Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 02, 2017 | Jun. 30, 2016 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2016 | ||
Trading Symbol | hgbl | ||
Entity Registrant Name | Heritage Global Inc. | ||
Entity Central Index Key | 849,145 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 28,470,148 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Public Float | $ 5,000,000 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 2,530 | $ 2,777 |
Accounts receivable, net | 1,247 | 639 |
Inventory – equipment | 263 | 395 |
Other current assets | 393 | 453 |
Total current assets | 4,433 | 4,264 |
Inventory – real estate | 3,715 | |
Property and equipment, net | 156 | 110 |
Intangible assets, net | 4,122 | 4,382 |
Goodwill | 6,158 | 6,158 |
Other assets | 275 | 173 |
Total assets | 15,144 | 18,802 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 6,746 | 6,639 |
Current portion of related party debt | 664 | 1,721 |
Current portion of contingent consideration | 961 | 865 |
Other current liabilities | 199 | 131 |
Total current liabilities | 8,570 | 9,356 |
Non-current portion of related party debt | 348 | 0 |
Non-current portion of third party debt | 0 | 2,500 |
Non-current portion of contingent consideration | 1,772 | 2,592 |
Deferred tax liabilities | 960 | 960 |
Total liabilities | 11,650 | 15,408 |
Commitments and contingencies (Note 11) | ||
Stockholders’ equity: | ||
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 569 Class N shares at December 31, 2016 and December 31, 2015 | 6 | 6 |
Common stock, $0.01 par value, authorized 300,000,000 shares; issued and outstanding 28,470,148 shares at December 31, 2016 and 28,467,648 shares at December 31, 2015 | 285 | 285 |
Additional paid-in capital | 284,149 | 284,046 |
Accumulated deficit | (280,875) | (280,889) |
Accumulated other comprehensive loss | (71) | (54) |
Total stockholders’ equity | 3,494 | 3,394 |
Total liabilities and stockholders’ equity | $ 15,144 | $ 18,802 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 10 | $ 10 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 569 | 569 |
Preferred stock, shares outstanding | 569 | 569 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common Stock, Shares, Issued | 28,470,148 | 28,467,648 |
Common stock, shares outstanding | 28,470,148 | 28,467,648 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | ||
Services revenue | $ 15,371 | $ 13,485 |
Asset sales | 8,410 | 3,946 |
Total revenues | 23,781 | 17,431 |
Operating costs and expenses: | ||
Cost of services revenue | 4,187 | 3,125 |
Cost of asset sales | 7,131 | 3,412 |
Real estate inventory write-down | 0 | 2,748 |
Selling, general and administrative | 12,009 | 12,774 |
Depreciation and amortization | 316 | 575 |
Impairment of goodwill and intangible assets | 0 | 5,437 |
Total operating costs and expenses | 23,643 | 28,071 |
Earnings of equity method investments | 52 | 286 |
Operating income (loss) | 190 | (10,354) |
Other income | 119 | 69 |
Fair value adjustment of contingent consideration | (92) | 228 |
Interest expense | (182) | (349) |
Income (loss) before income tax expense | 35 | (10,406) |
Income tax expense | 21 | 15 |
Net income (loss) | $ 14 | $ (10,421) |
Weighted average common shares outstanding – basic | 28,400,886 | 28,252,219 |
Weighted average common shares outstanding – diluted | 28,434,832 | 28,252,219 |
Net income (loss) per share – basic | $ 0 | $ (0.37) |
Net income (loss) per share – diluted | $ 0 | $ (0.37) |
Comprehensive loss: | ||
Net income (loss) | $ 14 | $ (10,421) |
Other comprehensive loss: | ||
Foreign currency translation adjustment | (17) | (20) |
Comprehensive loss | $ (3) | $ (10,441) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Beginning Balance at Dec. 31, 2014 | $ 13,477 | $ 6 | $ 282 | $ 283,691 | $ (270,468) | $ (34) |
Balance (in shares) at Dec. 31, 2014 | 575 | 28,167,408 | ||||
Conversion of Class N preferred shares (Shares) | (6) | 240 | ||||
Issuance of common stock from restricted stock awards | $ 3 | (3) | ||||
Issuance of common stock from restricted stock awards (shares) | 300,000 | |||||
Issuance of common stock from stock options awards (shares) | 0 | |||||
Stock-based compensation expense | $ 358 | 358 | ||||
Net income (loss) | (10,421) | (10,421) | ||||
Foreign currency translation adjustments | (20) | (20) | ||||
Ending Balance at Dec. 31, 2015 | 3,394 | $ 6 | $ 285 | 284,046 | (280,889) | (54) |
Balance (in shares) at Dec. 31, 2015 | 569 | 28,467,648 | ||||
Conversion of Class N preferred shares (Shares) | 0 | |||||
Issuance of common stock from stock options awards | $ 4 | 4 | ||||
Issuance of common stock from stock options awards (shares) | 40,000 | 40,000 | ||||
Forfeiture of unvested common stock from restricted stock awards (shares) | (37,500) | |||||
Stock-based compensation expense | $ 99 | 99 | ||||
Net income (loss) | 14 | 14 | ||||
Foreign currency translation adjustments | (17) | (17) | ||||
Ending Balance at Dec. 31, 2016 | $ 3,494 | $ 6 | $ 285 | $ 284,149 | $ (280,875) | $ (71) |
Balance (in shares) at Dec. 31, 2016 | 569 | 28,470,148 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows provided by (used in) operating activities: | ||
Net income (loss) | $ 14 | $ (10,421) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Accrued management fees and other charges added to principal of related party debt | 0 | 290 |
Accrued interest added to principal of related party debt | 65 | 90 |
Fair value adjustment of contingent consideration | 92 | (228) |
Stock-based compensation expense | 99 | 358 |
Real estate inventory write-down | 0 | 2,748 |
Earnings of equity method investments | (49) | (291) |
Depreciation and amortization | 316 | 575 |
Impairment of goodwill and intangible assets | 0 | 5,437 |
Return on investment in equity method investments | 93 | 680 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (601) | 216 |
Inventory - real estate and equipment | 3,847 | (211) |
Other assets | (37) | 299 |
Accounts payable and accrued liabilities | 75 | (378) |
Net cash provided by (used in) operating activities | 3,914 | (836) |
