotech also threatened 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 (the "
Romanian Claim
"). Infotech gave a draft complaint to the Company in
2018.
The Company also vigorously denied owing any of those obligations or amounts.
 
In order to avoid the expenses of protracted litigation, SGRP's Management and the Audit Committee agreed that it would be in the best interest of all stockholders to reach a reasonable settlement of both the Infotech Action and the Romanian Claim for installment payments in reasonable amounts and mutual releases of all other related claims.  Management had offed
$225,000
to settle both, but at the urging of the Board and assurances of several Board members that it would help them persuade Robert G. Brown to settle, management agreed to increase the settlement offer to a total of
$275,000.
  After extensive negotiation between the Company and Infotech, Robert G. Brown accepted the
$275,000
offer and the parties entered into the Confidential Settlement Agreement and Mutual Release on
October 8, 2019 (
the "
Infotech Settlement Agreement
"), which was approved and ordered by the Court on
October 30, 2019,
and the Infotech Action was discontinued (dismissed) with prejudice.
 
The Infotech Settlement Agreement requires the Company to make payments totaling
$275,000
in
four
installments: (i)
$75,000
following Court approval (which Payment has already been made); (ii)
$75,000
within
30
days following discontinuance of the Infotech Action (which was discontinued on
October 30, 2019); (
iii)
$75,000
within
60
days following discontinuance of the Infotech Action; and (iv)
$50,000
within
90
days following discontinuance of the Infotech Action.  The Company paid the
first
four
installments and has made an appropriate accrual for the final installment as of
December 31, 2019. 
In
January 2020,
the Company made the final payment to Infotech.
 
The Company believes that the robust and comprehensive mutual releases in the Infotech Settlement Agreement
provide valuable relief from potential future claims and litigation by Infotech respecting the Company's past involvement with Infotech in the Brazilian and Romanian transactions.
 
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
") furnished by others and 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 did
not
manage, direct or control SBS, and SGRP did
not
participate in or control the defense by SBS of any litigation against it. The Company terminated its relationship with SBS and received
no
services from SBS after
July 27, 2018. 
For affiliation, termination, contractual details and payment amounts, see Note
10
 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 had been periodically subject to legal challenge (both currently and historically) by various states and others. SBS' expenses of defending those challenges and other proceedings generally were, through but
not
after the termination of the SBS services, reimbursed by the Company after and to the extent the Company determined (on a case by case basis) that those defense expenses were costs of providing services to the Company.
 
The Company settled its potential liability (as a current or former party) under
two
class action lawsuits against SBS, namely Clothier and Hogan.  SBS was separately dismissed from the Hogan class action prior to the Company's settlement.  SBS settled with Clothier and Rodgers in the SBS Bankruptcy, but Robert G. Brown and William H. Bartels were
not
released from Clothier, any related case or Rodgers (see above).  The Company has never been a party to the Rodgers case.
 
Any claim made and proven by Robert G. Brown, William H. Bartels, SBS, SAS, any other related party or any
third
party that the Company is somehow liable (through indemnification or otherwise) for any judgment or similar amount imposed against Mr. Brown, Mr. Bartels, SBS or SAS or any other related party, 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.
 
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 (instead of as employees) 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 Misclassification Determination
").  The plaintiffs and SBS then moved into phase
two
to determine damages (if any), which has included discovery as to the measure of damages in this case.
 
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, subject to the final court approval (the "
Clothier Settlement
").  Final approval was granted on
September 20, 2019. 
and the Company was released by plaintiff and the settlement class from all other liability under the Clothier Case. The Company recorded a
$1.3
million charge for the Clothier Settlement during
2018,
when the agreement in the Clothier Settlement was reached.  Pursuant to the Clothier Settlement SGRP will pay a maximum settlement amount of
$1.3
million, payable in
four
equal annual installments that commenced with the
first
payment of
$325,000
in
December 2019. 
The
$975,000
balance was accrued as of
December 31, 2019.
 
Since SGRP has
no
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.
 
SBS did
not
participate in the Clothier Settlement and was
not
released. Rather than proceed to the damage portion of the trial respecting trial the Clothier Misclassification Determination, SBS filed for bankruptcy protection.  See Note
6
 to the Company's Consolidated Financial Statements -
Commitments and Contingencies -- Legal Matters -- SBS Bankruptcy, Settlement and
March 2020
Claim 
and
SAS Settlement Discussions and Arbitration
, above.
 
SBS and 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 by SBS as independent contractors (instead of as employees), 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,
SGRP 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.
 
On
March 12, 2018,
the Court denied the Motion to Compel Arbitration as to SGRP because as drafted by SBS, the arbitration clause did
not
reference or protect SGRP according to the Court.  However, the Court eventually granted SBS the right to arbitrate without SGRP. SGRP appealed to the First Circuit contesting the District Court's decision that the arbitration clause (as written by SBS) did
not
protect SGRP.
 
On
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
no
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 (the "
Hogan Settlement
"), which was approved by the court and became final in
November 2019,
and the Company was released by plaintiff and the settlement class from all other liability under the Hogan Case.  Pursuant to the Hogan Settlement, SGRP paid a maximum settlement amount of
$250,000
(in
three
installments), which payments commenced in
December 2019 
with the
first
payment of
$150,000.
  The balance of
$100,000
was accrued as of
December 31, 2019
with
$50,000
paid in
March 2020
and the remaining
$50,000
payable in
June 2020.