At the end of the fiscal quarter covered by this Report, on June 5, 2026, a purported shareholder derivative action was filed against certain of the Company's current and former directors and officers, naming the Company as a nominal defendant, in the Delaware Court of Chancery on behalf of the Company (“Complaint”). The Complaint was filed by Robert G. Brown, who purports to be a shareholder of the Company (“Brown”).  Brown subsequently filed an amended Complaint on July 24, 2026.  The amended Complaint asserts claims against certain current and former directors and officers of the Company, and generally alleges breach of fiduciary duty, unjust enrichment, and requests for declaratory and equitable relief relating to allegedly void or voidable Board actions. Neither the Company nor the individual defendants have filed a responsive pleading to the amended Complaint. 

Separately, on July 30, 2026, Brown filed an arbitration action against the Company, seeking to enforce a Settlement Agreement and Release dated as of May 1, 2026 (“Settlement Agreement”), which resolved a prior arbitration between Brown and the Company. As part of that settlement, the Company agreed to cooperate with Brown’s effort to convert certain shares held by Spar Business Services, Inc. to book-entry form and to facilitate the registration of such shares. The Company has refused to approve such transfer, asserting that Brown breached and repudiated both the Change-in-Control Agreement, dated January 28, 2022, and the Settlement Agreement by filing his stockholder derivative suit, which releases the Company from any further obligations under the Settlement Agreement. Brown seeks an order compelling the Company to specifically perform its obligations under the Settlement Agreement and awarding Brown damages for the Company’s alleged failure to do so.

The Company believes there is no merit to the allegations asserted by Brown, and intends to defend the actions vigorously, and to assert certain counterclaims in its response to the Complaint, and in arbitration.   Because these matters are in their preliminary stages, the Company is unable to predict their outcome or estimate a range of any reasonably possible loss, if any, and no assurance can be given that these matters will not have a material adverse effect on the Company's business, financial condition, or results of operations.

Separately, on July 30, 2026, Brown filed an arbitration action against the Company (the “Arbitration”), seeking to enforce a Settlement Agreement and Release dated as of May 1, 2026 (“Settlement Agreement”), which resolved a prior arbitration between Brown and the Company. As part of that settlement, the Company agreed to cooperate with Brown’s effort to convert certain shares held by Spar Business Services, Inc. to book-entry form and to facilitate the registration of such shares. The Company has refused to approve such transfer, asserting that Brown breached and repudiated both the Change-in-Control Agreement, dated January 28, 2022 (“CIC Agreement”), and the Settlement Agreement by filing the Complaint, which releases the Company from any further obligations under the Settlement Agreement. Brown seeks an order compelling the Company to specifically perform its obligations under the Settlement Agreement and awarding Brown damages for the Company’s alleged failure to do so. 

On August 7, 2026, the Company filed its answer to Brown’s demand for Arbitration, asserted affirmative defenses and requested judgment in the Company’s favor on all counts related to Brown’s demand for Arbitration. The Company also asserted certain counterclaims, including for damages related to, among other counterclaims, (i) for breach of the CIC Agreement and the Settlement Agreement; (ii) breach of the implied covenant of good faith and fair dealing; and (iii) disgorgement of short-swing profits under Section 16(b) of the Securities and Exchange Act of 1934, as amended (“Exchange Act”). The Company also seeks declarations that the Brown has repudiated the Settlement Agreement and the CIC Agreement. In its answer, the Company requests damages for, among other damages, (u) Brown’s breaches of the CIC Agreement and the Settlement Agreement; (v) restitution of all amounts paid to Brown under the Settlement Agreement; (w) all costs and expenses in defending both Complaint and the Arbitration; (x) all consequential and incidental damages proximately caused by Brown’s breaches of the CIC Agreement and Settlement Agreement; (y) specific performance of Brown’s obligations under the CIC Agreement and the Settlement Agreement; and (z) disgorgement of all short-swing profits realized by Brown as required under the Exchange Act.

The Company believes there is no merit to the allegations asserted by Brown, and intends to vigorously defend the actions, and vigorously pursue its counterclaims in its response to the Complaint, and in Arbitration.   Because these matters are in their preliminary stages, the Company is unable to predict their outcome or estimate a range of any reasonably possible loss or recovery, if any, and no assurance can be given that these matters will not have a material adverse effect on the Company's business, financial condition, or results of operations. 

The Company has evaluated this matter in accordance with ASC 855, Subsequent Events, and has concluded that it is a non-recognized subsequent event, as the underlying conduct predates the balance sheet date but the triggering event (the filing) occurred afterward, and no adjustment to the condensed consolidated financial statements as of June 30, 2026 is required as a result. The Company believes there is no merit to the allegations asserted by Brown, and intends to vigorously defend the actions, and to vigorously pursue its counterclaims in its response to the Complaint, and in Arbitration