11.

Stock Based Compensation and Other Plans

The Company believes that it is desirable to align the interests of its directors, executives, employees and consultants with those of its stockholders through their ownership of shares of Common Stock issued by ("

SGRP Shares

"). Although the Company does

not

require its directors, executives, employees or consultants to own SGRP Shares, the Company believes that it can help achieve this objective: (i) by providing medium term equity incentives through the issuance to its eligible directors, executives, employees or consultants of options to purchase SGRP Shares and other stock-based awards, which it believes it has done pursuant to the Prior Plans (as defined below); (ii) by providing medium-term equity incentives through the issuance to its eligible directors, executives and employees of options to purchase SGRP Shares pursuant to the

2020

Plan (as defined below) if approved by SGRP's stockholders; and (iii) by facilitating the purchase of SGRP Shares by all of its eligible executives, employees and consultants who elect to participate in its Employee or Consultant Stock Purchase Plans (as defined below). In particular, the Company believes that granting stock-based awards (including restricted options to purchase SGRP Shares to such directors, executives and employees, encourages growth in their ownership of SGRP Shares, which in turn leads to the expansion of their stake in the longer-term performance and success of the Company.

SGRP has granted stock option and restricted stock awards to the Company's eligible directors, officers and employees and consultants providing services to the Company to purchase SGRP Shares pursuant to SGRP's

2018

Stock Compensation (the "

2018

Plan

"), and SGRP's

2008

Stock Compensation Plan (as amended, the "

2008

Plan

"). SGRP's stockholders approved and adopted the

2018

Plan in

May 2018

and the

2008

Plan in

May 2008,

as the successor to various predecessor stock option plans.

As of

December 31, 2020,

there were awards representing

585,000

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

2018

Plan (

565,000

of which remained outstanding), and awards respecting

3,044,927

shares of SGRP's Common Stock outstanding under the

2008

Plan. After

May 31, 2019,

the

2018

Plan ended and

further grants can be made under the

2018

Plan respecting such shares of SGRP's Common Stock.

2020

Plan

The Board authorized and approved the revised proposed

2020

stock compensation plan of SPAR Group, Inc. (the "

2020

Plan

"), to be submitted to the Corporation's stockholders for ratification and approval at the Special Meeting. The

2020

Plan: (a) has

four

-month term from the

2020

Plan Effective Date (as defined below) through

May 1, 2021 (

the "

Period

"); (b) provides for the issuance of "non-qualified" option awards to purchase shares of SGRP's Common Stock ("

SGRP Shares

") aggregating: (i)

550,000

SGRP Shares

plus;

(ii)

50,000

SGRP Shares for each of up to the

first

three

additional new Directors during the period

December 1, 2020,

April 30, 2021 (

for a possible total of

700,000

SGRP Shares) available for future Awards during the

Period as outlined below (the "

Maximum

") under

2020

Plan; (c) requires the Company to issue as of the Effective Date of the Plan new awards for options to purchase: (i) New Awards for options to purchase an aggregate of

125,000

New Award Shares to

employees (other than the Named Executive Officers) in individual amounts designated by the Board; (ii)

10,000

new award shares to each of Panagiotis N. Lazaretos, Igor Novgorodtsev, Robert G. Brown, and Arthur H. Baer (each a director); and (iii)

50,000

new award shares to each member of the Board of Directors on the Effective Date of the Plan.

The

2020

Plan became effective immediately upon the approval by stockholders on

January 19, 2021 (

the "

2020

Plan Effective Date

"), and the

2020

Plan will govern all options issued thereafter. Capitalized terms used and

not

otherwise defined herein shall have the meanings respectively assigned to them in the

2020

Plan.

The

2020

Plan provides: (i) for a term from the

2020

Plan Effective Date (as defined below) through

May 31, 2021 (

the "

Period

"); and (ii) for

550,000

shares of SGRP's Common Stock ("

SGRP Shares

") plus

50,000

additional SGRP Shares for each new director added to the Board between

January 19, 2021

and

April

1,2021,

available for future Awards during the

Period as outlined below (the "

Maximum

") under

2020

Plan. The descriptions of the

2020

Plan below are subject to and are qualified in their entirety by the full text of the

2020

Plan, which is attached as Annex B to and is hereby incorporated by reference into this Proxy Statement/Information Statement.

