Note 8 - Related Party Transactions |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2025 | |||
| Notes to Financial Statements | |||
| Related Party Transactions Disclosure [Text Block] |
Domestic Related Party Transactions
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 ended 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 March 31, 2025 there are no retirement benefits remaining outstanding.
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 the Corporation'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
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. As of
March 31, 2025,
$0.5 million has been paid and the remaining
$2.2 million Promissory Note is outstanding and is reported on the condensed consolidated balance sheets (including current portion).
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. During the first three months of 2025, the Company his recognized approximately $129,000 in expenses under this agreement. In 2025, WB Marketing changed its name to Qantm Creative.
SBS and Infotech are related parties and affiliates of SGRP but are not under the control or part of the consolidated Company. In July 1999 the Company, SBS and Infotech entered into a perpetual software ownership agreement providing that each party independently owned an undivided share of and has the right to unilaterally license and exploit certain portions of the Company's proprietary scheduling, tracking, coordination, reporting and expense software are co-owned with SBS and Infotech, and each entered into a non-exclusive royalty-free license from the Company to use certain "SPAR" trademarks in the United States.
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.
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 in the first quarter of 2024, which is presented within Gain on sale of business in the Consolidated Statements of Operations and Comprehensive Income.
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. 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% ownership 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. 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. 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. 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. The Company has no continuing involvement in the Mexican Joint Venture.
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