4.	Credit Facilities and Other Debt

Domestic Credit Facilities

PNC Credit Facility

January 2018,

the Company repaid and replaced its credit facility with Sterling Bank with a secured revolving credit facility in the United States and Canada (as amended the "PNC Credit Facility") with PNC Bank, National Association.

An amendment to the PNC Credit Facility dated as of

July 3, 2018,

among other things, increased the maximum principal amount of the Revolving Loans to

$9.5

million.

April 10, 2019,

the Company repaid and replaced its credit facility with PNC Bank, National Association with a new secured revolving credit facility in the United States and Canada (the "NM Credit Facility") with North Mill Capital, LLC ("NM").

North Mill Capital Credit Facility

April 10, 2019,

the Company repaid and replaced its

2018

credit facility with PNC Bank, National Association ("PNC"), with the NM Credit Facility with NM.

In order to obtain, document and govern the NM Credit Facility: SGRP and certain of its direct and indirect subsidiaries in the United States and Canada, namely SPAR Marketing Force ("SMF"), Inc., and SPAR Canada Company ("SCC") (each, an "NM Borrower" and collectively, the "NM Borrowers"), and SPAR Canada, Inc., SPAR Acquisition, Inc., SPAR Assembly and Installation, Inc., and SPAR Trademarks, Inc. (together with SGRP, each a "NM Guarantor" and collectively, the "NM Guarantors"), entered into

eighteen

(

) month individual Loan and Security Agreements with NM dated as of

April 10, 2019 (

the "NM Loan Agreements"), which governs the obligations of the NM Loan Parties to NM and secures them with pledges of substantially all of the assets of the NM Loan Parties (other than SGRP's foreign subsidiaries, certain designated domestic subsidiaries, and their respective equity and assets); the SMF Borrower issued its

$12.5

million Revolving Credit Master Promissory Note to NM dated

April 10, 2019,

and the SCC Borrower issued its

$2.5

million Revolving Credit Master Promissory Note to NM dated

April 10, 2019 (

the "NM Notes"), which evidences the NM Borrowers' loans and other obligations to NM; the NM Guarantors entered into a Guaranty Agreement with NM dated as of

April 10, 2019 (

the "NM Guaranty"), which guaranties the NM Borrowers' loans and other obligations to NM. The NM Credit Facility, was subsequently extended until

October 2021.

April 10, 2019,

the Company drew down an initial advance under the NM Credit Facility of approximately

$9.8

million, which was used to repay the Company's existing credit facility with PNC.

The NM Note currently requires the NM Borrowers to pay interest on the loans thereunder equal to (A) Prime Rate designated by Wells Fargo Bank, plus (B)

one hundred twenty

five

basis points (

1.25%

) or a minimum of

6.75%.

In addition, the Company is paying a fee to NM of

$180,000

payable at

$10,000

per month over the term of the agreement. The Company utilized a broker to assist in this financing and has paid a fee of

$120,000

for their services. On

June 30, 2020

, the aggregate interest rate under that formula was

6.75%

per annum, and the outstanding loan balance was

$6.6

million. Outstanding amounts are classified as short-term debt.

Revolving loans are available to the Borrowers under the NM Credit Facility based upon the borrowing base formula defined in the NM Loan Agreement (principally

85%

of "eligible" accounts receivable less certain reserves and

60%

of eligible unbilled accounts receivable at a maximum limit of

$4.5

million).

The NM Credit Facility contains certain financial and other restrictive covenants and also limits certain expenditures by the NM Loan Parties, including, maintaining a positive trailing EBITDA for each Borrower and limits on capital expenditures and other investments. The Company was in compliance of such covenants as of

June 30, 2020

Fifth Third Credit Facility

One of the Company's consolidated subsidiaries, Resource Plus of North Florida ("Resource Plus"), is a party to a revolving line of credit facility (the "Fifth Third Credit Facility") from Fifth Third Bank for

$3.5

million, which was scheduled to become due on

April 23, 2020.

Effective

April 16, 2020,

the term of the Fifth Third Credit Facility was extended and is currently scheduled to become due on

June

16,

2022.

Revolving loans of up to

$3.5

million are available to Resource Plus under the Fifth Third Credit Facility based upon the borrowing base formula defined in the agreement (principally

80%

of "eligible" accounts receivable less certain reserves). As of

June 30, 2020

, there was a balance of

$700,000.