Cash flows (used in) provided by investing activities: | ||
Cash distributions from equity method investments | 20 | 850 |
Proceeds from sale of equity method investments | 0 | 1,992 |
Investment in equity method investments | 0 | (143) |
Purchase of property and equipment | (99) | (9) |
Net cash (used in) provided by investing activities | (79) | 2,690 |
Cash flows used in financing activities: | ||
Proceeds from debt payable to related party | 1,099 | 775 |
Repayment of debt payable to related party | (1,873) | (2,419) |
Repayment of debt payable to third parties | (2,500) | (525) |
Payment of contingent consideration | (816) | (513) |
Proceeds from exercise of options to purchase common shares | 4 | 0 |
Net cash used in financing activities | (4,086) | (2,682) |
Net decrease in cash and cash equivalents | (251) | (828) |
Effect of exchange rate changes on cash and cash equivalents | 4 | (28) |
Cash and cash equivalents at beginning of year | 2,777 | 3,633 |
Cash and cash equivalents at end of year | 2,530 | 2,777 |
Supplemental cash flow information: | ||
Cash paid for income taxes | 30 | 75 |
Cash paid for interest | $ 187 | $ 178 |
Description of Business and Pri
Description of Business and Principles of Consolidation | 12 Months Ended |
Dec. 31, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business and Principles of Consolidation | Note 1 – Description of Business and Principles of Consolidation These consolidated financial statements include the accounts of Heritage Global Inc. together with its subsidiaries, including Heritage Global Partners, Inc. (“HGP”), Equity Partners HG LLC (“Equity Partners”), National Loan Exchange Inc. (“NLEX”) and Heritage Global LLC (“HG LLC”). These entities, collectively, are referred to as “HGI,” the “Company,” “we” or “our” in these consolidated financial statements. These consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), as outlined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and include the assets, liabilities, revenues, and expenses of all subsidiaries over which HGI exercises control. All significant intercompany accounts and transactions have been eliminated upon consolidation. The Company’s sole operating segment is its asset liquidation business, which began operations in 2009 with the establishment of HG LLC. The business was subsequently expanded by the acquisitions of Equity Partners, HGP and NLEX in 2011, 2012 and 2014, respectively. As a result, HGI is positioned to provide an array of value-added capital and financial asset solutions: auction and appraisal services, traditional asset disposition sales, and financial solutions for distressed businesses and properties. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Use of estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant estimates include the assessment of collectability of revenue recognized and the valuation of accounts receivable, inventory, investments, goodwill and intangible assets, liabilities, contingent consideration, deferred income tax assets and liabilities, and stock-based compensation. These estimates have the potential to significantly impact our consolidated financial statements, either because of the significance of the financial statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events that are continuous in nature. Foreign Currency The functional currency of foreign operations is deemed to be the local country’s currency. Assets and liabilities of operations outside of the United States are generally translated into U.S dollars, and the effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive loss. Reclassifications Certain prior year balances within the consolidated financial statements have been reclassified to conform to current year presentation. Nature of Business The Company earns revenue both from commission or fee-based services, and from the sale of distressed or surplus assets. With respect to the former, revenue is recognized as the services are provided. With respect to the latter, the majority of the asset sale transactions are conducted directly by the Company and the revenue is recognized in the period in which the asset is sold. Fee based revenue is reported as services revenue, and the associated direct costs are reported as cost of services revenue. At the balance sheet date, any unsold assets which the Company owns are reported as inventory, any outstanding accounts receivable are included in the Company’s accounts receivable, and any associated liabilities are included in the Company’s accrued liabilities. Equipment inventory is expected to be sold within a year and is therefore classified as a current asset; however, real estate inventory is generally classified as non-current due to the uncertainty in the timing of its sale. The remaining asset sale transactions involve the Company acting jointly with one or more additional purchasers, pursuant to a partnership, joint venture or limited liability company (“LLC”) agreement (collectively, “Joint Ventures”). These transactions are accounted for as equity method investments, and, accordingly, the Company’s proportionate share of the net income (loss) is reported as earnings of equity method investments. At each balance sheet date, the Company’s investments in these Joint Ventures are reported in the consolidated balance sheet as equity method investments. Although the Company generally expects to exit each of its investments in Joint Ventures in less than one year, they are classified on the balance sheet as non-current assets due to the uncertainties relating to the timing of resale of the underlying assets as a result of the Joint Venture relationship. The Company monitors the value of the Joint Ventures’ underlying assets and liabilities, and records a write down of its investments if the Company concludes that there has been a decline in the value of the net assets. As the activity of the Joint Ventures involves asset purchase/resale transactions, which is similar in nature to the Company’s other asset liquidation activities, the earnings (losses) of the Joint Ventures are included in the operating income/loss in the accompanying consolidated statements of operations. Liquidity The Company has incurred significant operating losses for the past several years and has partially relied on debt financing to fund its operations. As of December 31, 2016, the Company had an accumulated deficit of $280.9 million and a working capital deficit of $4.1 million. Until the Company achieves profitability, it will need to continue to partially rely on debt financing to fund its operations. Management expects that a combination of the Company’s asset liquidation operations and debt financing will generate cash flow sufficient to fund the Company’s operations through the one year period subsequent to the financial statement issuance date, and beyond. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents with financial institutions in the United States and Spain. These accounts may from time to time exceed federally insured limits. The Company has not experienced any losses on such accounts. Accounts receivable The Company’s accounts receivable primarily relate to the operations of its asset liquidation business. They generally consist of three major categories: (1) fees, commissions and retainers relating to appraisals and auctions, (2) receivables from asset sales, and (3) receivables from Joint Venture partners. The initial value of an account receivable corresponds to the fair value of the underlying goods or services. To date, a majority of the receivables have been classified as current and, due to their short-term nature, any decline in fair value would be due to issues involving collectability. At each financial statement date the collectability of each outstanding account receivable is evaluated, and an allowance is recorded if the book value exceeds the amount that is deemed collectable. See Note 8 for more detail regarding the Company’s accounts receivable. Inventory The Company’s inventory consists of assets acquired for resale, which are normally expected to be sold within a one-year operating cycle. The inventory is recorded at the lower of cost or net realizable value. During the year ended December 31, 2015, the Company recorded an inventory write-down charge of $2.7 million to reduce the carrying value of its real estate inventory to its net realizable value. No such similar charge was required during the year ended December 31, 2016, as the Company sold its real estate inventory for an amount greater than its carrying value. See Note 3 for further discussion of the Company’s inventory real estate inventory. Fair value of financial instruments The fair value of financial instruments is the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. At December 31, 2016 and 2015, the carrying values of the Company’s cash, accounts receivable, deposits, other assets, accounts payable and accrued liabilities approximate fair value given the short term nature of these instruments. The Company’s debt obligations approximate fair value as a result of the interest rate on the debt obligation approximating prevailing market rates. There are three levels within the fair value hierarchy: Level 1 – quoted prices in active markets for identical assets or liabilities; Level 2 – significant other observable inputs; and Level 3 – significant unobservable inputs. The Company employs fair value accounting for only the contingent consideration recorded as part of the acquisition of NLEX. The fair value of the Company’s contingent consideration was determined using a discounted cash flow analysis, which is based on significant inputs that are not observable in the market and therefore fall within Level 3. See Note 10 for more discussion of this contingent consideration. Business combinations Acquisitions are accounted for under FASB Accounting Standards Codification Topic 805, Business Combinations Intangible assets Intangible assets are recorded at fair value upon acquisition. Those with an estimated useful life are amortized, and those with an indefinite useful life are unamortized. Subsequent to acquisition, the Company monitors events and changes in circumstances that require an assessment of intangible asset recoverability. Indefinite-lived intangible assets are assessed at least annually to determine both if they remain indefinite-lived and if they are impaired. The Company assesses whether or not there have been any events or changes in circumstances that suggest the value of the asset may not be recoverable. Amortized intangible assets are not tested annually, but are assessed when events and changes in circumstances suggest the assets may be impaired. If an assessment determines that the carrying amount of any intangible asset is not recoverable, an impairment loss is recognized in the statement of operations, determined by comparing the carrying amount of the asset to its fair value. All of the Company’s identifiable intangible assets at December 31, 2016 have been acquired as part of the acquisitions of HGP in 2012 and NLEX in 2014, and are discussed in more detail in Note 7. During 2015 the Company recorded an impairment charge of $2.7 million related to the customer network acquired as part of the acquisition of HGP. No impairment charges were necessary during 2016. See Note 7 for more detail regarding the Company’s identifiable intangible assets. Goodwill Goodwill, which results from the difference between the purchase price and the fair value of net identifiable tangible and intangible assets acquired in a business combination, is not amortized but, in accordance with GAAP, is tested at least annually for impairment. The Company performs its annual impairment test as of October 1. Testing goodwill is a two-step process, in which the carrying amount of the reporting unit associated with the goodwill is first compared to the reporting unit’s estimated fair value. If the carrying amount of the reporting unit exceeds its estimated fair value, the fair values of the reporting unit’s assets and