11.

Stock Based Compensation and Other Plans

The Company believes that it is desirable to align the interests of its directors, executives, employees and consultants with those of its stockholders through their ownership of shares of Common Stock issued by SGRP ("SGRP Shares"). Although the Company does

not

require its directors, executives, employees or consultants to own SGRP Shares, the Company believes that it can help achieve this objective by providing long term equity incentives through the issuance to its eligible directors, executives, employees or consultants of options to purchase SGRP Shares and other stock-based awards pursuant to the

2018

Plan (as defined below) and facilitating the purchase of SGRP Shares at a modest discount by all of its eligible executives, employees and consultants who elect to participate in its Employee or Consultant Stock Purchase Plans (as defined below). In particular, the Company believes that granting stock based awards (including restricted stock and options to purchase SGRP Shares) to such directors, executives, employees and consultants encourages growth in their ownership of SGRP Shares, which in turn leads to the expansion of their stake in the long-term performance and success of the Company.

In connection with the

2018

Annual Meeting, the Board, based (in part) on the recommendation of its Compensation Committee, approved the modifications to the proposed SPAR Group, Inc.

2018

Stock Compensation Plan (the

"2018

Plan") to remove adjustments for existing plans, which the Board determined was within its authority and

not

materially adverse to the interest of SGRP's existing stockholders. The SPAR Group, Inc.

2018

Stock Compensation Plan (including the above changes) was approved by the stockholders on

May 2, 2018.

The

2018

Plan and information regarding options, stock appreciation rights, restricted stock and restricted stock units granted thereunder are summarized below. The

2018

Plan is substantially similar to the

2008

Plan except for its

one

-year initial term and resetting the maximum award shares available to

600,000

under the

2018

Plan. The

2008

Plan terminated upon the adoption of the

2018

Plan, and thereafter

further Awards

may

be made under the

2008

Plan. There were approximately

345,750

SGRP shares remaining for grant Awards that were cancelled at that date.

The

2018

Plan has an initial term that ends on

May 31, 2019,

and

Award

may

be granted thereafter under this Plan, unless an extension or elimination of such initial term Plan is approved by stockholders of SGRP if and as required pursuant to the

2018

Plan. In any event,

Award

may

be granted under the

2018

Plan on or after the

tenth

(

10th

) anniversary of the Effective Date of the

2018

Plan unless an extension of the term of the

2018

Plan is approved by stockholders of SGRP if and as required pursuant to the

2018

Plan and Applicable Law. Awards granted prior to the end of the term of the

2018

Plan shall continue to be governed by the

2018

Plan (which

2018

Plan shall continue in full force and effect for that purpose).

The

2018

Plan resets and limits the maximum number of shares of Common Stock that

may

be issued pursuant to Awards made under the plan to

600,000

shares (the

"2018

Plan Maximum").

The

2018

Plan permits the granting of Awards consisting of options to purchase shares of Common Stock ("Options"), stock appreciation rights ("SARs"), restricted stock ("Restricted Stock"), and restricted stock units ("RSUs"). The

2018

Plan permits the granting of both Options that qualify under Section

422

of the United States Internal Revenue Code of

1986

as amended (the "Code") for treatment as incentive stock options ("Incentive Stock Options" or "ISOs") and Options that do

not

qualify under the Code as Incentive Stock Options ("Nonqualified Stock Options" or "NQSOs"). ISOs

may

only be granted to employees of SGRP or its subsidiaries.

The shares of Common Stock that

may

be issued pursuant to the Options, SARs, Restricted Stock and RSUs under the

2018

Plan are all subject to the

2018

Plan Maximum.

SGRP has granted restricted stock and stock option awards to its eligible directors, officers and employees and certain employees of its affiliates respecting shares of Common Stock issued by SGRP ("SGRP Shares") pursuant to SGRP's

2008

Stock Compensation Plan (as amended, the

"2008

Plan"), which was approved by SGRP's stockholders in

May

2008

and

2009.

The

2008

Plan provided for the granting of restricted SGRP shares, stock options to purchase SGRP shares (either incentive or nonqualified), and restricted stock units, stock appreciation rights and other awards based on SGRP shares ("Awards") to SGRP Directors and the Company's specified executives, employees and consultants (which are employees of certain of its affiliates), although to date SGRP has

not

issued any permissible form of Award other than stock option, restricted share awards, and performance stock units. At the

May 3, 2018

Annual meeting of stockholders, the

2008

Plan was terminated. At that time, the

2018

Plan was approved by SGRP's stockholders.

As of

December 31, 2018,

approximately

335,000

shares were available for Award grants under the

2018

Plan.

