XML 47 R19.htm IDEA: XBRL DOCUMENT
v3.19.1

Note 13 - Purchase of Interests in Subsidiaries | 12 Months Ended
--- | ---
Dec. 31, 2018
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | 13. Purchase of Interests in Subsidiaries Resource Plus Acquisition On January 9, 2018, the Company completed its acquisition of a 51% interest (the "Acquisition") in Resource Plus of North Florida, Inc. ("RPI"), a supplier of professional fixture installation and product merchandising services; and a 51% interest in both of its sister companies, Mobex of North Florida, Inc. ("Mobex"), a proprietary retail fixture mobilization system manufacturer, and Leasex, LLC ("Leasex"), a company formed to lease Mobex's proprietary equipment. RPI owns a 70% interest in BDA Resource, LLC, a Florida limited liability company ("BDA"), and RPI, Leasex, Mobex and BDA may be referred to individually and collectively as "Resource Plus". SGRP's subsidiary, SPAR Marketing Force, Inc. ("SMF"), purchased those equity interests in Resource Plus from Joseph L. Paulk and Richard Justus pursuant to separate Stock Purchase Agreements each dated as of October 13, 2017 ( each a "SPA"), which were subject to due diligence and completion of definitive documents. The base purchase prices under the SPAs for those Resource Plus equity interests were $3,000,000 for Mr. Paulk and $150,000 for Mr. Justus, subject to adjustment and potential bonuses as provided in their respective SPAs. At the closing on January 9, 2018, Mr. Paulk received the base purchase price in $400,000 cash and a Promissory Note for $2,600,000; and Mr. Justus received the base purchase price in $50,000 cash and a Promissory Note for $100,000. Those notes were issued by SMF, guaranteed by SGRP pursuant to separate Guaranties, and secured by SMF pursuant to separate Securities Pledge and Escrow Agreements to the sellers of the respective acquired equity interests, with each of those documents dated and effective as of January 1, 2018. Mr. Paulk's note is repayable in installments of $300,000, plus interest at 1.85% per annum, per year on December 31 of each year (commencing in 2018, which payment was made in 2018 ), with the balance due on December 31, 2023; and Mr. Justus's note on December 31 of each such year (commencing in 2018, which payment was also made in 2018 ) is repayable in installments of $33,333 per year, plus interest at 1.85% per annum, on December 31 of each year, with the balance of $33,334 due on December 31, 2020. In connection with that closing, Mr. Paulk retired, while Mr. Justus continued as President of Resource Plus and received an Executive Officer Employment Terms and Severance Agreement with RPI ("ETSA"), with a base salary of $200,000 per year (plus an incentive bonus), and a term of office and severance protection through January 1, 2020, subject to annual extensions in the discretion of the parties. This acquisition was accounted for using the purchase method of accounting with the purchase price allocated to the assets purchased and liabilities assumed based upon their estimated fair values at the date of acquisition. A summary of purchase price consideration to be allocated by SGRP in the acquisition of RPI is provided below:
Cash consideration |  | $ | 456 |
Notes payable |  |  | 2,300 |
Total consideration paid |  | $ | 2,756 |
The estimated assets acquired and liabilities assumed by SGRP are provided below:
Cash and cash equivalents |  | $ | 1,223 |
Accounts receivable |  |  | 2,699 |
Accounts payable |  |  | (255 | )
Property and equipment |  |  | 155 |
Prepaid assets |  |  | 86 |
Marketable securities |  |  | 20 |
Other assets |  |  | 50 |
Accrued expenses |  |  | (1,389 | )
Deferred tax liability |  |  | (572 | )
Revolving line of credit |  |  | (865 | )
Other intangible assets |  |  | 2,290 |
Residual goodwill |  |  | 1,962 |
Estimated fair value of assets acquired |  |  | 5,404 |
Non-controlling interest |  |  | (2,648 | )
Consideration paid for acquisition |  | $ | 2,756 |
The following table contains unaudited pro forma revenue and net income for SPAR Group, Inc. assuming SPAR Resource Plus closed on January 1, 2017 ( in thousands):
|  | Revenue |  |  | Net Income |
Consolidated supplemental pro forma for the twelve month period ended December 31, 2017 |  | $ | 205,604 |  |  | $ | 407 |
The pro forma in the table above includes adjustments for, amortization of intangible assets and acquisition costs to reflect results that are more representative of the results of the transactions as if the Resource Plus acquisition closed on January 1, 2017. This pro forma information utilizes certain estimates, is presented for illustrative purposes only and may not be indicative of the results of operation that would have actually occurred. In addition, future results may vary significantly from the results reflected in the pro forma information. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, such as anticipated cost savings from operating synergies. For the twelve month period ended December 31, 2018, Resource Plus contributed $24.2 million to the Company's total revenue and increased net income for the same period by $1.3 million.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration