10-Q

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549 

Form 10-Q

(Mark One)

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the third quarterly period ended September 30, 2016.

OR

☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from __________ to __________.  

Commission file number: 0-27824
SPAR Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware	33-0684451
State of Incorporation	IRS Employer Identification No.
333 Westchester Avenue, South Building, Suite 204, White Plains, New York 10604
Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (914) 332-4100

Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   

☒ Yes    ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☒ Yes    ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (See the definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act).

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☐	Smaller Reporting Company ☒
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      

☐ Yes    ☒ No

On November 11, 2016, there were 20,639,490 shares of Common Stock outstanding. 

SPAR Group, Inc.

Index

PART I:          FINANCIAL INFORMATION
Item 1	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2016 (Unaudited) and December 31, 2015	2
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2016 and 2015	3
	Unaudited Condensed Consolidated Statement of Equity for the nine months ended September 30, 2016	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2	Management's Discussion and Analysis of Financial Condition, Results of Operations, Liquidity and Capital Resources	20
Item 3	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4	Controls and Procedures	28
PART II:         OTHER INFORMATION
Item 1	Legal Proceedings	29
Item 1A	Risk Factors	29
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3	Defaults upon Senior Securities	30
Item 4	Mine Safety Disclosures	30
Item 5	Other Information	30
Item 6	Exhibits	31
SIGNATURES		32

1

PART I:     FINANCIAL INFORMATION

Item 1.           Condensed Consolidated Financial Statements

SPAR Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

	September 30, 2016			December 31, 2015
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	7,502		$	5,718
Accounts receivable, net		30,782			23,203
Deferred income taxes		532			529
Prepaid expenses and other current assets		898			661
Total current assets		39,714			30,111
Property and equipment, net		2,556			2,443
Goodwill		2,257			1,800
Intangible assets, net		2,154			2,551
Deferred income taxes		6,513			5,890
Other assets		2,290			611
Total assets	$	55,484		$	43,406
Liabilities and equity
Current liabilities:
Accounts payable	$	5,007		$	2,984
Accrued expenses and other current liabilities		12,628			7,082
Accrued expenses due to affiliates		989			78
Deferred income taxes		2,566			2,154
Customer deposits		955			503
Lines of credit and short-term loans		8,181			476
Total current liabilities		30,326			13,277
Long-term debt and other liabilities		12			5,731
Total liabilities		30,338			19,008
Commitments and Contingencies – See Note 8
Equity:
SPAR Group, Inc. equity
Preferred stock, $.01 par value:
Authorized and available shares– 2,445,598
Issued and outstanding shares–
None – September 30, 2016 and December 31, 2015		–			–
Common stock, $.01 par value:
Authorized shares – 47,000,000
Issued shares – 20,680,717 – September 30, 2016 and December 31, 2015		207			207
Treasury stock, at cost 42,177 shares – September 30, 2016 and 119,695 shares – December 31, 2015		(58	)		(169	)
Additional paid-in capital		16,041			15,871
Accumulated other comprehensive loss		(3,364	)		(2,869	)
Retained earnings		5,746			5,662
Total SPAR Group, Inc. equity		18,572			18,702
Non-controlling interest		6,574			5,696
Total equity		25,146			24,398
Total liabilities and equity	$	55,484		$	43,406

See accompanying notes.

2

SPAR Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net revenues	$	33,438		$	28,269		$	89,781		$	87,002
Cost of revenues		26,162			21,555			69,309			66,206
Gross profit		7,276			6,714			20,472			20,796
Selling, general and administrative expense		6,360			6,014			17,637			18,289
Depreciation and amortization		486			471			1,459			1,414
Operating income		430			229			1,376			1,093
Interest expense		51			47			111			187
Other (income), net		(78	)		(8	)		(183	)		(68	)
Income before income tax expense		457			190			1,448			974
Income tax (benefit) expense		(31	)		83			200			435
Net income		488			107			1,248			539
Net income attributable to non-controlling interest		(546	)		(199	)		(1,164	)		(676	)
Net (loss) income attributable to SPAR Group, Inc.	$	(58	)	$	(92	)	$	84		$	(137	)
Basic and diluted loss per common share:	$	–		$	–		$	–		$	(0.01	)
Weighted average common shares – basic		20,607			20,556			20,580			20,562
Weighted average common shares – diluted		20,607			20,556			21,299			20,562
Net income	$	488		$	107		$	1,248		$	539
Other comprehensive income (loss):
Foreign currency translation adjustments		206			(663	)		(495	)		(1,413	)
Comprehensive income (loss)		694			(556	)		753			(874	)
Comprehensive (income) attributable to non-controlling interest		(546	)		(199	)		(1,164	)		(676	)
Comprehensive income (loss) attributable to SPAR Group, Inc.	$	148		$	(755	)	$	(411	)	$	(1,550	)

See accompanying notes.

3

SPAR Group, Inc. and Subsidiaries

Condensed Consolidated Statement of Equity

(unaudited)

(In thousands)

	Common Stock				Treasury Stock						Additional			Accumulated Other					Non-
	Shares		Amount		Shares			Amount			Paid-In Capital			Comprehensive Loss			Retained Earnings		Controlling Interest			Total Equity
Balance at January 1, 2016		20,681	$	207		120		$	(169	)	$	15,871		$	(2,869	)	$	5,662	$	5,696		$	24,398
Share-based compensation		–		–		–			–			271			–			–		–			271
Purchase of treasury shares		–		–		11			(12	)		–			–			–		–			(12	)
Reissued treasury shares – RSU's		–		–		(33	)		46			(46	)		–			–		–			–
Reissued treasury shares – Employee Stock Plan		–		–		(2	)		3			(3	)		–			–		–			–
Exercise of stock options		–		–		(54	)		74			(52	)		–			–		–			22
Distributions to non-controlling investors		–		–		–			–			–			–			–		(286	)		(286	)
Other comprehensive loss		–		–		–			–			–			(495	)		–		–			(495	)
Net income		–		–		–			–			–			–			84		1,164			1,248
Balance at September 30, 2016		20,681	$	207		42		$	(58	)	$	16,041		$	(3,364	)	$	5,746	$	6,574		$	25,146

See accompanying notes.

4

SPAR Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

(In thousands)

	Nine Months Ended September 30,
	2016			2015
Operating activities
Net income	$	1,248		$	539
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		1,459			1,414
Bad debt expense, net of recoveries		317			409
Share based compensation		271			306
Changes in operating assets and liabilities:
Accounts receivable		(4,643	)		4,244
Prepaid expenses and other assets		(105	)		(21	)
Accounts payable		1,000			(403	)
Accrued expenses, other current liabilities and customer deposits		2,548			(1,395	)
Net cash provided by operating activities		2,095			5,093
Investing activities
Purchases of property and equipment and capitalized software		(1,153	)		(1,238	)
Purchases of Brazil subsidiary, net of cash		(306	)		-
Net cash used in investing activities		(1,459	)		(1,238	)
Financing activities
Net borrowing (payments) on lines of credit		2,015			(473	)
Proceeds from stock options exercised		22			24
Proceeds from local Brazil		102			-
Payments on term debt		(21	)		(18	)
Purchase of treasury shares		(12	)		(109	)
Distribution to non-controlling investors		(286	)		(329	)
Net cash provided by (used in) financing activities		1,820			(905	)
Effect of foreign exchange rate changes on cash		(672	)		(1,122	)
Net change in cash and cash equivalents		1,784			1,828
Cash and cash equivalents at beginning of year		5,718			4,382
Cash and cash equivalents at end of period	$	7,502		$	6,210
Supplemental disclosure of cash flows information
Interest paid	$	108		$	176
Income taxes paid	$	126		$	114

See accompanying notes.

5

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

1.     Basis of Presentation

The unaudited, interim condensed consolidated financial statements of SPAR Group, Inc., a Delaware corporation ("SGRP"), and its subsidiaries (together with SGRP, collectively, the "Company" or the "SPAR Group"), accompanying this Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (this "Quarterly Report"), 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. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The condensed consolidated balance sheet as of December 31, 2015 has been compiled from the Company’s audited consolidated balance sheet as of such date. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation have been included in these interim financial statements. However, these interim financial statements should be read in conjunction with the annual consolidated financial statements and notes thereto for the Company as contained in the SGRP's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission (the "SEC") on March 30, 2016 (the "2015 Annual Report"), and SGRP's Proxy Statement for its 2016 Annual Meeting of Stockholders as filed with the SEC on April 27, 2016 (the "2016 Proxy Statement"). Particular attention should be given to Items 1 and 1A of the 2015 Annual Report respecting the Company's Business and Risk Factors, respectively, and the following parts of SGRP's 2016 Proxy Statement: (i) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, (ii) CORPORATE GOVERNANCE, (iii) EXECUTIVE OFFICERS, COMPENSATION, DIRECTORS AND OTHER INFORMATION and (iv) EXECUTIVE COMPENSATION, EQUITY AWARDS AND OPTIONS. The Company's results of operations for the interim period are not necessarily indicative of its operating results for the entire year.

2.     Business and Organization

The Company is a supplier of merchandising and other marketing services throughout the United States and internationally. The Company also provides in-store event staffing, product sampling, audit services, furniture and other product assembly services, technology services and marketing research services. Assembly services are performed in stores, homes and offices while those other services are primarily performed in mass merchandisers, office supply, grocery, drug store, home improvement, independent, convenience, value channel and electronics stores.

Merchandising services primarily consist of regularly scheduled, special project and other product services provided at the store level, and the Company may be engaged by either the retailer or the manufacturer. Those services may include restocking and adding new products, removing spoiled or outdated products, resetting categories "on the shelf" in accordance with client or store schematics, confirming and replacing shelf tags, setting new sale or promotional product displays and advertising, replenishing kiosks, providing in-store event staffing and providing assembly services in stores, homes and offices. Other merchandising services include whole store or departmental product sets or resets, including new store openings, new product launches and in-store demonstrations, audit services, special seasonal or promotional merchandising, focused product support and product recalls. The Company also provides technology services and marketing research services.

As of September 30, 2016, the Company operates in 10 countries and divides its operations into two reportable segments: its Domestic Division, which provides those services in the United States of America since certain of its predecessors were formed in 1979, and its International Division, which began operations in May 2001 and provides similar merchandising, marketing, audit and in-store event staffing services in Japan, Canada, South Africa, India, China, Australia, Mexico, Turkey and Brazil.

6

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited) (continued)

3.     Earnings Per Share

The following table sets forth the computations of basic and diluted net income per share (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016		2015
Numerator:
Net (loss) income attributable to SPAR Group, Inc.	$	(58	)	$	(92	)	$	84	$	(137	)
Denominator:
Weighted average shares used in basic net income per share calculation		20,607			20,556			20,580		20,562
Weighted average shares used in diluted net income per share calculation		20,607			20,556			21,299		20,562
Basic and diluted net (loss) income per common share	$	–		$	–		$	–	$	(0.01	)

For the three month period ended September 30, 2016, 696,000 vested and non-vested stock options were not included in the calculation because they would have had an anti-dilutive effect. For the three and nine months ended September 30, 2015, 1,008,000 and 1,016,000 vested and non-vested options were not included due to their anti-dilutive effect.

4.     Credit Facilities

Sterling Credit Facility:

SGRP and certain of its US and Canadian subsidiaries, (namely SPAR Marketing Force, Inc., SPAR Assembly & Installation, Inc. (f/k/a SPAR National Assembly Services, Inc.), SPAR Group International, Inc., SPAR Trademarks, Inc., SPAR Acquisition, Inc., SPAR Canada, Inc. and SPAR Canada Company) (together with SGRP, the "Borrowers"), are parties to a Revolving Loan and Security Agreement dated as of July 6, 2010, as amended (as amended, the "Sterling Loan Agreement"), with Sterling National Bank (the "Lender"), and their Secured Revolving Loan Note in the amended maximum principal amounts of $8.5 million (see below) to Sterling National Bank (as amended, the "Sterling Note"), to document and govern their credit facility with the Lender (including such agreement and note, the "Sterling Credit Facility"). The Sterling Credit Facility as amended effective September 28, 2015 currently is scheduled to expire and the Borrowers' loans thereunder will become due on July 6, 2017 (with no early termination fee).

The Sterling Loan Agreement currently requires the Borrowers to pay interest on the loans thereunder equal to the Agent's floating Prime Rate (as defined in such agreement) minus one half of one percent (0.5%) per annum, and a fee on the maximum unused line thereunder equal to one-eighth of one percent (0.125%) per annum.

Revolving loans of up to $8.5 million are available to the Borrowers under the Sterling Credit Facility based upon the borrowing base formula defined in the Sterling Loan Agreement (principally 85% of "eligible" US and Canadian accounts receivable less certain reserves). The Sterling Credit Facility is secured by substantially all of the assets of the Borrowers (other than the Company's non-Canadian foreign subsidiaries, certain designated domestic subsidiaries, and those subsidiaries' respective equity and assets).

The amendment to the Sterling Credit Facility effective as of September 28, 2015, among other things, extended the scheduled term of the Sterling Credit Facility to July 6, 2017 (with no early termination fee), increased the maximum principal amounts of Sterling's commitment under the Sterling Loan Agreement to $8.5 million, and provided for the amendment and restatement of the Sterling Note with a new $8.5 million note from the Borrowers in replacement of the old notes and made other changes to its covenant and collateral formulas.

7

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

The Sterling Loan Agreement requires the Borrowers to maintain certain financial covenants, including maintenance by the Borrowers of a minimum combined tangible net worth of $3.4 million and minimum consolidated tangible net worth of $4.8 million, with those figures increasing by at least 50% of combined and consolidated net profit each year, respectively. In addition, the Borrowers and the Company must not exceed a maximum combined indebtedness to tangible net worth ratio of 3.0 to 1.0, and the Borrowers must maintain a minimum fixed charge coverage ratio of 1.5 to 1.0. Also, capital expenditures for the Borrowers cannot exceed $2.0 million during any fiscal year, and, on a consolidated basis, the Company's year-end operations may not result in a loss or deficit, as determined in accordance with GAAP. The Company was not in compliance with the Fixed Charge Ratio covenant at September 30, 2016, however a waiver was obtained from Sterling Bank on November 18, 2016.   

International Credit Facilities: 

SPARFACTS Australia Pty. Ltd., has a secured line of credit facility with Oxford Funding Pty Ltd. for $1.2 million (Australian) or approximately $916,000 USD (based upon the exchange rate at September 30, 2016). The facility provides for borrowing based upon a formula, as defined in the agreement (principally 80% of eligible accounts receivable less certain deductions). The agreement is on a month to month basis at the Company's request. The outstanding balance at September 30, 2016, was approximately $448,000 (Australian) or $342,000 USD (based on the exchange rate at September 30, 2016).

On March 7, 2011, the Japanese subsidiary, SPAR FM Japan, Inc., a wholly owned subsidiary, secured a term loan with Mizuho Bank in the amount of approximately 20.0 million Yen (Japanese) or $198,000 USD. The loan is payable in monthly installments of 238,000 Yen or $2,400 USD at an interest rate of 0.1% per annum with a maturity date of February 28, 2018. The outstanding balance at September 30, 2016, was approximately 4.1 million Yen or $40,000 USD (based upon the exchange rate at September 30, 2016).

SPAR Todopromo has secured a line of credit facility with BBVA Bancomer Bank for 5.0 million pesos or approximately $257,000 USD (based upon the exchange rate at September 30, 2016). The revolving line of credit was secured on March 15, 2016 with a contract for 24 months. The variable interest rate is TIIE (Interbank Interest Rate) +4% which results in an actual interest rate of 8.5% at the end of September. The outstanding balance at September 30, 2016 was 5.0 million pesos or $257,000 USD.

The Company had scheduled future maturities of loans as of September 30, 2016, approximately as follows (dollars in thousands):

	Interest Rate as of September 30, 2016			October - December 2016		2017		2018
Mizuho Bank		0.1	%	$	7	$	28	$	5
Sterling National Bank		3.0	%		–		7,554		–
Oxford Funding Pty Ltd.		6.3	%		342		–		–
BBVA Bankcomer		8.5	%		257		–		–
Total				$	606	$	7,582	$	5

	September 30, 2016		December 31, 2015
Unused Availability:
United States	$	317	$	1,635
Australia		574		640
Mexico		–		–
Total Unused Availability	$	891	$	2,275

8

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

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.

5.     Related-Party Transactions

SGRP's policy respecting approval of transactions with related persons, promoters and control persons is contained in the SPAR Group Code of Ethical Conduct for its Directors, Senior Executives and Employees Amended and Restated (as of) August 13, 2015 (the "Ethics Code"). The Ethics Code is intended to promote and reward honest, ethical, respectful and professional conduct by each Covered Person (as defined in the Ethics Code in his or her position with the Company anywhere in the world, including (among other things) serving each customer, dealing with each vendor and treating each other with integrity and respect, and behaving honestly, ethically and professionally with each customer, each vendor, each other and the Company. Article II of the Ethics Code specifically prohibits various forms of self-dealing and collusion and Article V of the Ethics Code generally prohibits each "Covered Person" (including SGRP's officers and directors) from engaging in any business activity that conflicts with his or her duties to the Company, and directs each "Covered Person" to avoid any activity or interest that is inconsistent with the best interests of the SPAR Group, in each case except for any "Approved Activity" (as such terms are defined in the Ethics Code). Examples of violations include (among other things) having any ownership interest in, acting as a director or officer of or otherwise personally benefiting from business with any competitor, customer or vendor of the Company other than pursuant to any Approved Activity. Approved Activities include (among other things) any contract with an affiliated person (each an "Approved Affiliate Contract") or anything else disclosed to and approved by SGRP's Board of Directors (the "Board"), its Governance Committee or its Audit Committee, as the case may be, as well as the ownership, board, executive and other positions held in and services and other contributions to affiliates of SGRP and its subsidiaries by certain directors, officers or employees of SGRP, any of its subsidiaries or any of their respective family members. The Company's senior management is generally responsible for monitoring compliance with the Ethics Code and establishing and maintaining compliance systems, including conflicting relationships and transactions, subject to the review and oversight of SGRP's Governance Committee as provided in clause IV.11 of the Governance Committee's Charter, and SGRP's Audit Committee as provided in clause I.2(l) of the Audit Committee's Charter. The Governance Committee and Audit Committee each consist solely of independent outside directors.

SGRP's Audit Committee has the specific duty and responsibility to review and approve the overall fairness of all material related-party transactions. The Audit Committee receives affiliate contracts and amendments thereto for its review and approval (to the extent approval is given), and these contracts are periodically (often annually) again reviewed, in accordance with the Audit Committee Charter, the Ethics Code, the rules of the Nasdaq Stock Market, Inc. ("Nasdaq"), and other applicable law to ensure that the overall economic and other terms will be (or continue to be) no less favorable to the Company than would be the case in an arms-length contract with an unrelated provider of similar services (i.e., its overall fairness to the Company including pricing and the ability to provide services at comparable performance levels). The Audit Committee periodically reviews all of the related party relationships, agreements and transactions described below.