liabilities are analyzed to determine whether the goodwill of the reporting unit has been impaired. An impairment loss is recognized to the extent that the Company’s recorded goodwill exceeds its implied fair value as determined by this two-step process. FASB Accounting Standards Update 2011-08, Testing Goodwill for Impairment In testing goodwill, the Company initially uses a qualitative approach and analyzes relevant factors to determine if events and circumstances have affected the value of the goodwill. If the result of this qualitative analysis indicates that the value has been impaired, the Company then applies a quantitative approach to calculate the difference between the goodwill’s recorded value and its fair value. An impairment loss is recognized to the extent that the recorded value exceeds its fair value. All of the Company’s goodwill relates to its acquisitions of Equity Partners in 2011, HGP in 2012 and NLEX in 2014, and is discussed in more detail in Note 7. During 2015 the Company recorded an impairment charge of $2.7 million related to the goodwill from its acquisition of HGP. No impairment charges were necessary during 2016. Deferred income taxes The Company recognizes deferred tax assets and liabilities for temporary differences between the tax bases of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted tax rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. In 2014, as a result of incurring losses in previous years, the Company recorded a valuation allowance against all of its net deferred tax assets. The Company continues to carry the full valuation allowance as of December 31, 2016. Contingent consideration At December 31, 2016 the Company’s contingent consideration consists of the estimated fair value of remaining payments pursuant to an earn-out provision payable to the former owner and current president of NLEX (“David Ludwig”) that was part of the consideration for the acquisition of NLEX in 2014. The estimated fair value assigned to the contingent consideration at the acquisition date was determined using a discounted cash flow analysis. Its fair value is assessed quarterly, and any adjustments, together with the accretion of the present value discount, are reported as a fair value adjustment on the Company’s consolidated statement of operations. In the fourth quarter of 2016 the Company agreed in principle with David Ludwig to extend the earn-out provision. The extension of the earn-out is subject to ratification by the Board of Directors. As a result, and based on management’s best estimate as of December 31, 2016 that the earn-out will be extended by at least one year, the Company adjusted the earn-out liability in the fourth quarter of 2016 by approximately $1.0 million to reflect an increase in the expected payments to be made to David Ludwig. See Note 10 to the consolidated financial statements for more discussion of the contingent consideration. Liabilities and contingencies The Company is involved from time to time in various legal matters arising out of its operations in the normal course of business. On a case by case basis, the Company evaluates the likelihood of possible outcomes for this litigation. Based on this evaluation, the Company determines whether a loss accrual is appropriate. If the likelihood of a negative outcome is probable, and the amount can be estimated, the Company accounts for the estimated loss in the current period. Revenue recognition Services revenue generally consists of commissions and fees from providing auction services, appraisals, brokering of sales transactions and providing merger and acquisition advisory services. Revenue is recognized when persuasive evidence of an arrangement exists, the selling price is fixed and determinable, goods or services have been provided, and collectability is reasonably assured. For asset sales revenue is recognized in the period in which the asset is sold, the buyer has assumed the risks and awards of ownership, the Company has no continuing substantive obligations and collectability is reasonably assured. We evaluate revenue from asset liquidation transactions in accordance with the accounting guidance to determine whether to report such revenue on a gross or net basis. We have determined that we act as an agent for our fee based asset liquidation transactions and therefore we report the revenue from transactions in which we act as an agent on a net basis. The Company also earns asset liquidation income through asset liquidation transactions that involve the Company acting jointly with one or more additional purchasers, pursuant to a partnership, joint venture or limited liability company (“LLC”) agreement (collectively, “Joint Ventures”). For these transactions, the Company does not record asset liquidation revenue or expense. Instead, the Company’s proportionate share of the net income (loss) is reported as earnings of equity method investments. In general, the Joint Ventures apply the same revenue recognition and other accounting policies as the Company. Cost of services revenue and asset sales Cost of services revenue generally includes the direct costs associated with generating commissions and fees from the Company’s auction and appraisal services, merger and acquisition advisory services, and brokering of charged-off receivable portfolios. The Company recognizes these expenses in the period in which the revenue they relate to is recorded. Cost of asset sales generally includes the cost of purchased inventory and the related direct costs of selling inventory. The Company recognizes these expenses in the period in which title to the inventory passes to the buyer, and the buyer assumes the risk and reward of the inventory. Stock-based compensation The Company’s stock-based compensation is primarily in the form of options to purchase common shares. The grant date fair value of stock options is calculated using the Black-Scholes option pricing model. The determination of the fair value of the Company’s stock options is based on a variety of factors including, but not