{"url_path":"/sec/sgrp/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-03-31","source_url":"https://www.sec.gov/Archives/edgar/data/1004989/0001437749-26-010508-index.html","accession_number":"0001437749-26-010508","cik":"0001004989","ticker":"SGRP","issuer_name":"SPAR Group, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1004989/0001437749-26-010508-index.html","primary_entity_key":"0001004989","primary_entity_name":"SPAR Group, Inc."},"word_count":4102,"has_tables":true,"body_markdown":"**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations**\n\n \n\n***Overview of Our Business***\n\n \n\nSPAR Group is a leading merchandising and brand marketing services company, providing a broad range of sales enhancing services to retailers across most classes of trade and consumer goods manufacturers and distributors around the world. The Company’s goal is to be the most creative, energizing and effective retail services company that drives sales, margins and operating efficiency for our clients. \n\n \n\nAs of December 31, 2025, the Company operated in the U.S. and Canada. During 2024, the Company strategically exited international operations in Mexico, Brazil, South Africa, China, Japan and India.\n\n \n\nWith more than 50 years of experience and a diverse network of merchandising specialists around the world, the Company continues to grow its relationships with some of the world’s leading businesses. The combination of resource scale, deep expertise, advanced technology and unwavering commitment to excellence, separates the Company from the competition. \n\n \n\nThe Company is dedicated to delivering a spectrum of specialized services tailored to enhance retail operations and profitability. Our team collaborates closely with clients to identify their primary goals, ensuring the execution of strategies that boost sales and profit margins. With a focus on merchandising and brand marketing, our specialists deploy a variety of programs aimed at maximizing product sell-through to consumers. These initiatives range from launching new products and setting up promotional displays to assembling fixtures and ensuring consistent stock availability, thus facilitating efficient reordering processes. Furthermore, we extend our expertise to sales enhancement and customer service improvement. As the retail landscape evolves, our team is adept at undertaking comprehensive store renovations and preparing new locations for their grand openings, ensuring they meet the modern consumer's expectations. Additionally, our distribution associates play a pivotal role in retail and consumer goods distribution centers, preparing these facilities for operation, optimizing system functionality, managing product logistics, and providing essential staffing solutions to meet our clients' needs effectively.\n\n \n\nThe Company’s business is led and operated from its headquarters in Charlotte, North Carolina, with local leadership and offices in the U.S. and Canada. \n\n \n\n**EBITDA and Adjusted EBITDA**\n\n \n\nEBITDA and Adjusted EBITDA is a non-GAAP measure of our operating performance and should not be considered as an alternative to net income as a measure of financial performance or any other performance measure derived in accordance with generally accepted accounting principles in the United States of America (\"U.S. GAAP\"). \"EBITDA\" is defined as net income before (i) depreciation and amortization, (ii) interest expense, net, and (iii) income tax expense. \"Adjusted EBITDA\" is defined as net (loss) income before (i) depreciation and amortization of long-lived assets, (ii) interest expense (iii) income tax expense, (iv) restructuring expenses, (v) impairment, (vi) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company's core operations, (vii) special items as determined by management, and (viii) review of strategic alternatives, which includes primarily legal, consulting, and investment bank fees. This metric is a supplemental measure of our operating performance that is neither required by, nor presented in accordance with, U.S. GAAP.\n\n \n\nWe present Adjusted EBITDA because we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our ongoing operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in future periods, and any such modification may be material. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.