0001004989 2012-03-31 0001004989 2011-12-31 0001004989 2012-01-01 2012-03-31 0001004989 2011-01-01 2011-03-31 0001004989 us-gaap:CommonStockMember 2011-12-31 0001004989 us-gaap:AdditionalPaidInCapitalMember 2011-12-31 0001004989 us-gaap:RetainedEarningsMember 2011-12-31 0001004989 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2011-12-31 0001004989 us-gaap:NoncontrollingInterestMember 2011-12-31 0001004989 us-gaap:CommonStockMember 2012-01-01 2012-03-31 0001004989 us-gaap:AdditionalPaidInCapitalMember 2012-01-01 2012-03-31 0001004989 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2012-01-01 2012-03-31 0001004989 us-gaap:RetainedEarningsMember 2012-01-01 2012-03-31 0001004989 us-gaap:NoncontrollingInterestMember 2012-01-01 2012-03-31 0001004989 us-gaap:CommonStockMember 2012-03-31 0001004989 us-gaap:AdditionalPaidInCapitalMember 2012-03-31 0001004989 us-gaap:RetainedEarningsMember 2012-03-31 0001004989 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2012-03-31 0001004989 us-gaap:NoncontrollingInterestMember 2012-03-31 0001004989 2010-12-31 0001004989 2011-03-31 iso4217:USD iso4217:USD xbrli:shares xbrli:shares The Balance Sheet at December 31, 2011, is excerpted from the consolidated audited financial statements as of that date but does not include certain information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. 1666000 1705000 14673000 15461000 860000 801000 17199000 17967000 1771000 1523000 1148000 1148000 677000 705000 195000 178000 20990000 21521000 3401000 1819000 3423000 4039000 1551000 1092000 217000 183000 972000 3641000 9564000 10774000 438000 334000 10002000 11108000 0.01 0.01 2445598 2445598 0 0 0 0 201000 201000 0.01 0.01 47000000 47000000 20130918 20103043 20130918 20103043 14098000 13940000 -214000 -172000 -4319000 -4626000 9766000 9343000 1222000 1070000 20990000 21521000 21047000 16418000 15278000 11186000 5769000 5232000 5022000 4573000 277000 262000 470000 397000 -51000 -81000 82000 -9000 501000 307000 42000 24000 459000 283000 152000 30000 307000 253000 0.02 0.01 0.01 0.01 20117000 19639000 21467000 21347000 -42000 23000 417000 306000 20103000 201000 13940000 -4626000 -172000 1070000 10413000 20000 153000 153000 8000 5000 5000 -42000 -42000 307000 152000 20131000 201000 14098000 -4319000 -214000 1222000 10988000 153000 55000 -792000 -1759000 76000 -501000 1582000 -266000 -215000 -348000 2972000 2246000 239000 188000 -2675000 -1269000 5000 14000 244000 9000 503000 53000 20000 -2732000 -1534000 -40000 26000 -39000 550000 923000 1473000 55000 57000 13000 105000 6000 253000 SPAR GROUP INC 10-Q --12-31 20130918 false 0001004989 Yes No Smaller Reporting Company No 2012 Q1 2012-03-31 <div> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Basis of Presentation</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The accompanying unaudited, consolidated financial statements of SPAR Group, Inc., a Delaware corporation ("SGRP"), and its subsidiaries (together with SGRP, collectively, the "Company" or the "SPAR Group") have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. 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In addition, SPAR Trademarks, Inc. ("STM"), SMS and SIT entered into separate perpetual trademark licensing agreements whereby STM has granted non-exclusive royalty-free licenses to SIT and SMS (and through them to their commonly controlled subsidiaries and affiliates by sublicenses, including SMSI) for their continued use of the name "SPAR" and certain other trademarks and related rights of STM, a wholly owned subsidiary of SGRP.&#160;&#160;SMS and SMSI provide services to the Company, as described above, and SIT no longer provides services to the Company and does not compete with the Company.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Through arrangements with the Company, SMS and SMSI participate in various benefit plans, insurance policies and similar group purchases by the Company, for which the Company charges them their allocable shares of the costs of those group items and the actual costs of all items paid specifically for them. All such transactions between the Company and the above affiliates are paid and/or collected by the Company in the normal course of business.&#160;&#160;As an accommodation, the Company also provides certain accounting, human resource and similar administrative services to SIT and certain other affiliates of Robert G. Brown and William H. Bartels, at a nominal cost.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In addition to the above, SMSI purchases insurance coverage for worker compensation, casualty and property insurance risk for itself, SMS and the Company from Affinity Insurance, Ltd. (&#8220;Affinity&#8221;).&#160;&#160;SMSI owns minority (less than 1%) equity interest in Affinity, and Mr. Robert G. Brown is a director of Affinity.&#160;&#160;The Affinity insurance premiums for such coverage are ultimately charged to SMSI, SMS and the Company based on the proportion of their respective insurable interests.