Domestic Related Party Services:

SPAR Business Services, Inc. ("SBS"), SPAR Administrative Services, Inc. ("SAS"), and SPAR InfoTech, Inc. ("SIT"), are affiliates of SGRP but are not part of the consolidated Company. Mr. Robert G. Brown, a Director, the Chairman and a major stockholder of SGRP, and Mr. William H. Bartels, a Director and the Vice Chairman of the Company and a major stockholder of SGRP, are the sole stockholders of SBS. Mr. Brown is the sole stockholder of SIT. Mr. Brown is a director and officer of SBS and SIT. Mr. Bartels is a director and officer of SAS. The stockholders of SAS were Mr. Bartels and Mr. Brown, and as of January 1, 2015, Mr. Brown had transferred all of his ownership to parties related to Mr. Brown, each of whom are considered affiliates of the Company for related party purposes because of their family relationships with Mr. Brown.

9

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

The Company had expenses of $19.7 million and $18.9 million for the nine months ended September 30, 2016 and 2015, respectively (each "Total Domestic Field Cost"), for the execution of the field merchandising, auditing, assembly and other specialists (each a "Field Specialist") who execute the services provided by the Company to its domestic clients. SBS, through the use as needed of approximately 6,000 of its available Field Specialists in the U.S.A., provided a majority of all of the domestic Field Specialists used by the Company (which amounted to approximately 78% and 83% of the Company's Total Domestic Field Cost for the nine months ended September 30, 2016 and 2015, respectively). SAS, through the use of its 59 full-time national, regional and district administrators, provided substantially all of the domestic field administrative services used by the Company (which amounted to approximately 92% and 90% of the Company's total domestic field administrative service cost for the nine months ended September 30, 2016 and 2015, respectively).

Pursuant to the terms of the Amended and Restated Field Service Agreement with SBS dated as of January 1, 2004, as amended in 2011, and the Amended and Restated Field Management Agreement with SAS dated as of January 1, 2004 (each a "Prior Agreement"), defined reimbursable expenses and established the "Cost Plus Fee" arrangement where the Company paid SBS and SAS for their costs of providing those services plus a fixed percentage of such reimbursable expenses (the "Cost Plus Fee"). The parties have had negotiations respecting replacement agreements since the Prior Agreements expired on November 30, 2014.

The Company and SBS have agreed in principle to a Cost Plus Fee to 2.96% of SBS's reimbursable expenses as noted above. This agreement in principle went into effect on and has applied since December 1, 2014. A new SBS agreement is being prepared, which will be subject to contractual terms and provisions reasonably acceptable to the parties.

No SBS compensation for Mr. Brown has been reimbursed to date by the Company, and no such salary reimbursements were made under SBS's Prior Agreement. Although recently requested by SBS, those reimbursements have not been agreed upon or authorized by the Company. However, since SBS is a "Subchapter S" corporation and owned by Messrs. Brown and Bartels, all income from SBS is allocated to them.

On June 14, 2016, SAS and SMF entered into a new Field Administration Agreement (the "SAS Agreement"), a copy of which was filed with the Company's Current Report on Form 8-K as filed with the SEC on June 20, 2016. In order to provide continuity with SAS' Prior Agreement, the SAS Agreement is effective and governs the relationship of the parties as of December 1, 2014, and amends, restates and completely replaces SAS' Prior Agreement. The SAS Agreement more clearly defines reimbursable expenses, exclusions and procedures and continues the indemnifications and releases provided by SAS' Prior Agreement (which indemnifications and releases were and are comparable to those applicable to SGRP's directors and executive officers under its By-Laws and applicable law). Significantly, the SAS Agreement reduced the Cost Plus Fee from 4% to 2% effective as of June 1, 2016.

SGRP's Audit Committee has approved the SAS Agreement pursuant to its specific duty and responsibility to review and approve the overall fairness of all material related-party transactions, as more fully provided above in this Note 5 to the Company's Condensed Consolidated Financial Statements.

No salary reimbursements for Mr. Bartels have been included in such SAS reimbursable expenses or Cost Plus Fee, as such salary reimbursements were not made under the SAS's Prior Agreement and have not been included in the new SAS Agreement approved by the Audit Committee (as required under related party transaction rules). However, since SAS is a "Subchapter S" corporation and owned by Mr. Bartels and relatives of Mr. Brown, all income from SAS is allocated to them.

10

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

SBS renders the services of independent contractors to provide field merchandising, auditing, assembly and other services (such as “Field Specialist”). The appropriateness of SBS's treatment of its Field Specialists as independent contractors has been periodically subject to challenge (both currently and historically) by various states and others, and SBS's expenses of defending those challenges and other litigation have been paid by the Company (consistent with the Prior Agreements and to endeavor to manage related potential risks). See Note 8 to the Condensed Consolidated Financial Statements – Commitments and Contingencies, below. The Company paid SBS for its legal expenses in defending all of its litigation in the amounts of $143,920 and $116,635 for the three month periods ended September 30, 2016 and 2015, respectively, and $586,836 and $383,971 for the nine month periods ended September 30, 2016, and 2015, respectively.

National Merchandising Services, LLC ("NMS"), is a consolidated domestic subsidiary of the Company and is owned jointly by SGRP through its indirect ownership of 51% of the NMS membership interests and by National Merchandising of America, Inc. ("NMA"), through its ownership of the other 49% of the NMS membership interests. Mr. Edward Burdekin is the Chief Executive Officer and President and a director of NMS and also is an executive officer and director of NMA and the sole member and manager of National Retail Source, LLC ("NRS"). Ms. Andrea Burdekin, Mr. Burdekin's wife, is the sole stockholder and a director of NMA and a director of NMS. NRS and NMA are affiliates of the Company but are not consolidated with the Company. NMS commenced operations as of September 1, 2012.

NRS provided a substantial amount of the domestic merchandising specialist field force used by NMS during 2015. Pursuant to the terms of the Master Field Services Agreement dated as of August 1, 2013 (the "NRS Services Agreement"), NMS received merchandising services from NRS through the use of field merchandising specialists during 2015. For those services, the Company had agreed to reimburse NRS for its total costs of providing those services and to pay NRS a fee equal to 2% of its total costs (the "Plus 2% Fee"). Those costs included all field and administrative costs and expenses (effectively including workers compensation insurance expenses) of NRS but exclude certain legal and other administrative expenses. Accordingly, no salary reimbursement for Mr. Burdekin or Ms. Burdekin were included in such reimbursable costs or Plus 2% Fee.

11

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

In 2015, NRS provided a substantial amount of the domestic merchandising specialist field force used by NMS and 5% of all of the domestic merchandising specialist field force used by the Company for the nine months ended September 30, 2015. The total Plus 1% Fee earned by NRS for services rendered was approximately $20,000 for the nine months ended September 30, 2015. As of December 2015, NMS no longer uses NRS but uses field merchandising services from a non-affiliated third-party provider, but NMS could once again use NRS in the future.

International Related Party Services:

SGRP Meridian (Pty), Ltd. ("Meridian") is a consolidated international subsidiary of the Company and is owned 51% by SGRP and 49% by the following individuals: Mr. Brian Mason, Mr. Garry Bristow, and Mr. Adrian Wingfield. Mr. Mason is President and a director and Mr. Bristow is an officer and director of Meridian. Mr. Mason is also an officer and director and shareholder of Merhold Property Trust ("MPT"). Mr. Mason and Mr. Bristow are both officers and directors and both are shareholders of Merhold Cape Property Trust ("MCPT"). Mr. Mason, Mr. Bristow and Mr. Wingfield are all officers and shareholders of Merhold Holding Trust ("MHT") which provides similar services like MPT. MPT owns the building where Meridian is headquartered and also owns two vehicles both of which are subleased to Meridian. MCPT provides a fleet of 126 vehicles to Meridian under a 4 year lease program. These leases are provided to Meridian at local market rates included in the summary table below.

SGRP NDS Tanitim Ve Danismanlik A.S. ("NDS") is a consolidated international subsidiary of the Company and is owned 51% by SGRP and 49% by Mr. Medet Yilmaz and Ms. Nurgül Yilmaz. Mr. Yilmaz is President and a director and Ms. Yilmaz is an officer and director of NDS. They are both officers and directors of NDS Tanitim Danismanlik Hizmetleri Gida Tekstil Turizm Pazarlama Ticaret Limited Sirketi ("NDS Tanitim") and NDS Reklam Tanitim Ve Danismanlik Hizmetleri Pazarlama Ticaret Limited Sirketi ("NDS Reklam"). Mr. and Ms. Yilmaz are shareholders of NDS Tanitim and NDS Reklam. NDS Tanitim provided NDS field administration services while NDS Reklam provided NDS field merchandising services both at local market rates through May 2015 at which time NDS assumed these service responsibilities.

SPAR Todopromo is a consolidated international subsidiary of the Company and is owned 51% by SGRP and 49% by the following individuals: Mr. Juan F. Medina Domenzain, Mr. Juan Medina Staines, Mr. Julio Cesar Hernandez Vanegas, and Mr. Jorge Medina Staines. Mr. Juan F. Medina Domenzain is an officer and director of SPAR Todopromo and is also majority shareholder of CONAPAD ("CON") which supplies administrative and operational consulting support to SPAR Todopromo.

At the end of August, Mr. Juan F. Medina Domenzain ("JFMD"), partner in SPAR Todopromo, purchased a warehouse that was leased by SPAR Todopromo. He is leasing the use of the warehouse to SPAR Todopromo for the same amount per month as the prior warehouse owner. He currently has a rental contract for the rest of the year with SPAR Todopromo and a new contract is expected to be signed in January, 2017 at current market rates.

The Company continues to purchase services from SBS, SAS, NRS, MPT, MCPT, MHT, NDS Tanitim, NDS Reklam, CON and JFMD because it believes the value of services it receives from them are at least as favorable to the Company as it could obtain from non-affiliated providers of similar services. The Company believes it is the largest and most important customer of SBS, SAS, NRS, MPT, MCPT, MHT, NDS Tanitim, NDS Reklam, CON and JFMD (and from time to time may be their only customer), and accordingly the Company generally has been able to negotiate better terms, receives more personal and responsive service and is more likely to receive credits and other financial accommodations from SBS, SAS, NRS, MPT, MCPT, MHT, NDS Tanitim, NDS Reklam, CON and JFMD than the Company could reasonably expect to receive from an unrelated service provider who has significant other customers and business. SBS, SAS and NRS affiliate contracts and arrangements are annually reviewed and considered for approval by SGRP's Audit Committee, subject to the ongoing negotiations as described above.

12

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

Summary of Related Party Services:

The following costs of affiliates were charged to the Company (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Services provided by affiliates:
Field merchandiser and other expenses (SBS)	$	5,491	$	5,022	$	15,828	$	16,034
Field administration and other expenses (SAS)	$	1,011	$	1,080	$	3,138	$	3,334
Field merchandiser expenses (NMA and NRS)	$	–	$	471	$	–	$	1,038
Office and vehicle rental expenses (MPT)	$	8	$	1	$	32	$	30
Vehicle rental expenses (MCPT)	$	245	$	197	$	618	$	757
Office and vehicle rental expenses (MHT)	$	34	$	39	$	85	$	89
Field administration expenses (NDS Tanitim)	$	–	$	–	$	–	$	15
Field merchandiser expenses (NDS Reklam)	$	1	$	63	$	1	$	180
Consulting and administrative services (CON)	$	74	$	89	$	241	$	279
Warehouse rental (JFMD)	$	3	$	–	$	3	$	–
Total services provided by affiliates	$	6,867	$	6,962	$	19,946	$	21,756

Accrued expenses due to affiliates (in thousands):	September 30,		December 31,
	2016		2015
Total accrued expenses due to affiliates	$	989	$	78

Other Related Party Transactions and Arrangements

In July 1999, SPAR Marketing Force, Inc. ("SMF"), SBS and SIT entered into a perpetual software ownership agreement providing that each party independently owned an undivided share of and had the right to unilaterally license and exploit their "Business Manager" Internet job scheduling software (which had been jointly developed by such parties), and all related improvements, revisions, developments and documentation from time to time voluntarily made or procured by any of them at its own expense. Business Manager and its other proprietary software and applications are used by the Company for (among other things) the scheduling, tracking, coordination and reporting of its merchandising and marketing services and are accessible via the Internet or other applicable telecommunication network by the authorized representatives of the Company and its clients through their respective computers and mobile devices. In addition, SPAR Trademarks, Inc. ("STM"), SBS and SIT entered into separate perpetual trademark licensing agreements whereby STM has granted non-exclusive royalty-free licenses to SIT and SBS (and through them to their commonly controlled subsidiaries and affiliates by sublicenses, including SAS) for their continued use of the name "SPAR" and certain other trademarks and related rights of STM, a wholly owned subsidiary of SGRP. SBS and SAS provide services to the Company, as described above, SIT assisted in the Brazilian acquisition, as described below, and SIT no longer provides services to and does not compete with the Company.

Through arrangements with the Company, SBS, SAS and other companies owned by Mr. Brown or Mr. Bartels 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.

In addition to the above, SAS purchases insurance coverage for worker compensation, casualty and property insurance risk for itself, SBS for its field merchandising specialists that require such insurance coverage and the Company from Affinity Insurance, Ltd. ("Affinity"). SAS owns a minority (less than 1%) of the common stock in Affinity. The Affinity insurance premiums for such coverage are ultimately charged to SAS, SBS (and through SBS to its covered field merchandising specialists) and the Company based on the contractual arrangements of the parties.

13

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

Related Party Transactions and Arrangements in the Brazil Acquisition

The following related party transactions occurred and arrangements established in connection with the Company's September 2016 acquisition in Brazil of the NM Companies (as defined and more fully described in Note 10 to Consolidated Financial Statements - Purchase of Interests in Subsidiaries, below).

On September 8, 2016, the Company (through its Cayman Islands subsidiary) acquired 100% ownership of SGRP Brasil Participações Ltda. ("SGRP Holdings"), a Brazilian limitada (which is a form of limited liability company), from its affiliate, SPAR Infotech, Inc. ("SIT") (see below), at cost (including approved expenses). SGRP Holdings then completed the formation and acquired a majority of the stock of SPAR Brasil Serviços de Merchandising e Tecnologia S.A., a Brazilian corporation ("SPAR BSMT").

SGRP Holdings, JK Consultoria Empresarial Ltda.-ME, a Brazilian limitada ("JKC"), and Earth Investments, LLC, a Nevada limited liability company ("EILLC"), entered into a Joint Venture Agreement respecting SPAR BSMT dated and effective as of September 13, 2016 (the "JV Agreement"). See below respecting the ownership and related party status of JKC and EILLC. The JV Agreement (among other things) provided for the NM Acquisition described (and defined) below, provided for the capitalization of and loans to SPAR BSMT to fund the NM Acquisition and its working capital, and established terms for the election of officers and directors and governance of SPAR BSMT. In addition, the JV Agreement provided for the issuance of shares by SPAR BSMT in the necessary amounts to give SGRP Holdings 51%, JKC 39% and EILLC 10% of the outstanding shares of SPAR BSMT's stock. Under the JV Agreement, SPAR BSMT has five directors, three of which are nominated by SGRP Holdings, one of which is nominated by JKC and one of which is nominated by EILLC.

JKC is owned by Mr. Jonathan Dagues Martins, a Brazilian citizen and resident ("JDM") and his sister, Ms. Karla Dagues Martins, a Brazilian citizen and resident. JDM is the Chief Executive Officer and President of each SPAR Brazil company pursuant to a Management Agreement between JDM and SPAR BSMT dated September 13, 2016. JDM also is a director of SPAR BSMT. Accordingly, JKC and JDM are each a related party in respect of the Company. JKC and SGRP Holdings are parties to separate Loan Agreements with SPAR BSMT dated September 14, 2016, pursuant to which SGRP Holdings loaned R$1,400,000 (approximately US$448,000) and JKC loaned R$453,673 (approximately US$145,175) to SPAR BMST as required by the JV Agreement. JKC funded that loan in part through a loan of R$120,423 (approximately US$38,700) to JKC from SGRP Holdings pursuant to a Loan Agreement between them dated September 14, 2016.

EILLC is owned by Mr. Peter W. Brown, a citizen and resident of the USA ("PWB"). PWB is an officer and employee of the Company's affiliate, SIT which is owned by SGRP's Chairman, Mr. Robert G. Brown, PWB is an official observer at the meetings of SGRP's Board, and PWB also is the nephew of Mr. Robert G. Brown. PWB also is a director of SPAR BSMT. Accordingly, PWB and EILLC are each a related party in respect of the Company. In consideration of PWB's efforts in finding and pursuing the NM Acquisition, the Company agreed to grant his company, EILLC, a 10% interest in SPAR BSMT, have SGRP Holdings take over and make the initial loans to SPAR BSMT that would otherwise have been required to have been made by EILLC (aggregating R$116,326 or approximately US$37,200). The Company also agreed to reimburse Infotech for PWB's approved expenses.

The NM Acquisition and associated related party transactions were reviewed and approved by the Audit Committee of SGRP's Board of Directors.

Company paid SBS for its legal expenses in defending all of its litigation in the amounts of $143,920 and $116,635 for the three month periods ended September 30, 2016 and 2015, respectively, and $586,836 and $383,971 for the nine month periods ended September 30, 2016, and 2015, respectively.

14

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

6.      Preferred Stock

SGRP's certificate of incorporation 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. 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. The Company issued 554,402 of SGRP shares to affiliated retirement plans which were all converted into common shares in 2011 (including dividends earned thereon), leaving 2,445,598 shares of remaining authorized preferred stock. At September 30, 2016, no shares of SGRP Series A Preferred Stock were issued and outstanding.

7.      Stock-Based Compensation and Other Plans

SGRP has granted restricted stock and stock option awards to its eligible directors, officers and employees and certain employees of its affiliates respecting shares of Common Stock issued by SGRP ("SGRP Shares") pursuant to SGRP's 2008 Stock Compensation Plan (as amended, the "2008 Plan"), which was approved by SGRP's stockholders in May of 2008 and 2009. The 2008 Plan provides for the granting of restricted SGRP shares, stock options to purchase SGRP shares (either incentive or nonqualified), 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 option, restricted share awards, and performance stock units. As of September 30, 2016, approximately 700,000 SGRP shares were available for Award grants under the amended 2008 Plan. In the third quarter, there were 75,000 options awarded to officers, 50,000 options awarded to Peter W. Brown, a consultant and related party to the Company, and 400,000 options awarded to the new President and CEO of SPAR Group, Inc. In addition, the CEO was awarded 25,000 shares of restricted stock in the quarter.

The Company recognized $90,000 and $119,000 in stock-based compensation expense relating to stock option awards during the three month periods ended September 30, 2016 and 2015, respectively. The tax benefit available from stock based compensation expense related to stock option during the three months ended September 30, 2016 and 2015 was approximately $34,000 and $45,000 respectively. The Company recognized $232,000 and $290,000 in stock-based compensation expense relating to stock option Awards during the nine month periods ended September 30, 2016 and 2015, respectively. The tax benefit, available to the Company, from stock based compensation expense related to stock options during the nine months ended September 30, 2016 and 2015 was approximately $85,000 and $110,000, respectively. However, since the Company has NOL's available for the next several years, these tax benefits have not been realized as of this report. As of September 30, 2016, total unrecognized stock-based compensation expense related to stock options was $674,000.

During the three months ended September 30, 2016 and 2015, the Company recognized approximately $9,000 and $15,000, respectively of stock based compensation expense related to restricted stock. The tax benefit available to the Company from stock based compensation expense related to restricted stock during the three months ended September 30, 2016 and 2015 was approximately $3,500 and $5,600, respectively. During the nine months ended September 30, 2016 and 2015, the Company recognized approximately $39,000 and $35,000, respectively, of stock-based compensation expense related to restricted stock. The tax benefit, available to the Company, from stock based compensation expense related to restricted stock during the nine months ended September 30, 2016 and 2015 was approximately $14,800 and $13,500, respectively. However, since the Company has NOL's available for the next several years, these tax benefits have not been realized as of this report. As of September 30, 2016, total unrecognized stock-based compensation expense related to unvested restricted stock Awards was $118,000.

15

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

8.     Commitments and Contingencies

The Company is a party to various legal actions and administrative proceedings arising in the normal course of business, and through its insurance programs, the Company endeavors to manage any underlying or related potential risk.

The Company executes the services it provides to its domestic clients through independent field merchandising, auditing, assembly and other specialists (each a "Field Specialist"), the vast majority of whom are provided by SBS. For affiliated relationships, contractual details, and payment amounts, see Note 5 to the Condensed Consolidated Financial Statements – Related Party Transactions - Domestic Related Party Services, in this Quarterly Report, above. The appropriateness of SBS's treatment of its Field Specialists as independent contractors has been periodically subject to challenge (both currently and historically) by various states and others, and SBS's expenses of defending those challenges and other litigation have been paid by the Company (consistent with their Prior Agreements and to endeavor to manage related potential risks). That treatment is being challenged currently in a California class action lawsuit where the State Court separated the issues of independent contractor status and damages, tried the status issue first, and ruled that the Field Specialists were employees because (among other things) they failed to sufficiently exercise their independence. The second stage of the trial will be the determination of damages, if any. When a decision has been reached on those damages, the liability and damage decisions can be appealed to a higher court. There can be no assurance that SBS will succeed in defending any such challenge, the legal expenses of prolonged litigation and appeals could continue to be (and have from time to time been) significant, and any adverse determination could increase the Company's costs of doing business.

The Company's management does not anticipate at this time that disposition of those matters would be likely to have a material adverse effect on the Company.

9.      Segment Information

The Company reports net revenues from continuing operations and operating income from continuing operations by reportable segment. Reportable segments are components of the Company for which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company provides similar merchandising and marketing services throughout the world, operating within two reportable segments, its Domestic Division and its International Division. The Company uses those divisions to improve its administration and operational and strategic focuses, and it tracks and reports certain financial information separately for each of those divisions. The Company measures the performance of its Domestic and International Divisions and subsidiaries using the same metrics. The primary measurement utilized by management is operating profits, historically the key indicator of long-term growth and profitability, as the Company is focused on reinvesting the operating profits of each of its international subsidiaries back into its local markets in an effort to improve market share and continued expansion efforts.

16

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

Management evaluates performance as follows (in thousands): 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
United States	$	11,332		$	10,706		$	32,268		$	32,783
International		22,106			17,563			57,513			54,219
Total revenue	$	33,438		$	28,269		$	89,781		$	87,002
Operating income (loss):
United States	$	(184	)	$	63		$	(120	)	$	309
International		614			166			1,496			784
Total operating income	$	430		$	229		$	1,376		$	1,093
Interest expense:
United States	$	36		$	25		$	88		$	66
International		15			22			23			121
Total interest expense	$	51		$	47		$	111		$	187
Other (income), net:
United States	$	–		$	–		$	–		$	–
International		(78	)		(8	)		(183	)		(68	)
Total other (income), net	$	(78	)	$	(8	)	$	(183	)	$	(68	)
Income before income tax expense:
United States	$	(220	)	$	38		$	(208	)	$	243
International		677			152			1,656			731
Total income before income tax expense	$	457		$	190		$	1,448		$	974
Income tax (benefit) expense:
United States	$	(306	)	$	(66	)	$	(394	)	$	(74	)
International		275			149			594			509
Total income tax expense	$	(31	)	$	83		$	200		$	435
Net income:
United States	$	86		$	104		$	186		$	317
International		402			3			1,062			222
Total net income	$	488		$	107		$	1,248		$	539
Depreciation and amortization:
United States	$	334		$	344		$	1,014		$	1,004
International		152			127			445			410
Total depreciation and amortization	$	486		$	471		$	1,459		$	1,414
Capital expenditures:
United States	$	291		$	213		$	798		$	918
International		151			119			376			320
Total capital expenditures	$	442		$	332		$	1,174		$	1,238

Note: There were no inter-company sales for the nine months ended September 30, 2016 or 2015.

	September 30,		December 31,
	2016		2015
Assets:
United States	$	23,936	$	21,799
International		31,548		21,607
Total assets	$	55,484	$	43,406

17

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

Geographic Data (in thousands)

	Three Months Ended September 30,										Nine Months Ended September 30,
	2016					2015					2016					2015
International revenue:			% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue
South Africa	$	5,936		17.8	%	$	4,968		17.6	%	$	14,871		16.6	%	$	15,189		17.5	%
Mexico		5,495		16.4			3,962		14.0			15,600		17.4			12,076		13.9
China		3,029		9.1			3,682		13.0			8,646		9.6			10,197		11.7
Brazil		1,850		5.5			–		–			1,850		2.1			–		–
Japan		1,799		5.4			1,306		4.6			5,157		5.7			3,907		4.5
India		1,523		4.6			1,385		4.9			4,203		4.7			5,001		5.7
Canada		1,453		4.3			1,368		4.8			4,582		5.1			4,173		4.8
Australia		945		2.8			829		2.9			2,359		2.6			3,316		3.8
Turkey		76		0.2			63		0.2			245		0.3			360		0.4
Total international revenue	$	22,106		66.1	%	$	17,563		62.0	%	$	57,513		64.1	%	$	54,219		62.3	%

	September 30,		December 31,
	2016		2015
Long lived assets:
United States	$	11,325	$	10,147
International		4,445		3,148
Total long lived assets	$	15,770	$	13,295

10. Purchase of Interests in Subsidiaries

After acquiring SGRP Brasil Participações Ltda. ("SGRP Holdings"), a Brazilian limitada (which is a form of limited liability company), and establishing SPAR Brasil Serviços de Merchandising e Tecnologia S.A., a Brazilian corporation ("SPAR BSMT"), in a series of related party transactions (See Note 5 to Condensed Consolidated Financial Statements - Related Party Transactions, above), SGRP Holdings and SPAR BSMT (the "Purchasers") entered into a Quota Purchase Agreement dated September 13, 2016 (the "NM QPA"), with Interservice Publicidade Sociedade Ltda., a Brazilian limitada, Momentum Promoções Ltda., a Brazilian limitada, and IPG Nederland B.V., a Netherlands company (collectively, the "Sellers"). The Sellers are subsidiaries of The Interpublic Group of Companies, Inc., a Delaware corporation ("Interpublic"), which is a global provider of advertising, media and other business services. The NM QPA provided for the acquisition by the Purchasers from the Sellers (the "NM Acquisition") of all of the equity shares (called "quotas") in New Momentum Ltda., a Brazilian limitada, and New Momentum Serviços Temporários Ltda., a Brazilian limitada (each a "NM Company" or collectively “the new Companies”), two of Interpublic's "In Store" companies in Brazil. SPAR BSMT acquired 99% of the quotas issued by each NM Company and SGRP Holdings acquired 1% of the quotas issued by each NM Company pursuant to the NM QPA. The closing of the acquisition of the NM Companies was completed with the disbursement of the purchase price to the Sellers on September 19, 2016, effective as of September 13, 2016.

The preliminary purchase price at closing for the NM Companies was R$1,163,263 (approximately US$358,000), based on a preliminary balance sheet as of July 31, 2016 which is subject to adjustment (upward or downward) based on the final closing balance sheet as of September 13, 2016. The Sellers have until December 12, 2016 to present the final closing balance sheet to the Company.

18

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

Momentum Promoções Ltda., one of the Sellers, also agreed to provide certain transition services and continued use of certain existing office space to SPAR BSMT and each of the NM Companies (collectively, "SPAR Brazil"), pursuant to a Transition Services Agreement dated September 13, 2016 (the "Transition Agreement"), and a Sublease Agreement dated September 13, 2016 (the "Sublease"), respectively. The Sublease has an initial term of 12 months and requires monthly rent and back office support payments of R$205,417 (approximately US$65,700). The Transition Agreement has an initial term ending December 31, 2016, and requires various monthly service payments estimated to be in total R$74,534 (approximately US$23,850).

The Company has completed its preliminary calculation of the estimated fair value and related allocation of assets between goodwill and other. This valuation may be subject to change upon receipt of the final closing balance sheet as of September 13, 2016, which is expected by the end of this year at which time the Company will update its fair value allocation analysis. The Company expects to finalize the purchase price allocation as soon as practical, but no later than one year from acquisition date. A summary of assets acquired, goodwill and liabilities assumed and net of purchase price are as follows (in thousands);

Cash	$	52
Net Working Capital, net of cash		222
Fixed Assets		23
Non-operating Assets		11
Goodwill		457
Assumed Liabilities		(407	)
Net Fair Value of Assets Acquired	$	358

The following table includes the amount of Brazil’s revenue and earnings included in the Company’s consolidated statement of income for the quarter ended September 30, 2016, and a pro forma calculation of the amounts that would have been included in the Company’s consolidated statements of income for the three and nine month periods ended September 30, 2016 and 2015 had the Brazil acquisition date been January 1, 2015, instead of September 14, 2016 (in thousands):

	Revenue		Net (Loss)
Actual New Momentum Companies from Sept. 14 to Sept. 30, 2016	$	1,850	$	(43	)
Consolidated supplemental pro forma, July 1 to September 30, 2016	$	40,679	$	(151	)
Consolidated supplemental pro forma, July 1 to September 30, 2015	$	35,301	$	(338	)
Consolidated supplemental pro forma, January 1 to September 30, 2016	$	111,907	$	(161	)
Consolidated supplemental pro forma, January 1 to September 30, 2015	$	111,209	$	(594	)

19

SPAR Group, Inc. and Subsidiaries

Notes to Condensed Consilidated Financial Statements

(unaudited) (continued)

Item 2. Management's Discussion and Analysis of Financial Condition, Results of Operations, Liquidity and Capital Resources

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the nine months ended September 30, 2016 (this "Quarterly Report"), contains "forward-looking statements" made by SPAR Group, Inc. ("SGRP", and together with its subsidiaries, the "SPAR Group" or the "Company") and was filed on November 21, 2016, by SGRP with the Securities and Exchange Commission (the "SEC"). There also are "forward looking statements" contained in SGRP's Annual Report on Form 10-K for its fiscal year ended December 31, 2015 (as filed, the "Annual Report"), as filed with the SEC on March 30, 2016, in SGRP's definitive Proxy Statement respecting its Annual Meeting of Stockholders held on May 19, 2016 (as filed, the "Proxy Statement"), which SGRP filed with the SEC on April 27, 2016, and SGRP's Current Reports on Form 8-K and other reports and statements as and when filed with the SEC (including this Quarterly Report, the Annual Report and the Proxy Statement, each a "SEC Report"). "Forward-looking statements" are defined in Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and other applicable federal and state securities laws, rules and regulations, as amended (together with the Securities Act and Exchange Act, collectively, "Securities Laws").

The forward-looking statements made by the Company in this Quarterly Report may include (without limitation) any expectations, guidance or other information respecting the pursuit or achievement of the Company's five corporate objectives (growth, customer value, employee development, productivity & efficiency, and earnings per share), building upon the Company's strong foundation, leveraging compatible global opportunities, improving on the value we already deliver to customers, our growing client base, continuing balance sheet strength, customer contract expansion, growing revenues and becoming profitable through organic growth and acquisitions, attracting new business that will increase SPAR Group's revenues, improving product mix, continuing to maintain or reduce costs and consummating any transactions. The Company's forward-looking statements also include, in particular and without limitation, those made in the "Management's Discussion and Analysis of Financial Condition, Results of Operations, Liquidity and Capital Resources" in this Quarterly Report, and those made in "Business", "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report. You can identify forward-looking statements in such information by the Company's use of terms such as "may", "will", "expect", "intend", "believe", "estimate", "anticipate", "continue" or similar words or variations or negatives of those words.

You should carefully consider (and not place undue reliance on) the Company's forward-looking statements, risk factors and the other risks, cautions and information made, contained or noted in or incorporated by reference into this Quarterly Report, the Annual Report, the Proxy Statement and the other applicable SEC Reports that could cause the Company's actual performance or condition (including its assets, business, capital, cash flow, credit, expenses, financial condition, income, liabilities, liquidity, locations, marketing, operations, performance, prospects, sales, strategies, taxation or other achievement, results, risks, trends or condition to differ materially from the performance or condition planned, intended, anticipated, estimated or otherwise expected by the Company (collectively, "expectations") and described in the information in the Company's forward-looking and other statements, whether express or implied. Although the Company believes them to be reasonable, those expectations involve known and unknown risks, uncertainties and other unpredictable factors (many of which are beyond the Company's control) that could cause those expectations to fail to occur or be realized or such actual performance or condition to be materially and adversely different from the Company's expectations. In addition, new risks and uncertainties arise from time to time, and it is impossible for the Company to predict these matters or how they may arise or affect the Company. Accordingly, the Company cannot assure you that its expectations will be achieved in whole or in part, that the Company has identified all potential risks, or that the Company can successfully avoid or mitigate such risks in whole or in part, any of which could be significant and materially adverse to the Company and the value of your investment in the Company's Common Stock.

You should carefully review the risk factors described in the Annual Report (See Item 1A – Risk Factors) and any other risks, cautions or information made, contained or noted in or incorporated by reference into this Quarterly Report, the Annual Report, the Proxy Statement or other applicable SEC Report. All forward-looking and other statements or information attributable to the Company or persons acting on its behalf are expressly subject to and qualified by all such risk factors and other risks, cautions and information.

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The Company does not intend or promise, and the Company expressly disclaims any obligation, to publicly update or revise any forward-looking statements, risk factors or other risks, cautions or information (in whole or in part), whether as a result of new information, risks or uncertainties, future events or recognition or otherwise, except as and to the extent required by applicable law.

GENERAL

SPAR Group, Inc. ("SGRP"), and its subsidiaries (together with SGRP, the "SPAR Group" or the "Company"), is a diversified international merchandising and marketing services company and provides a broad array of services worldwide to help companies improve their sales, operating efficiency and profits at retail locations. The Company provides its merchandising and other marketing services to manufacturers, distributors and retailers worldwide, primarily in mass merchandisers, office supply, grocery, drug store, independent, convenience, toy, home improvement and electronics stores. The Company also provides furniture and other product assembly services in stores, homes and offices. The Company has supplied these services in the United States since certain of its predecessors were formed in 1979 and internationally since the Company acquired its first international subsidiary in Japan in May of 2001. The Company currently does business in 10 countries that encompass approximately 50% of the total world population through its operations in the United States, Canada, Japan, South Africa, India, China, Australia, Mexico, Turkey and Brazil.

Merchandising services primarily consist of regularly scheduled, special project and other product services provided at store level, and the Company may be engaged by either the retailer or the manufacturer. Those services may include restocking and adding new products, removing spoiled or outdated products, resetting categories "on the shelf" in accordance with client or store schematics, confirming and replacing shelf tags, setting new sale or promotional product displays and advertising, replenishing kiosks, demonstrating or promoting a product, providing on-site audit and in-store event staffing services and providing product assembly services in stores, homes and offices. Other merchandising services include whole store or departmental product sets or resets, including new store openings, new product launches and in-store demonstrations, special seasonal or promotional merchandising, focused product support and product recalls. The Company continues to seek to expand its merchandising, assembly and marketing services business throughout the world.

An Overview of the Merchandising and Marketing Services Industry

The merchandising and marketing services industry includes manufacturers, retailers, brokers, distributors and professional service merchandising companies. Merchandising services primarily involve placing orders, shelf maintenance, display placement, reconfiguring products on store shelves and replenishing product inventory. Additional marketing services include but are not limited to new store sets and remodels, audits, sales assist, installation and assembly, product demos/sampling, promotion and various others. The Company believes that merchandising and marketing services add value to retailers, manufacturers and other businesses and enhance sales by making a product more visible and more available to consumers.

Historically, retailers staffed their stores as needed to provide these services to ensure that manufacturers' inventory levels, the advantageous display of new items on shelves, and the maintenance of shelf schematics and product placement were properly merchandised. However retailers, in an effort to improve their margins, have decreased their own store personnel and increased their reliance on manufacturers to perform such services. At one time, manufacturers attempted to satisfy the need for merchandising and marketing services in retail stores by utilizing their own sales representatives. Additionally, retailers also used their own employees to merchandise their stores to satisfy their own merchandising needs. However, both manufacturers and retailers discovered that using their own sales representatives and employees for this purpose was expensive and inefficient. In addition, the changing retail environment, driven by the rise of digital and mobile technology, is fostering even more challenges to the labor model of retailers and manufacturers. These challenges include increased consumer demand for more interaction and engagement with retail sales associates, stores remodels to accommodate more technology, installation and continual maintenance of in-store digital and mobile technology, in-store pick-up and fulfillment of online orders and increased inventory management to reduce out-of-stocks from omnichannel shopping.

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SPAR Group, Inc. and Subsidiaries

Most manufacturers and retailers have been, and SPAR Group believes they will continue, outsourcing their merchandising and marketing service needs to third parties capable of operating at a lower cost by (among other things) serving multiple manufacturers simultaneously. The Company also believes that it is well positioned, as a domestic and international merchandising and marketing services company, to provide these services to retailers, manufacturers and other businesses around the world more effectively and efficiently than other available alternatives.

Another significant trend impacting the merchandising and marketing services business is the continued preference of consumers to shop in stores and their tendency to make product purchase decisions once inside the store. Accordingly, merchandising and marketing services and in-store product promotions have proliferated and diversified. Retailers are continually re-merchandising and re-modeling entire departments and stores in an effort to respond to new product developments and changes in consumer preferences. We estimate that these activities have increased in frequency over the last few years. Both retailers and manufacturers are seeking third party merchandisers to help them meet the increased demand for these labor-intensive services.

In addition, the consolidation of many retailers and changing store formats have created opportunities for third party merchandisers when an acquired retailer's stores are converted to the look and format of the acquiring retailer. In many of those cases, stores are completely remodeled and re-merchandised to implement the new store formats.

SPAR Group believes the current trend in business toward globalization fits well with its expansion model. As companies expand into foreign markets they will need assistance in merchandising or marketing their products. As evidenced in the United States, retailer and manufacturer sponsored merchandising and marketing programs are both expensive and inefficient. The Company also believes that the difficulties encountered by these programs are only exacerbated by the logistics of operating in foreign markets. This environment has created an opportunity for the Company to exploit its global Internet and data network based technology (through computers or mobile devices) and its business model worldwide.

The Company's Domestic and International Geographic Segments:

The Company provides similar merchandising and marketing services throughout the world, operating within two reportable segments, its Domestic and International Divisions. The Company tracks and reports certain financial information separately for these two segments using the same metrics. The primary measurement utilized by management is operating profit level, historically the key indicator of long-term growth and profitability, as the Company is focused on reinvesting the operating profits of each of its international subsidiaries back into local markets in an effort to improve its market share and continued expansion efforts. Certain financial information regarding each of the Company's two segments, which includes their respective net revenues and operating income for each of the three and nine months ended September 30, 2016 and 2015, and their respective assets as of September 30, 2016, and December 31, 2015, is provided above in Note 9 to the Company's Condensed Consolidated Financial Statements – Segment Information.

The Company's international business in each territory outside the United States is conducted through a foreign subsidiary incorporated in its primary territory. The primary territory establishment date (which may include predecessors), the percentage of the Company's equity ownership, and the principal office location for its US (domestic) subsidiaries and each of its foreign (international) subsidiaries is as follows:

Primary Territory	Date Established	SGRP Percentage Ownership			Principal Office Location
United States of America	1979		100	%	White Plains, New York, United States of America
Japan	May 2001		100	%	Tokyo, Japan
Canada	June 2003		100	%	Toronto, Canada
South Africa	April 2004		51	%	Durban, South Africa
India	April 2004		51	%	New Delhi, India
Australia	April 2006		51	%	Melbourne, Australia
China	March 2010		51	%	Shanghai, China
Mexico	August 2011		51	%	Mexico City, Mexico
Turkey	November 2011		51	%	Istanbul, Turkey
Brazil1	September 2016		51	%	Sao Paolo, Brazil

1. In September, the Company established a new joint venture subsidiary in Brazil as noted above in Note 10 to the Company's Condensed Consolidated Financial Statements – Purchase of Interests in Subsidiaries. This new subsidiary purchased stock in two Brazilian companies – New Momentum, Ltda. and New Momentum Servicos Temporarios Ltda.

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SPAR Group, Inc. and Subsidiaries

Critical Accounting Policies

There were no material changes during the nine months ended September 30, 2016, to the Company's critical accounting policies as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the SEC on March 30, 2016.

Results of Operations

Three months ended September 30, 2016, compared to three months ended September 30, 2015

The following table sets forth selected financial data and data as a percentage of net revenues for the periods indicated (in thousands, except percent data).

	Three Months Ended September 30,
	2016						2015
		$		%				$		%
Net revenues	$	33,438			100.0	%	$	28,269			100.0	%
Cost of revenues		26,162			78.2			21,555			76.2
Gross profit		7,276			21.8			6,714			23.8
Selling, general & administrative expense		6,360			19.0			6,014			21.3
Depreciation & amortization		486			1.5			471			1.7
Operating income		430			1.3			229			0.8
Interest expense, net		51			0.2			47			0.1
Other (income), net		(78	)		(0.2	)		(8	)		0.0
Income before income taxes		457			1.3			190			0.7
Income tax (benefit) expense		(31	)		(0.1	)		83			0.3
Net income		488			1.4			107			0.4
Net income attributable to non-controlling interest		(546	)		(1.6	)		(199	)		(0.7	)
Net (loss) attributable to SPAR Group, Inc.	$	(58	)		(0.2	)%	$	(92	)		(0.3	)%

Net Revenues

Net revenues for the three months ended September 30, 2016, were $33.4 million, compared to $28.3 million for the three months ended September 30, 2015, an increase of $5.1 million or 18%. The increase is primarily attributable to our international segment, across almost all subsidiaries but especially Mexico, plus the incremental revenue from the September 2016 Brazil acquisition.

Domestic net revenues totaled $11.3 million in the three months ended September 30, 2016, compared to $10.7 million for the same period in 2015, an increase of 6%. The increase was primarily due to an increase in annuity business compared to last year.

International net revenues totaled $22.1 million for the three months ended September 30, 2016, compared to $17.6 million for the same period in 2015, an increase of $4.5 million or 26%. The increase in net revenues was primarily due to higher revenue in all subsidiaries except China, plus $1.9 million of revenue from the acquisition in Brazil. Actual in-country revenue increased by $5.7 million but was offset by negative foreign currency impact of $1.2 million year over year.

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Cost of Revenues

The Company's cost of revenues consists of its on-site labor and field administration fees, travel and other direct labor-related expenses and was 78.2% of its net revenues for the three months ended September 30, 2016, and 76.2% of its net revenues for the three months ended September 30, 2015.

Domestic cost of revenues was 73.5% of net revenues for the three months ended September 30, 2016, and 69.7% of net revenues for the three months ended September 30, 2015. The increase in cost of revenues as a percentage of net revenues of 3.8 percentage points was due primarily to continued price pressure and an unfavorable mix of project work compared to the same period last year. For the three months ended September 30, 2016 and 2015, approximately 76% and 80%, respectively, of the Company's domestic cost of revenues resulted from in-store merchandiser specialist, on-site assembly technician and field administration services, purchased from certain of the Company's affiliates, SPAR Business Services, Inc. ("SBS"), and SPAR Administrative Services, Inc. ("SAS"), respectively. For the three months ended September 30, 2015, approximately 6% of the Company's domestic cost of revenues resulted from in-store merchandiser specialist services purchased from one of the Company's other affiliates, National Retail Source, LLC ("NRS"). As of December 2015, the Company no longer uses NRS, but could again in the future (See Note 5 to the Condensed Consolidated Financial Statements - Related-Party Transactions).

Internationally, the cost of revenues increased to 80.7% of net revenues for the three months ended September 30, 2016, compared to 80.3% of net revenues for the three months ended September 30, 2015. The cost of revenue increase of 0.4 percentage points was primarily due to a mix of higher cost margin business in Canada and Japan, partially offset by a mix of lower cost margin business in Mexico and China.

Selling, General and Administrative Expenses

Selling, general and administrative expenses of the Company include its corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expenses. Selling, general and administrative expenses were approximately $6.4 million and $6.0 million for the three months ended September 30, 2016 and 2015, respectively.

Domestic selling, general and administrative expenses totaled $2.9 million for three months ended September 30, 2016, approximately the same as the $2.8 million for the three months ended September 30, 2015. The increase in spending was directly attributable to one-time expenses related to management changes during the period.

International selling, general and administrative expenses totaled $3.5 million for the three months ended September 30, 2016, compared to $3.2 million for the same period in 2015. The increase of approximately $300,000 was primarily attributable to the Brazil acquisition.

Depreciation and Amortization

Depreciation and amortization charges totaled $486,000 for the three months ended September 30, 2016, and $471,000 for the same period in 2015.

Interest Expense

The Company's net interest expense was $51,000 and $47,000 for the three months ended September 30, 2016, and 2015, respectively.

Other Income

Other income totaled $78,000 and $8,000 for the three months ended September 30, 2016 and 2015, respectively, with the increases primarily in South Africa and China.

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Income Taxes

The income tax provision was a net benefit of $31,000 for the three months ended September 30, 2016, and an expense of $83,000 for the three months ended September 30, 2015.

Non-controlling Interest

Net operating profits from the non-controlling interest, from the Company's 51% owned subsidiaries, resulted in allocation of income of $546,000 and $199,000 to the non-controlling shareholders for the three months ended September 30, 2016 and 2015, respectively.

Net Loss

The Company reported a net loss of $58,000 for the three months ended September 30, 2016, or $0.00 per diluted share, compared to a net loss of $92,000, or $0.00 per diluted share, for the corresponding period last year.

Nine months ended September 30, 2016, compared to nine months ended September 30, 2015

The following table sets forth selected financial data and data as a percentage of net revenues for the periods indicated (in thousands, except percent data).

	Nine Months Ended September 30,
	2016						2015
		$		%				$		%
Net revenues	$	89,781			100.0	%	$	87,002			100.0	%
Cost of revenues		69,309			77.2			66,206			76.1
Gross profit		20,472			22.8			20,796			23.9
Selling, general & administrative expense		17,637			19.7			18,289			21.0
Depreciation & amortization		1,459			1.6			1,414			1.6
Operating income		1,376			1.5			1,093			1.3
Interest expense, net		111			0.1			187			0.2
Other (income), net		(183	)		(0.2	)		(68	)		(0.1	)
Income before income taxes		1,448			1.6			974			1.2
Income tax expense		200			0.2			435			0.5
Net income		1,248			1.4			539			0.7
Net income attributable to non-controlling interest		(1,164	)		(1.3	)		(676	)		(0.8	)
Net income (loss) attributable to SPAR Group, Inc.	$	84			0.1	%	$	(137	)		(0.1	)%

Net Revenues

Net revenues for the nine months ended September 30, 2016, were $89.8 million, compared to $87.0 million for the nine months ended September 30, 2015, an increase of $2.8 million or 3%. The increase is attributable to our international segment, including the Brazil acquisition.

Domestic net revenues totaled $32.3 million in the nine months ended September 30, 2016, compared to $32.8 million for the same period in 2015. The change is due to lower project and annuity work compared to the same period last year.

International net revenues totaled $57.5 million for the nine months ended September 30, 2016, compared to $54.2 million for the same period in 2015, an increase of $3.3 million or 6%. The increase in net revenues was primarily due to higher revenue in Mexico, Japan and Canada, plus the Brazil acquisition, partially offset by lower revenue in China, Australia and India. Actual in-country revenue increased by $9.7 million but was offset by a negative foreign currency impact of $6.4 million year over year.

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Cost of Revenues

The Company's cost of revenues consists of its on-site labor and field administration fees, travel and other direct labor-related expenses and was 77.2% of its net revenues for the nine months ended September 30, 2016, and 76.1% of its net revenues for the nine months ended September 30, 2015.

Domestic cost of revenues was 71.5% of net revenues for the nine months ended September 30, 2016, and 69.1% of net revenues for the nine months ended September 30, 2015. The increase in cost of revenues as a percentage of net revenues of 2.4 percentage points was due primarily to an unfavorable mix of project and annuity work compared to the same period last year. For the nine months ended September 30, 2016 and 2015, approximately 80% and 84%, respectively, of the Company's domestic cost of revenues resulted from in-store merchandiser specialist, on-site assembly technician and field administration services purchased from certain of the Company's affiliates, SPAR Business Services, Inc. ("SBS"), and SPAR Administrative Services, Inc. ("SAS"), respectively. For the nine months ended September 30, 2015, approximately 5% of the Company's domestic cost of revenues resulted from in-store merchandiser specialist services purchased from certain of the Company's other affiliates, National Retail Source, LLC ("NRS"). As of December 2015, the Company no longer uses NRS, but could again in the future (See Note 5 to the Condensed Consolidated Financial Statements - Related-Party Transactions).

Internationally, the cost of revenues increased to 80.4% of net revenues for the nine months ended September 30, 2016, compared to 80.3% of net revenues for the nine months ended September 30, 2015. The cost of revenue increase of 0.1 percentage points was primarily due to a mix of higher cost margin business in South Africa and Japan, partially offset by a mix of lower cost margin business in Mexico and Canada.

Selling, General and Administrative Expenses

Selling, general and administrative expenses of the Company include its corporate overhead, project management, information technology, executive compensation, human resources, legal and accounting expenses. Selling, general and administrative expenses were approximately $17.6 million and $18.3 million for the nine months ended September 30, 2016 and 2015, respectively.

Domestic selling, general and administrative expenses totaled $8.3 million for nine months ended September 30, 2016, compared to $8.8 million for the nine months ended September 30, 2015. The decrease of approximately $500,000 was primarily due to implemented cost savings partially offset by one-time expenses related to management changes.

International selling, general and administrative expenses totaled $9.3 million for the nine months ended September 30, 2016, compared to $9.5 million for the same period in 2015. The decrease of approximately $200,000 was primarily attributable to cost savings in Australia and China, partially offset by increases in Japan, and the acquisition in Brazil.

Depreciation and Amortization

Depreciation and amortization charges totaled $1.5 million for the nine months ended September 30, 2016, and $1.4 million for the same period in 2015.

Interest Expense

The Company's net interest expense was $111,000 and $187,000 for the nine months ended September 30, 2016 and 2015, respectively. The decrease is primarily due to increased interest income in South Africa.

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Other Income

Other income totaled $183,000 and $68,000 for the nine months ended September 30, 2016 and 2015, respectively. The increases were primarily in South Africa and China.

Income Taxes

The income tax provision totaled $200,000 for the nine months ended September 30, 2016 and $435,000 for the nine months ended September 30, 2015.

Non-controlling Interest

Net operating profits from the non-controlling interest, from the Company's 51% owned subsidiaries, resulted in allocation of income of $1,164,000 and $676,000 to the non-controlling shareholders for the nine months ended September 30, 2016 and 2015, respectively.

Net Income (Loss)

The Company reported net income of $84,000 for the nine months ended September 30, 2016, or $0.00 per diluted share, compared to a net loss of $137,000, or $(0.01) per diluted share, for the corresponding period last year.

Liquidity and Capital Resources  

In the nine months ended September 30, 2016, the Company had a net income before non-controlling interest of $1.2 million.

Net cash provided by operating activities was $2.1 million and $5.1 million for the nine months ended September 30, 2016 and 2015, respectively. The net cash provided by operating activities was primarily due to cash-impacting earnings and increases in accounts payable and accrued expenses, partially offset by increases in accounts receivable and prepaid expenses and other assets.

Net cash used in investing activities for the nine months ended September 30, 2016 and 2015, was approximately $1.5 million and $1.2 million, respectively. The net cash used in investing activities in 2016 was due to fixed asset additions and the purchase of the business in Brazil.

Net cash provided by financing activities for the nine months ended September 30, 2016, was approximately $1.8 million, compared to $905,000 used in financing activities for the nine months ended September 30, 2015. Net cash provided by financing activities was primarily a result of net borrowing on lines of credit, partially offset by a distribution to the non-controlling investors in South Africa.

The above activity and the impact of foreign exchange rate changes resulted in an increase in cash and cash equivalents for the nine months ended September 30, 2016, of $1.8 million.

At September 30, 2016, the Company had net working capital of $9.4 million, as compared to net working capital of $16.8 million at December 31, 2015. The Company's current ratio was 1.3 at September 30, 2016, compared to 2.3 at December 31, 2015.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company's accounting policies for financial instruments and disclosures relating to financial instruments require that the Company's consolidated balance sheets include the following financial instruments: cash and cash equivalents, accounts receivable, accounts payable and lines of credit. The Company carries current assets and liabilities at their stated or face amounts in its consolidated financial statements, as the Company believes those amounts approximate the fair value for these items because of the relatively short period of time between origination of the asset or liability and their expected realization or payment. The Company monitors the risks associated with asset and liability positions, as well as interest rates. The Company's investment policy objectives require the preservation and safety of the principal, and the maximization of the return on investment based upon its safety and liquidity objectives.

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SPAR Group, Inc. and Subsidiaries

The Company is exposed to market risk related to the variable interest rate on its lines of credit, both in its United States subsidiaries (i.e., the Domestic Division) and in its International (non-U.S.) subsidiaries (i.e., the International Division). At September 30, 2016, the Company's outstanding lines of credit and other debt totaled approximately $8.4 million, as noted in the table below (in thousands):

Location	Variable Interest Rate (1)			US Dollars (2)
United States		3.0%		$	7,554
International	0.1%	-	8.5%		639
				$	8,193

(1) Based on interest rate at September 30, 2016.

(2) Based on exchange rate at September 30, 2016.

The Company has foreign currency exposure associated with its international subsidiaries. In both 2016 and 2015, these exposures are primarily concentrated in the South African Rand, the Canadian Dollar, the Mexican Peso, the Australian Dollar, the Japanese Yen, and the Chinese Yuan, and in 2016 also the Brazilian Real.

Item 4.      Controls and Procedures

Management's Report on Internal Control Over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting for the registrant, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Management has designed such internal control over financial reporting by the Company to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.

The Company's management has evaluated the effectiveness of the Company's internal control over financial reporting using the "Internal Control – Integrated Framework (2013)" created by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") framework. Based on this evaluation, management has concluded that internal controls over financial reporting were effective as of September 30, 2016.

Management's Evaluation of Disclosure Controls and Procedures

The Company's chief executive officer and chief financial officer have each reviewed and evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report, as required by Exchange Act Rules 13a-15(b) and Rule 15d-15(b). Based on that evaluation, the chief executive officer and chief financial officer have each concluded that the Company's current disclosure controls and procedures are effective to ensure that the information required to be disclosed by the Company in reports it files, or submits under the Exchange Act were recorded, processed, summarized and reported within the time period specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There have been no changes in the Company's internal controls over financial reporting that occurred during the Company's three quarters of its 2016 fiscal year that materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

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PART II: OTHER INFORMATION

Item 1.      Legal Proceedings

The Company is a party to various legal actions and administrative proceedings arising in the normal course of business. The Company also has paid SBS (consistent with the Prior Agreements) for its expenses in defending various legal actions and administrative proceedings respecting SBS's services and Field Specialists.   See Note 5 to the Condensed Consolidated Financial Statements – Related Party Transaction – Domestic Related Party Services, and Note 8 to the Condensed Consolidated Financial Statements – Commitments and Contingencies, above.

Item 1A.      Risk Factors

Existing Risk Factors

Various risk factors applicable to the Company and its businesses are described in Item 1A under the caption "Risk Factors" in SGRP's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the Securities and Exchange Commission (the "SEC") on March 30, 2016 (the "2015 Annual Report"), which risk factors are incorporated by reference into this Quarterly Report. There have been no material changes in the Company's risk factors since the 2015 Annual Report other than in the following risk factor, which amends, restates and replaces the corresponding risk factor in the 2015 Annual Report.

Dependence Upon and Cost of Services Provided by Affiliates

The success of the Company's domestic business is dependent upon the successful execution and administration of its field services by certain domestic affiliates, namely SPAR Business Services, Inc. ("SBS"), SPAR Administrative Services, Inc. ("SAS"), and to the extent it resumes providing field services to the Company, National Retail Source, LLC ("NRS"), and by certain foreign affiliates, each of which is an affiliate, but not a subsidiary, of the Company, and none of which is controlled by the Company or consolidated in the Company's consolidated financial statements. NRS had provided, and in the future could again provide, substantially all of the field merchandising services used by National Merchandising Services, LLC ("NMS"), which is a subsidiary of SGRP and part of the Company. As of December 2015, NMS no longer uses NRS and instead uses field merchandising services from a non-affiliated third-party provider.

The Company executes the services it provides to its domestic clients through independent field merchandising, auditing, assembly and other specialists (each a "Field Specialist"), the vast majority of whom are provided by SBS, and administers those services through administrators, substantially all of whom are provided by SAS. For contractual details and payment amounts, see Note 5 to the Condensed Consolidated Financial Statements – Related Party Transactions - Domestic Related Party Services, in this Quarterly Report, and Note 8 to the Condensed Consolidated Financial Statements – Commitments and Contingencies, above. In the 2015 Annual Report please also see the following: Item IA - Risk Factors - Potential Conflicts in Services Provided by Affiliates, Item 13 – Certain Relationships and Related Transactions, and Director Independence, below, and Note 10 to the Consolidated Financial Statements – Related Party Transactions.

SBS and NRS have independently advised the Company that they continue to use independent contractors as their Field Specialists, that those independent Field Specialists generally provide greater flexibility and performance quality at lower total costs as a result of their business independence and initiative, that it has an agreement with each Field Specialist clearly confirming his, her or its status as an independent contractor, and that SBS complies with applicable independent contractor requirements for the individuals and companies it retains as Field Specialists.

29

The appropriateness of SBS's treatment of its Field Specialists as independent contractors has been periodically subject to challenge (both currently and historically) by various states and others, and SBS's expenses of defending those challenges and other litigation have been paid by the Company. Current material proceedings (if any) against SBS are described in Note 8 to the Condensed Consolidated Financial Statements – Commitments and Contingencies, in this Quarterly Report, above. There can be no assurance that SBS will succeed in defending any such challenge, the legal expenses of prolonged litigation and appeals could continue to be (and have from time to time been) significant, and any adverse determination could increase the Company's costs of doing business. Any material increase in the legal defense costs of SAS, SBS or NRS (and thus the reimbursable expenses it charges to the Company), or any decrease in such performance quality, could have a material adverse effect on the Company or its estimated or desired assets, business, capital, cash flow, credit, expenses, financial condition, income, liabilities, liquidity, locations, marketing, operations, prospects, sales, strategies, taxation or other achievement, results or condition.

Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds

Item 2(a): The Company approved an extension on their previously reported Stock Repurchase Plan until  August 2018 and increased the total amount that could be purchased to 532,000 shares.

Item 2(b): Not applicable

Item 2(c): Not applicable

Item 3.       Defaults upon Senior Securities

Item 3(a): Defaults under Indebtedness: None.

Item 3(b): Defaults under Preferred Stock: None.

Item 4.       Mine Safety Disclosures

Not applicable. 

Item 5.       Other Information

Not applicable.

30

SPAR Group, Inc. and Subsidiaries

Item 6.       Exhibits

10.1	Waiver letter from Sterling National Bank, dated as of November 18, 2016, but effective as of September 30, 2016, as filed herewith.
31.1	Certification of the CEO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed herewith.
31.2	Certification of the CFO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed herewith.
32.1	Certification of the CEO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as filed herewith.
32.2	Certification of the CFO pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as filed herewith.
101.INS*	XBRL Instance
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation
101.DEF*	XBRL Taxonomy Extension Definition
101.LAB*	XBRL Taxonomy Extension Labels
101.PRE*	XBRL Taxonomy Extension Presentation

* XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

31

SPAR Group, Inc. and Subsidiaries

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 21, 2016	SPAR Group, Inc., Registrant
	By: /s/ James R. Segreto
	James R. Segreto
	Chief Financial Officer, Treasurer, Secretary
	and duly authorized signatory

32

EX-10.1

Exhibit 10.1

 

EX-31.1

SPAR Group, Inc. and Subsidiaries 

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott Popaditch, certify that:

1.     I have reviewed this quarterly report on Form 10-Q for the nine-month period ended September 30, 2016 (this "report"), of SPAR Group, Inc. (the "registrant");

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 21, 2016	/s/ Scott Popaditch
	Scott Popaditch
	President and Chief Executive Officer

EX-31.2

SPAR Group, Inc. and Subsidiaries

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James R. Segreto, certify that:

1.     I have reviewed this quarterly report on Form 10-Q for the nine-month period ended September 30, 2016 (this "report"), of SPAR Group, Inc. (the "registrant");

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 21, 2016	/s/ James R. Segreto
	James R. Segreto, Chief Financial Officer,
	Treasurer and Secretary

EX-32.1

SPAR Group, Inc. and Subsidiaries

EXHIBIT 32.1

Certification of the Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q for the nine-month period ended September 30, 2016 (this "report"), of SPAR Group, Inc. (the "registrant"), the undersigned hereby certifies that, to her knowledge:

1.     The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2.     The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

/s/ Scott Popaditch

Scott Popaditch

President and Chief Executive Officer

November 21, 2016

A signed original of this written statement required by Section 906 has been provided to SPAR Group, Inc. and will be retained by SPAR Group, Inc., and furnished to the Securities and Exchange Commission or its staff upon request. 

EX-32.2

SPAR Group, Inc. and Subsidiaries

EXHIBIT 32.2

Certification of the Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q for the nine-month period ended September 30, 2016 (this "report"), of SPAR Group, Inc. (the "registrant"), the undersigned hereby certifies that, to his knowledge:

1.     The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2.     The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

/s/ James R. Segreto

James R. Segreto

Chief Financial Officer, Treasurer and

Secretary

November 21, 2016

A signed original of this written statement required by Section 906 has been provided to SPAR Group, Inc. and will be retained by SPAR Group, Inc., and furnished to the Securities and Exchange Commission or its staff upon request. 

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 11, 2016
Document Information [Line Items]
Entity Registrant Name	SPAR GROUP INC
Entity Central Index Key	0001004989
Trading Symbol	sgrp
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		20,639,490
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 7,502	$ 5,718
Accounts receivable, net	30,782	23,203
Deferred income taxes	532	529
Prepaid expenses and other current assets	898	661
Total current assets	39,714	30,111
Property and equipment, net	2,556	2,443
Goodwill	2,257	1,800
Intangible assets, net	2,154	2,551
Deferred income taxes	6,513	5,890
Other assets	2,290	611
Total assets	55,484	43,406
Liabilities and equity
Accounts payable	5,007	2,984
Accrued expenses and other current liabilities	12,628	7,082
Total accrued expenses due to affiliates	989	78
Deferred income taxes	2,566	2,154
Customer deposits	955	503
Lines of credit and short-term loans	8,181	476
Total current liabilities	30,326	13,277
Long-term debt and other liabilities	12	5,731
Total liabilities	30,338	19,008
Commitments and Contingencies – See Note 8
Preferred stock, $.01 par value: Authorized and available shares - 2,445,598, Issued and outstanding shares - None – September 30, 2016 and December 31, 2015
Common stock, $.01 par value: Authorized shares - 47,000,000, Issued shares – 20,680,717 – September 30, 2016 and December 31, 2015	207	207
Treasury stock, at cost 42,177 shares – September 30, 2016 and 119,695 shares – December 31, 2015	(58)	(169)
Additional paid-in capital	16,041	15,871
Accumulated other comprehensive loss	(3,364)	(2,869)
Retained earnings	5,746	5,662
Total SPAR Group, Inc. equity	18,572	18,702
Non-controlling interest	6,574	5,696
Total equity	25,146	24,398
Total liabilities and equity	$ 55,484	$ 43,406

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,445,598	2,445,598
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	47,000,000	47,000,000
Common stock, shares issued (in shares)	20,680,717	20,680,717
Treasury stock, shares (in shares)	42,177	119,695

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net revenues	$ 33,438	$ 28,269	$ 89,781	$ 87,002
Cost of revenues	26,162	21,555	69,309	66,206
Gross profit	7,276	6,714	20,472	20,796
Selling, general and administrative expense	6,360	6,014	17,637	18,289
Depreciation and amortization	486	471	1,459	1,414
Operating income	430	229	1,376	1,093
Interest expense	51	47	111	187
Other (income), net	(78)	(8)	(183)	(68)
Income before income tax expense	457	190	1,448	974
Income tax (benefit) expense	(31)	83	200	435
Net income	488	107	1,248	539
Net income attributable to non-controlling interest	(546)	(199)	(1,164)	(676)
Net (loss) income attributable to SPAR Group, Inc.	$ (58)	$ (92)	$ 84	$ (137)
Basic and diluted loss per common share: (in dollars per share)				$ (0.01)
Weighted average common shares – basic (in shares)	20,607	20,556	20,580	20,562
Weighted average common shares – diluted (in shares)	20,607	20,556	21,299	20,562
Net income	$ 488	$ 107	$ 1,248	$ 539
Other comprehensive income (loss):
Foreign currency translation adjustments	206	(663)	(495)	(1,413)
Comprehensive income (loss)	694	(556)	753	(874)
Comprehensive (income) attributable to non-controlling interest	(546)	(199)	(1,164)	(676)
Comprehensive income (loss) attributable to SPAR Group, Inc.	$ 148	$ (755)	$ (411)	$ (1,550)

XML

Condensed Consolidated Statement of Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) shares in Thousands, $ in Thousands	Restricted Stock Units (RSUs) [Member] Common Stock [Member]	Restricted Stock Units (RSUs) [Member] Treasury Stock [Member]	Restricted Stock Units (RSUs) [Member] Additional Paid-in Capital [Member]	Restricted Stock Units (RSUs) [Member] AOCI Attributable to Parent [Member]	Restricted Stock Units (RSUs) [Member] Retained Earnings [Member]	Restricted Stock Units (RSUs) [Member] Noncontrolling Interest [Member]	Restricted Stock Units (RSUs) [Member]	Employee Stock Purchase Plan [Member] Common Stock [Member]	Employee Stock Purchase Plan [Member] Treasury Stock [Member]	Employee Stock Purchase Plan [Member] Additional Paid-in Capital [Member]	Employee Stock Purchase Plan [Member] AOCI Attributable to Parent [Member]	Employee Stock Purchase Plan [Member] Retained Earnings [Member]	Employee Stock Purchase Plan [Member] Noncontrolling Interest [Member]	Employee Stock Purchase Plan [Member]	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Shares (in shares) at Dec. 31, 2015															20,681	120
Balance at Dec. 31, 2015															$ 207	$ (169)	$ 15,871	$ (2,869)	$ 5,662	$ 5,696	$ 24,398
Share-based compensation																	271				271
Purchase of treasury shares (in shares)																11
Purchase of treasury shares																$ (12)					(12)
Reissued treasury shares (in shares)		(33)							(2)
Reissued treasury shares		$ 46	$ (46)						$ 3	$ (3)
Exercise of stock options (in shares)																(54)
Exercise of stock options																$ 74	(52)				22
Distributions to non-controlling investors																				(286)	(286)
Other comprehensive loss																		(495)			(495)
Net income																			84	1,164	1,248
Shares (in shares) at Sep. 30, 2016															20,681	42
Balance at Sep. 30, 2016															$ 207	$ (58)	$ 16,041	$ (3,364)	$ 5,746	$ 6,574	$ 25,146

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Brazil Acquisition [Member]
Investing activities
Purchases of Brazil subsidiary, net of cash	$ (306)
Financing activities
Proceeds from local Brazil	102
Net income	1,248	539
Depreciation and amortization	1,459	1,414
Bad debt expense, net of recoveries	317	409
Share based compensation	271	306
Accounts receivable	(4,643)	4,244
Prepaid expenses and other assets	(105)	(21)
Accounts payable	1,000	(403)
Accrued expenses, other current liabilities and customer deposits	2,548	(1,395)
Net cash provided by operating activities	2,095	5,093
Purchases of property and equipment and capitalized software	(1,153)	(1,238)
Net cash used in investing activities	(1,459)	(1,238)
Net borrowing (payments) on lines of credit	2,015	(473)
Proceeds from stock options exercised	22	24
Payments on term debt	(21)	(18)
Purchase of treasury shares	(12)	(109)
Distribution to non-controlling investors	(286)	(329)
Net cash provided by (used in) financing activities	1,820	(905)
Effect of foreign exchange rate changes on cash	(672)	(1,122)
Net change in cash and cash equivalents	1,784	1,828
Cash and cash equivalents at beginning of year	5,718	4,382
Cash and cash equivalents at end of period	7,502	6,210
Supplemental disclosure of cash flows information
Interest paid	108	176
Income taxes paid	$ 126	$ 114

XML

Note 1 - Basis of Presentation

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1.     Basis of Presentation

The unaudited, interim condensed consolidated financial statements of SPAR Group, Inc., a Delaware corporation ("SGRP"), and its subsidiaries (together with SGRP, collectively, the "Company" or the "SPAR Group"), accompanying this Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (this "Quarterly Report"), 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. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The condensed consolidated balance sheet as of December 31, 2015 has been compiled from the Company’s audited consolidated balance sheet as of such date. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation have been included in these interim financial statements. However, these interim financial statements should be read in conjunction with the annual consolidated financial statements and notes thereto for the Company as contained in the SGRP's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission (the "SEC") on March 30, 2016 (the "2015 Annual Report"), and SGRP's Proxy Statement for its 2016 Annual Meeting of Stockholders as filed with the SEC on April 27, 2016 (the "2016 Proxy Statement"). Particular attention should be given to Items 1 and 1A of the 2015 Annual Report respecting the Company's Business and Risk Factors, respectively, and the following parts of SGRP's 2016 Proxy Statement: (i)

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

, (ii) CORPORATE GOVERNANCE, (iii) EXECUTIVE OFFICERS, COMPENSATION, DIRECTORS AND OTHER INFORMATION and (iv)

EXECUTIVE COMPENSATION, EQUITY AWARDS AND OPTIONS.

The Company's results of operations for the interim period are not necessarily indicative of its operating results for the entire year.

XML

Note 2 - Business and Organization

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Nature of Operations [Text Block]

2.     Business and Organization

The Company is a supplier of merchandising and other marketing services throughout the United States and internationally. The Company also provides in-store event staffing, product sampling, audit services, furniture and other product assembly services, technology services and marketing research services. Assembly services are performed in stores, homes and offices while those other services are primarily performed in mass merchandisers, office supply, grocery, drug store, home improvement, independent, convenience, value channel and electronics stores.

Merchandising services primarily consist of regularly scheduled, special project and other product services provided at the store level, and the Company may be engaged by either the retailer or the manufacturer. Those services may include restocking and adding new products, removing spoiled or outdated products, resetting categories "on the shelf" in accordance with client or store schematics, confirming and replacing shelf tags, setting new sale or promotional product displays and advertising, replenishing kiosks, providing in-store event staffing and providing assembly services in stores, homes and offices. Other merchandising services include whole store or departmental product sets or resets, including new store openings, new product launches and in-store demonstrations, audit services, special seasonal or promotional merchandising, focused product support and product recalls. The Company also provides technology services and marketing research services.

As of September 30, 2016, the Company operates in 10 countries and divides its operations into two reportable segments: its Domestic Division, which provides those services in the United States of America since certain of its predecessors were formed in 1979, and its International Division, which began operations in May 2001 and provides similar merchandising, marketing, audit and in-store event staffing services in Japan, Canada, South Africa, India, China, Australia, Mexico, Turkey and Brazil.

XML

Note 3 - Earnings Per Share

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Earnings Per Share [Text Block]

3.     Earnings Per Share

The following table sets forth the computations of basic and diluted net income per share (in thousands, except per share data):

	Three Months Ended September 30 ,						Nine Months Ended September 30 ,
	20 16			20 15			20 16		20 15
Numerator:
Net (loss) income attributable to SPAR Group, Inc.	$	(58	)	$	(92	)	$	84	$	(137	)
Denominator:
Weighted average shares used in basic net income per share calculation		20,607			20,556			20,580		20,562
Weighted average shares used in diluted net income per share calculation		20,607			20,556			21,299		20,562
Basic and diluted net (loss) income per common share	$	–		$	–		$	–	$	(0.01	)

For the three month period ended September 30, 2016, 696,000 vested and non-vested stock options were not included in the calculation because they would have had an anti-dilutive effect. For the three and nine months ended September 30, 2015, 1,008,000 and 1,016,000 vested and non-vested options were not included due to their anti-dilutive effect.

XML

Note 4 - Credit Facilities

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

4.     Credit Facilities

Sterling Credit Facility:

SGRP and certain of its US and Canadian subsidiaries, (namely SPAR Marketing Force, Inc., SPAR Assembly & Installation, Inc. (f/k/a SPAR National Assembly Services, Inc.), SPAR Group International, Inc., SPAR Trademarks, Inc., SPAR Acquisition, Inc., SPAR Canada, Inc. and SPAR Canada Company) (together with SGRP, the "Borrowers"), are parties to a Revolving Loan and Security Agreement dated as of July 6, 2010, as amended (as amended, the "Sterling Loan Agreement"), with Sterling National Bank (the "Lender"), and their Secured Revolving Loan Note in the amended maximum principal amounts of $8.5 million (see below) to Sterling National Bank (as amended, the "Sterling Note"), to document and govern their credit facility with the Lender (including such agreement and note, the "Sterling Credit Facility"). The Sterling Credit Facility as amended effective September 28, 2015 currently is scheduled to expire and the Borrowers' loans thereunder will become due on July 6, 2017 (with no early termination fee).

The Sterling Loan Agreement currently requires the Borrowers to pay interest on the loans thereunder equal to the Agent's floating Prime Rate (as defined in such agreement) minus one half of one percent (0.5%) per annum, and a fee on the maximum unused line thereunder equal to one-eighth of one percent (0.125%) per annum.

Revolving loans of up to $8.5 million are available to the Borrowers under the Sterling Credit Facility based upon the borrowing base formula defined in the Sterling Loan Agreement (principally 85% of "eligible" US and Canadian accounts receivable less certain reserves). The Sterling Credit Facility is secured by substantially all of the assets of the Borrowers (other than the Company's non-Canadian foreign subsidiaries, certain designated domestic subsidiaries, and those subsidiaries' respective equity and assets).

The amendment to the Sterling Credit Facility effective as of September 28, 2015, among other things, extended the scheduled term of the Sterling Credit Facility to July 6, 2017 (with no early termination fee), increased the maximum principal amounts of Sterling's commitment under the Sterling Loan Agreement to $8.5 million, and provided for the amendment and restatement of the Sterling Note with a new $8.5 million note from the Borrowers in replacement of the old notes and made other changes to its covenant and collateral formulas.

The Sterling Loan Agreement requires the Borrowers to maintain certain financial covenants, including maintenance by the Borrowers of a minimum combined tangible net worth of $3.4 million and minimum consolidated tangible net worth of $4.8 million, with those figures increasing by at least 50% of combined and consolidated net profit each year, respectively. In addition, the Borrowers and the Company must not exceed a maximum combined indebtedness to tangible net worth ratio of 3.0 to 1.0, and the Borrowers must maintain a minimum fixed charge coverage ratio of 1.5 to 1.0. Also, capital expenditures for the Borrowers cannot exceed $2.0 million during any fiscal year, and, on a consolidated basis, the Company's year-end operations may not result in a loss or deficit, as determined in accordance with GAAP. The Company was not in compliance with the Fixed Charge Ratio covenant at September 30, 2016, however a waiver was obtained from Sterling Bank on November 18, 2016.   

International Credit Facilities:

 

SPARFACTS Australia Pty. Ltd., has a secured line of credit facility with Oxford Funding Pty Ltd. for $1.2 million (Australian) or approximately $916,000 USD (based upon the exchange rate at September 30, 2016). The facility provides for borrowing based upon a formula, as defined in the agreement (principally 80% of eligible accounts receivable less certain deductions). The agreement is on a month to month basis at the Company's request. The outstanding balance at September 30, 2016, was approximately $448,000 (Australian) or $342,000 USD (based on the exchange rate at September 30, 2016).

On March 7, 2011, the Japanese subsidiary, SPAR FM Japan, Inc., a wholly owned subsidiary, secured a term loan with Mizuho Bank in the amount of approximately 20.0 million Yen (Japanese) or $198,000 USD. The loan is payable in monthly installments of 238,000 Yen or $2,400 USD at an interest rate of 0.1% per annum with a maturity date of February 28, 2018. The outstanding balance at September 30, 2016, was approximately 4.1 million Yen or $40,000 USD (based upon the exchange rate at September 30, 2016).