\n\n \n\nOur management believes Adjusted EBITDA is helpful in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We also use Adjusted EBITDA to supplement U.S. GAAP measures of performance in the evaluation of the effectiveness of our business strategies and to make budgeting decisions.\n\n \n\nAdjusted EBITDA has its limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations include:\n\n \n\n \n\n●\n\nAdjusted EBITDA does not reflect our cash expenditure or future requirements for capital expenditures or contractual commitments;\n\n \n\n●\n\nAdjusted EBITDA does not reflect changes in our cash requirements for our working capital needs;\n\n \n\n●\n\nAdjusted EBITDA does not reflect the interest expense and the cash requirements necessary to service interest or principal payments on our debt;\n\n \n\n●\n\nAdjusted EBITDA does not reflect cash requirements for replacement of assets that are being depreciated and amortized;\n\n \n\n●\n\nAdjusted EBITDA does not reflect non-cash compensation, which is a key element of our overall long-term compensation;\n\n \n\n●\n\nAdjusted EBITDA does not reflect the impact of certain cash charges or cash receipts resulting from matters we do not find indicative of our ongoing operations; and\n\n \n\n●\n\nOther companies in our industry may calculate Adjusted EBITDA differently than we do.\n\n \n\nOur loss from continuing operations was approximately $24.6 million and $1.8 million for the years ended December 31, 2025, and December 31, 2024. Our Consolidated EBITDA loss was approximately $16.5 million and income of $3.6 million for the years ended December 31, 2025 and 2024 respectively. The following is a reconciliation of our net income to Adjusted EBITDA for the periods presented:\n\n \n \n\n**Year Ended December 31,**\n\n \n\n(in thousands)\n\n \n\n**2025**\n\n \n \n\n**2024**\n\n \n\nLoss from continuing operations\n\n \n$\n(24,626\n)\n \n$\n(1,806\n)\n\nDepreciation and amortization\n\n \n \n1,634\n \n \n \n1,553\n \n\nInterest expense\n\n \n \n2,415\n \n \n \n2,191\n \n\nIncome tax expense\n\n \n \n4,073\n \n \n \n144\n \n\nEBITDA of discontinued operations\n\n \n \n-\n \n \n \n1,475\n \n\nSubtotal of adjustments to loss from continuing operations\n\n \n \n8,122\n \n \n \n5,363\n \n\n**Consolidated EBITDA**\n\n \n$\n(16,504\n)\n \n$\n3,557\n \n\nReview of strategic alternatives\n\n \n \n525\n \n \n \n5,221\n \n\nGain on sale of businesses\n\n \n \n-\n \n \n \n(2,536\n)\n\nRestructuring costs and severance\n\n \n \n4,765\n \n \n \n-\n \n\nLegal costs / settlements - non-recurring\n\n \n \n1,277\n \n \n \n100\n \n\nShare-based compensation\n\n \n \n140\n \n \n \n137\n \n\nOther one-time expense\n\n \n \n1,235\n \n \n \n171\n \n\n**Consolidated Adjusted EBITDA**\n\n \n$\n(8,562\n)\n \n$\n6,650\n \n\nAdjusted EBITDA attributable to non-controlling interest\n\n \n \n-\n \n \n \n(1,034\n)\n\nAdjusted EBITDA attributable to SPAR Group, Inc.\n\n \n$\n(8,562\n)\n \n$\n5,616\n \n\n \n\n14\n\n \n\n \n\n**Results of Operations**\n\n \n\nThe following table sets forth selected financial data for the years indicated (dollars in millions):\n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**%**\n\n \n \n\n**2024**\n\n \n \n\n**%**\n\n \n\nNet revenues\n\n \n$\n136.1\n \n \n \n100.0\n%\n \n$\n163.6\n \n \n \n100.0\n%\n\nCost of revenues\n\n \n \n114.4\n \n \n \n84.1\n \n \n \n130.0\n \n \n \n79.5\n \n\nSelling, general and administrative expense\n\n \n \n32.2\n \n \n \n23.7\n \n \n \n33.9\n \n \n \n20.7\n \n\nRestructuring costs and severance\n\n \n \n4.8\n \n \n \n3.5\n \n \n \n-\n \n \n \n-\n \n\nGain on sale of business\n\n \n \n-\n \n \n \n-\n \n \n \n(2.5\n)\n \n \n(1.5\n)\n\nDepreciation and amortization\n\n \n \n1.6\n \n \n \n1.2\n \n \n \n1.5\n \n \n \n0.9\n \n\nInterest expense\n\n \n \n2.4\n \n \n \n1.8\n \n \n \n2.2\n \n \n \n1.3\n \n\nOther expense, net\n\n \n \n1.3\n \n \n \n1.0\n \n \n \n0.2\n \n \n \n0.1\n \n\nLoss from continuing operations before income tax expense\n\n \n \n(20.6\n)\n \n \n(15.1\n)\n \n \n(1.7\n)\n \n \n(1.0\n)\n\nIncome tax expense\n\n \n \n4.0\n \n \n \n2.9\n \n \n \n0.1\n \n \n \n0.1\n \n\nNet loss from continuing operations\n\n \n \n(24.6\n)\n \n \n(18.1\n)\n \n \n(1.8\n)\n \n \n(1.1\n)\n\nNet loss from discontinued operations\n\n \n \n-\n \n \n \n-\n \n \n \n(0.9\n)\n \n \n(0.6\n)\n\nNet loss\n\n \n \n(24.6\n)\n \n \n(18.1\n)\n \n \n(2.7\n)\n \n \n(1.7\n)\n\nNet income attributable to non-controlling interest\n\n \n \n-\n \n \n \n-\n \n \n \n(0.5\n)\n \n \n(0.3\n)\n\nNet loss attributable to SPAR Group, Inc.