🧾 What This Document Is

This is an 8-K filing, which is a report of major events that shareholders should know about. Attached to it is Exhibit 99.1, the company's official press release announcing its financial results for the full year and fourth quarter of 2025 (which ended December 31, 2025). Think of it as the company's quarterly report card and strategic update, shared publicly.

🏢 What The Company Does

👉 In simple terms, SPAR Group helps brands and retailers get their products onto store shelves, set up displays, and run marketing promotions in stores across the U.S. and Canada. They're like the behind-the-scenes team that makes sure products look good and are available for you to buy.

💰 Financial Highlights: The 2025 Scorecard

The numbers tell a story of a company in the middle of a big, costly overhaul.

Revenue (Sales):

• Full-year 2025 sales were $136.1 million.
• On a comparable basis (looking at just the U.S. and Canada businesses they still own), sales grew 3.3% from 2024. This shows demand for their core services is steady.

Profitability (The Tough Part):

• Gross Profit Margin fell to 15.9% from 20.5% last year. This means they made less money on each dollar of sales, mainly due to the mix of services they provided.
• The company reported a GAAP Net Loss of $24.6 million for the year. That's a significant increase from a $3.2 million loss in 2024.
• A big reason for the larger loss was $4.8 million in restructuring costs for things like severance, as they streamlined the company.
• Even using a adjusted measure (Adjusted EBITDA), they had a loss of $8.6 million, down from a profit of $5.6 million in 2024.

Why it matters: The losses are painful, but management says they are the direct result of intentional, one-time investments to clean up the business for future health. They are spending money now to (hopefully) save and make more later.

🚀 Key Moves: A "Transformational" Year

CEO William Linnane called 2025 "transformational." Here’s what they actually did:

• Exited global & joint venture businesses to focus solely on the U.S. and Canada.
• Implemented a new company-wide ERP system (the core software that runs finance, HR, etc.).
• Moved headquarters and refreshed the executive team.
• Cut costs and reduced layers of management.

👉 The Goal: To become a "structurally leaner, profit-focused business" with a clear technology and growth plan.

📦 Financial Position & A New Loan

At year-end, the company's financial footing was solid but tight:

• Cash on hand: $3.3 million.
• Positive working capital (current assets minus current liabilities) of $14.7 million, which shows they can cover short-term bills.
• However, they used $18.4 million in cash from operating activities over the year, which highlights their need to improve profitability and cash generation.

Important "Subsequent Event": In March 2026, they secured a $4 million unsecured loan.

• Term: 3 years, due March 16, 2029.
• Interest Rate: 8% per year, fixed.
• Unique Feature: They also gave the lender 1 million shares of stock (at $0.80 per share). The $800,000 from that stock sale will reduce the final loan payoff.

🔮 What's Next: The 2026 Game Plan

Management is setting clear targets for the "next phase" of their strategy:

• Improve Margins: They expect a "rebound" in gross margin rates in 2026 by focusing on higher-margin merchandising work and new tech-enabled services.
• Control Costs: They are targeting quarterly SG&A (overhead) costs below $6.5 million and aim to get SG&A down to 15% of sales or lower over the medium term.
• Grow Smarter: They are excited about their sales pipeline and recent customer wins, using AI tools and RetailTech partnerships to offer better services.
• Priority #1: Generate positive cash flow and manage working capital tightly.

⚖️ Big Picture: Strengths & Risks

👍 Strengths:

• Core Business Growing: 3.3% comparable sales growth in a tough retail environment is a positive sign.
• Strategic Clarity: Management has a clear, communicated plan to fix the cost structure and focus on technology.
• Balance Sheet Action: They proactively extended their lending facilities and raised a new $4M loan to ensure they have the financial fuel to execute their plan.

⚠️ Risks:

• Execution Risk: The transformation is massive. Can they actually improve margins and cut costs as planned while still growing?
• Cash Burn: The company is not yet profitable and used significant cash in 2025. They need to turn this around in 2026.
• Competitive Market: The retail services industry is competitive. Winning new, higher-margin tech contracts is key to their future.

🧠 The Analogy

SPAR Group is like a homeowner who took on a major, messy kitchen renovation. In 2025, they ripped out old cabinets (exited global ventures), installed new plumbing and wiring (new ERP system), and lived in a construction zone, which was expensive and inconvenient (the net loss). The house is still standing, and now they have a modern foundation. In 2026, they plan to start cooking gourmet meals (profitable growth) in their brand-new, efficient kitchen.

📇 Key Contacts & People

• William Linnane, President and Chief Executive Officer
• Steven Hennen, Chief Financial Officer
• Company Website: http://www.sparinc.com

🧩 Final Takeaway

SPAR Group is in the tough, costly final stages of a deep corporate transformation. The 2025 losses are a direct result of that overhaul. The key for investors in 2026 is to watch for proof that the cost cuts are working and that the new, tech-focused sales strategy is translating into better profit margins, not just more revenue.