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On December 31, 2010, there were 338,801 shares of SGRP's Series A Preferred Stock owned by a non-SGRP retirement plan whose trustee is and beneficiaries include Robert G. Brown (who is a co-founder, director, executive officer and significant shareholder of SGRP), and there were 215,601 shares of SGRP's Series A Preferred Stock owned by a non-SGRP retirement plan whose trustee is and beneficiaries include William H. Bartels (who also is a co-founder, director, executive officer and significant shareholder of SGRP), which shares collectively constituted all of the outstanding shares of Series A Preferred Stock issued by SGRP. Those shares were originally purchased pursuant to subscription agreements on March 31, 2008, and September 24, 2008, at the closing Nasdaq bid price of SGRP's Common Stock for the preceding trading day, which was $1.12 per share for the March purchases and $0.86 per share for the September purchases.&#160;&#160;Each share of SGRP's Series A Preferred Stock could be converted into one share of SGRP's Common Stock (at the rate of one to one), at the option of the holder and without further consideration, and accumulated dividends at the rate of ten percent per annum.&#160;&#160;SGRP's Audit Committee and Board of Directors each reviewed and unanimously approved this transaction, including the pricing, conversion and other terms of the Preferred Stock and the affiliated relationship of the parties. The offer,&#160;&#160;sale and conversion of such Preferred Stock were&#160;&#160;not&#160;&#160;registered under the Securities Act or other securities laws, as they were a non-public offer and sale made in reliance upon (among other things) Section 4 (2) of the Securities Act.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On or before March 10, 2011, Mr. Brown and Mr. Bartels, as trustees of those plans, each had requested that their plan's preferred shares be converted into SGRP&#8217;s Common Stock in accordance with its terms, and in order to facilitate conversion of those shares by payment of all accrued and unpaid dividends, on March 10, 2011, SGRP's Board of Directors (i) fixed March 10, 2011, as the applicable record date for determination of the holders of the SGRP&#8217;s Series A Preferred Stock eligible to receive such dividends, (ii) declared a dividend on such SGRP&#8217;s Series A Preferred Stock equal to the accrued and unpaid dividends thereon, payable in shares of SGRP&#8217;s Common Stock valued at their market value ($2.34 per share) on such record date, and (iii) authorized the issuance of the shares of SGRP&#8217;s Common Stock necessary to effect such conversion (554,402 shares) and accrued dividend payment (54,584 shares) in consideration of the preferred shares surrendered and the accrued dividends thereby satisfied.&#160;&#160;As a result of such conversions and stock dividends, on March 11, 2011, Mr. Brown's plans received 372,158 shares of SGRP&#8217;s Common Stock (33,357 shares of which were for accrued dividends) and Mr. Bartels' plan received 236,828 shares of SGRP&#8217;s Common Stock (21,227 shares of which were for accrued dividends).</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In the event of any material dispute in the business relationships between the Company and SMS, SMSI, or SIT, it is possible that Messrs. Brown or Bartels may have one or more conflicts of interest with respect to these relationships and such dispute could have a material adverse effect on the Company.</font> </div><br/> <div> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">7.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Preferred Stock</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">SGRP's certificate of incorporation also authorizes it to issue 3,000,000 shares of preferred stock with a par value of $0.01 per share (the "SGRP Preferred Stock"), which may have such preferences and priorities over the SGRP Common Stock and other rights, powers and privileges as the Company's Board of Directors may establish in its discretion from time to time.&#160;&#160;The Company has created and authorized the issuance of a maximum of 3,000,000 shares of Series A Preferred Stock pursuant to SGRP's Certificate of Designation of Series "A" Preferred Stock (the "SGRP Series A Preferred Stock"), which have dividend and liquidation preferences, have a cumulative dividend of 10% per year, are redeemable at the Company's option and are convertible at the holder's option (and without further consideration) on a one-to-one basis into SGRP Common Stock.&#160;&#160;After the Series A Preferred Stock conversion described in Note 6, above, 2,445,598 shares of SGRP Series A Preferred Stock remained authorized and available for issuance under SGRP's certificate of incorporation and Certificate of Designation of Series "A" Preferred Stock.&#160;&#160;The number of shares authorized by such designation could, however, be reduced by amendment or redemption to facilitate the creation of other SGRP Preferred Series.