Since

one

new director joined the Board,

600,000

SGRP Shares were available for Awards on the

2020

Plan Effective Date. After making the contemplated awards after the

2020

Plan Effective Date, the remaining availability for future new awards for options to purchase will be

35,000

SGRP Shares unless new directors join the Board between

January 19, 2021

and

April

1,2021.

Under the

2020

Plan, the Company (through its Compensation Committee with Board approval)

may

from time to time grant Awards in the form of nonqualified stock options ("

NQSO

s"), respecting SGRP Shares to and the Company's specified executives and employees and directors. However, unlike the

2008

Plan and

2018

Plan, the

2020

Plan does

not

permit the granting of incentive stock options ("

ISOs

"), stock appreciation rights based on SGRP Shares ("

SAR

s"), restricted SGRP Shares ("

Restricted Stock

"), or restricted stock units based on SGRP Shares ("

RSU

s").

Summary of the

2020

Plan

The

2020

Plan and

2018

Plan and information regarding options, stock appreciation rights, restricted stock and restricted stock units granted thereunder are summarized below, but these descriptions are subject to and are qualified in their entirety by the full text of the

2020

Plan. Unless again amended and extended (as approved by SGRP's stockholders), the

2020

Plan terminates on

May 31, 2021,

and thereafter

further Awards

may

be made under it unless additional time and shares are added to it in an amendment approved by the Board and stockholders. Awards granted prior to the end the final term of the

2020

Plan shall continue to be governed by the

2020

Plan (which

2020

Plan shall continue in full force and effect for that purpose).

Subject to the terms and conditions and within the limitations of the

2020

Plan, the Compensation Committee has the power and authority to recommend to the Board for Board approval: (i) the persons who shall be granted Awards under the

2020

Plan; (ii) when they shall receive Awards and the applicable grant dates; (iii) the standard term of each award, including any provisions for early termination or forfeiture; (iv) the method or formula for determining: (A) the date each option shall become exercisable; (B) whether the installments shall be cumulative; and (C) the date each installment shall become exercisable or vest and the term of each installment; (v) the form of payment of the exercise price for any option; (vi) the method or formula for determining: (A) the exercise price of each option; and (B) the Fair Market Value of a share of Common Stock for all purposes of the Plan; (vii) whether and under what conditions to subject the exercise or vesting of all or any portion of an award to the fulfillment of certain restrictions or contingencies, including (without limitation) restrictions or contingencies relating to: (A) entering into a covenant

not

to compete with any SGRP Company; (B) financial objectives for the Corporation, any of its Subsidiaries, a division, a product line or other category; and/or (C) the period of continued employment or consulting of the awardee with any SGRP Company, and in each case to determine whether such restrictions or contingencies have been met; (viii) the method or formula for determining the amount, if any, necessary to satisfy the obligation to withhold taxes or other amounts with respect to any award; (ix) whether to cancel or modify an award either with or without the consent of the Awardee or as provided in the Contract, provided, however, that any modified provision is permitted to be included in an Award granted under the

2020

Plan on the date of the modification, and provided, further, that in the case of a modification (within the meaning of Section

424

(h) of the Code) of an ISO, such option as modified would be permitted to be granted on the date of such modification under the terms of the

2020

Plan; (

) how to construe the respective Contracts and the

2020

Plan; and (xi) the policies, rules and regulations relating to the

2020

Plan and how and when to prescribe, amend and rescind the same.

The

2020

Plan sets and limits the maximum number of shares of Common Stock that

may

be issued pursuant to Awards made under the

2020

Plan to the

Maximum during the

Period, subject to adjustment as provided in the

2020

Plan (see below).

The employees, officers and directors of the providing services to the Company (collectively, the "

Participants

") under the

2020

Plan

may

be (and under the

2018

Plan

may

have been) granted certain Equity Compensation Awards based on SGRP Shares. There are approximately

120

employees, officers and directors who currently meet the eligibility requirements to participate in the

2020

Plan.

Like the

2018

Plan, the

2020

Plan permits the granting of awards consisting of non-qualified options to purchase shares of SGRP Shares Common Stock ("

NQSOs

" or "

Options

"). However (unlike the

2018

Plan and

2008

Plan), the

2020

Plan does

not

permit granting options that qualify under Section

422

of the United States Internal Revenue Code of

1986

as amended (the "

Code

") for treatment as incentive stock options ("

Incentive Stock Options

" or "

ISO

") stock appreciation rights based on SGRP Shares ("

SAR

s"), restricted SGRP Shares ("

Restricted Stock

"), and restricted stock units based on SGRP Shares ("

RSUs

").