limited to, the price of the Company’s common stock, the expected volatility of the stock price over the expected life of the award, and expected exercise behavior. The grant date fair value of the awards is subsequently expensed over the vesting period. The provisions of the Company’s stock-based compensation plans do not require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the option awards as equity. See Note 15 for further discussion of the Company’s stock-based compensation. Advertising The Company expenses advertising costs in the period in which they are incurred. Advertising and promotion expense included in selling, general and administrative expense for both the years ended December 31, 2016 and 2015, was $0.4 million. Recently adopted accounting pronouncements In 2014, the FASB issued Accounting Standards update 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern In 2015, the FASB issued Accounting Standards update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items In 2015, the FASB issued Accounting Standards update 2015-02, Amendments to the Consolidation Analysis In 2015, the FASB issued Accounting Standards update 2015-03, Simplifying the Presentation of Debt Issuance Costs In 2015, the FASB issued Accounting Standards update 2015-15, Interest – Imputation of Interest In 2015, the FASB issued Accounting Standards update 2015-16, Simplifying the Accounting for Measurement-Period Adjustments Future accounting pronouncements In 2014, the FASB issued Accounting Standards update 2014-09, Revenue from Contracts with Customers In 2015, the FASB issued Accounting Standards update 2015-17, Balance Sheet Classification of Deferred In 2016, the FASB issued Accounting Standards update 2016-02, Leases In 2016, the FASB issued Accounting Standards update 2016-07, Investments – Equity Method and Joint Ventures In 2016, the FASB issued Accounting Standards update 2016-08, Revenue from Contracts with Customers In 2016, the FASB issued Accounting Standards update 2016-09, Compensation – Stock Compensation In 2016, the FASB issued Accounting Standards update 2016-10, Revenue from Contracts with Customers In 2016, the FASB issued Accounting Standards update 2016-12, Revenue from Contracts with Customers In 2016, the FASB issued Accounting Standards update 2016-15, Statement of Cash Flows In 2017, the FASB issued Accounting Standards update 2017-01, Business Combinations In 2017, the FASB issued Accounting Standards update 2017-04, Intangibles – Goodwill and Other |
Real Estate Inventory
Real Estate Inventory | 12 Months Ended |
Dec. 31, 2016 | |
Real Estate [Abstract] | |
Real Estate Inventory | Note 3 – Real Estate Inventory In October 2015, the Company executed a listing agreement with a real estate broker to list its real estate inventory for sale at a list price of $4.9 million. The carrying value of the inventory had been $6.5 million. The Company determined that the net realizable value for the inventory, based on the most probable selling price net of costs to complete the sale, was $3.7 million. As such, the Company recorded an inventory write-down charge during 2015 of $2.7 million, reducing the carrying cost of the inventory to $3.7 million. In the first quarter of 2016, the Company entered into a purchase and sale agreement with International Auto Processing Inc. (“IAP”) to sell the Company’s real estate inventory for $4.1 million. IAP subsequently assigned the purchase and sale agreement to an affiliate, International Investments and Infrastructure, LLC (“III”). Concurrently, the Company entered into a five-year lease agreement with an affiliate of III to lease the building during the escrow period, which would terminate at the close of escrow. The purchase agreement gave III the right to terminate its obligation to consummate the sale for any reason before June 9, 2016, but in the event the sale was not consummated, the lease agreement would have continued through the end of the lease term. Annual rental payments under the lease were $0.7 million, and the lessee was responsible for all operating costs associated with the property. During the year ended December 31, 2016, the Company earned rental income of $0.3 million, which is included within services revenue in the consolidated statement of operations. No rental income was earned during the year ended December 31, 2015. In the third quarter of 2016, the Company completed the sale of its real estate inventory and, in accordance with the purchase and sale agreement, terminated the previously existing lease agreement between the Company and an affiliate of III. The Company sold the real estate inventory for $4.1 million and, after recognizing carrying costs of $3.7 million and closing costs of $0.3 million, realized a gross profit of $0.1 million. |
Equity Method Investments
Equity Method Investments | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investments And Joint Ventures [Abstract] | |
Equity Method Investments | Note 4 – Equity Method Investments The table below details the Company’s share of revenues and operating income earned from the Joint Ventures in which it was invested during the years ended December 31, 2016 and 2015 (in thousands): 2016 2015 Revenues $ 198 $ 1,007 Operating income $ 52 $ 286 The table below details the summarized components of assets and liabilities, as at December 31, 2016 and 2015, attributable to HGI from the Joint Ventures in which it was invested at those dates (in thousands): 2016 2015 Current assets $ 57 $ 194 Current liabilities $ 106 $ 291 The table below details the classification of the earnings of equity method investments within the consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2016 and 2015 (in thousands): 2016 2015 Earnings of equity method investments included within operating income (loss) $ 52 $ 286 (Losses) earnings of equity method investments included within other income (3 ) 5 Total earnings of equity method investments $ 49 $ 291 |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Note 5 – Earnings per Share The Company is