</font> </div><br/> <div> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">8.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Stock-Based Compensation</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="3" style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">SGRP currently grants options to its eligible directors, officers and employees and certain employees of its affiliates to purchase shares of Common Stock issued by SGRP ("SGRP Shares") pursuant to its 2008 Stock Compensation Plan, (as amended, the "2008 Plan").&#160;&#160;SGRP also has granted stock options that continue to be outstanding under its predecessor, the 2000 stock option plan ("2000 Plan"). The 2000 Plan will continue to be outstanding for the purposes of any remaining outstanding options issued under it for so long as such options are outstanding. As described below, SGRP has the authority to issue other types of stock-based awards under the 2008 Plan, but (except for restricted stock award described below) to date it has not done so.</font></font></font> </div><br/><div style="TEXT-ALIGN: justify; LINE-HEIGHT: 1.25; TEXT-INDENT: 27pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company believes that it is desirable to align the interests of SGRP&#8217;s directors, executives, employees and consultants with those of its stockholders through their ownership of SGRP Shares.&#160;&#160;Although the Company does not require its directors, executives, employees or consultants to own SGRP Shares, the Corporation believes that it can help achieve this objective by providing long term equity incentives through the issuance to its directors, executives, employees or consultants of options to purchase SGRP Shares and other stock-based awards pursuant to the 2008 Plan (as described below) and facilitating the purchase of SGRP Shares at a modest discount by all of its executives, employees and consultants who elect to participate in its Employee Stock Purchase Plan (as defined below).&#160;&#160;In particular, the Company believes that the award of 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.</font></font> </div><br/><div style="TEXT-ALIGN: justify; LINE-HEIGHT: 1.25; TEXT-INDENT: 27pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">SGRP's stockholders approved and adopted the 2008 Plan in May of 2008, as the successor to the 2000 Plan with respect to all new options issued, and an amendment to the 2008 Plan in May of 2009, permitting the discretionary repricing described below. The 2008 Plan provides for the granting of either incentive or nonqualified stock options to purchase SGRP Shares, restricted SGRP Shares, 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 options.&#160;&#160;Unless terminated sooner as provided therein, the 2008 Plan will terminate on May 28, 2018, which is ten years from the 2008 Plan Effective Date, and no further Awards may be made under it.&#160;&#160;However, any existing Awards made prior to such termination will continue in accordance with their respective terms and will continue to be governed by the 2008 Plan.&#160;&#160;Stock options granted under the 2008 Plan have a maximum term of ten years, except in the case of incentive stock options granted to greater than 10% stockholders (whose terms are limited to a maximum of five years), and SGRP has generally issued options having maximum terms.</font></font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The 2008 Plan limits the number of SGRP Shares that may be covered by Awards ("Outstanding Covered Shares") to 5,600,000 SGRP Shares in the aggregate (the "Maximum Covered Shares"), which Outstanding Covered Shares for this purpose consist of the sum of (i) the SGRP Shares covered by all Awards issued under the 2008 Plan on or after May 29, 2008 ("New Awards"), plus (ii) and the SGRP Shares covered by all stock options issued at any time under the 2000 Plan or 1995 Plan to the extent they were still outstanding on May 29, 2008 ("Continuing Awards").&#160;&#160;SGRP Shares covered by New Awards or Continuing Awards that expire, lapse, terminate, are forfeited, become void or otherwise cease to exist (other than as a result of exercise) are no longer Outstanding Covered Shares, are added back to remaining availability under the Maximum Covered Shares and thus become available for New Award grants, while those SGRP Shares covered by exercised New Awards or Continuing Awards continue to be Outstanding Covered Shares and are not added back to, and thus continue to reduce, the remaining availability under the Maximum Covered Shares under the 2008 Plan.&#160;&#160;The Outstanding Covered Shares and Maximum Covered Shares (as well as the SGRP Shares covered by a particular Award) are all subject to certain adjustments that may be made by the Compensation Committee upon the occurrence of certain changes in the Corporation's capitalization or structure as provided in the 2008 Plan.&#160;&#160;Except for the adjustments described above, an increase in the Maximum Covered Shares requires the consent of the SGRP stockholders under the terms of the 2008 Plan and Exchange Rules.