2008

Plan Summary

2008

Plan Stock option award activity for the years ended

December 31, 2020

and

2019

is summarized below:

					Weighted-
			Weighted-		Average		Aggregate
			Average		Remaining		Intrinsic
			Exercise		Contractual		Value
Option Awards	Shares		Price		Term (Years)		(thousands)
Outstanding at January 1, 2019		3,044,927	$	1.01		4.55	$	103
Granted		–		–		–		–
Exercised/cancelled		804,580	$	0.44		–	$	–
Forfeited or expired		13,136		–		–		–
Outstanding at December 31, 2019		2,227,211	$	1.22		4.83	$	452
Granted		–		–		–		–
Exercised		57,500	$	1.00		–	$	–
Forfeited or expired		711,775		–		–		–
Outstanding at December 31, 2020		1,457,936	$	1.31		3.63	$	113
Exercisable at December 31, 2020		1,367,936	$	1.33		3.45	$	101

The weighted-average grant-date fair value of stock option awards granted during the year ended

December 31, 2020

was

$0.00.

The total intrinsic value of stock option awards exercised during the year ended

December 31, 2020

and

2019

was

$6,000

and

$257,000,

respectively.

The Company recognized

$95,000

and

$139,000

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

December 31, 2020

and

2019

, respectively. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended

December 31, 2020

and

2019

, was approximately

$24,000

and

$35,000,

respectively.

As of

December 31, 2020

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

$17,000.

This expense is expected to be recognized over a weighted average period of approximately

1.0

years, and will be adjusted for changes in estimated forfeitures.

Plan Summary

Following are the specific valuation assumptions used for options granted in

2020

and

2019

for the

2019

Plan:

	2020			2019
Expected volatility		0.0	%		39.0	%
Expected dividend yields		0.0	%		0.0	%
Expected term (in years)		2			3
Risk free interest rate		0.0	%		2.3	%
Expected forfeiture rate		0.0	%		5.0	%

2018

Plan Stock option award activity for the years ended

December 31, 2020

and

2019

are summarized below:

					Weighted-
			Weighted-		Average		Aggregate
			Average		Remaining		Intrinsic
			Exercise		Contractual		Value
Option Awards	Shares		Price		Term (Years)		(thousands)
Outstanding at January 1, 2019		235,000	$	1.23		9.35	$	–
Granted		320,000	$	0.64		–	$	–
Exercised/cancelled		–		–		–		–
Forfeited or expired		–		–		–		–
Outstanding at December 31, 2019		555,000	$	0.89		8.88	$	–
Granted		–		–		–		–
Exercised		18,750	$	0.64		–	$	–
Forfeited or expired		106,250		–		–		–
Outstanding at December 31, 2020		430,000	$	0.90		7.87	$	8
Exercisable at December 31, 2020		281,250	$	0.90		7.87	$	8

The weighted-average grant-date fair value of stock option awards granted during the year ended

December 31, 2020

was

$0.00.

The total intrinsic value of stock option awards exercised during the years ended

December 31, 2020

and

2018

was

$3,000

and

$0.

The Company recognized

$34,000

and

$90,000

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

December 31, 2020

and

2019

, respectively. The recognized tax benefit on stock-based compensation expense related to stock options during the years ended

December 31, 2020

and

2019

, was approximately

$8,000

and

$22,000,

respectively.

As of

December 31, 2020

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

$41,000.

This expense is expected to be recognized over a weighted average period of approximately

2.0

years, and will be adjusted for changes in estimated forfeitures.

Restricted Stock -

2008

Plan

The restricted stock awards previously issued under the

2008

Plan vested during the

first

four

years following issuance at the rate of

25%

on each anniversary date of their issuance so long as the holder continues to be employed by the Company. Restricted stock granted under the

2008

Plan is measured at fair value on the date of the grant, based on the number of shares granted and the quoted price of the Company's common stock. The shares of stock are issued and value is recognized as compensation expense ratably over the requisite service period which generally is the award's vesting period. The Company did

not

issue restricted stock awards to its employees or Directors under the

2008

plan during the years ended

December 31, 2020

and

2019.