The

2018

Plan (like the

2008

Plan as amended in

2009

) gives SGRP's Compensation Committee the full authority and complete flexibility from time to time to designate and modify (in its discretion)

one

or more of the outstanding Awards (including their exercise and base prices and other components and terms) to (among other things) restore their intended values and incentives to their holders. However, the exercise price, base value or similar component (if equal to SGRP's full stock price at issuance) of any Award cannot be lowered to an amount that is less than the Fair Market Value (as defined in the

2018

Plan) on the date of the applicable modification, and

modification can adversely affect an awardee's rights or obligations under an award without the awardee's consent.

further consent of SGRP's stockholders is required for any repricing or other modification of any outstanding or other aware under the

2018

Plan or

2008

Plan, including those previously issued under the Prior Plans. To date, Awards have only been repriced once (in

2009

) pursuant to this authority.

The stock option Awards issued under the

2018

Plan are typically "nonqualified" (as a tax matter), have a

ten

(

) year maximum life (term) and vest during the

first

four

years following issuance at the rate of

25%

on each anniversary date of their issuance so long as the holder continues to be employed by the Company. Stock-based compensation cost is measured on the grant date, based on the fair value of the stock options Award calculated at that date, and is recognized as compensation expense on a straight-line basis over the requisite service period, which generally is the options' vesting period. Fair value is calculated using the Black-Scholes option pricing model.

The Restricted Stock Awards issued under the

2018

Plan (like those under the

2008

Plan) vest during the

first

four

years following issuance at the rate of

25%

on each anniversary date of their issuance so long as the holder continues to be employed by the Company. Restricted Stock is measured at fair value on the date of the grant, based on the number of shares granted and the quoted price of the Company's common stock. The shares of stock are issued and value is recognized as compensation ratably over the requisite period which generally is the Award's vesting period.

2008

Plan Summary

Following are the specific valuation assumptions used for options granted in

2018

for the

2008

Plan:

Expected volatility	43	%
Expected dividend yields	0	%
Expected term (in years)	5
Risk free interest rate	2.5	%
Expected forfeiture rate	5	%

2008

Plan Stock option Award activity for the years ended

December 31, 2018

and

2017

is summarized below:

					Weighted-
			Weighted-		Average		Aggregate
			Average		Remaining		Intrinsic
	Covered		Exercise		Contractual		Value
Option Awards	Shares		Price		Term (Years)		(thousands)
Outstanding at January 1, 2017		3,111,052	$	0.98		4.74	$	678
Granted		943,000		1,05		–		–
Exercised/cancelled		110,187		0.87		–		–
Forfeited or expired		599,688		–		–		–
Outstanding at December 31, 2017		3,344,177	$	0.96		5.17	$	1,221
Granted		45,000		1.67		–		–
Exercised		306,750		0.40		–		–
Forfeited or expired		37,500		–		–		–
Outstanding at December 31, 2018		3,044,927	$	1.01		4.55	$	103
Exercisable at December 31, 2018		2,239,677	$	1.00		3.15	$	103

The weighted-average grant-date fair value of stock option Awards granted during the year ended

December 31, 2018

was

$0.76.

The total intrinsic value of stock option Awards exercised during the year ended

December 31, 2018

and

2017

was

$274,000

and

$16,000,

respectively.

The Company recognized

$155,000

and

$187,000

in stock-based compensation expense relating to stock option Awards during the years ended

December 31, 2018

and

2017,

respectively. The recognized tax benefit on stock based compensation expense related to stock options during the years ended

December 31, 2018

and

2017,

was approximately

$38,000

and

$71,000,

respectively.

As of

December 31, 2018,

total unrecognized stock-based compensation expense related to stock options was

$309,000.

This expense is expected to be recognized over a weighted average period of approximately

2.0

years, and will be adjusted for changes in estimated forfeitures.

Plan Summary

Following are the specific valuation assumptions used for options granted in

2018

for the

2018

Plan:

Expected volatility	43	%
Expected dividend yields	0	%
Expected term (in years)	5
Risk free interest rate	2.8	%
Expected forfeiture rate	5	%

2018

Plan Stock option Award activity for the year ended

December 31, 2018

is summarized below:

Weighted-

Average

Aggregate

Average

Remaining

Intrinsic

Covered

Exercise

Contractual

Value

Option Awards

Price

Term

(Years)

(thousands)

Granted

245,000

1.23

–

Exercised

–

Cancelled

–

Forfeited or expired

10,000

–

Outstanding at December 31, 2018

235,000

1.23

9.35

–

Exercisable at December 31, 2018

–

The weighted-average grant-date fair value of stock option Awards granted during the year ended

December 31, 2018

was

$0.57.