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">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 2008 Plan) on the date of the applicable modification, and no modification can adversely affect an awardee's rights or obligations under an award without the awardee's consent. No further consent of SGRP's stockholders is required for any repricing or other modification of any outstanding or other aware under the 2008 Plan, including those previously issued under predecessor plans.&#160;&#160;Awards have only been repriced once to date pursuant to this authority.&#160;&#160;In 2009, SGRP&#8217;s Compensation Committee approved an offer to exchange and reprice stock options covering 2.1 million shares of SGRP&#8217;s Common Stock, and outstanding stock options were voluntarily surrendered by and repriced for eighty-one of SGRP&#8217;s eligible officers, employees and consultants and five of its directors, who received new option contracts to purchase an aggregate of 1,788,304 shares of SGRP&#8217;s Common Stock in exchange for their old options.&#160;&#160;For details of such offer, please see SGRP&#8217;s Offer to Exchange Certain Outstanding Stock Options, as described below.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Stock options and other stock based awards under the 2008 Plan may be issued from time to time by SGRP in its discretion to the Company's executives and other employees and generally are included in the annual incentive plans of SGRP's executives.&#160;&#160;The Company's management may present recommendations for such awards to the Compensation Committee at any of its regular quarterly meetings, although recently most recommendations have been made at the August meeting.&#160;&#160;The Chairman of the Board or the Compensation Committee may make those recommendations respecting Mr. Raymond, Mr. Raymond as Chief Executive Officer makes those recommendations respecting Mr. Segreto, Ms. Belzer and Ms. Franco, as well as for any new officer, and each of those executives in turn are allocated potential option shares for their departments and make recommendations respecting those under their supervision (subject to review and approval by Mr. Raymond).&#160;&#160;In recommending to the Compensation Committee the actual number of options (and options shares covered) to be granted to each individual, the person making the recommendation makes an assessment of the individual's contribution to the Company's overall performance, the individual's successful completion of a special project, and any significant increase or decrease in the participant's abilities, responsibilities and performance of his or her duties.&#160;&#160;The Compensation Committee reviews and discusses managements' recommendations at its meeting and determines whether and to what extent to approve and grant the proposed stock option or other stock based awards to executives and employees of the Company pursuant to the 2008 Plan.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The stock options issued under the 2008 Plan are typically "nonqualified" (as a tax matter), have a ten (10) 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.&#160;&#160;The Company accounts for its employee and affiliate employee stock option expense as compensation expense in the Company&#8217;s financial statements when the stock options are granted, as now required by applicable accounting principles. Share-based compensation cost is measured on the grant date, based on the fair value of the award calculated at that date, and is recognized over the requisite service period, which generally is the options' vesting period. Fair value is calculated using the Black-Scholes option pricing model.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Based upon the Black-Scholes calculation, share-based compensation expense related to employee and non-employee stock option grants totaled $108,000 and $55,000 for the three months ended March 31, 2012 and 2011, respectively.&#160;&#160;The unamortized expense as of March 31, 2012, was approximately $720,000 employee and non-employee outstanding stock option grants.&#160;&#160;The impact of the total share-based compensation expense on basic/diluted earnings per share was less than half a cent for both the three months ended March 31, 2012 and 2011.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="3" style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On March 10, 2011, SGRP's Compensation Committee authorized an award of 100,000 shares of restricted SGRP common stock as additional compensation to Gary S. Raymond, the Company's Chief Executive Officer and President.&#160; The restricted shares vest 20,000 shares a year over the next five (5) year, starting on March 10, 2012 and continuing through March 10, 2016, provided Mr. Raymond continues to be so employed by the Company on the applicable vesting date.&#160; In March 2012, the Company issued the first 20,000 restricted common shares to Mr. Raymond.