required, in periods in which it has net income, to calculate basic earnings per share (“basic EPS”) using the two-class method. The two-class method is required because the Company’s Class N preferred shares, each of which is convertible to 40 common shares, have the right to receive dividends or dividend equivalents should the Company declare dividends on its common stock. Under the two-class method, earnings for the period are allocated on a pro-rata basis to the common and preferred stockholders. The weighted-average number of common and preferred shares outstanding during the period is then used to calculate basic EPS for each class of shares. In periods in which the Company has a net loss, basic loss per share is calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The two-class method is not used in periods in which the Company has a net loss because the preferred stock does not participate in losses. Stock options and other potential common shares are included in the calculation of diluted earnings per share (“diluted EPS”), since they are assumed to be exercised or converted, except when their effect would be anti-dilutive. The table below shows the calculation of the shares used in computing diluted EPS: For the Year Ended December 31, Weighted Average Shares Calculation: 2016 2015 Basic weighted average shares outstanding 28,400,886 28,252,219 Treasury stock effect of common stock options and restricted stock awards 33,946 — Diluted weighted average common shares outstanding 28,434,832 28,252,219 There were 5.1 million potential common shares not included in the computation of diluted EPS because they would have been anti-dilutive for the year ended December 31, 2016. There were 2.2 million potential common shares not included for the year ended December 31, 2015 as the Company generated a net loss, and therefore basic EPS was the same as diluted EPS during 2015. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | Note 6 – Property and Equipment Property and equipment are recorded at historical cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives on a straight-line basis. Leasehold improvements are amortized over the useful life of the asset or the lease term, whichever is shorter. Estimated service lives are five years for furniture, fixtures and office equipment and three years for software and technology assets. Expenditures for repairs and maintenance not considered to substantially lengthen the life of the asset or increase capacity or efficiency are charged to expense as incurred. The following summarizes the components of the Company’s property and equipment (in thousands): December 31, 2016 December 31, 2015 Furniture, fixtures and office equipment $ 144 $ 95 Software and technology assets 254 245 398 340 Accumulated depreciation (242 ) (230 ) Property and equipment, net $ 156 $ 110 Depreciation expense related to property and equipment was $56,000 and $49,000 for the years ended December 31, 2016 and 2015, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Note 7 – Intangible Assets and Goodwill Intangible assets The details of identifiable intangible assets as of December 31, 2016 and 2015, are shown below (in thousands except for lives): Amortized Intangible Assets Original Life (years) Remaining Life (years) Carrying Value December 31 2015 Amortization Impairment Carrying Value December 2016 Customer Network (HGP) 12 7.2 $ 178 $ (20 ) — $ 158 Trade Name (HGP) 14 9.2 1,059 (106 ) — 953 Customer Relationships (NLEX) 7.6 5.1 660 (110 ) — 550 Non-Compete Agreement (NLEX) 2 0 15 (15 ) — — Website (NLEX) 5 2.4 33 (9 ) — 24 Total 1,945 (260 ) — 1,685 Unamortized Intangible Assets Trade Name (NLEX) N/A N/A 2,437 — — 2,437 Total $ 4,382 $ (260 ) $ — $ 4,122 Amortized Intangible Assets Original Life (years) Remaining Life (years) Carrying Value December 31 2014 Amortization Impairment Carrying Value December 31 2015 Customer Network (HGP) 12 8.2 $ 3,193 $ (266 ) $ (2,749 ) $ 178 Trade Name (HGP) 14 10.2 1,165 (106 ) — 1,059 Customer Relationships (NLEX) 7.6 6.1 770 (110 ) — 660 Non-Compete Agreement (NLEX) 2 0.4 50 (35 ) — 15 Website (NLEX) 5 3.4 42 (9 ) — 33 Total 5,220 (526 ) (2,749 ) 1,945 Unamortized Intangible Assets Trade Name (NLEX) N/A N/A 2,437 — — 2,437 Total $ 7,657 $ (526 ) $ (2,749 ) $ 4,382 Amortization expense during each of 2016 and 2015 was $0.3 million and $0.5 million, respectively. No significant residual value is estimated for these intangible assets. As part of its annual impairment test in 2015, the Company first performed a qualitative assessment of its intangible assets to determine if the two-step impairment test was required. The results of the qualitative analysis assessment of the HGP customer network and tradename indicated that, due to the sustained losses of HGP, the Company would be required to perform the two-step impairment test. The Company tested the recoverability of each asset using an undiscounted cash flow analysis. Based on the results of the test, the Company concluded that the carrying cost of the HGP tradename was recoverable, and therefore no further testing was warranted, however the carrying cost of the HGP customer network was not recoverable, and therefore the Company proceeded to step two of the impairment test. Under step two of the impairment test, the Company used a discounted cash flow analysis to determine the fair value of the customer network, which was then compared against the asset’s carrying cost to determine if an impairment charge is warranted. This step of the assessment indicated that the fair value of the customer network was less than its carrying value, and as a result, the Company recorded a non-cash impairment charge of $2.7 million in the fourth quarter of 2015, reducing the carrying amount of the HGP customer network to $0.2 million. The Company performed its annual impairment test for the year ended December 31, 2016, in the fourth quarter, and determined that no impairment charges were necessary. The estimated amortization expense during the next five fiscal years and thereafter