SPAR Group, Inc. (NASDAQ:SGRP) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive
Agreement.

Amendment to and Temporary Increase in
Sterling
Domestic Credit
Facility:

SGRP and certain of its US and Canadian subsidiaries, (namely
SPAR Marketing Force, Inc., SPAR Assembly Installation, Inc.
(f/k/a SPAR National Assembly Services, Inc.), SPAR Group
International, Inc., SPAR Trademarks, Inc., SPAR Acquisition,
Inc., SPAR Canada, Inc. and SPAR Canada Company) (together with
SGRP, the “Borrowers”), are parties to a Revolving Loan and
Security Agreement dated as of July 6, 2010, as amended (as
amended, the “Sterling Loan Agreement”), with Sterling National
Bank (the “Lender”), and their Amended and Restated Secured
Revolving Loan Note in the amended maximum principal amounts of
$9.0 million to Sterling National Bank (as amended, the
“Restated Sterling Note”), to document and govern their credit
facility with the Lender (including such agreement and note, the
“Sterling Credit Facility”). The Sterling Credit Facility as
amended currently is scheduled to expire and the Borrowers’
loans thereunder will become due on July 6, 2017 (with no early
termination fee).

The amendment to the Sterling Credit Facility effective as of
December 22, 2016 (the “Eighth Sterling Amendment”), among
other things, temporarily increased the maximum principal amounts
of Sterling’s commitment under the Sterling Loan Agreement from
$8.5 million to 9.0 million through January 31, 2017 (when such
maximum reverts to $8.5 million), increased the interest charges
from Sterling’s prime rate minus 0.50 per annum to Sterling’s
prime rate plus 0.50% per annum, and provided for the
Borrowers’ issuance of the Restated Sterling Note in replacement
of the old notes.

Revolving loans of up to $9.0 million ($8.5 million after January
31, 2017) are available to the Borrowers under the Sterling
Credit Facility based upon the borrowing base formula defined in
the Sterling Loan Agreement (principally 85% of “eligible” US
and Canadian accounts receivable less certain reserves). The
Sterling Credit Facility is secured by substantially all of the
assets of the Borrowers (other than the Company’s non-Canadian
foreign subsidiaries, certain designated domestic subsidiaries,
and those subsidiaries’ respective equity and assets).

The Sterling Loan Agreement currently requires the Borrowers to
pay interest on the loans thereunder equal to the greater of (i)
the Agent’s floating Prime Rate (as defined in such agreement)
plus one half of one percent (0.5%) per annum or (ii)
3.75% per annum), and to pay a fee on the maximum unused line
thereunder equal to one-eighth of one percent (0.125%) per annum.

The Sterling Loan Agreement continues to require the Borrowers to
maintain certain financial covenants (unchanged by the Eighth
Sterling Amendment), including maintenance by the Borrowers of a
minimum combined tangible net worth of $3.4 million and minimum
consolidated tangible net worth of $4.8 million, with those
figures increasing by at least 50% of combined and consolidated
net profit each year, respectively. In addition, the Borrowers
must not exceed a maximum combined indebtedness to tangible net
worth ratio of 3.0 to 1.0, and consolidated tangible net worth
ratio of 4.0 to 1.0 for the Company, and the Borrowers must
maintain a minimum fixed charge coverage ratio of 1.5 to 1.0.
Also, capital expenditures for the Borrowers cannot exceed $2.0
million during any fiscal year, and, on a consolidated basis, the
Company’s year-end operations may not result in a loss or
deficit, as determined in accordance with GAAP. As previously
reported in the Company’s most recent Quarterly Report filed on
Form 10-Q, The Company was not in compliance with the Fixed
Charge Ratio covenant at September 30, 2016, however a waiver was
obtained from Sterling Bank on November 18, 2016.

The Eighth Sterling Amendment and the Restated Sterling Note are
attached hereto and filed herewith as Exhibits 99.1 and 99.2,
respectively, and are hereby incorporated herein by reference.

Forward Looking Statements

This Current Report contains “forward-looking statements” made
by SPAR Group, Inc. (“SGRP“, and together with its
subsidiaries, the “SPAR Group” or the
“Company“) and this Current Report has been filed by
SGRP with the Securities and Exchange Commission (the
“SEC“). There also are “forward looking statements”
contained in SGRP’s Annual Report on Form 10-K for its fiscal
year ended December 31, 2015 (as filed, the “Annual
Report“), as filed with the SEC on March 30, 2016, in
SGRP’s definitive Proxy Statement respecting its Annual Meeting
of Stockholders held on May 19, 2016 (as filed, the “Proxy
Statement“), which SGRP filed with the SEC on April 27,
2016, and SGRP’s Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and other reports and statements as and when filed
with the SEC (including this Current Report, the Annual Report,
the Proxy Statement, and such other reports, each a “SEC
Report“). “Forward-looking statements” are defined in
Section 27A of the Securities Act of 1933, as amended (the
“Securities Act“) and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act“),
and other applicable federal and state securities laws, rules and
regulations, as amended (together with the Securities Act and
Exchange Act, collectively, “Securities Laws“).

