Credit Facilities

Sterling 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 ("SCC") (together with SGRP and SCC, each a "Borrower") are parties to a Revolving Loan and Security Agreement dated

July

2010,

as amended in

June

2011,

July

2012,

January

2013,

July

2013,

October

2013,

June

2014,

September

2015,

December

2016,

March

2017

and

April

2017

(as amended, the "Sterling Loan Agreement"), with Sterling National Bank (the "Lender"), and their Secured Revolving Loan Note in the amended maximum principal amounts of

$9.0

million (see below) to the Lender (as amended by all loan amendments, the "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 currently is scheduled to expire and the Borrowers' loans thereunder will become due on

July

2017

(with no early termination fee).

The Sterling Loan Agreement currently requires the Borrowers to pay interest on the loans thereunder equal to the Agent's floating Prime Rate (as defined in such agreement) plus

one

half of

one

percent

(1/2%)

per annum, and a fee on the maximum unused line thereunder equal to

one

eighth

one

percent

(0.125%)

per annum.

Revolving Loans of up to

$9.0

million 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 SGRP's non-Canadian foreign subsidiaries, certain designated domestic subsidiaries, and their respective equity and assets).

The amendment to the Sterling Loan Agreement dated as of

December

22,

2016,

among other things, increased the maximum principal amount of the Secured Revolving Loan Note to

$9.0

million until

January

31,

2017

and increased the interest rate to Prime plus

one

half of

one

percent. The amendment to the Sterling Loan Agreement dated as of

March

2017,

among other things, extended the Secured Revolving Loan Note of

$9.0

million until

July

2017.

The amendment to the Sterling Loan Agreement dated as of

April

13,

2017,

among other things, provided for a waiver of the Company’s default on its Fixed Charge Ratio (“FCR”) for the year ended

December

31,

2016

and provided for an adjustment to its FCR for

2017.

The Sterling Loan Agreement requires the Borrowers to maintain certain financial covenants, including maintenance by the Borrowers of a minimum combined tangible net worth of

$7.4

million and minimum consolidated tangible net worth of

$10.0

million, with those figures increasing by at least

50%

of combined and consolidated net profit each year, respectively. In addition, the Borrowers and the Company must not exceed a maximum combined indebtedness to tangible net worth ratio of

3.0

1.0,

and the Borrowers must maintain a minimum fixed charge coverage ratio of

1.5

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. The Company was in compliance with its financial covenants at

March

31,

2017.

International Credit Facilities:

SPARFACTS Australia Pty. Ltd. has a secured line of credit facility with Oxford Funding Pty Ltd. for

$1.2

million (Australian) or approximately

$917,000

(based upon the exchange rate at

March

31,

2017).

The facility provides for borrowing based upon a formula, as defined in the agreement (principally

80%

of eligible accounts receivable less certain deductions). The agreement technically expired on

October

31,

2012,

but is being extended from month to month at the Company's request. The outstanding balance as of

March

31,

2017

was

$252,000.

March

2011,

the Japanese subsidiary, SPAR FM Japan, Inc., a wholly owned subsidiary, secured a term loan with Mizuho Bank in the amount of

20.0

million Yen (Japanese), or approximately

$179,000.

The loan is payable in monthly installments of

238,000

Yen or approximately

$2,000

at an interest rate of

0.1%

per annum with a maturity date of

February

28,

2018.

The outstanding balance at

March

31,

2017,

was approximately

2.6

million Yen or

$24,000

(based upon the exchange rate at

March

31,

2017),

all of which is now short term.

November

29,

2016,

SPAR Brazil established a line of credit with Itau Bank for

1.5

million Brazilian Real or approximately

$477,000

USD (based upon the exchange rate at

March

31,

2017).

The line of credit expires

November

29,

2017,

and the current interest rate is

2.08%

per month. The outstanding balance at

March

31,

2017

was

zero.

December

26,

2016,

SPAR Brazil secured a term loan with Bradesco Bank for

2.0

million Brazilian Real or approximately

$636,000

USD (based upon the exchange rate at

March

31,

2017).

The term loan is payable in monthly installments of

R$184,000

or approximately

$58,000

USD at an annual interest rate of

17.3%

with a maturity date of

December

15,

2017.

As of

March

31,

2017,

1,445,000

Brazilian Real or

$459,000

USD was outstanding (based upon the exchange rate at

March

31,

2017).

SPAR Todopromo has secured a line of credit facility with BBVA Bancomer Ban for

5.0

million Mexican Pesos or approximately

$267,000

USD (based upon the exchange rate at

March

31,

2017).

The revolving line of credit was secured on

March

15,

2016

and expires

March

2018.

The variable interest rate is TIIE (Interbank Interest Rate) +

which resulted in an annual interest rate of

10.5%

at the end of

March

2017.

The outstanding balance at

March

31,

2017

was

zero.

The Company had scheduled future maturities of loans as of

March

31,

2017,

approximately as follows (dollars in thousands):

	Interest Rate as of March 31, 2017			2017		2018
USA - Sterling National Bank		4.5	%	$	5,800		–
Japan - Mizuho Bank		0.1	%		19	$	5
Australia - Oxford Funding Pty Ltd.		6.4	%		252		–

Brazil – Bradesco Bank		17.3	%		459		–
Total				$	6,530	$	5

Summary of

Unused Company Credit and Other Debt Facilities (in thousands):

	March 31, 2017		December 31, 2016
Unused Availability:
United States	$	1,716	$	500
Australia		665		688
Mexico		267		241
Brazil		477		–
Total Unused Availability	$	3,125	$	1,429

Management believes that based upon the continuation of the Company's existing credit facilities, projected results of operations, vendor payment requirements and other financing available to the Company (including amounts due to affiliates), sources of cash availability should be manageable and sufficient to support ongoing operations over the next year. However, delays in collection of receivables due from any of the Company's major clients, or a significant reduction in business from such clients could have a material adverse effect on the Company's cash resources and its ongoing ability to fund operations.