is shown below: Year Amount 2017 $ 245 2018 245 2019 240 2020 236 2021 236 Thereafter 483 Total $ 1,685 Goodwill As part of its acquisitions, the Company recognized goodwill of $0.6 million related to Equity Partners in 2011, $4.7 million related to HGP in 2012, and $3.5 million related to NLEX in 2014. A summary of the goodwill activity for 2016 and 2015 is shown below (in thousands): Acquisition December 31, 2014 Impairment December 31, 2015 Impairment December 31, 2016 Equity Partners $ 573 $ — $ 573 $ — $ 573 HGP 4,728 (2,688 ) 2,040 — 2,040 NLEX 3,545 — 3,545 — 3,545 Total goodwill $ 8,846 $ (2,688 ) $ 6,158 $ — $ 6,158 As part of its annual impairment test in 2015, the Company first performed a qualitative assessment of its reporting units to determine if the two-step impairment test was required. The results of the qualitative assessment of the HGP reporting unit indicated that due to its sustained losses the Company would be required to perform the two-step impairment test. The Company performed the first step of the impairment test by comparing the fair value of the reporting unit to its carrying value. The Company determined the fair value of the reporting unit using a combination of valuation techniques, including multiples from comparable companies and discounted cash flows, due to the lack of quoted market prices for the reporting unit. The carrying value of the reporting unit exceeded its fair value, and the Company proceeded to step two of the impairment test. Under step two of the impairment test the Company performed a hypothetical purchase price allocation as if the reporting unit was being acquired in a business combination, and estimated the fair value of the identifiable assets and liabilities of the reporting unit. This determination required the Company to make estimates and assumptions regarding the fair value of its recorded assets and liabilities. This step of the assessment indicated that the implied fair value of the Company’s goodwill for HGP was $2.0 million. As a result, the Company recorded a non-cash impairment charge of $2.7 million in the fourth quarter of 2015, reducing the carrying amount of its HGP goodwill to $2.0 million. The Company performed its annual impairment test for the year ended December 31, 2016, in the fourth quarter, and determined that no impairment charges were necessary. |
Accounts Receivable and Account
Accounts Receivable and Accounts Payable | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Receivable And Accounts Payable [Abstract] | |
Accounts Receivable and Accounts Payable | Note 8 – Accounts Receivable and Accounts Payable Accounts receivable As described in Note 2, the Company’s accounts receivable are primarily related to the operations of its asset liquidation business. With respect to auction proceeds and asset dispositions, including NLEX’s accounts receivable brokerage transactions, the assets are not released to the buyer until payment has been received. The Company, therefore, is not exposed to significant collectability risk relating to these receivables. Given this experience, together with the ongoing business relationships between the Company and its joint venture partners, the Company has not historically required a formal credit quality assessment in connection with these activities. The Company has not experienced any significant collectability issues with its accounts receivable. As the Company’s asset liquidation business expands, more comprehensive credit assessments may be required. The Company’s allowance for doubtful accounts was $36,000 and $44,000 as of December 31, 2016 and 2015, respectively. Accounts payable and accrued liabilities Accounts payable and accrued liabilities consisted of the following at December 31, 2016 and 2015 (in thousands): 2016 2015 Due to auction clients $ 3,152 $ 3,457 Sales and other taxes 935 1,421 Remuneration and benefits 637 645 Accounting, auditing and tax consulting 151 128 Customer deposits — 108 Due to Joint Venture partners 1,371 69 Asset liquidation expenses 257 246 Interest expense — 76 Other 243 489 Total accounts payable and accrued liabilities $ 6,746 $ 6,639 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Note 9 – Debt Outstanding debt at December 31, 2016 and 2015 is summarized as follows (in thousands): 2016 2015 Current: Related party debt $ 664 $ 1,721 Non-current: Related party debt 348 — Third party debt — 2,500 Total debt $ 1,012 $ 4,221 The Company entered into a loan with an unrelated third party (the “Third Party Debt”) during 2014 for a principal amount of $2.5 million. The loan bore interest at 6% and had an original maturity date of January 15, 2015. In December 2014, the maturity date was extended to January 15, 2016 at the same interest rate and in early 2016 the maturity date was further extended to January 15, 2017 at the same interest rate. In the third quarter of 2016 the Company repaid $2.5 million of outstanding principal, plus accrued interest, on the Third Party Debt, and terminated the loan agreement with the third party. The Company’s related party debt (the “Street Capital Loan”) was originally entered into in 2003 and accrued interest at 10% per annum compounded quarterly from the date funds were advanced. The Street Capital Loan was originally secured by the assets of the Company. In 2014, following Street Capital’s distribution of its ownership interest in HGI to Street Capital shareholders as a dividend in kind, the unpaid balance of the Street Capital Loan began accruing interest at a rate per annum equal to the lesser of the Wall St. Journal (“WSJ”) prime rate + 2.0%, or the maximum rate allowable by law. As of December 31, 2015, the interest rate on the loan was 5.50%. In the third quarter of 2016, following an amendment to the loan agreement, the Street Capital Loan began accruing interest at a rate per annum equal to the WSJ prime rate + 1.0%. The Company also agreed to a monthly payment schedule to begin in the third quarter of 2016, and Street Capital removed the security from the Company’s assets. As of