SPAR Todopromo has secured a line of credit facility with BBVA Bancomer Bank for 5.0 million pesos or approximately $257,000 USD (based upon the exchange rate at September 30, 2016). The revolving line of credit was secured on March 15, 2016 with a contract for 24 months. The variable interest rate is TIIE (Interbank Interest Rate) +4% which results in an actual interest rate of 8.5% at the end of September. The outstanding balance at September 30, 2016 was 5.0 million pesos or $257,000 USD.

The Company had scheduled future maturities of loans as of September 30, 2016, approximately as follows (dollars in thousands):

	Interest Rate as of September 30, 2016			October - December 2016		2017		2018
Mizuho Bank		0.1	%	$	7	$	28	$	5
Sterling National Bank		3.0	%		–		7,554		–
Oxford Funding Pty Ltd.		6.3	%		342		–		–
BBVA Bankcomer		8.5	%		257		–		–
Total				$	606	$	7,582	$	5

	September 30, 2016		December 31, 20 15
Unused Availability:
United States	$	317	$	1,635
Australia		574		640
Mexico		–		–
Total Unused Availability	$	891	$	2,275

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.

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Note 5 - Related-party Transactions

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

5.     Related-Party Transactions

SGRP's policy respecting approval of transactions with related persons, promoters and control persons is contained in the SPAR Group Code of Ethical Conduct for its Directors, Senior Executives and Employees Amended and Restated (as of) August 13, 2015 (the "Ethics Code"). The Ethics Code is intended to promote and reward honest, ethical, respectful and professional conduct by each Covered Person (as defined in the Ethics Code in his or her position with the Company anywhere in the world, including (among other things) serving each customer, dealing with each vendor and treating each other with integrity and respect, and behaving honestly, ethically and professionally with each customer, each vendor, each other and the Company. Article II of the Ethics Code specifically prohibits various forms of self-dealing and collusion and Article V of the Ethics Code generally prohibits each "Covered Person" (including SGRP's officers and directors) from engaging in any business activity that conflicts with his or her duties to the Company, and directs each "Covered Person" to avoid any activity or interest that is inconsistent with the best interests of the SPAR Group, in each case except for any "Approved Activity" (as such terms are defined in the Ethics Code). Examples of violations include (among other things) having any ownership interest in, acting as a director or officer of or otherwise personally benefiting from business with any competitor, customer or vendor of the Company other than pursuant to any Approved Activity. Approved Activities include (among other things) any contract with an affiliated person (each an "Approved Affiliate Contract") or anything else disclosed to and approved by SGRP's Board of Directors (the "Board"), its Governance Committee or its Audit Committee, as the case may be, as well as the ownership, board, executive and other positions held in and services and other contributions to affiliates of SGRP and its subsidiaries by certain directors, officers or employees of SGRP, any of its subsidiaries or any of their respective family members. The Company's senior management is generally responsible for monitoring compliance with the Ethics Code and establishing and maintaining compliance systems, including conflicting relationships and transactions, subject to the review and oversight of SGRP's Governance Committee as provided in clause IV.11 of the Governance Committee's Charter, and SGRP's Audit Committee as provided in clause I.2(l) of the Audit Committee's Charter. The Governance Committee and Audit Committee each consist solely of independent outside directors.

SGRP's Audit Committee has the specific duty and responsibility to review and approve the overall fairness of all material related-party transactions. The Audit Committee receives affiliate contracts and amendments thereto for its review and approval (to the extent approval is given), and these contracts are periodically (often annually) again reviewed, in accordance with the Audit Committee Charter, the Ethics Code, the rules of the Nasdaq Stock Market, Inc. ("Nasdaq"), and other applicable law to ensure that the overall economic and other terms will be (or continue to be) no less favorable to the Company than would be the case in an arms-length contract with an unrelated provider of similar services (i.e., its overall fairness to the Company including pricing and the ability to provide services at comparable performance levels). The Audit Committee periodically reviews all of the related party relationships, agreements and transactions described below.

Domestic Related Party Services:

SPAR Business Services, Inc. ("SBS"), SPAR Administrative Services, Inc. ("SAS"), and SPAR InfoTech, Inc. ("SIT"), are affiliates of SGRP but are not part of the consolidated Company. Mr. Robert G. Brown, a Director, the Chairman and a major stockholder of SGRP, and Mr. William H. Bartels, a Director and the Vice Chairman of the Company and a major stockholder of SGRP, are the sole stockholders of SBS. Mr. Brown is the sole stockholder of SIT. Mr. Brown is a director and officer of SBS and SIT. Mr. Bartels is a director and officer of SAS. The stockholders of SAS were Mr. Bartels and Mr. Brown, and as of January 1, 2015, Mr. Brown had transferred all of his ownership to parties related to Mr. Brown, each of whom are considered affiliates of the Company for related party purposes because of their family relationships with Mr. Brown.

The Company had expenses of $19.7 million and $18.9 million for the nine months ended September 30, 2016 and 2015, respectively (each "Total Domestic Field Cost"), for the execution of the field merchandising, auditing, assembly and other specialists (each a "Field Specialist") who execute the services provided by the Company to its domestic clients. SBS, through the use as needed of approximately 6,000 of its available Field Specialists in the U.S.A., provided a majority of all of the domestic Field Specialists used by the Company (which amounted to approximately 78% and 83% of the Company's Total Domestic Field Cost for the nine months ended September 30, 2016 and 2015, respectively). SAS, through the use of its 59 full-time national, regional and district administrators, provided substantially all of the domestic field administrative services used by the Company (which amounted to approximately 92% and 90% of the Company's total domestic field administrative service cost for the nine months ended September 30, 2016 and 2015, respectively).

Pursuant to the terms of the Amended and Restated Field Service Agreement with SBS dated as of January 1, 2004, as amended in 2011, and the Amended and Restated Field Management Agreement with SAS dated as of January 1, 2004 (each a "Prior Agreement"), defined reimbursable expenses and established the "Cost Plus Fee" arrangement where the Company paid SBS and SAS for their costs of providing those services plus a fixed percentage of such reimbursable expenses (the "Cost Plus Fee"). The parties have had negotiations respecting replacement agreements since the Prior Agreements expired on November 30, 2014.

The Company and SBS have agreed in principle to a Cost Plus Fee to 2.96% of SBS's reimbursable expenses as noted above. This agreement in principle went into effect on and has applied since December 1, 2014. A new SBS agreement is being prepared, which will be subject to contractual terms and provisions reasonably acceptable to the parties.

No SBS compensation for Mr. Brown has been reimbursed to date by the Company, and no such salary reimbursements were made under SBS's Prior Agreement. Although recently requested by SBS, those reimbursements have not been agreed upon or authorized by the Company. However, since SBS is a "Subchapter S" corporation and owned by Messrs. Brown and Bartels, all income from SBS is allocated to them.

On June 14, 2016, SAS and SMF entered into a new Field Administration Agreement (the "SAS Agreement"), a copy of which was filed with the Company's Current Report on Form 8-K as filed with the SEC on June 20, 2016. In order to provide continuity with SAS' Prior Agreement, the SAS Agreement is effective and governs the relationship of the parties as of December 1, 2014, and amends, restates and completely replaces SAS' Prior Agreement. The SAS Agreement more clearly defines reimbursable expenses, exclusions and procedures and continues the indemnifications and releases provided by SAS' Prior Agreement (which indemnifications and releases were and are comparable to those applicable to SGRP's directors and executive officers under its By-Laws and applicable law). Significantly, the SAS Agreement reduced the Cost Plus Fee from 4% to 2% effective as of June 1, 2016.

SGRP's Audit Committee has approved the SAS Agreement pursuant to its specific duty and responsibility to review and approve the overall fairness of all material related-party transactions, as more fully provided above in this Note 5 to the Company's Condensed Consolidated Financial Statements.

No salary reimbursements for Mr. Bartels have been included in such SAS reimbursable expenses or Cost Plus Fee, as such salary reimbursements were not made under the SAS's Prior Agreement and have not been included in the new SAS Agreement approved by the Audit Committee (as required under related party transaction rules). However, since SAS is a "Subchapter S" corporation and owned by Mr. Bartels and relatives of Mr. Brown, all income from SAS is allocated to them.

SBS renders the services of independent contractors to provide field merchandising, auditing, assembly and other services (such as “Field Specialist”). The appropriateness of SBS's treatment of its Field Specialists as independent contractors has been periodically subject to challenge (both currently and historically) by various states and others, and SBS's expenses of defending those challenges and other litigation have been paid by the Company (consistent with the Prior Agreements and to endeavor to manage related potential risks). See Note 8 to the Condensed Consolidated Financial Statements –

Commitments and Contingencies,

below

.

The Company paid SBS for its legal expenses in defending all of its litigation in the amounts of $143,920 and $116,635 for the three month periods ended September 30, 2016 and 2015, respectively, and $586,836 and $383,971 for the nine month periods ended September 30, 2016, and 2015, respectively.

National Merchandising Services, LLC ("NMS"), is a consolidated domestic subsidiary of the Company and is owned jointly by SGRP through its indirect ownership of 51% of the NMS membership interests and by National Merchandising of America, Inc. ("NMA"), through its ownership of the other 49% of the NMS membership interests. Mr. Edward Burdekin is the Chief Executive Officer and President and a director of NMS and also is an executive officer and director of NMA and the sole member and manager of National Retail Source, LLC ("NRS"). Ms. Andrea Burdekin, Mr. Burdekin's wife, is the sole stockholder and a director of NMA and a director of NMS. NRS and NMA are affiliates of the Company but are not consolidated with the Company. NMS commenced operations as of September 1, 2012.

NRS provided a substantial amount of the domestic merchandising specialist field force used by NMS during 2015. Pursuant to the terms of the Master Field Services Agreement dated as of August 1, 2013 (the "NRS Services Agreement"), NMS received merchandising services from NRS through the use of field merchandising specialists during 2015. For those services, the Company had agreed to reimburse NRS for its total costs of providing those services and to pay NRS a fee equal to 2% of its total costs (the "Plus 2% Fee"). Those costs included all field and administrative costs and expenses (effectively including workers compensation insurance expenses) of NRS but exclude certain legal and other administrative expenses. Accordingly, no salary reimbursement for Mr. Burdekin or Ms. Burdekin were included in such reimbursable costs or Plus 2% Fee.

In 2015, NRS provided a substantial amount of the domestic merchandising specialist field force used by NMS and 5% of all of the domestic merchandising specialist field force used by the Company for the nine months ended September 30, 2015. The total Plus 1% Fee earned by NRS for services rendered was approximately $20,000 for the nine months ended September 30, 2015. As of December 2015, NMS no longer uses NRS but uses field merchandising services from a non-affiliated third-party provider, but NMS could once again use NRS in the future.

International Related Party Services:

SGRP Meridian (Pty), Ltd. ("Meridian") is a consolidated international subsidiary of the Company and is owned 51% by SGRP and 49% by the following individuals: Mr. Brian Mason, Mr. Garry Bristow, and Mr. Adrian Wingfield. Mr. Mason is President and a director and Mr. Bristow is an officer and director of Meridian. Mr. Mason is also an officer and director and shareholder of Merhold Property Trust ("MPT"). Mr. Mason and Mr. Bristow are both officers and directors and both are shareholders of Merhold Cape Property Trust ("MCPT"). Mr. Mason, Mr. Bristow and Mr. Wingfield are all officers and shareholders of Merhold Holding Trust ("MHT") which provides similar services like MPT. MPT owns the building where Meridian is headquartered and also owns two vehicles both of which are subleased to Meridian. MCPT provides a fleet of 126 vehicles to Meridian under a 4 year lease program. These leases are provided to Meridian at local market rates included in the summary table below.

SGRP NDS Tanitim Ve Danismanlik A.S. ("NDS") is a consolidated international subsidiary of the Company and is owned 51% by SGRP and 49% by Mr. Medet Yilmaz and Ms. Nurgül Yilmaz. Mr. Yilmaz is President and a director and Ms. Yilmaz is an officer and director of NDS. They are both officers and directors of NDS Tanitim Danismanlik Hizmetleri Gida Tekstil Turizm Pazarlama Ticaret Limited Sirketi ("NDS Tanitim") and NDS Reklam Tanitim Ve Danismanlik Hizmetleri Pazarlama Ticaret Limited Sirketi ("NDS Reklam"). Mr. and Ms. Yilmaz are shareholders of NDS Tanitim and NDS Reklam. NDS Tanitim provided NDS field administration services while NDS Reklam provided NDS field merchandising services both at local market rates through May 2015 at which time NDS assumed these service responsibilities.

SPAR Todopromo is a consolidated international subsidiary of the Company and is owned 51% by SGRP and 49% by the following individuals: Mr. Juan F. Medina Domenzain, Mr. Juan Medina Staines, Mr. Julio Cesar Hernandez Vanegas, and Mr. Jorge Medina Staines. Mr. Juan F. Medina Domenzain is an officer and director of SPAR Todopromo and is also majority shareholder of CONAPAD ("CON") which supplies administrative and operational consulting support to SPAR Todopromo.

At the end of August, Mr. Juan F. Medina Domenzain ("JFMD"), partner in SPAR Todopromo, purchased a warehouse that was leased by SPAR Todopromo. He is leasing the use of the warehouse to SPAR Todopromo for the same amount per month as the prior warehouse owner. He currently has a rental contract for the rest of the year with SPAR Todopromo and a new contract is expected to be signed in January, 2017 at current market rates.

The Company continues to purchase services from SBS, SAS, NRS, MPT, MCPT, MHT, NDS Tanitim, NDS Reklam, CON and JFMD because it believes the value of services it receives from them are at least as favorable to the Company as it could obtain from non-affiliated providers of similar services. The Company believes it is the largest and most important customer of SBS, SAS, NRS, MPT, MCPT, MHT, NDS Tanitim, NDS Reklam, CON and JFMD (and from time to time may be their only customer), and accordingly the Company generally has been able to negotiate better terms, receives more personal and responsive service and is more likely to receive credits and other financial accommodations from SBS, SAS, NRS, MPT, MCPT, MHT, NDS Tanitim, NDS Reklam, CON and JFMD than the Company could reasonably expect to receive from an unrelated service provider who has significant other customers and business. SBS, SAS and NRS affiliate contracts and arrangements are annually reviewed and considered for approval by SGRP's Audit Committee, subject to the ongoing negotiations as described above.

Summary of Related Party Services:

The following costs of affiliates were charged to the Company (in thousands):

	Three Months Ended September 30 ,				Nine Months Ended September 30 ,
	201 6		201 5		201 6		201 5
Services provided by affiliates:
Field merchandiser and other expenses (SBS)	$	5,491	$	5,022	$	15,828	$	16,034
Field administration and other expenses (SAS)	$	1,011	$	1,080	$	3,138	$	3,334
Field merchandiser expenses (NMA and NRS)	$	–	$	471	$	–	$	1,038
Office and vehicle rental expenses (MPT)	$	8	$	1	$	32	$	30
Vehicle rental expenses (MCPT)	$	245	$	197	$	618	$	757
Office and vehicle rental expenses (MHT)	$	34	$	39	$	85	$	89
Field administration expenses (NDS Tanitim)	$	–	$	–	$	–	$	15
Field merchandiser expenses (NDS Reklam)	$	1	$	63	$	1	$	180
Consulting and administrative services (CON)	$	74	$	89	$	241	$	279
Warehouse rental (JFMD)	$	3	$	–	$	3	$	–
Total services provided by affiliates	$	6,867	$	6,962	$	19,946	$	21,756

Accrued expenses due to affiliates (in thousands):	September 30 ,		December 31,
	201 6		201 5
Total accrued expenses due to affiliates	$	989	$	78

Other Related Party Transactions and Arrangements

In July 1999, SPAR Marketing Force, Inc. ("SMF"), SBS and SIT entered into a perpetual software ownership agreement providing that each party independently owned an undivided share of and had the right to unilaterally license and exploit their "Business Manager" Internet job scheduling software (which had been jointly developed by such parties), and all related improvements, revisions, developments and documentation from time to time voluntarily made or procured by any of them at its own expense. Business Manager and its other proprietary software and applications are used by the Company for (among other things) the scheduling, tracking, coordination and reporting of its merchandising and marketing services and are accessible via the Internet or other applicable telecommunication network by the authorized representatives of the Company and its clients through their respective computers and mobile devices. In addition, SPAR Trademarks, Inc. ("STM"), SBS and SIT entered into separate perpetual trademark licensing agreements whereby STM has granted non-exclusive royalty-free licenses to SIT and SBS (and through them to their commonly controlled subsidiaries and affiliates by sublicenses, including SAS) for their continued use of the name "SPAR" and certain other trademarks and related rights of STM, a wholly owned subsidiary of SGRP. SBS and SAS provide services to the Company, as described above, SIT assisted in the Brazilian acquisition, as described below, and SIT no longer provides services to and does not compete with the Company.

Through arrangements with the Company, SBS, SAS and other companies owned by Mr. Brown or Mr. Bartels 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.

In addition to the above, SAS purchases insurance coverage for worker compensation, casualty and property insurance risk for itself, SBS for its field merchandising specialists that require such insurance coverage and the Company from Affinity Insurance, Ltd. ("Affinity"). SAS owns a minority (less than 1%) of the common stock in Affinity. The Affinity insurance premiums for such coverage are ultimately charged to SAS, SBS (and through SBS to its covered field merchandising specialists) and the Company based on the contractual arrangements of the parties.

Related Party Transactions and Arrangements in the Brazil Acquisition

The following related party transactions occurred and arrangements established in connection with the Company's September 2016 acquisition in Brazil of the NM Companies (as defined and more fully described in Note 10 to Consolidated Financial Statements -

Purchase of Interests in Subsidiaries

, below).

On September 8, 2016, the Company (through its Cayman Islands subsidiary) acquired 100% ownership of SGRP Brasil Participações Ltda. ("SGRP Holdings"), a Brazilian limitada (which is a form of limited liability company), from its affiliate, SPAR Infotech, Inc. ("SIT") (see below), at cost (including approved expenses). SGRP Holdings then completed the formation and acquired a majority of the stock of SPAR Brasil Serviços de Merchandising e Tecnologia S.A., a Brazilian corporation ("SPAR BSMT").

SGRP Holdings, JK Consultoria Empresarial Ltda.-ME, a Brazilian limitada ("JKC"), and Earth Investments, LLC, a Nevada limited liability company ("EILLC"), entered into a Joint Venture Agreement respecting SPAR BSMT dated and effective as of September 13, 2016 (the "JV Agreement"). See below respecting the ownership and related party status of JKC and EILLC. The JV Agreement (among other things) provided for the NM Acquisition described (and defined) below, provided for the capitalization of and loans to SPAR BSMT to fund the NM Acquisition and its working capital, and established terms for the election of officers and directors and governance of SPAR BSMT. In addition, the JV Agreement provided for the issuance of shares by SPAR BSMT in the necessary amounts to give SGRP Holdings 51%, JKC 39% and EILLC 10% of the outstanding shares of SPAR BSMT's stock. Under the JV Agreement, SPAR BSMT has five directors, three of which are nominated by SGRP Holdings, one of which is nominated by JKC and one of which is nominated by EILLC.

