UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
Amendment No. 1
FOR ANNUAL AND TRANSITIONAL REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2003
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 for the transition period from _______ to _______
Commission file number 0-27824
SPAR GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0684451
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
580 White Plains Road, Tarrytown, New York 10591
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 332-4100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Common Stock,
par value $.01 per share
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ].
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Rule 12b-2 of the Act.) YES [ ] NO [X]
The aggregate market value of the Common Stock of the Registrant held
by non-affiliates of the Registrant on June 30, 2003, based on the closing price
of the Common Stock as reported by the Nasdaq National Market on such date, was
approximately $20,892,441.
The number of shares of the Registrant's Common Stock outstanding as of
December 31, 2003, was 18,858,972 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Introduction
This Form 10-K/A (Amendment No. 1) amends the Annual Report for the Fiscal Year
ended December 31, 2003 on Form 10-K by amending and restating certain portions
of the Notes to the Consolidated Financial Statements substituting for such
items are the following replacements as indicated. The following paragraph in
Note 6, Joint Venture Guarantee is restated to change the currency from Yen in
the last sentence. The following table in Note 9 is amended and restated to
indicate the number of options outstanding as of December 31, 2000. The
following list of Exhibits and Reports on Form 8-K is amended and restated to
include recently filed Periodic Reports on Form 8-K and the exhibits filed
therewith (other than earning reports previously reported on Form 10-Q). In
order to complete the list of amendments to the existing Third Amended and
Restated Revolving Credit and Security Agreement with Webster Business Credit
Corporation (Exhibit 10.14, as previously filed), attached hereto as Exhibit
10.16 is a copy of the existing Waiver and Amendment thereto dated as of
January, 2004.
6. Commitments and Contingencies
Joint Venture Guarantee
In May 2001, the Company and Paltac, Inc. ("Paltac"), a large Japanese
distributor, entered into a joint venture to create a Japanese company, SPAR FM.
SPAR FM entered into a Yen 300 million Revolving Credit Agreement with a
Japanese bank. The bank required Paltac guarantee the outstanding balance on the
revolving credit facility. As part of the joint venture agreement, should Paltac
be required to make a payment on its guarantee to the bank, then the Company has
agreed to remit to Paltac 50% of any such payment up to a maximum of Yen 150
million or approximately $1.4 million. As of December 31, 2003, SPAR FM has
borrowed Yen 100 million under its Revolving Credit Agreement. Therefore, the
Company's current exposure to Paltac respecting outstanding loans to SPAR FM at
December 31, 2003 would be Yen 50 million or approximately $470,000. The Company
has recorded approximately $0.3 million in long-term liabilities for its share
of the cumulative losses associated with this joint venture.
9. Stock Options (continued)
The following table summarizes stock option activity under the Company's plans:
Weighted Average
Shares Exercise Price
----------------------------------------
Options outstanding, December 31, 2000 2,989,849 $ 4.82
Granted 2,564,844 $ 1.31
Exercised (309,492) 1.30
Canceled or expired (2,761,474) 5.00
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Options outstanding, December 31, 2001 2,483,727 $ 1.42
Granted 332,792 $ 2.01
Exercised (230,463) 1.23
Canceled or expired (487,875) 5.05
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Options outstanding, December 31, 2002 2,098,181 $ 1.52
Granted 401,020 $ 3.51
Exercised (143,641) 1.17
Canceled or expired (86,500) 2.38
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Options outstanding, December 31, 2003 2,269,060 $ 1.85
Option price range at end of year $0.01 to $14.00
2003 2002 2001
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Grant Date weighted average fair value of
options granted during the year $ 2.33 $ 1.60 $ 1.28
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Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit
Number Description
- ------ -----------
3.1 Certificate of Incorporation of SPAR Group, Inc. (referred to therein
under its former name of PIA Merchandising Services, Inc.), as amended
(which exhibit is hereby incorporated by reference its Registration
Statement on Form S-1 (Registration No. 33-80429), as filed with the
Securities and Exchange Commission (the "SEC") on December 14, 1995
(the "Form S-1")), and the Certificate of Amendment filed with the
Secretary of State of the State of Delaware on July 8, 1999 (which
exhibit is hereby incorporated by reference from Exhibit 3.1 to SGRP's
Form 10-Q for the 3rd Quarter ended September 30, 1999), which
amendment (among other things) changed its name to SPAR Group, Inc.
