Note 14 - Purchase and Sale of Interests in Subsidiaries

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

14. Purchase and Sale of Interests in Subsidiaries

The following contains descriptions of the Company's purchases and sale of interests in its operating subsidiaries during the years ended December 31, 2013 and 2012. In each of the consolidated subsidiaries noted below, the Company made its investment together with an experienced person or company in the local area who is not otherwise affiliated with the Company (each a "Local Investor"). The Company provides its subsidiaries with its proprietary Internet-based technological systems (which include its logistical, communication, scheduling, tracking, reporting and accounting programs) that run on and are developed, managed, maintained and controlled from the Company's information and technology control center in Auburn Hills, Michigan, U.S.A. (the Company's "Global Technology Systems"), which are generally phased in over time following acquisition. The Company also provides its subsidiaries with company-wide executive management, administrative support, accounting oversight, procedures and controls (financial and reporting), credit support and corporate codes and policies that apply to each such subsidiary (the Company's "Global Administration", and together with its Global Technology Systems, the Company's "Global Contributions"). The Company also seeks to own a majority (at least 51%) of such a subsidiary's equity while the Local Investor purchases a minority equity interest in it (49% or less). In addition to that equity, a Local Investor provides credit support, certain services and the useful local attention, perspective and relationships of a substantial (although non-controlling) equity owner with a strong financial stake in such subsidiary's success (the "Local Contributions"). The Local Investor also often contributes an existing customer base to the subsidiary in which it invests. The Company, through its various agreements with the applicable Local Investor, has provided for exit strategies that are deemed fair and equitable for both the Company and the Local Investor.  

BIP (Romania)

In 2012, the Company acquired this 51% interest in its Romanian joint venture, SPAR Business Ideas Provider S.R.L. ("BIP") for $60,000. Effective August 31, 2013, the Company sold all of its interests in BIP to an affiliate, SIT. See Note 11 to the Consolidated Financial Statements – Related-Party Transactions.

NMS (USA)

In September 2012, the Company made a domestic acquisition that also used its international strategy of seeking a minority (i.e., non-controlling) non-affiliated Local Investor for the Company's new consolidated subsidiary in Georgia, U.S.A.  As with most of its international counterparts, the Company acquired a 51% interest in National Merchandising Services, LLC, a newly formed Nevada limited liability company ("NMS"), and is providing its usual Global Contributions, and since then NMS has been a part of the Company's consolidated financial statements.  NMS provides merchandising services in the U.S.A. to multiple Fortune 500 companies previously supplied by its Local Investor.  The Local Investor in this case is National Merchandising of America, Inc., a Georgia corporation ("NMA"), which owns a 49% interest in NMS and provided field merchandising services to NMS pursuant to a Field Services Agreement with NMS through July 31, 2013.  In addition, NMA contributed substantially all of its customers to NMS and is providing the usual Local Contributions.

The Company's total initial investment in NMS was $859,050, which consists of the following (1) $510 in capital, (2) a cash payment of $400,000 to NMA and a $200,000 non-interest bearing promissory note paid to NMA on January 2, 2013, (3) issuance of SPAR common stock worth $165,000 to NMA, and (4) a contingent liability of $93,540 described below.  

NMS agreed to pay an incentive consulting fee ("Consulting Fee") to NMA based on NMS achieving certain earnings goals in each of the next three 12 month periods.  The Consulting Fee is calculated based on 50% of NMS earnings in excess of the annual base earnings of $500,000. The maximum consideration for the Consulting Fee could be as much as $600,000.  The projected consulting fee is approximately $94,000 and has been recorded as a contingent liability at December 31, 2013 and 2012. The Company has completed its valuation of the fair value and related allocation between identifiable intangibles and goodwill, and recorded the following in 2012:

Customer list	$	526,320
Goodwill		332,730
	$	859,050

The customer list is being amortized over ten years.

CMR-Meridian (South Africa)

In September 2012, the Company's existing local consolidated subsidiary, SGRP Meridian (Pty) Ltd. ("SGRP Meridian"), acquired a majority (51%) of the equity interests in CMR Meridian (Pty) Ltd. ("CMR-Meridian"). Combined Manufacturers National (Pty) Ltd ("CMR") acquired the remaining minority (49%) non-controlling interest in CMR-Meridian as its Local Investor, contributed substantially all of its customers to CMR-Meridian and provided the usual Local Contributions while the Company provides its usual Global Contributions. SGRP Meridian and CMR-Meridian are both part of the Company's consolidated financial statements.