The Fifth Third Credit Facility is secured by substantially all assets of Resource Plus.

The Fifth Third Credit Facility currently requires Resource Plus to pay interest on the loans thereunder equal to (A) the Daily LIBOR Rate (as defined in the agreement) per annum, plus (B)

two hundred fifty

basis points (

2.50%

). On

June 30, 2020

, the aggregate interest rate under that formula was

3.60%

per annum.

Other Debt

Effective with the closing of the Resource Plus acquisition, the Company entered into promissory notes with the sellers totaling

$2.3

million. The notes are payable in annual installments at various amounts due on

December

31st

of each year starting with

December 31, 2018

and continuing through

December 31, 2023.

As such these notes are classified as both short term and long term for the appropriate amounts. The total balance owed at

June 30, 2020

was approximately

$1.6

million.

International Credit Facilities:

SPARFACTS Australia Pty. Ltd. has a secured line of credit facility with National Australia Bank, effective

October 31, 2017,

for

$800,000

(Australian) or approximately

$550,000

USD (based upon the exchange rate at

June 30, 2020

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

80%

of eligible accounts receivable less certain deductions). The outstanding balance with National Australia Bank as of

June 30, 2020

was

$21,000

(Australian) or

$15,000

USD and is due on demand.

October 5, 2018,

SPAR Brazil secured a line of credit facility with Banco Santander for approximately

381,000

Brazilian Real or approximately

$70,000

USD (based upon the exchange rate at

June 30, 2020

). The outstanding balance as of

June 30, 2020

was approximately

13,000

Brazilian Real or approximately

$2,000

USD. This note is due

September 30, 2020.

SPAR Todopromo has secured a line of credit facility with Steel Factoring for

5.0

million Mexican Pesos or approximately

$217,000

USD (based upon the exchange rate at

June 30, 2020

). The revolving line of credit was secured on

December 13, 2019,

and expires

December 2020.

The fixed interest rate for the Steel Factoring facility is

18%,

as of

June 30, 2020

. The outstanding balance as of

June 30, 2020

was

$5,000,000

million Pesos or approximately

$217,000

USD (based upon the exchange rate at

June 30, 2020

Effective

February 4, 2020,

SPAR Todopromo established a line of credit facility with Ve Por Mas for

5.2

million Mexican Pesos or approximately

$226,000

USD (based upon the exchange rate at

June 30, 2020).

The line expires on

February 4, 2021.

The variable interest rate is TIIE plus

3.0%

resulting in a rate of

9.1%

as of

June 30, 2020.

The outstanding balance was

4.7

million Mexican Pesos or approximately

$205,000

USD (based upon the exchange rate at

June 30, 2020).

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

5.0

million Mexican Pesos or approximately

$217,000

USD (based upon the exchange rate at

June 30, 2020

). The revolving line of credit expired

April 2020

but has been extended to

May 2021.

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

5.2%

resulting in a rate of

10.9%

as of

June 30, 2020.

There was

outstanding balance as of

June 30, 2020.

	Interest Rate
	as of
	June 30, 2020			2020		2021		2022		2023		2024		2025
Australia - National Australia Bank		6.56	%		15		-		-		-		-		-
Brazil - Santander		16.52	%		2		-		-		-		-		-
Mexico - Steel Factoring		18.00	%		217		-		-		-		-		-
Mexico - Ve Por Mas		9.10	%		205		-		-		-		-		-
Mexico - Bancomer Bank		10.90	%		-		-		-		-		-		-
USA – North Mill Capital		6.75	%		6,631		-		-		-		-		-
USA - Fifth Third Bank		3.60	%		700		-		-		-		-		-
USA – Resource Plus Seller Notes		1.85	%		333		300		300		700		-		-
Total				$	8,103	$	300	$	300	$	700	$	-	$	–

Summary of

Unused

Company Credit and Other Debt Facilities (in thousands):

	June 30,		December 31,
	2020		2019
Unused Availability:
United States / Canada	$	8,169	$	3,694
Australia		536		423
Mexico		237		-
Brazil		68		49
Total Unused Availability	$	9,010	$	4,166

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.