The following table summarizes the activity for restricted stock Awards during the years ended

December 31, 2020

and

2019

				Weighted-
				Average
				Grant Date
				Fair Value
	Shares			per Share
Unvested at January 1, 2019		1,000		$	1.36
Granted		–			–
Vested		(1,000	)		1.36
Forfeited		–			–
Unvested at December 31, 2019		–			–
Granted		–			–
Vested		–			–
Forfeited		–			–
Unvested at December 31, 2020		–		$	–

During the years ended

December 31, 2020

and

2019

, the Company recognized approximately

and

$1,200,

respectively, of stock-based compensation expense related to restricted stock. The recognized tax benefit on stock-based compensation expense related to restricted stock during the years ended

December 31, 2020

and

2019

was approximately

During the years ended

December 31, 2020

and

2019

, the total fair value of restricted stock vested was

and

$1,000,

respectively.

As of

December 31, 2020

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

$0.

Restricted Stock -

2018

Plan

The restricted stock awards previously issued under the

2018

Plan (like those under the

2008

Plan) vested during the

first

four

years following issuance at the rate of

25%

on each anniversary date of their issuance so long as the holder continues to be employed by the Company. Restricted stock granted under the

2018

Plan (like those under the

2008

Plan) is measured at fair value on the date of the grant, based on the number of shares granted and the quoted price of the Company's common stock. The shares of stock are issued and value is recognized as compensation expense ratably over the requisite service period which generally is the award's vesting period. In

2020

and

2019,

there were

restricted stock awards issued to its Directors.

The following table summarizes the activity for restricted stock awards during the year ended

December 31, 2020

and

2019:

				Weighted-
				Average
				Grant Date
				Fair Value
	Shares			per Share
Unvested at January 1, 2019		10,000		$	1.23
Granted		–			–
Vested		(10,000	)		1.23
Forfeited		–			–
Unvested at December 31, 2019		–			–
Granted		–			–
Vested		–			–
Forfeited		–			–
Unvested at December 31, 2020		–		$	–

During the years ended

December 31, 2020

and

2019

, the Company recognized approximately

and

$4,000,

respectively, of stock-based compensation expense related to restricted stock. The recognized tax benefit on stock based compensation expense related to restricted stock during the years ended

December 31, 2020

and

2019

was approximately

and

$1,000,

respectively.

During the years ended

December 31, 2020

and

2019

, the total fair value of restricted stock vested was

and

$7,000,

respectively.

As of

December 31, 2020

and

2019,

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

Inducement Plan Summary

During

2020,

the Company issued

200,000

inducement stock options outside the

2018

Plan.

Inducement Plan Stock option award activity for the year ended

December 31, 2020

is summarized below:

				Weighted-
			Weighted-	Average		Aggregate
			Average	Remaining		Intrinsic
			Exercise	Contractual		Value
Option Awards	Shares		Price	Term (Years)		(thousands)
Outstanding at December 31, 2019	–		–	–		–
Granted	200,000	$	0.85	9.67	$	60
Exercised	–		–	–		–
Forfeited or expired	–		–	–		–
Outstanding at December 31, 2020	200,000	$	0.85	9.67	$	60
Exercisable at December 31, 2020	–		–	–		–

The weighted-average grant-date fair value of stock option Awards granted during the year ended

December 31, 2020

was

$0.

The total intrinsic value of stock option Awards exercised during the year ended

December 31, 2020

was

$0.

The Company recognized

$7,000

and

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

December 31, 2020.

The recognized tax benefit on stock-based compensation expense related to stock options during the years ended

December 31, 2020,

was approximately

$2,000.

As of

December 31, 2020,

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

$71,000.

This expense is expected to be recognized over a weighted average period of approximately

4.0

years, and will be adjusted for changes in estimated forfeitures.

Stock Purchase Plans

2001,

SGRP adopted its

2001

Employee Stock Purchase Plan (the "

ESP Plan

"), which replaced its earlier existing plan, and its

2001

Consultant Stock Purchase Plan (the "

CSP Plan

"). These plans were each effective as of

June 1, 2001.

The ESP Plan allows employees of the Company, and the CSP Plan allows employees of the affiliates of the Company to purchase SGRP's Common Stock from SGRP without having to pay any brokerage commissions. On

August 8, 2002,

the Board approved a

15%

discount for employee purchases of Common Stock under the ESP Plan and recommended that its affiliates pay

15%

of the value of the stock purchased as a cash bonus for affiliate consultant purchases of Common Stock under the CSP Plan.