JKC is owned by Mr. Jonathan Dagues Martins, a Brazilian citizen and resident ("JDM") and his sister, Ms. Karla Dagues Martins, a Brazilian citizen and resident. JDM is the Chief Executive Officer and President of each SPAR Brazil company pursuant to a Management Agreement between JDM and SPAR BSMT dated September 13, 2016. JDM also is a director of SPAR BSMT. Accordingly, JKC and JDM are each a related party in respect of the Company. JKC and SGRP Holdings are parties to separate Loan Agreements with SPAR BSMT dated September 14, 2016, pursuant to which SGRP Holdings loaned R$1,400,000 (approximately US$448,000) and JKC loaned R$453,673 (approximately US$145,175) to SPAR BMST as required by the JV Agreement. JKC funded that loan in part through a loan of R$120,423 (approximately US$38,700) to JKC from SGRP Holdings pursuant to a Loan Agreement between them dated September 14, 2016.

EILLC is owned by Mr. Peter W. Brown, a citizen and resident of the USA ("PWB"). PWB is an officer and employee of the Company's affiliate, SIT which is owned by SGRP's Chairman, Mr. Robert G. Brown, PWB is an official observer at the meetings of SGRP's Board, and PWB also is the nephew of Mr. Robert G. Brown. PWB also is a director of SPAR BSMT. Accordingly, PWB and EILLC are each a related party in respect of the Company. In consideration of PWB's efforts in finding and pursuing the NM Acquisition, the Company agreed to grant his company, EILLC, a 10% interest in SPAR BSMT, have SGRP Holdings take over and make the initial loans to SPAR BSMT that would otherwise have been required to have been made by EILLC (aggregating R$116,326 or approximately US$37,200). The Company also agreed to reimburse Infotech for PWB's approved expenses.

The NM Acquisition and associated related party transactions were reviewed and approved by the Audit Committee of SGRP's Board of Directors.

Company paid SBS for its legal expenses in defending all of its litigation in the amounts of $143,920 and $116,635 for the three month periods ended September 30, 2016 and 2015, respectively, and $586,836 and $383,971 for the nine month periods ended September 30, 2016, and 2015, respectively.

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Note 6 - Preferred Stock

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Preferred Stock [Text Block]

6.      Preferred Stock

SGRP's certificate of incorporation 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. 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. The Company issued 554,402 of SGRP shares to affiliated retirement plans which were all converted into common shares in 2011 (including dividends earned thereon), leaving 2,445,598 shares of remaining authorized preferred stock. At September 30, 2016, no shares of SGRP Series A Preferred Stock were issued and outstanding.

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Note 7 - Stock-based Compensation and Other Plans

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

7.      Stock-Based Compensation and Other Plans

SGRP has granted restricted stock and stock option awards to its eligible directors, officers and employees and certain employees of its affiliates respecting shares of Common Stock issued by SGRP ("SGRP Shares") pursuant to SGRP's 2008 Stock Compensation Plan (as amended, the "2008 Plan"), which was approved by SGRP's stockholders in May of 2008 and 2009. The 2008 Plan provides for the granting of restricted SGRP shares, stock options to purchase SGRP shares (either incentive or nonqualified), 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 option, restricted share awards, and performance stock units. As of September 30, 2016, approximately 700,000 SGRP shares were available for Award grants under the amended 2008 Plan. In the third quarter, there were 75,000 options awarded to officers, 50,000 options awarded to Peter W. Brown, a consultant and related party to the Company, and 400,000 options awarded to the new President and CEO of SPAR Group, Inc. In addition, the CEO was awarded 25,000 shares of restricted stock in the quarter.

The Company recognized $90,000 and $119,000 in stock-based compensation expense relating to stock option awards during the three month periods ended September 30, 2016 and 2015, respectively. The tax benefit available from stock based compensation expense related to stock option during the three months ended September 30, 2016 and 2015 was approximately $34,000 and $45,000 respectively. The Company recognized $232,000 and $290,000 in stock-based compensation expense relating to stock option Awards during the nine month periods ended September 30, 2016 and 2015, respectively. The tax benefit, available to the Company, from stock based compensation expense related to stock options during the nine months ended September 30, 2016 and 2015 was approximately $85,000 and $110,000, respectively. However, since the Company has NOL's available for the next several years, these tax benefits have not been realized as of this report. As of September 30, 2016, total unrecognized stock-based compensation expense related to stock options was $674,000.

During the three months ended September 30, 2016 and 2015, the Company recognized approximately $9,000 and $15,000, respectively of stock based compensation expense related to restricted stock. The tax benefit available to the Company from stock based compensation expense related to restricted stock during the three months ended September 30, 2016 and 2015 was approximately $3,500 and $5,600, respectively. During the nine months ended September 30, 2016 and 2015, the Company recognized approximately $39,000 and $35,000, respectively, of stock-based compensation expense related to restricted stock. The tax benefit, available to the Company, from stock based compensation expense related to restricted stock during the nine months ended September 30, 2016 and 2015 was approximately $14,800 and $13,500, respectively. However, since the Company has NOL's available for the next several years, these tax benefits have not been realized as of this report. As of September 30, 2016, total unrecognized stock-based compensation expense related to unvested restricted stock Awards was $118,000.

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Note 8 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8.     Commitments and Contingencies

The Company is a party to various legal actions and administrative proceedings arising in the normal course of business, and through its insurance programs, the Company endeavors to manage any underlying or related potential risk.

The Company executes the services it provides to its domestic clients through independent field merchandising, auditing, assembly and other specialists (each a "Field Specialist"), the vast majority of whom are provided by SBS. For affiliated relationships, contractual details, and payment amounts, see Note 5 to the Condensed Consolidated Financial Statements –

Related

Party Transactions

- Domestic Related Party Services

, in this Quarterly Report, above. The appropriateness of SBS's treatment of its Field Specialists as independent contractors has been periodically subject to challenge (both currently and historically) by various states and others, and SBS's expenses of defending those challenges and other litigation have been paid by the Company (consistent with their Prior Agreements and to endeavor to manage related potential risks). That treatment is being challenged currently in a California class action lawsuit where the State Court separated the issues of independent contractor status and damages, tried the status issue first, and ruled that the Field Specialists were employees because (among other things) they failed to sufficiently exercise their independence. The second stage of the trial will be the determination of damages, if any. When a decision has been reached on those damages, the liability and damage decisions can be appealed to a higher court. There can be no assurance that SBS will succeed in defending any such challenge, the legal expenses of prolonged litigation and appeals could continue to be (and have from time to time been) significant, and any adverse determination could increase the Company's costs of doing business.

The Company's management does not anticipate at this time that disposition of those matters would be likely to have a material adverse effect on the Company.

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Note 9 - Segment Information

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

9.      Segment Information

The Company reports net revenues from continuing operations and operating income from continuing operations by reportable segment. Reportable segments are components of the Company for which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company provides similar merchandising and marketing services throughout the world, operating within two reportable segments, its Domestic Division and its International Division. The Company uses those divisions to improve its administration and operational and strategic focuses, and it tracks and reports certain financial information separately for each of those divisions. The Company measures the performance of its Domestic and International Divisions and subsidiaries using the same metrics. The primary measurement utilized by management is operating profits, historically the key indicator of long-term growth and profitability, as the Company is focused on reinvesting the operating profits of each of its international subsidiaries back into its local markets in an effort to improve market share and continued expansion efforts.

Management evaluates performance as follows (in thousands):

 

	Three Months Ended September 30,						Nine Months Ended September 30,
	201 6			201 5			2016			2015
Revenue:
United States	$	11,332		$	10,706		$	32,268		$	32,783
International		22,106			17,563			57,513			54,219
Total revenue	$	33,438		$	28,269		$	89,781		$	87,002
Operating income (loss):
United States	$	(184	)	$	63		$	(120	)	$	309
International		614			166			1,496			784
Total operating income	$	430		$	229		$	1,376		$	1,093
Interest expense:
United States	$	36		$	25		$	88		$	66
International		15			22			23			121
Total interest expense	$	51		$	47		$	111		$	187
Other (income), net:
United States	$	–		$	–		$	–		$	–
International		(78	)		(8	)		(183	)		(68	)
Total other (income), net	$	(78	)	$	(8	)	$	(183	)	$	(68	)
Income before income tax expense:
United States	$	(220	)	$	38		$	(208	)	$	243
International		677			152			1,656			731
Total income before income tax expense	$	457		$	190		$	1,448		$	974
Income tax (benefit) expense:
United States	$	(306	)	$	(66	)	$	(394	)	$	(74	)
International		275			149			594			509
Total income tax expense	$	(31	)	$	83		$	200		$	435
Net income:
United States	$	86		$	104		$	186		$	317
International		402			3			1,062			222
Total net income	$	488		$	107		$	1,248		$	539
Depreciation and amortization:
United States	$	334		$	344		$	1,014		$	1,004
International		152			127			445			410
Total depreciation and amortization	$	486		$	471		$	1,459		$	1,414
Capital expenditures:
United States	$	291		$	213		$	798		$	918
International		151			119			376			320
Total capital expenditures	$	442		$	332		$	1,174		$	1,238

Note: There were no inter-company sales for the nine months ended September 30, 2016 or 2015.

	September 30,		December 31,
	201 6		201 5
Assets:
United States	$	23,936	$	21,799
International		31,548		21,607
Total assets	$	55,484	$	43,406

Geographic Data

(in thousands)

	Three Months Ended September 30 ,										Nine Months Ended September 30 ,
	20 16					2015					20 16					2015
International revenue:			% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue
South Africa	$	5,936		17.8	%	$	4,968		17.6	%	$	14,871		16.6	%	$	15,189		17.5	%
Mexico		5,495		16.4			3,962		14.0			15,600		17.4			12,076		13.9
China		3,029		9.1			3,682		13.0			8,646		9.6			10,197		11.7
Brazil		1,850		5.5			–		–			1,850		2.1			–		–
Japan		1,799		5.4			1,306		4.6			5,157		5.7			3,907		4.5
India		1,523		4.6			1,385		4.9			4,203		4.7			5,001		5.7
Canada		1,453		4.3			1,368		4.8			4,582		5.1			4,173		4.8
Australia		945		2.8			829		2.9			2,359		2.6			3,316		3.8
Turkey		76		0.2			63		0.2			245		0.3			360		0.4
Total international revenue	$	22,106		66.1	%	$	17,563		62.0	%	$	57,513		64.1	%	$	54,219		62.3	%

	September 30,		December 31,
	20 16		20 15
Long lived assets:
United States	$	11,325	$	10,147
International		4,445		3,148
Total long lived assets	$	15,770	$	13,295

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Note 10 - Purchase of Interests in Subsidiaries

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

10. Purchase of Interests in Subsidiaries

After acquiring SGRP Brasil Participações Ltda. ("SGRP Holdings"), a Brazilian limitada (which is a form of limited liability company), and establishing SPAR Brasil Serviços de Merchandising e Tecnologia S.A., a Brazilian corporation ("SPAR BSMT"), in a series of related party transactions (See Note 5 to Condensed Consolidated Financial Statements - Related Party Transactions, above), SGRP Holdings and SPAR BSMT (the "Purchasers") entered into a Quota Purchase Agreement dated September 13, 2016 (the "NM QPA"), with Interservice Publicidade Sociedade Ltda., a Brazilian limitada, Momentum Promoções Ltda., a Brazilian limitada, and IPG Nederland B.V., a Netherlands company (collectively, the "Sellers"). The Sellers are subsidiaries of The Interpublic Group of Companies, Inc., a Delaware corporation ("Interpublic"), which is a global provider of advertising, media and other business services. The NM QPA provided for the acquisition by the Purchasers from the Sellers (the "NM Acquisition") of all of the equity shares (called "quotas") in New Momentum Ltda., a Brazilian limitada, and New Momentum Serviços Temporários Ltda., a Brazilian limitada (each a "NM Company" or collectively “the new Companies”), two of Interpublic's "In Store" companies in Brazil. SPAR BSMT acquired 99% of the quotas issued by each NM Company and SGRP Holdings acquired 1% of the quotas issued by each NM Company pursuant to the NM QPA. The closing of the acquisition of the NM Companies was completed with the disbursement of the purchase price to the Sellers on September 19, 2016, effective as of September 13, 2016.

The preliminary purchase price at closing for the NM Companies was R$1,163,263 (approximately US$358,000), based on a preliminary balance sheet as of July 31, 2016 which is subject to adjustment (upward or downward) based on the final closing balance sheet as of September 13, 2016. The Sellers have until December 12, 2016 to present the final closing balance sheet to the Company.

Momentum Promoções Ltda., one of the Sellers, also agreed to provide certain transition services and continued use of certain existing office space to SPAR BSMT and each of the NM Companies (collectively, "SPAR Brazil"), pursuant to a Transition Services Agreement dated September 13, 2016 (the "Transition Agreement"), and a Sublease Agreement dated September 13, 2016 (the "Sublease"), respectively. The Sublease has an initial term of 12 months and requires monthly rent and back office support payments of R$205,417 (approximately US$65,700). The Transition Agreement has an initial term ending December 31, 2016, and requires various monthly service payments estimated to be in total R$74,534 (approximately US$23,850).

The Company has completed its preliminary calculation of the estimated fair value and related allocation of assets between goodwill and other. This valuation may be subject to change upon receipt of the final closing balance sheet as of September 13, 2016, which is expected by the end of this year at which time the Company will update its fair value allocation analysis. The Company expects to finalize the purchase price allocation as soon as practical, but no later than one year from acquisition date. A summary of assets acquired, goodwill and liabilities assumed and net of purchase price are as follows (in thousands);

Cash	$	52
Net Working Capital, net of cash		222
Fixed Assets		23
Non-operating Assets		11
Goodwill		457
Assumed Liabilities		(407	)
Net Fair Value of Assets Acquired	$	358

The following table includes the amount of Brazil’s revenue and earnings included in the Company’s consolidated statement of income for the quarter ended September 30, 2016, and a pro forma calculation of the amounts that would have been included in the Company’s consolidated statements of income for the three and nine month periods ended September 30, 2016 and 2015 had the Brazil acquisition date been January 1, 2015, instead of September 14, 2016 (in thousands):

	Revenue		Net (Loss)
Actual New Momentum Companies from Sept. 14 to Sept. 30, 2016	$	1,850	$	(43	)
Consolidated supplemental pro forma, July 1 to September 30, 2016	$	40,679	$	(151	)
Consolidated supplemental pro forma, July 1 to September 30, 2015	$	35,301	$	(338	)
Consolidated supplemental pro forma, January 1 to September 30, 2016	$	111,907	$	(161	)
Consolidated supplemental pro forma, January 1 to September 30, 2015	$	111,209	$	(594	)

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Note 3 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended September 30 ,						Nine Months Ended September 30 ,
	20 16			20 15			20 16		20 15
Numerator:
Net (loss) income attributable to SPAR Group, Inc.	$	(58	)	$	(92	)	$	84	$	(137	)
Denominator:
Weighted average shares used in basic net income per share calculation		20,607			20,556			20,580		20,562
Weighted average shares used in diluted net income per share calculation		20,607			20,556			21,299		20,562
Basic and diluted net (loss) income per common share	$	–		$	–		$	–	$	(0.01	)

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Note 4 - Credit Facilities (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Debt [Table Text Block]

	Interest Rate as of September 30, 2016			October - December 2016		2017		2018
Mizuho Bank		0.1	%	$	7	$	28	$	5
Sterling National Bank		3.0	%		–		7,554		–
Oxford Funding Pty Ltd.		6.3	%		342		–		–
BBVA Bankcomer		8.5	%		257		–		–
Total				$	606	$	7,582	$	5

Credit And Debt Facilities Unused Availability [Table Text Block]

	September 30, 2016		December 31, 20 15
Unused Availability:
United States	$	317	$	1,635
Australia		574		640
Mexico		–		–
Total Unused Availability	$	891	$	2,275

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Note 5 - Related-party Transactions (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Related Party Transactions [Table Text Block]

	Three Months Ended September 30 ,				Nine Months Ended September 30 ,
	201 6		201 5		201 6		201 5
Services provided by affiliates:
Field merchandiser and other expenses (SBS)	$	5,491	$	5,022	$	15,828	$	16,034
Field administration and other expenses (SAS)	$	1,011	$	1,080	$	3,138	$	3,334
Field merchandiser expenses (NMA and NRS)	$	–	$	471	$	–	$	1,038
Office and vehicle rental expenses (MPT)	$	8	$	1	$	32	$	30
Vehicle rental expenses (MCPT)	$	245	$	197	$	618	$	757
Office and vehicle rental expenses (MHT)	$	34	$	39	$	85	$	89
Field administration expenses (NDS Tanitim)	$	–	$	–	$	–	$	15
Field merchandiser expenses (NDS Reklam)	$	1	$	63	$	1	$	180
Consulting and administrative services (CON)	$	74	$	89	$	241	$	279
Warehouse rental (JFMD)	$	3	$	–	$	3	$	–
Total services provided by affiliates	$	6,867	$	6,962	$	19,946	$	21,756

Related Party Accrued Expenses [Table Text Block]

Accrued expenses due to affiliates (in thousands):	September 30 ,		December 31,
	201 6		201 5
Total accrued expenses due to affiliates	$	989	$	78

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Note 9 - Segment Information (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended September 30,						Nine Months Ended September 30,
	201 6			201 5			2016			2015
Revenue:
United States	$	11,332		$	10,706		$	32,268		$	32,783
International		22,106			17,563			57,513			54,219
Total revenue	$	33,438		$	28,269		$	89,781		$	87,002
Operating income (loss):
United States	$	(184	)	$	63		$	(120	)	$	309
International		614			166			1,496			784
Total operating income	$	430		$	229		$	1,376		$	1,093
Interest expense:
United States	$	36		$	25		$	88		$	66
International		15			22			23			121
Total interest expense	$	51		$	47		$	111		$	187
Other (income), net:
United States	$	–		$	–		$	–		$	–
International		(78	)		(8	)		(183	)		(68	)
Total other (income), net	$	(78	)	$	(8	)	$	(183	)	$	(68	)
Income before income tax expense:
United States	$	(220	)	$	38		$	(208	)	$	243
International		677			152			1,656			731
Total income before income tax expense	$	457		$	190		$	1,448		$	974
Income tax (benefit) expense:
United States	$	(306	)	$	(66	)	$	(394	)	$	(74	)
International		275			149			594			509
Total income tax expense	$	(31	)	$	83		$	200		$	435
Net income:
United States	$	86		$	104		$	186		$	317
International		402			3			1,062			222
Total net income	$	488		$	107		$	1,248		$	539
Depreciation and amortization:
United States	$	334		$	344		$	1,014		$	1,004
International		152			127			445			410
Total depreciation and amortization	$	486		$	471		$	1,459		$	1,414
Capital expenditures:
United States	$	291		$	213		$	798		$	918
International		151			119			376			320
Total capital expenditures	$	442		$	332		$	1,174		$	1,238

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	September 30,		December 31,
	201 6		201 5
Assets:
United States	$	23,936	$	21,799
International		31,548		21,607
Total assets	$	55,484	$	43,406

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block]