3.2 Amended and Restated By-Laws of SPAR Group, Inc. Dated and Effective as
of May 18, 2004 (which exhibit is hereby incorporated by reference from
Exhibit 3.1 to SGRP's Form 8-K dated May 18, 2004, as filed with the
SEC on May 27, 2004).
3.3 Amended and Restated Charter of the Audit Committee of the Board of
Directors of SPAR Group, Inc. Dated (as of) May 18, 2004 (which exhibit
is hereby incorporated by reference from Exhibit 3.2 to SGRP's Form 8-K
dated May 18, 2004, as filed with the SEC on May 27, 2004).
3.4 Charter of the Compensation Committee of the Board of Directors of SPAR
Group, Inc. Dated (as of) May 18, 2004 (which exhibit is hereby
incorporated by reference from Exhibit 3.3 to SGRP's Form 8-K dated May
18, 2004, as filed with the SEC on May 27, 2004).
3.5 Charter of the Governance Committee of the Board of Directors of SPAR
Group, Inc. Dated (as of) May 18, 2004 (which exhibit is hereby
incorporated by reference from Exhibit 3.4 to SGRP's Form 8-K dated May
18, 2004, as filed with the SEC on May 27, 2004).
3.6 SPAR Group, Inc. Statement of Policy Respecting Stockholder
Communications with Directors dated as of May 18, 2004 (which exhibit
is hereby incorporated by reference from Exhibit 3.5 to SGRP's Form 8-K
dated May 18, 2004, as filed with the SEC on May 27, 2004).
3.7 SPAR Group, Inc. Statement of Policy Regarding Director Qualifications
and Nominations of dated as of May 18, 2004 (which exhibit is hereby
incorporated by reference from Exhibit 3.6 to SGRP's Form 8-K dated May
18, 2004, as filed with the SEC on May 27, 2004).
4.1 Registration Rights Agreement entered into as of January 21, 1992, by
and among RVM Holding Corporation, RVM/PIA, a California Limited
Partnership, The Riordan Foundation and Creditanstalt-Bankverine (which
exhibit is hereby incorporated by reference to the Form S-1).
10.1 2000 Stock Option Plan, as amended, (which exhibit is hereby
incorporated by reference from Annex A to SGRP's Proxy Statement for
the Company's Annual meeting held on August 2, 2001, as filed with the
SEC on July 12, 2001).
10.2 2001 Employee Stock Purchase Plan (which exhibit is hereby incorporated
by reference from Annex B to SGRP's Proxy Statement for the Company's
Annual meeting held on August 2, 2001, as filed with the SEC on July
12, 2001).
10.3 2001 Consultant Stock Purchase Plan (which exhibit is hereby
incorporated by reference from Annex C to SGRP's Proxy Statement for
the Company's Annual meeting held on August 2, 2001, as filed with the
SEC on July 12, 2001).
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10.4 Business Manager Agreement dated as of July 8, 1999, by and between
SPAR Marketing Force, Inc., and SPAR Marketing Services, Inc. (which
exhibit is hereby incorporated by reference from Exhibit 10.18 to
SGRP's Form 10-K/A (Amendment No. 1) for the fiscal year ended December
31, 1999).
10.5 Trademark License Agreement dated as of July 8, 1999, by and between
SPAR Marketing Services, Inc., and SPAR Trademarks, Inc. (which exhibit
is hereby incorporated by reference from Exhibit 10.6 to SGRP's Form
10-K for the fiscal year ended December 31, 2002).
10.6 Trademark License Agreement dated as of July 8, 1999, by and between
SPAR Infotech, Inc., and SPAR Trademarks, Inc. (which exhibit is hereby
incorporated by reference from Exhibit 10.7 to SGRP's Form 10-K for the
fiscal year ended December 31, 2002).