CMR-Meridian initiated operations on October 1, 2012, and SGRP provided approximately $380,000 in a working capital loan to SGRP Meridian to assist SGRP Meridian in this transaction. SGRP Meridian, through the joint venture agreement with CMR, paid approximately $73,000 at closing to CMR and recorded a contingent liability in the amount of $154,000 representing the fair value of potential future payments required to be made by SGRP Meridian to CMR.

Based on exchange rates at December 31, 2013, potential payments could be:

For 2013, the payment will be 50% of earnings in excess of $200,000, up to a maximum of $140,000 (based on actual 2013 results, this payment earned is $140,000 to be paid in early 2014),

For 2014, the payment will be 25% of the earnings in excess of $200,000 up to a maximum of $82,000, and

For 2015, the payment will be 10% of the earnings in excess of $200,000 up to a maximum of $39,000.

At the end of the first three full years of operations, an additional bonus of $50,000 (based on exchange rate at December 31, 2013) will be paid by CMR-Meridian to CMR if the combined cumulative earnings before interest and taxes exceed $600,000 provided that in each year, a minimum $200,000 in earnings is achieved.  Based on 2013 results, CMR-Meridian met the criteria to earn the full Incentive Consulting Fee for that period. While the contingent liability recorded in 2012 is adequate to satisfy the consulting fee payment for 2013, any potential consulting fee earned for 2014 and 2015 will need to be charged to the statement of operations in those years.

Preceptor (India)

In March 2013, the Company purchased a majority (51%) of the equity interests in Preceptor Marketing Services Private Limited ("Preceptor"), a recently formed Indian corporation, from Krognos Integrated Marketing Services Private Limited ("Krognos"), and Preceptor became a new consolidated subsidiary of the Company.  The Company also is providing the usual Global Contributions to Preceptor, while Krognos as the Local Investor retained the remaining minority (49%) non-controlling interest in Preceptor and is providing the usual Local Contributions.  Krognos also is the Local Investor in the Company's existing subsidiary in India, SPAR Krognos Marketing Private Limited.  Preceptor will enable the Company to service clients not serviced by its existing Indian subsidiary.  The Company paid $21,000 for its interest in Preceptor, and Preceptor became a consolidated subsidiary of the Company on March 1, 2013. 

Certain MFI Business (USA)

In March 2013, the Company also purchased general merchandising service and certain in-store audit service businesses from Market Force Information, Inc. ("MFI"), a leading customer intelligence solution provider.  The acquired in-store audit services include the price, point of sale, out of stock, intercept and planogram audits managed by MFI's New York office.  With this acquisition, the Company entered the growing in-store audit service business and expanded its existing general merchandising service and client base domestically.

The purchase was made pursuant to the Asset Purchase Agreement dated as of March 15, 2013 (the "Purchase Agreement") between MFI, as the seller, and SPAR Marketing Force, Inc. ("SMF"), a consolidated subsidiary of SGRP and its principal domestic operating company.  The purchase was completed on March 15, 2013.  The Purchase Price under the Purchase Agreement consisted of a cash purchase price of $1.3 million and the assumption of certain specified liabilities (principally those arising after the closing under the assumed contracts).  The Company completed its purchase price valuation analysis and has recorded customer contracts and customer list with a value of approximately $1.3 million and goodwill of approximately $8,000 based on its analysis.  The customer contracts and customer lists value of $1.3 million is being amortized on a straight line basis over five years. In addition, SMF entered into a Consulting Services Agreement and a Transition Services Agreement with MFI, under which MFI will provide certain services, equipment and facilities for up to one year, and various assignments and other transfer documents.

The following table includes the amount of MFI's revenue and earnings included in the Company's consolidated income statement for the year ended December 31, 2013 and a pro forma calculation of the amounts that would have been included in the Company's consolidated statement of income for the year ended December 31, 2013 and 2012 had the MFI acquisition date been January 1, 2013 and 2012, instead of March 15, 2013 (in thousands):

	Revenue		Net Income
Actual MFI from March 15 to December 31, 2013	$	6,642	$	589
2013 consolidated supplemental pro forma from January 1 to December 31, 2013	$	114,123	$	3,000
2012 consolidated supplemental pro forma from January 1 to December 31, 2012	$	109,574	$	1,664