\n\n \n$\n(24.6\n)\n \n \n(18.1\n%)\n \n$\n(3.2\n)\n \n \n(2.0\n%)\n\n \n\n**Results of operations for the year ended December 31, 2025, compared to the year ended December 31, 2024.**\n\n \n\n**Net Revenues**\n\n \n\nConsolidated net revenues for the year ended December 31, 2025, were $136.1 million compared to $163.6 million for the year ended December 31, 2024, a decrease of $27.5 million or 16.8%. This decrease in revenue was primarily driven by the sale of all international operations, except Canada, during various times throughout 2024. \n\n \n\nU.S. net revenues totaled $122.1 million and $117.5 million for the years ended December 31, 2025 and 2024, respectively. The increase of $4.6 million or 3.9% is driven by continued growth in the U.S. market.\n\n \n\nCanada net revenues totaled $14.0 million and $14.3 million for the years ended December 31, 2025 and 2024, respectively, a decrease of $0.3 million or 2.1%.\n\n \n\nAll Other net revenues totaled $31.8 million for the year ended December 31, 2024. The Company exited all international operations, except Canada, in 2024.\n\n \n\n**Cost of Revenue**\n\n \n\nThe Company's cost of revenue consists of its in-store labor and field management wages, related benefits, travel and other direct labor-related expenses and was 84.1% of net revenue for the year ended December 31, 2025 compared to 79.5% of net revenues for the year ended December 31, 2024. The decline in margin in 2025 was driven by significant growth in revenue from the remodel business, which is lower margin than the traditional merchandising business.\n\n \n\nU.S. cost of revenue as a percent of net revenue was 85.6% and 79.5% for the years ended December 31, 2025 and 2024, respectively. The increase in cost of 6.1% was the result of higher costs in our U.S. business related to the high proportion of revenue growth in the remodel business. \n\n \n\nThe Canada cost of revenue as a percent of net revenue was 70.9% and 68.8% for the years ended December 31, 2025 and 2024, respectively. This increase in cost of  2.1% was the result of increased merchandising business with a large client which has a lower profit margin.\n\n \n\nAll Other cost of revenue as a percent of net revenues was 84.2% for the year ended December 31, 2024. The Company exited all international operations, except Canada in 2024.\n\n \n\n**Selling, General and Administrative Expense**\n\n \n\nSelling, general and administrative expense (\"SG&A\") for the Company include its corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expenses. SG&A expenses were approximately \n$32.2 million, or \n23.7% of net revenue, and approximately \n$33.9 million, or \n20.7% of net revenue for the years ended \nDecember 31, 2025 and\n2024, respectively. SG&A expenses for the year-ended \nDecember 31, 2025 includes expenses of approximately $2.0 million related to strategic initiatives, legal costs, expenses incurred to resolve prior year restatements, and shareholder matters. For the year-ended December 31, 2024, includes expenses of approximately $5.5 million related to costs to execute sales of international operations and transaction costs associated with strategic initiatives. \n\n \n\nU.S. SG&A expenses totaled $29.5 million and $25.2 million for the years ended December 31, 2025 and 2024, respectively. The increase in expense of 17.1% was the result of strategic initiatives, legal costs, expenses incurred to resolve prior year restatements, and shareholder matters.\n\n \n\nCanada SG&A expenses totaled $2.7 million and $2.7 million for the years ended December 31, 2025 and 2024, respectively. \n\n \n\nAll Other SG&A expenses totaled $6.0 million for the year ended December 31, 2024. The Company exited all international operations, except Canada in 2024.\n\n \n\n**Restructuring Costs and Severance**\n\n \n\nRestructuring costs and severance for the Company include costs related to relocating its corporate headquarters from Auburn Hills, Michigan to its existing operations office in Charlotte, North Carolina, in November of 2025 and the severance of certain Executives during this move. Restructuring costs and severance were approximately $4.8 million and $0.0 million for the year ended December 31, 2025 and 2024, respectively.\n\n \n\n15\n\n \n\n \n\n**Depreciation and Amortization**\n\n \n\nDepreciation and amortization expense was approximately $1.6 million and $1.5 million for the years ended December 31, 2025 and 2024, respectively.\n\n \n\n**Interest Expense**\n\n \n\nThe Company's interest expense was $2.4 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively.\n\n \n\n**Other Expenses, Net**\n\n \n\nOther expenses, net was $1.2 and $0.2 million for the years ended December 31, 2025 and 2024, respectively. \n\n \n\n**Income Tax Expense**\n\n \n\nThe Company had income tax expense of $4.1 million, with an effective tax rate of (19.8%), and $0.1 million, with an effective rate of (8.7%) for the years ended December 31, 2025 and 2024, respectively. For the year ended December 31, 2025, our effective income tax rate varied from the U.S. federal statutory rate of 21.0% primarily as a result of the valuation allowance, executive compensation disallowed pursuant to Section 162(m), adjustments in tax credits, foreign rate differential and other permanent differences. For the year ended December 31, 2024, our effective income tax rate varied from the U.S. federal statutory rate of 21.0% primarily as a result of Brazilian withholding taxes, foreign disregarded income, and permanent differences.\n\n \n\n**Net Income Attributable to Non-Controlling Interest**\n\n \n\nNet income attributable to noncontrolling interest was $0.0 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively.\n\n \n\n**Critical Accounting Policies and Estimates**\n\n \n\nThe Company’s critical accounting policies, including the assumptions and judgments underlying them, are disclosed in Note 2 to the Company’s consolidated financial statements included elsewhere in this Annual Report on Form 10-K. These policies have been consistently applied in all material respects and address matters such as impairment of long-lived assets, intangible assets, and goodwill, revenue recognition, allowance for credit losses, and internal use software. While the estimates and judgments associated with the application of these policies may be affected by different assumptions or conditions, the Company believes the estimates and judgments associated with the reported amounts are appropriate under the circumstances.\n\n \n\n**Impairment of Long-Lived Assets, Intangible Assets, and Goodwill**\n\n \n\nThe Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of the Company’s property and equipment and may not be recoverable. When indicators of potential impairment exist, the Company assesses the recoverability of the assets by estimating whether the Company will recover its carrying value through the undiscounted future cash flows generated by the use of the asset and its eventual disposition. Based on this analysis, if the Company does not believe that it will be able to recover the carrying value of the asset, the Company records an impairment loss to the extent that the carrying value exceeds the estimated fair value of the asset. If any assumptions, projections or estimates regarding any asset change in the future, the Company may have to record an impairment to reduce the net book value of such individual asset.\n\n \n\nWhen facts and circumstances indicate that the carrying value of definite-lived intangible assets may not be recoverable, the Company assesses the recoverability of the carrying value by preparing estimates of sales volume and the resulting profit and cash flows expected to result from the use of the asset or asset group and its eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, the Company recognizes an impairment loss. The impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the fair value. The Company uses a variety of methodologies to determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions hypothetical marketplace participants would use.\n\n \n\nGoodwill is subject to annual impairment tests and interim impairment tests if impairment indicators are present. The Company performs the annual impairment test on October 31 each year. The impairment tests require the Company to first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. The Company is not required to calculate the fair value of a reporting unit unless it determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. If it is determined that it is more likely than not, or if the Company elects not to perform a qualitative assessment, the Company proceeds with the quantitative assessment. Under the quantitative test, if the fair value of a reporting unit exceeds its carrying amount, then goodwill of the reporting unit is considered to not be impaired. If the carrying amount of the reporting unit exceeds its fair value, then an impairment loss is recognized in an amount equal to the excess, up to the value of the goodwill.