The forward-looking statements made by the Company in this
Current Report includes (without limitation) any expectations,
guidance or other information respecting the pursuit or
achievement of the Company’s five corporate objectives (growth,
customer value, employee development, productivity efficiency,
and earnings per share), building upon the Company’s strong
foundation, leveraging compatible global opportunities, improving
on the value we already deliver to customers, our growing client
base, continuing balance sheet strength, customer contract
expansion, growing revenues and becoming profitable through
organic growth and acquisitions, attracting new business that
will increase SPAR Group’s revenues, improving product mix,
continuing to maintain or reduce costs and consummating any
transactions. The Company’s forward-looking statements also
include, in particular and without limitation, those made in
“Business”, “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in
the Annual Report. You can identify forward-looking statements in
such information by the Company’s use of terms such as “may”,
“will”, “expect”, “intend”, “believe”, “estimate”,
“anticipate”, “continue” or similar words or variations or
negatives of those words.

You should carefully consider (and not place undue reliance on)
the Company’s forward-looking statements, risk factors and the
other risks, cautions and information made, contained or noted in
or incorporated by reference into this Current Report, the Annual
Report, the Proxy Statement and the other applicable SEC Reports
that could cause the Company’s actual performance or condition
(including its assets, business, capital, cash flow, credit,
expenses, financial condition, income, liabilities, liquidity,
locations, marketing, operations, performance, prospects, sales,
strategies, taxation or other achievement, results, risks, trends
or condition to differ materially from the performance or
condition planned, intended, expected, estimated or otherwise
expected by the Company (collectively, “expectations“)
and described in the information in the Company’s
forward-looking and other statements, whether express or implied.
Although the Company believes them to be reasonable, those
expectations involve known and unknown risks, uncertainties and
other unpredictable factors (many of which are beyond the
Company’s control) that could cause those expectations to fail
to occur or be realized or such actual performance or condition
to be materially and adversely different from the Company’s
expectations. In addition, new risks and uncertainties arise from
time to time, and it is impossible for the Company to predict
these matters or how they may arise or affect the Company.
Accordingly, the Company cannot assure you that its expectations
will be achieved in whole or in part, that the Company has
identified all potential risks, or that the Company can
successfully avoid or mitigate such risks in whole or in part,
any of which could be significant and materially adverse to the
Company and the value of your investment in the Company’s Common
Stock.

You should carefully review the risk factors described in the
Annual Report (See Item 1A Risk Factors) and any other risks,
cautions or information made, contained or noted in or
incorporated by reference into this Current Report, the Annual
Report, the Proxy Statement or other applicable SEC Report. All
forward-looking and other statements or information attributable
to the Company or persons acting on its behalf are expressly
subject to and qualified by all such risk factors and other
risks, cautions and information.

The Company does not intend or promise, and the Company expressly
disclaims any obligation, to publicly update or revise any
forward-looking statements, risk factors or other risks, cautions
or information (in whole or in part), whether as a result of new
information, risks or uncertainties, future events or recognition
or otherwise, except as and to the extent required by applicable
law.

Item 9.01.Financial Statements and Exhibits.

to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

EXHIBIT INDEX

About SPAR Group, Inc. (NASDAQ:SGRP)

Spar Group, Inc. is an international merchandising and marketing services company. The Company provides its merchandising and other marketing services to manufacturers, distributors and retailers across the world, primarily in mass merchandisers, office supply, grocery, drug store, independent, convenience, toy, home improvement and electronics stores. It operates through two segments: the Domestic Division and the International Division. The Domestic Division provides merchandising and marketing services, furniture and other product assembly services, audit services, and technology services to manufacturers, distributors and retailers in the United States. Those services are primarily performed in mass merchandisers, office supply, grocery, drug store, dollar and electronics stores. The International Division provides merchandising, marketing services and in-store event staffing through subsidiaries in Japan, Canada, South Africa, India, China, Australia, Mexico and Turkey.

SPAR Group, Inc. (NASDAQ:SGRP) Recent Trading Information

SPAR Group, Inc. (NASDAQ:SGRP) closed its last trading session up +0.02 at 1.01 with 5,600 shares trading hands.