10.7 Amended and Restated Field Service Agreement dated and effective as of
January 1, 2004, by and between SPAR Marketing Services, Inc., SPAR
Marketing Force, Inc. (which exhibit is hereby incorporated by
reference from Exhibit 10.1 to SGRP's Form 10-Q for the first quarter
ended March 31, 2004).
10.8 Amended and Restated Field Management Agreement dated and effective as
of January 1, 2004, by and between SPAR Management Services, Inc., and
SPAR Marketing Force, Inc. (which exhibit is hereby incorporated by
reference from Exhibit 10.2 to SGRP's Form 10-Q for the first quarter
ended March 31, 2004).
10.9 Amended and Restated Programming and Support Agreement dated and
effective as of January 1, 2004, by and between SPAR InfoTech, Inc.,
and SPAR Marketing Force, Inc. (which exhibit is hereby incorporated by
reference from Exhibit 10.3 to SGRP's Form 10-Q for the first quarter
ended March 31, 2004).
10.10 [Reserved.]
10.11 Stock Purchase and Sale Agreement by and among Performance Holdings,
Inc. and SPAR Incentive Marketing, Inc., effective as of June 30, 2002
(which exhibit is hereby incorporated by reference from Exhibit 10.17
to SGRP's Form 10-Q for the quarter ended June 30, 2002).
10.12 Revolving Credit, Guaranty and Security Agreement by and among
Performance Holdings, Inc. and SPAR Incentive Marketing, Inc.,
effective as of June 30, 2002 (which exhibit is hereby incorporated by
reference from Exhibit 10.18 to SGRP's Form 10-Q for the quarter ended
June 30, 2002).
10.13 Term Loan, Guaranty and Security Agreement by and among Performance
Holdings, Inc. and SPAR Incentive Marketing, Inc., effective as of June
30, 2002 (which exhibit is hereby incorporated by reference from
Exhibit 10.19 to SGRP's Form 10-Q for the quarter ended June 30, 2002).
10.14 Third Amended and Restated Revolving Credit and Security Agreement by
and among Whitehall Business Credit Corporation (the "Lender") with
SPAR Marketing Force, Inc., SPAR Group, Inc., SPAR, Inc., SPAR/Burgoyne
Retail Services, Inc., SPAR Incentive Marketing, Inc., SPAR Trademarks,
Inc., SPAR Marketing, Inc. (DE), SPAR Marketing, Inc. (NV), SPAR
Acquisition, Inc., SPAR Group International, Inc., SPAR Technology
Group, Inc., SPAR/PIA Retail Services, Inc., Retail Resources, Inc.,
Pivotal Field Services Inc., PIA Merchandising Co., Inc., Pacific
Indoor Display Co. and Pivotal Sales Company (collectively, the
"Existing Borrowers"), dated as of January 24, 2003 (which exhibit is
hereby incorporated by reference from Exhibit 10.13 to SGRP's Form 10-K
for the fiscal year ended December 31, 2002).
10.15 Consent, Joinder, Release and Amendment Agreement dated as of October
31, 2003, by and among the Lender, the Existing Borrowers and SPAR All
Store Marketing, Inc., as a Borrower (which exhibit is hereby
incorporated by reference from Exhibit 10.14 to SGRP's Form 10-K for
the fiscal year ended December 31, 2003).
10.16 Waiver and Amendment to Third Amended and Restated Revolving Credit and
Security Agreement by and among the Lender and the Borrowers dated as
of January, 2004, and filed herewith.
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10.17 Waiver And Amendment No. 3 To Third Amended And Restated Revolving
Credit And Security Agreement by and among the Lender and the Borrowers
entered into as of March 26, 2004 (which exhibit is hereby incorporated
by reference from Exhibit 10.1 to SGRP's Form 8-K dated March 26, 2004,
as filed with the SEC on May 26, 2004).
10.18 Joinder, Waiver And Amendment No. 4 To Third Amended And Restated
Revolving Credit And Security Agreement by and among the Lender and the
Borrowers entered into as of May 17, 2004 (which exhibit is hereby
incorporated by reference from Exhibit 10.2 to SGRP's Form 8-K dated
March 26, 2004, as filed with the SEC on May 26, 2004.)