&#160;&#160;If Mr. Raymond leaves such employment, he will lose his right to receive any unvested shares.&#160; The compensation expense related to these restricted shares will be amortized, by the Company, over the five (5) year vesting period that started on April 1, 2011.&#160;&#160;The Company recorded compensation expense of $11,064 for the three months ended March 21, 2012.&#160;&#160;The unamortized expense as of March 31, 2012 was approximately $177,000.&#160;</font></font></font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In 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 (See - Transactions with Related Persons, Promoters and Certain Control Persons, above), to purchase SGRP's Common Stock from SGRP without having to pay any brokerage commissions. 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FONT-SIZE: 10pt; FONT-WEIGHT: bold">15.&#160;&#160;&#160;&#160;&#160;&#160;Recently Issued Accounting Standards</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In 2012 we adopted the provisions of ASU No. 2011-05, &#8220;Comprehensive Income.&#8221; This ASU intends to enhance comparability and transparency of other comprehensive income components. The guidance provides an option to present total comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement or two separate but consecutive statements. This ASU eliminates the option to present other comprehensive income components as part of the statement of changes in shareowners&#8217; equity. The provisions of this ASU were applied retrospectively.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman"><font size="3" style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In September 2011, the FASB issued ASU No, 2001-07, &#8220;Goodwill and Other Intangible Assets&#8221;.&#160;&#160;This ASU is intended to simplify goodwill impairment testing by adding a qualitative review step to assess whether the required quantitative impairment analysis that exists today is necessary. The amended guidance permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. The amended guidance is effective beginning in 2012, however, with earlier adoption permitted.&#160;&#160;The Company decided to early-adopt the updated guidance to its 2011 annual impairment test and it did not have a significant impact on the Company&#8217;s consolidated financial statements.</font></font> </div><br/> <div> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">16.&#160;&#160;&#160;&#160;&#160;&#160;Taxes</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In July 2006, the FASB issued an interpretation, <font style="FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Accounting for Uncertainty in Income Taxes</font>, now codified as ASC Topic 740, which detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise's financial statements.&#160;&#160;Tax positions must meet a more-likely-than-not recognition threshold and requires that interest and penalties that the tax law requires to be paid on the underpayment of taxes should be accrued on the difference between the amount claimed or expected to be claimed on the return and the tax benefit recognized in the financial statements. The Company's policy is to record this interest and penalties as additional tax expense.&#160;&#160;The Company's tax reserves at March 31, 2012 and December 31, 2011 totaled $65,000 for potential domestic state tax and federal tax liabilities.</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">SPAR and its subsidiaries file numerous consolidated, combined and separate company income tax returns in the U.S. Federal jurisdiction and in many U.S. state and foreign jurisdictions. With few exceptions, SPAR is subject to U.S. Federal, state and local income tax examinations for the years 2008 through the present. However, tax authorities have the ability to review years prior to the position taken by the Company to the extent that SPAR utilized tax attributes carried forward from those prior years.</font> </div><br/> <div> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">17.&#160;&#160;&#160;&#160;&#160;&#160;Reclassifications</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt"> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Certain reclassifications have been made to the 2011 financial statements to conform to the 2012 presentation.</font> </div><br/> <div> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">18.&#160;&#160;&#160;&#160;&#160;&#160;Subsequent Event</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 27pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="3" style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="3" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="3" style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">In May 2012, the Company sold its 51% interest in its subsidiary in Romania, SPAR CITY S.R.L. to that subsidiary&#8217;s local investor for approximately $</font>120,000<font size="3" style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">.</font></font></font></font></font> </div><br/>