	Three Months Ended September 30 ,										Nine Months Ended September 30 ,
	20 16					2015					20 16					2015
International revenue:			% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue					% of consolidated net revenue
South Africa	$	5,936		17.8	%	$	4,968		17.6	%	$	14,871		16.6	%	$	15,189		17.5	%
Mexico		5,495		16.4			3,962		14.0			15,600		17.4			12,076		13.9
China		3,029		9.1			3,682		13.0			8,646		9.6			10,197		11.7
Brazil		1,850		5.5			–		–			1,850		2.1			–		–
Japan		1,799		5.4			1,306		4.6			5,157		5.7			3,907		4.5
India		1,523		4.6			1,385		4.9			4,203		4.7			5,001		5.7
Canada		1,453		4.3			1,368		4.8			4,582		5.1			4,173		4.8
Australia		945		2.8			829		2.9			2,359		2.6			3,316		3.8
Turkey		76		0.2			63		0.2			245		0.3			360		0.4
Total international revenue	$	22,106		66.1	%	$	17,563		62.0	%	$	57,513		64.1	%	$	54,219		62.3	%

Reconciliation Of Long Lived Assets From Segments To Consolidated [Table Text Block]

	September 30,		December 31,
	20 16		20 15
Long lived assets:
United States	$	11,325	$	10,147
International		4,445		3,148
Total long lived assets	$	15,770	$	13,295

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Note 10 - Purchase of Interests in Subsidiaries (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Cash	$	52
Net Working Capital, net of cash		222
Fixed Assets		23
Non-operating Assets		11
Goodwill		457
Assumed Liabilities		(407	)
Net Fair Value of Assets Acquired	$	358

Business Acquisition, Pro Forma Information [Table Text Block]

	Revenue		Net (Loss)
Actual New Momentum Companies from Sept. 14 to Sept. 30, 2016	$	1,850	$	(43	)
Consolidated supplemental pro forma, July 1 to September 30, 2016	$	40,679	$	(151	)
Consolidated supplemental pro forma, July 1 to September 30, 2015	$	35,301	$	(338	)
Consolidated supplemental pro forma, January 1 to September 30, 2016	$	111,907	$	(161	)
Consolidated supplemental pro forma, January 1 to September 30, 2015	$	111,209	$	(594	)

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Note 2 - Business and Organization (Details Textual)	9 Months Ended
	Sep. 30, 2016
Number of Countries in which Entity Operates	10
Number of Reportable Segments	2

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Note 3 - Earnings Per Share (Details Textual) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2015
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	696,000	1,008,000	1,016,000

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Note 3 - Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Net (loss) income attributable to SPAR Group, Inc.	$ (58)	$ (92)	$ 84	$ (137)
Weighted average common shares – basic (in shares)	20,607	20,556	20,580	20,562
Weighted average common shares – diluted (in shares)	20,607	20,556	21,299	20,562
Basic and diluted loss per common share: (in dollars per share)				$ (0.01)

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Note 4 - Credit Facilities (Details Textual) MXN in Millions				9 Months Ended
	Sep. 28, 2015 USD ($)	Mar. 07, 2011 USD ($)	Mar. 07, 2011 JPY (¥)	Sep. 30, 2016 USD ($)	Sep. 30, 2016 JPY (¥)	Sep. 30, 2016 MXN	Sep. 30, 2016 AUD	Mar. 07, 2011 JPY (¥)
Sterling Credit Facility [Member] | Prime Rate [Member]
Debt Instrument, Basis Spread on Variable Rate				0.50%
Sterling Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 8,500,000			$ 8,500,000
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage				0.125%
Percent Of Eligible Domestic Accounts Receivable Less Certain Reserves To Calculate Borrowing Availability				85.00%	85.00%	85.00%	85.00%
Line of Credit Facility, Covenant Terms, Minimum Tangible Net Worth	3,400,000
Line of Credit Facility, Covenant Terms, Minimum Consolidated Tangible Net Worth	$ 4,800,000
Line of Credit Facility, Covenant Terms, Percent of Increase in Net Profit	50.00%
Line of Credit Facility, Covenant Terms, Maximum Indebtedness to Tangible Net Worth Ratio	3
Line of Credit Facility, Covenant Terms, Minimum Fixed Charge Coverage Ratio	1.5
Line of Credit Facility, Covenant Terms, Maximum Capital Expenditures	$ 2,000,000
Oxford Funding Pty Ltd [Member]
Line of Credit Facility, Maximum Borrowing Capacity				$ 916,000			AUD 1,200,000
Percent Of Eligible Domestic Accounts Receivable Less Certain Reserves To Calculate Borrowing Availability				80.00%	80.00%	80.00%	80.00%
Long-term Line of Credit				$ 342,000			AUD 448,000
Revolving Credit Facility [Member] | Interbank Interest Rate [Member] | BBVA Bancomer Bank [Member]
Debt Instrument, Basis Spread on Variable Rate				4.00%
Revolving Credit Facility [Member] | BBVA Bancomer Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity				$ 257,000		MXN 5
Long-term Line of Credit				$ 257,000		MXN 5
Debt Instrument, Term				2 years
Line of Credit Facility, Interest Rate at Period End				8.50%	8.50%	8.50%	8.50%
Mizuho Bank [Member]
Debt Instrument, Face Amount		$ 198,000						¥ 20,000,000
Debt Instrument, Periodic Payment		$ 2,400	¥ 238,000
Debt Instrument, Interest Rate, Stated Percentage		0.10%						0.10%
Loans Payable				$ 40,000	¥ 4,100,000
Line of Credit Facility, Interest Rate at Period End				0.10%	0.10%	0.10%	0.10%
BBVA Bancomer Bank [Member]
Line of Credit Facility, Interest Rate at Period End				8.50%	8.50%	8.50%	8.50%

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Note 4 - Credit Facilities - Summary of Credit and Other Debt Facilities (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Mizuho Bank [Member]
Line of Credit Facility, Interest Rate at Period End	0.10%
2016	$ 7
2017	28
2018	$ 5
Sterling Credit Facility [Member]
Line of Credit Facility, Interest Rate at Period End	3.00%
2017	$ 7,554
Oxford Funding Pty Ltd [Member]
Line of Credit Facility, Interest Rate at Period End	6.30%
2016	$ 342
BBVA Bancomer Bank [Member]
Line of Credit Facility, Interest Rate at Period End	8.50%
2016	$ 257
2016	606
2017	7,582
2018	$ 5

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Note 4 - Credit Facilities - Unused Availability (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
UNITED STATES
Unused Availability	$ 317	$ 1,635
AUSTRALIA
Unused Availability	574	640
MEXICO
Unused Availability
Unused Availability	$ 891	$ 2,275

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Note 5 - Related-party Transactions (Details Textual)				3 Months Ended		4 Months Ended	5 Months Ended	9 Months Ended		12 Months Ended
	Sep. 14, 2016 USD ($)	Sep. 14, 2016 BRL	Sep. 13, 2016	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016	May 31, 2016	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2017 USD ($)	Sep. 08, 2016
SBS [Member] | Domestic Merchandising Specialists Field Force [Member]
Percent Of Service Provided By Related Party								78.00%	83.00%
SBS [Member] | Domestic Field Management [Member]
Percent Of Service Provided By Related Party								92.00%	90.00%
SBS [Member] | Cost Plus Fees [Member]
Related Party Transaction, Rate								2.96%
SBS [Member] | Legal Expenses Paid by Company to SBS [Member]
Legal Fees				$ 143,920	$ 116,635			$ 586,836	$ 383,971
SBS [Member]
Number of Merchandising Specialists								6,000
Number of National, Regional, and District Administrators								59
Related Party Transaction, Annual Maximum Reimbursement for Settlement and Judgement Costs								$ 8
Related Party Transaction, Reimbursement of Legal Expenses from Transaction with Related Party				$ 143,920	$ 116,635			$ 586,836	$ 383,971
SAS [Member] | Cost Plus Fees [Member] | Scenario, Forecast [Member]
Related Party Transaction, Amounts of Transaction										$ 5
SAS [Member] | Cost Plus Fees [Member]
Related Party Transaction, Rate						2.00%	4.00%
NRS [Member] | Domestic Merchandising Specialists Field Force [Member]
Percent Of Service Provided By Related Party									5.00%
NRS [Member] | Plus2 Compensation [Member]
Related Party Transaction, Rate									2.00%
Related Party Transaction, Amounts of Transaction									$ 20,000
NRS [Member]
Majority Interest Ownership Percentage By Parent				51.00%		51.00%		51.00%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				49.00%		49.00%		49.00%
C M R Meridien [Member] | Lease Arrangement With MCPT [Member]
Number Of Vehicles Subleased								2
Number Of Vehicles Leased								126
Lessee Leasing Arrangements, Operating Leases, Term of Contract								4 years
C M R Meridien [Member]
Majority Interest Ownership Percentage By Parent				51.00%		51.00%		51.00%
Mr. Brian Mason Mr. Garry Bristow And Mr. Adrian Wingfield [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				49.00%		49.00%		49.00%
NDS [Member]
Majority Interest Ownership Percentage By Parent				51.00%		51.00%		51.00%
Mr And Ms Yilmaz [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				49.00%		49.00%		49.00%
SPAR Todopromo [Member]
Majority Interest Ownership Percentage By Parent				51.00%		51.00%		51.00%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				49.00%		49.00%		49.00%
Affinity Insurance [Member] | Maximum [Member]
Noncontrolling Interest, Ownership Percentage by Parent				1.00%		1.00%		1.00%
SGRP Holdings [Member] | JV Agreement [Member] | SPAR BSMT [Member]
Number of Directors			3
Proceeds from Related Party Debt	$ 448,000	BRL 1,400,000
SGRP Holdings [Member] | Loan Agreement [Member] | JKC [Member]
Proceeds from Related Party Debt	38,700	120,423
JKC [Member] | JV Agreement [Member] | SPAR BSMT [Member]
Number of Directors			1
Proceeds from Related Party Debt	145,175	453,673
EILLC [Member] | JV Agreement [Member] | SPAR BSMT [Member]
Number of Directors			1
JV Agreement [Member] | SPAR BSMT [Member]
Number of Directors			5
Loan From SGRP Holdings on Behalf of EILLC [Member] | SPAR BSMT [Member]
Proceeds from Related Party Debt	$ 37,200	BRL 116,326
SGRP Holdings [Member]
Business Acquisition, Percentage of Voting Interests Acquired											100.00%
SGRP Holdings [Member] | SPAR BSMT Joint Venture [Member]
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage			51.00%
JKC [Member] | SPAR BSMT Joint Venture [Member]
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage			39.00%
EILLC [Member] | SPAR BSMT Joint Venture [Member]
Variable Interest Entity, Qualitative or Quantitative Information, Ownership Percentage			10.00%
Cost of Services, Domestic Field Costs								$ 19,700,000	$ 18,900,000

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Note 5 - Related-party Transactions - Transactions Between the Company and Affiliates (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Field Merchandiser Services SBS [Member]
Services provided by affiliates:
Services provided by affiliates	$ 5,491	$ 5,022	$ 15,828	$ 16,034
Field Administration Expenses SAS [Member]
Services provided by affiliates:
Services provided by affiliates	1,011	1,080	3,138	3,334
Field Merchandiser Services NRS [Member]
Services provided by affiliates:
Services provided by affiliates		471		1,038
Office And Vehicle Rental MPT [Member]
Services provided by affiliates:
Services provided by affiliates	8	1	32	30
Vehicle Rental MCPT [Member]
Services provided by affiliates:
Services provided by affiliates	245	197	618	757
Office And Vehicle Rental MHT [Member]
Services provided by affiliates:
Services provided by affiliates	34	39	85	89
Field Management Services NDS Tanitim [Member]
Services provided by affiliates:
Services provided by affiliates				15
Field Merchandiser Services NDS Reklam [Member]
Services provided by affiliates:
Services provided by affiliates	1	63	1	180
Consulting and Administrative Services (CON) [Member]
Services provided by affiliates:
Services provided by affiliates	74	89	241	279
Warehouse Rental (JFMD) [Member]
Services provided by affiliates:
Services provided by affiliates	3		3
Services provided by affiliates	$ 6,867	$ 6,962	$ 19,946	$ 21,756

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Note 5 - Related-party Transactions - Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Total accrued expenses due to affiliates	$ 989	$ 78

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Note 6 - Preferred Stock (Details Textual) - $ / shares	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2011	Dec. 31, 2010
Series A Preferred Stock [Member]
Preferred Stock, Shares Outstanding	0
Preferred Stock, Shares Issued	0
Preferred Stock, Shares Authorized	3,000,000
Preferred Stock, Dividend Rate, Percentage	10.00%
Preferred Stock, Conversion Basis	1
Common Stock For Conversion			554,402
Preferred Stock Number Of Authorized Shares Remaining			2,445,598
Preferred Stock, Shares Outstanding	0	0
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Authorized	2,445,598	2,445,598		3,000,000
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01

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Note 7 - Stock-based Compensation and Other Plans (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
The 2008 Plan [Member] | Employee Stock Option [Member] | Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	75,000
The 2008 Plan [Member] | Employee Stock Option [Member] | Consultant and Related Party [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	50,000
The 2008 Plan [Member] | Employee Stock Option [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	400,000
The 2008 Plan [Member] | Employee Stock Option [Member]
Allocated Share-based Compensation Expense	$ 90,000	$ 119,000	$ 232,000	$ 290,000
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense	$ 34,000	45,000	$ 85,000	110,000
The 2008 Plan [Member] | Restricted Stock [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	25,000
The 2008 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	700,000		700,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 674,000		$ 674,000
Restricted Stock [Member]
Allocated Share-based Compensation Expense	9,000	15,000	39,000	35,000
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense	3,500	$ 5,600	14,800	$ 13,500
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 118,000		$ 118,000

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Note 9 - Segment Information (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)
Intersegment Eliminations [Member]
Revenue, Net			$ 0	$ 0
Revenue, Net	$ 33,438,000	$ 28,269,000	$ 89,781,000	$ 87,002,000
Number of Reportable Segments			2

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Note 9 - Segment Information - Segment Reporting Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
UNITED STATES
Revenue, Net	$ 11,332	$ 10,706	$ 32,268	$ 32,783
Operating income (Loss)	(184)	63	(120)	309
Interest expense	36	25	88	66
Other (income) expense, net
Income before income tax expense	(220)	38	(208)	243
Income tax expense	(306)	(66)	(394)	(74)
Net income (loss) from continuing operations	86	104	186	317
Depreciation and amortization	334	344	1,014	1,004
Capital expenditures	291	213	798	918
International [Member]
Revenue, Net	22,106	17,563	57,513	54,219
Operating income (Loss)	614	166	1,496	784
Interest expense	15	22	23	121
Other (income) expense, net	(78)	(8)	(183)	(68)
Income before income tax expense	677	152	1,656	731
Income tax expense	275	149	594	509
Net income (loss) from continuing operations	402	3	1,062	222
Depreciation and amortization	152	127	445	410
Capital expenditures	151	119	376	320
Revenue, Net	33,438	28,269	89,781	87,002
Operating income (Loss)	430	229	1,376	1,093
Interest expense	51	47	111	187
Other (income) expense, net	(78)	(8)	(183)	(68)
Income before income tax expense	457	190	1,448	974
Income tax expense	(31)	83	200	435
Net income (loss) from continuing operations	488	107	1,248	539
Depreciation and amortization	486	471	1,459	1,414
Capital expenditures	$ 442	$ 332	$ 1,153	$ 1,238

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Note 9 - Segment Information - Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
UNITED STATES
Assets	$ 23,936	$ 21,799
International [Member]
Assets	31,548	21,607
Assets	$ 55,484	$ 43,406

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Note 9 - Segment Information - Geographic Data (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
SOUTH AFRICA
Revenue, Net	$ 5,936	$ 4,968	$ 14,871	$ 15,189
% of consolidated net revenue	17.80%	17.60%	16.60%	17.50%
MEXICO
Revenue, Net	$ 5,495	$ 3,962	$ 15,600	$ 12,076
% of consolidated net revenue	16.40%	14.00%	17.40%	13.90%
CHINA
Revenue, Net	$ 3,029	$ 3,682	$ 8,646	$ 10,197
% of consolidated net revenue	9.10%	13.00%	9.60%	11.70%
BRAZIL
Revenue, Net	$ 1,850		$ 1,850
% of consolidated net revenue	5.50%		2.10%
JAPAN
Revenue, Net	$ 1,799	$ 1,306	$ 5,157	$ 3,907
% of consolidated net revenue	5.40%	4.60%	5.70%	4.50%
INDIA
Revenue, Net	$ 1,523	$ 1,385	$ 4,203	$ 5,001
% of consolidated net revenue	4.60%	4.90%	4.70%	5.70%
CANADA
Revenue, Net	$ 1,453	$ 1,368	$ 4,582	$ 4,173
% of consolidated net revenue	4.30%	4.80%	5.10%	4.80%
AUSTRALIA
Revenue, Net	$ 945	$ 829	$ 2,359	$ 3,316
% of consolidated net revenue	2.80%	2.90%	2.60%	3.80%
TURKEY
Revenue, Net	$ 76	$ 63	$ 245	$ 360
% of consolidated net revenue	0.20%	0.20%	0.30%	0.40%
International [Member]
Revenue, Net	$ 22,106	$ 17,563	$ 57,513	$ 54,219
% of consolidated net revenue	66.10%	62.00%	64.10%	62.30%
Revenue, Net	$ 33,438	$ 28,269	$ 89,781	$ 87,002

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Note 9 - Segment Information - Long Lived Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
UNITED STATES
Long lived assets	$ 11,325	$ 10,147
International [Member]
Long lived assets	4,445	3,148
Long lived assets	$ 15,770	$ 13,295

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Note 10 - Purchase of Interests in Subsidiaries (Details Textual) - Sep. 13, 2016	USD ($)	BRL
NM Acquisition [Member] | SGRP Holdings and SPAR BSMT [Member]
Business Acquisition, Number of Acquired Entity	2	2
Business Combination, Consideration Transferred	$ 358,000	BRL 1,163,263
NM Acquisition [Member] | SPAR BSMT [Member]
Business Acquisition, Percentage of Voting Interests Acquired	99.00%	99.00%
NM Acquisition [Member] | SGRP Holdings [Member]
Business Acquisition, Percentage of Voting Interests Acquired	1.00%	1.00%
Sublease Agreement [Member]
Lessee Leasing Arrangements, Operating Leases, Term of Contract	1 year	1 year
Operating Lease, Monthly Rent	$ 65,700	BRL 205,417
Transition Agreement, Monthly Service Payments	$ 23,850	BRL 74,534

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Note 10 - Purchase of Interests in Subsidiaries - Assets and Liabilities Acquired (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 13, 2016	Dec. 31, 2015
NM Acquisition [Member] | SGRP Holdings and SPAR BSMT [Member]
Cash		$ 52
Net Working Capital, net of cash		222
Fixed Assets		23
Non-operating Assets		11
Goodwill		457
Assumed Liabilities		(407)
Net Fair Value of Assets Acquired		$ 358
Goodwill	$ 2,257		$ 1,800

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Note 10 - Purchase of Interests in Subsidiaries - Consolidated Statement of Income, Pro Forma (Details) - Brazil Acquisition [Member] - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Actual New Momentum Companies from Sept. 14 to Sept. 30, 2016	$ 1,850
Actual New Momentum Companies from Sept. 14 to Sept. 30, 2016	$ (43)
Revenue		$ 40,679	$ 35,301	$ 111,907	$ 111,209
Net (Loss)		$ (151)	$ (338)	$ (161)	$ (594)