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Note 12 - Subsequent Events

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Subsequent Events [Text Block]

12.

Subsequent Events

Potential Going Private Transaction

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

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

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

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

South Africa Consent

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