14.1 SPAR Group Code of Ethical Conduct for its Directors, Senior Executives
and Employees dated (as of) May 1, 2004 (which exhibit is hereby
incorporated by reference from Exhibit 14.1 to SGRP's Form 8-K dated
May 1, 2004, as filed with the SEC on May 5, 2004).
14.2 SPAR Group Statement of Policy Regarding Personal Securities
Transaction in SGRP Stock and Non-Public Information Dated, Amended and
Restated as of May 1, 2004 (which exhibit is hereby incorporated by
reference from Exhibit 14.2 to SGRP's Form 8-K dated May 1, 2004, as
filed with the SEC on May 5, 2004).
21.1 List of Subsidiaries (which exhibit is hereby incorporated by reference
from Exhibit 21.1 to SGRP's Form 10-K for the year ended December 31,
2003).
21.2 Consent of Ernst & Young LLP (which exhibit is hereby incorporated by
reference from Exhibit 21.2 to SGRP's Form 10-K for the year ended
December 31, 2003).
31.1 Certification of the CEO pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and filed
herewith.
31.2 Certification of the CFO pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and filed
herewith.
32.1 Certification of the CEO pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and filed
herewith.
32.2 Certification of the CFO pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and filed
herewith.
(b) Reports on Form 8-K.
1. Periodic Report on Form 8-K, dated November 10, 2003, filed with the
SEC on November 10, 2003, respecting the earnings press release for the
quarter ended September 30, 2003.
2. Periodic Report on Form 8-K, dated March 26, 2004, filed with the SEC
on May 26, 2004, respecting each of the following: (i) Waiver And
Amendment No. 3 To Third Amended And Restated Revolving Credit And
Security Agreement by and among the Lender and the Borrowers entered
into as of March 26, 2004 (Exhibit 10.17, above); and (ii) Joinder,
Waiver And Amendment No. 4 To Third Amended And Restated Revolving
Credit And Security Agreement by and among the Lender and the Borrowers
entered into as of May 17, 2004 (Exhibit 10.18, above).
3. Periodic Report on Form 8-K, dated May 1, 2004, filed with the SEC on
May 5, 2004, respecting the adoption and filing of each of the
following: (i) SPAR Group Code of Ethical Conduct for its Directors,
Senior Executives and Employees dated (as of) May 1, 2004 (Exhibit
14.1, above); and (ii) SPAR Group Statement of Policy Regarding
Personal Securities Transaction in SGRP Stock and Non-Public
Information Dated, Amended and Restated as of May 1, 2004 (Exhibit
14.2, above).
4. Periodic Report on Form 8-K, dated May 18, 2004, filed with the SEC on
May 27, 2004, respecting the adoption and filing of each of the
following: (i) Amended and Restated By-Laws of SPAR Group, Inc.
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Dated and Effective as of May 18, 2004 (Exhibit 3.2, above); (ii)
Amended and Restated Charter of the Audit Committee of the Board of
Directors of SPAR Group, Inc. Dated (as of) May 18, 2004 (Exhibit 3.3,
above); (iii) Charter of the Compensation Committee of the Board of
Directors of SPAR Group, Inc. Dated (as of) May 18, 2004 (Exhibit 3.4,
above); (iv) Charter of the Governance Committee of the Board of
Directors of SPAR Group, Inc. Dated (as of) May 18, 2004 (Exhibit 3.5,
above); (v) SPAR Group, Inc. Statement of Policy Respecting Stockholder
Communications with Directors dated as of May 18, 2004 (Exhibit 3.6,
above); and (vi) SPAR Group, Inc. Statement of Policy Regarding
Director Qualifications and Nominations of dated as of May 18, 2004
(Exhibit 3.7, above).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to the
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SPAR Group, Inc.
By: /s/ Charles Cimitile
--------------------
Charles Cimitile
Chief Financial Officer and duly
authorized signatory
Dated: June 28, 2004
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