\n\n \n\n**Revenue Recognition**\n\n \n\nThe Company generates its revenues by providing merchandising services to its clients. Revenues are recognized when the Company satisfies a performance obligation by transferring services promised in a contract to a customer and in an amount that reflects the consideration that the Company expects to receive in exchange for those services. Performance obligations in the Company’s contracts represent distinct or separate services that we provide to the Company’s customers; generally, the Company’s contracts have a single performance obligation. If, at the outset of an arrangement, the Company determines that a contract with enforceable rights and obligations does not exist, revenues are deferred until all criteria for an enforceable contract are met.\n\n \n\nThe Company’s merchandising services are provided over time, generally on a daily, weekly, or monthly basis, and transaction price is based on the contractually-specified rate-per-driver metric (i.e., rate per hour, rate per store visit, or rate per item assembled, or rate by task). The Company recognizes revenues for its contracts based on the contractually specified rate-per-driver metric(s) utilizing the right-to-invoice practical expedient because the Company has a right to consideration for merchandising services completed to date. Most of the Company’s contracts have a duration of one year or less and over 90% of the Company’s contracts are completed in less than 30 days.\n\n \n\nCustomer deposits, which are considered advances on future work, are deferred and recorded as revenue in the period in which the services are provided.\n\n \n\n**Allowance for Credit Losses**\n\n \n\nThe Company continually monitors the collectability of its accounts receivable based upon current client credit information and financial condition. Balances that are deemed to be uncollectible after the Company has attempted reasonable collection efforts are written off through a charge to the bad debt allowance and a credit to accounts receivable. Accounts receivable balances, net of any applicable reserves or allowances, are stated at the amount that management expects to collect from the outstanding balances. The Company provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance for credit losses based in part on management’s assessment of the current status of individual accounts.\n\n16\n\n \n\n \n\nBased on management’s assessment, the Company established an allowance for credit losses of $0.0 million and $0.4 million as of December 31, 2025 and 2024, respectively. Credit loss expense was $0.1 million and $0.4 million for the years ended December 31, 2025 and 2024, respectively. \n\n \n\n**Internal Use Software**\n\n \n\nThe Company capitalizes certain costs associated with its internally developed software. The Company capitalizes the costs of materials and services incurred in developing or obtaining internal use software and such costs include, but are not limited to: the cost to purchase software, the cost to write program code, and payroll and related benefits and travel expenses for those employees who are directly involved with and who devote time to the Company’s software development projects. Capitalization of such costs begins during the application development stage once the preliminary project stage is complete, management authorizes and commits to funding the project, and it is probable that the project will be completed and that the software will be used to perform the function intended. Capitalization ceases when the project is substantially complete and ready for its intended purpose. Costs incurred during preliminary project and post-implementation stages, as well as software maintenance and training costs, are expensed in the period in which they are incurred.\n\n \n\nThe Company capitalized approximately $2.4 million and $1.0 million of costs related to software developed for internal use for the years ended December 31, 2025 and 2024, respectively, and recognized approximately $1.4 million and $1.4 million of amortization of capitalized software for the years ended December 31, 2025 and 2024\n\n \n\n**Income Taxes**\n\n \n\nThe Company records deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determinations, the Company considers all available evidence, including future reversals of existing deferred tax liabilities, projected future taxable income, feasible and prudent tax planning strategies, and recent financial operating results. If the Company determines that it will not be able to realize deferred income tax assets in the future, a valuation allowance is recorded. If sufficient positive evidence arises in the future indicating that all or a portion of the deferred tax assets meet the more likely than not standard for realization, the valuation allowance would be reduced accordingly in the period that such a conclusion is reached.