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Note 11 - Related Party Transactions | 12 Months Ended
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Dec. 31, 2024
Notes to Financial Statements |
Related Party Transactions Disclosure [Text Block] | 11. Related Party Transactions Domestic Related Party Transactions On December 1, 2021, the Corporation entered into the Agreement for Marketing and Advertising Services (the "WB Agreement") with WB Marketing, Inc. (the "Agent", and together with the Company, the "Parties"). The Agent is an entity owned and controlled by Mrs. Jean Matacunas who is the wife of President and Chief Executive Officer, Michael R. Matacunas. Mr. Matacunas is also a minority owner of the Agent. The service fees paid to WB Marketing for the years ended December 31, 2024 and 2023, were $104,000 and $103,000, respectively. Prior to December 31, 2023, National Merchandising Services, LLC ("NMS"), was a consolidated domestic subsidiary of the Company owned jointly by SGRP and by National Merchandising of America, Inc. ("NMA"). Mr. Edward Burdekin was the Chief Executive Officer and President and a director of NMS and also an executive officer and director of NMA. Ms. Andrea Burdekin, Mr. Burdekin's wife, was the sole stockholder and also a director of both NMA and NMS. NMA was a related party of the Company but is not under the control of or consolidated with the Company. Mr. Burdekin's wife also owns National Remodel & Setup Services, LLC ("NRSS"). During the years ended December 31, 2023 and 2022, NRSS provided substantially all of the domestic merchandising specialist field force used by NMS. For those services, NMS reimbursed NRSS certain costs for providing those services plus a premium ranging from 4.0% to 10.0% of certain costs. NMS also leased office space from Mr. Burdekin's personal property. In December 2023, the Company sold its ownership interest in NMS. On December 22, 2023, the Company entered into an agreement with National Retail Remodel Services (the "Buyer") to sell its 51% ownership interest in National Merchandising Services, LLC ("NMS") to the Buyer for total consideration of $1,441,004. The transaction closed on December 31, 2023. Per the agreement, the purchase price is due from the Buyer as follows: (1) a payment of $700,000 due immediately to the escrow agent upon closing, releasable to the Company in January 2024; (2) $523,000 in the form of the Buyer's promissory note due and payable on January 31, 2024; and (3) a payment of up to $209,004 contingent upon collection of an outstanding receivable. The $700,000 and $523,000 portions of consideration for this transaction are recorded in "Other Receivables" at December 31, 2023 and were received in first quarter of 2024. The Company’s December 31, 2023 financial results include a loss on this sale of approximately $427,000, primarily reflecting the write-off of remaining goodwill related to NMS. As of December 31st, 2024, payment upon collection of the outstanding receivables has not been made and attempts to collect are ongoing. The Company has not included the receivables related to this collection on its balance sheet. SPAR Group, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 11. Related Party Transactions (continued) Summary of Certain Related Party Transactions The following costs of affiliates were charged to the Company (in thousands):
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Services provided by affiliates: |  |  |  |  |  |  |  |
National Remodel & Setup Services (NRSS) (1) |  | $ | - |  |  | $ | 5,173 |
Consulting and administrative services (RJ Holdings) (2) |  |  | 161 |  |  |  | 472 |
Office lease expenses (RJ Holdings) (2) |  |  | 4 |  |  |  | 8 |
Consulting and administrative fees (SPARFACTS) (2) |  |  | - |  |  |  | 112 |
Other (2) |  |  | 50 |  |  |  | 178 |
Total services provided by affiliates |  | $ | 215 |  |  | $ | 5,943 |
Due to affiliates consists of the following (in thousands): |  | December 31, |
|  | 2024 |  |  | 2023 |
Loans from local investors:(3) |  |  |  |  |  |  |  |
China |  | $ | - |  |  | $ | 2,316 |
Mexico |  |  | - |  |  |  | 623 |
Resource Plus |  |  | - |  |  |  | 266 |
Total due to affiliates |  | $ | - |  |  | $ | 3,205 |
(1) Represent loans from the local investors into the Company's subsidiaries (representing their proportionate share of working capital loans). The loans have no payment terms and are due on demand. (2) These expenses are reflected in "Selling, general, and administrative expense" expense in the consolidated statements of operations and comprehensive (loss) income. (3) Represent loans from the local investors into the Company's subsidiaries (representing their proportionate share of working capital loans). The loans have no payment terms and are due on demand. Bartels' Retirement and Director Compensation William H. Bartels retired as an employee of the Company as of January 1, 2020. However, he continues to serve as a member of SPAR's Board. Mr. Bartels is a significant stockholder of SGRP, is one of the founders of the Company, and is an affiliate and related party of SGRP. Effective as of January 18, 2020, SPAR's Governance Committee proposed and unanimously approved retirement benefits for Mr. Bartels, for the five-year period commencing January 1, 2020, and ending December 31, 2024 (the "Five-Year Period"), for Mr. Bartels. The aggregate value of benefits payable to Mr. Bartels is approximately $0.2 million per year and a total of $1.1 million for the Five-Year Period. As of December 31, 2024 $23,000 of retirement benefits remains outstanding and is included within Accrued expenses and other current liabilities on the consolidated balance sheets. Pursuant to the 2024 Stock Repurchase Program, on May 3, 2024, SGRP's Board and its Audit Committee approved SGRP's Repurchase Agreement with William H. Bartels for SGRP's private repurchase of 1,000,000 shares of SGRP's Common Stock from William H. Bartels, dated and effective as of April 30, 2024, at a purchase price of $1.80 per share (the Nasdaq closing price on April 29, 2024). Other Related Party Transactions and Arrangements On April 18, 2024, the Company entered into a Securities Purchase Agreement to buy from Mr. Richard Justus the remaining minority joint venture interests of Resource Plus and its sister companies, Mobex of North Florida, Inc., and Leasex, LLC. Based on the terms set in the original joint venture agreement, the Company will pay a total of $3 million in annual payments over a five-year period. $0.3 million was paid within the five business days of closing, and the remaining $2.8 million will be paid pursuant to a Secured Promissory Note. The agreement resulted in the termination of all relevant shareholder and operating agreements, although specific confidentiality obligations remain effective for three years post-closing and specific mutual releases were provided. The purchase was closed and completed on May 1, 2024. As of December 31, 2024, $0.5 million has been paid and the remaining $2.2 million Promissory Note is outstanding and is reported on the balance sheet in long-term debt (including current portion). International Joint Venture Transactions Agreement to sell the Company’s ownership interest in its South African Joint Venture Prior to March 31, 2024, SGRP Meridian Proprietary Limited ("Meridian") was a consolidated international subsidiary of the Company and was owned 51% by the Company and 49% by Friedshelf (Pty) Ltd., Lindicom Proprietary Limited, and Lindicom Empowerment Holdings Proprietary Limited ("Local Owners"). On February 7, 2024, the Company entered into an agreement to sell its 51% ownership interest in Meridian to the Local Owners for 180,700,000 South African Rand, 80% of which would be paid upon closing. SPAR Group, Inc. and Subsidiaries Notes to Consolidated Financial Statements (continued) 11. Related Party Transactions (continued) The closing conditions under that agreement were satisfied in all material respects by March 31, 2024. and on April 29, the Company received 144,560,000 South African Rand from the Local Buyers (or approximately $7.7 million). The remaining purchase price of approximately $1.9 million is recorded as other receivable on the balance sheet and will be paid on December 31, 2025, and its payment is secured by an irrevocable unconditional guarantee from Investec Bank Limited. The Company has also licensed certain technology (including SPARView) and trademarks to Meridian in connection with the sale. The Company recognized a pre-tax gain of approximately $7.2 million on this transaction, which is presented within “(Gain) / loss on sale of business” in the Consolidated Statements of Operations and Comprehensive (Loss) Income. The company has no continuing involvement in Meridian. Agreement to sell the Company’s ownership interest in its Chinese Joint Venture On February 23, 2024, the Company entered into an agreement to sell its 51% ownership interest in SPAR (Shanghai) Marketing Management Co., Ltd. to Shanghai Jingbo Enterprise Consulting Co., Ltd. and Shanghai Wedone Marketing Management Co. Ltd. The total price paid to the Company is $200,000. The sale was completed in April 2024. The Company has recognized a loss of $1.1 million in the second quarter of 2024 as a result of this transaction, which is presented within “Loss on disposal of business” in the Consolidated Statements of Operations and Comprehensive (Loss) Income from discontinued operations. The company has no continuing involvement in SPAR (Shanghai) Marketing Management Co., Ltd. Agreement to sell the Company’s Brazilian subsidiary that owns its interest in its Brazilian Joint Venture On March 26, 2024, the Company signed a share purchase agreement with JK Consultoria Empresarial Ltda. ("JKC") for JKC to acquire the Company's Brazilian holding company (which in turn owns the Company's 51 percent interest in its Brazilian joint venture subsidiary) for BRL 58.9 million or approximately $11.8 million. Closing of the sale occurred in June 2024. The Company has recognized a loss of $1.2 million in the second quarter of 2024 as a result of this transaction, which is presented within “(Gain) / Loss on sale of business” in the Consolidated Statements of Operations and Comprehensive (Loss) Income. The company has no continuing involvement in the Brazilian Joint Venture. Agreement to sell SPAR's 100% ownership interest in SPAR Japan On July 23, 2024, the Company entered into an agreement to sell its 100% ownership interest in SPAR Japan for $500,000. The sale closed on August 30, 2024. The Company has recognized a loss of $0.7 million in the third quarter of 2024 as a result of this transaction, which is presented within “(Gain) / Loss on sale of business” in the Consolidated Statements of Operations and Comprehensive (Loss) Income. The company has no continuing involvement in SPAR Japan. Agreement to sell SPAR's 51% ownership interest in its Indian Joint Venture On August 31, 2024, the Company closed on an agreement to sell its 51% ownership interest in its Indian Joint venture for $500,000. The sale closed on September 25, 2024. The Company has recognized a loss of $1.4 million in the third quarter of 2024 as a result of this transaction, which is presented within “(Gain) / Loss on sale of business” in the Consolidated Statements of Operations and Comprehensive (Loss) Income. The company has no continuing involvement in the Indian Joint Venture. Agreement to sell SPAR's 51% ownership interest in its Mexican Joint Venture On December 19, 2024, the Company closed on an agreement to sell its 51% ownership interest in its Mexican Joint venture for $417,000. The sale closed on December 19, 2024. The Company has recognized a loss of $1.1 million in the fourth quarter of 2024 as a result of this transaction, which is presented within “(Gain) / Loss on sale of business” in the Consolidated Statements of Operations and Comprehensive (Loss) Income. The company has no continuing involvement in the Mexican Joint Venture.

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