The total intrinsic value of stock option Awards exercised during the year ended

December 31, 2018

was

$0.

The Company recognized

$31,000

and

in stock-based compensation expense relating to stock option Awards during the years ended

December 31, 2018

and

2017,

respectively. The recognized tax benefit on stock based compensation expense related to stock options during the years ended

December 31, 2018

and

2017,

was approximately

$8,000

and

$0,

respectively.

As of

December 31, 2018,

total unrecognized stock-based compensation expense related to stock options was

$98,000.

This expense is expected to be recognized over a weighted average period of approximately

3.0

years, and will be adjusted for changes in estimated forfeitures.

Restricted Stock-

2008

Plan

The restricted stock Awards previously issued under the

2008

Plan vested during the

first

four

years following issuance at the rate of

25%

on each anniversary date of their issuance so long as the holder continues to be employed by the Company. Restricted stock granted under the

2008

Plan is measured at fair value on the date of the grant, based on the number of shares granted and the quoted price of the Company's common stock. The shares of stock are issued and value is recognized as compensation expense ratably over the requisite service period which generally is the Award's vesting period. In

2018,

the Company did

not

issue restricted stock Awards to its employees or Directors.

The following table summarizes the activity for restricted stock Awards during the years ended

December 31, 2018

and

2017:

				Weighted-
				Average
				Grant Date
				Fair Value
	Shares			per Share
Unvested at January 1, 2017		132,000		$	1.32
Granted		–			–
Vested		(22,800	)		1.53
Forfeited		(40,800	)		1.08
Unvested at December 31, 2017		68,400			1.38
Granted		–			–
Vested		(18,900	)		1.48
Forfeited		(48,500	)		1.35
Unvested at December 31, 2018		1,000		$	1.36

During the years ended

December 31, 2018

and

2017,

the Company recognized approximately

$15,000

and

$38,000,

respectively, of stock-based compensation expense related to restricted stock. The recognized tax benefit on stock based compensation expense related to restricted stock during the years ended

December 31, 2018

and

2017

was approximately

$4,000

and

$14,000,

respectively.

During the years ended

December 31, 2018

and

2017,

the total fair value of restricted stock vested was

$23,000

and

$24,000,

respectively.

As of

December 31, 2018,

total unrecognized stock-based compensation expense related to unvested restricted stock Awards was

$1,000,

which is expected to be expensed over a weighted-average period of

year.

Restricted Stock-

2018

Plan

The restricted stock Awards previously issued under the

2018

Plan (like those under the

2008

Plan) vested during the

first

four

years following issuance at the rate of

25%

on each anniversary date of their issuance so long as the holder continues to be employed by the Company. Restricted stock granted under the

2018

Plan (like those under the

2008

Plan) is measured at fair value on the date of the grant, based on the number of shares granted and the quoted price of the Company's common stock. The shares of stock are issued and value is recognized as compensation expense ratably over the requisite service period which generally is the Award's vesting period. In

2018,

the Company issued

20,000

restricted stock Awards to its Directors.

The following table summarizes the activity for restricted stock Awards during the year ended

December 31, 2018:

				Weighted-
				Average
				Grant Date
				Fair Value
	Shares			per Share
Granted		20,000			1.23
Vested		(10,000	)		1.23
Forfeited		–			–
Unvested at December 31, 2018		10,000		$	1.23

During the years ended

December 31, 2018

and

2017,

the Company recognized approximately

$20,000

and

$0,

respectively, of stock-based compensation expense related to restricted stock. The recognized tax benefit on stock based compensation expense related to restricted stock during the years ended

December 31, 2018

and

2017

was approximately

$5,000

and

$0,

respectively.

During the years ended

December 31, 2018

and

2017,

the total fair value of restricted stock vested was

$12,000

and

$0,

respectively.

As of

December 31, 2018,

total unrecognized stock-based compensation expense related to unvested restricted stock Awards was

$4,000,

which is expected to be expensed over a weighted-average period of

year.

Stock Purchase Plans

2001,

SGRP adopted its

2001

Employee Stock Purchase Plan (the "ESP Plan"), which replaced its earlier existing plan, and its

2001

Consultant Stock Purchase Plan (the "CSP Plan"). These plans were each effective as of

June 1, 2001.

The ESP Plan allows employees of the Company, and the CSP Plan allows employees of the affiliates of the Company to purchase SGRP's Common Stock from SGRP without having to pay any brokerage commissions. On

August 8, 2002,

SGRP's Board approved a

15%

discount for employee purchases of Common Stock under the ESP Plan and recommended that its affiliates pay

15%

of the value of the stock purchased as a cash bonus for affiliate consultant purchases of Common Stock under the CSP Plan.