\n\n \n\nValuation allowances of $7.6 million and $0.0 million at December 31, 2025 and 2024, respectively, related principally to deferred tax assets for net operating losses (\"NOLs\"), disallowed interest expense and tax credits that are uncertain as to realizability.\n\n \n\nAn income tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on its technical merits. The unrecognized tax reserves at December 31, 2025 and 2024 were $0.16 million and $0.11 million respectively, excluding accrued interest and penalties.\n\n \n\nThe Company has historically calculated its quarterly tax provision based on its best estimate of the full year tax rate applicable to the quarter. The Company did not significantly change the methodology for calculating income tax expenses, deferred tax assets and liabilities and reserves for uncertain tax positions for the years presented. See Note 5, Income Taxes in the Notes to Consolidated Financial Statements for additional information.\"\n\n \n\n**Recent Accounting Pronouncements**\n\n \n\nSee the sections titled \"Summary of Significant Accounting Policies— Recently Adopted Accounting Pronouncements” and \"—Recently issued accounting pronouncements not yet adopted” in Note 2 to the Company's Consolidated Financial Statements, *Summary of Significant Accounting Policies,* included elsewhere in this Annual Report on Form 10‑K.\n\n \n\n**Liquidity and Capital Resources**\n\n \n\n**Funding Requirements**\n\n \n\nManagement 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, a significant reduction in business from such clients, or a negative economic downturn could have a material adverse effect on the Company's business, cash resources and ongoing ability to fund operations.\n\n \n\nThe Company is a party to both U.S. and Canada credit facilities. These credit facilities require compliance with their respective financial covenants. For the year ended December 31, 2025, the Company was in compliance with all financial covenants under these arrangements. See Note 4 to the Company's Consolidated Financial Statements, *Debt,* included elsewhere in this Annual Report on Form 10-K.\n\n \n\n**Cash Flows for the Years Ended December 31, 2025 and 2024**\n\n \n\nNet cash used in operating activities was $18.4 million for the year ended December 31, 2025 and net cash used in operating activities was $0.7 million for the year ended December 31, 2024. The year-over-year increase in net cash used by operating activities was mainly driven by lower operating income and unfavorable changes in working capital, largely due to the timing of customer collections, partially offset by favorable timing of payments to suppliers.\n\n \n\nNet cash used in investing activities was $1.1 million for the year ended December 31, 2025 compared to cash provided by investing activities of $9.9 million for the year ended December 31, 2024. The net use of cash for investing activities was primarily attributable to the costs associated with software developed for internal use, implementation of a new enterprise resource planning system, and expenditures related to outfitting the new corporate headquarters.\n\n \n\nNet cash provided by financing activities was $4.5 million for the year ended December 31, 2025 compared to cash used in financing activities of $1.7 million for the year ended December 31, 2024. The year-over-year increase in cash from financing activities was driven by borrowings under the line of credits and sale of treasury shares.\n\n \n\nFor the year ended December 31, 2025, the Company experienced a net decrease in cash and cash equivalents amounting to approximately $15.0 million, net of the impact of foreign exchange rate fluctuations of $0.0 million. The year-over-year decrease in cash and cash equivalents was due to lower operating income and unfavorable changes in working capital, largely due to the timing of customer collections, the costs associated with software developed for internal use, expenditures related to outfitting the new corporate headquarters, offset by favorable timing of payments to suppliers."}