December 31, 2016, the interest rate on the loan was 4.75%. S In the first quarter of 2016, the Company entered into a related party loan with a trust controlled by certain executive officers of the Company. The Company received proceeds of $0.4 million. The loan accrued interest at 10% per annum and was payable within 90 days of the loan date. The Company repaid the loan plus accrued interest of $8,000 in March 2016. In the third quarter of 2016, the Company entered into a related party loan with both an entity owned by certain executive officers of the Company (the “Entity”) and the Company’s Chief Executive Officer. The Company received proceeds of $0.7 million. The loan accrued interest at 10% per annum and was payable within 180 days of the loan date. The Company repaid the loan plus accrued interest of $19,000 as of December 31, 2016. In the fourth quarter of 2016, the Company entered into a related party secured promissory note with the Entity for a revolving line of credit (the “Line of Credit”). Under the terms of the Line of Credit, the Company received a revolving line of credit with an aggregate borrowing capacity of $1.5 million. Interest under the Line of Credit is charged at a variable rate. Aggregate loans under the Line of Credit up to $1.0 million incur interest at a variable rate per annum based on the rate charged to the Entity by its bank, plus 2.0%. Amounts outstanding at any time in excess of $1.0 million incur interest at a rate of 8.0% per annum. The Company is required to pay the Entity an annual commitment fee of $15,000, payable on a monthly basis, and due regardless of amounts drawn against the line. Further, the Entity is eligible to participate in the net profits and net losses of certain industrial auction principal and guarantee transactions entered into by the Company on or after January 1, 2017, and consummated on or prior to the maturity date. Principal transactions are those in which the Company purchases assets for resale. Guarantee transactions are those in which the Company guarantees its client a minimum amount of proceeds from the auction. The Line of Credit matures at the earlier of (i) three years from the date of the Agreement, (ii) the termination of the Entity’s line of credit with its bank, or (iii) forty-five (45) days following the date the Company closes a new credit facility with a financial institution As of December 31, 2016, the Company has not drawn on the Line of Credit. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 10 – Fair Value Measurements In accordance with the authoritative guidance for financial assets and liabilities measured at fair value on a recurring basis, the Company prioritizes the inputs used to measure fair value from market-based assumptions to entity specific assumptions: • Level 1 – Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. • Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 – Inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instruments valuation. As of December 31, 2016 and 2015, the Company had no Level 1 or Level 2 assets or liabilities measured at fair value. As of December 31, 2016 and 2015, the Company’s contingent consideration from the acquisition of NLEX in 2014 of $2.7 million and $3.5 million respectively, was the only liability measured at fair value on a recurring basis, and was classified as Level 3 within the fair value hierarchy. The fair value of the Company’s contingent consideration was determined using a discounted cash flow analysis, which is based on significant inputs that are not observable in the market. The following tables present the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015 (in thousands): Fair Value as of December 31, 2016 Level 1 Level 2 Level 3 Total Liabilities Contingent consideration $ — $ — $ 2,733 $ 2,733 Fair Value as of December 31, 2015 Level 1 Level 2 Level 3 Total Liabilities Contingent consideration $ — $ — $ 3,457 $ 3,457 When valuing its Level 3 liabilities, the Company gives consideration to operating results, financial condition, economic and/or market events, and other pertinent information that would impact its estimate of the expected contingent consideration payment. The valuation of the liability is primarily based on management’s estimate of the Net Profits of NLEX (as defined in the NLEX stock purchase agreement). Given the short term nature of the contingent consideration periods, changes in the discount rate are not expected to have a material impact on the fair value of the liability. The following table summarizes the changes in the fair value of the contingent consideration liability during 2015 and 2016 (in thousands): Balance at December 31, 2014 $ 4,198 Payment of contingent consideration (513 ) Fair value adjustment of contingent consideration (228 ) Balance at December 31, 2015 3,457 Payment of contingent consideration (816 ) Fair value adjustment of contingent consideration 92 Balance at December 31, 2016 $ 2,733 The fair value adjustment for the period ended December 31, 2016 includes the Company’s assumption that it will extend the earn-out period by at least one year (see Note 2 for further detail). The Company had no assets measured at fair value on a non-recurring basis as of December 31, 2016. The Company’s assets measured at fair value on a non-recurring basis as of December 31, 2015 consisted of its goodwill and intangible assets subject to the impairment charges recorded during the fourth quarter of 2015. Refer to Note 7 for further detail on the fair value techniques used by the Company in assessing the fair value of the goodwill and intangible assets. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 – Commitments and Contingencies At December 31, 2016, HGI’s lease commitments related to its offices in California, Illinois, Maryland, and Arizona, an automobile lease, and a copier lease. The California office leases expire in January 2020 and April 2021; the Illinois office lease expires in June 2018, and the Arizona office lease expires in August 2019. The automobile lease expires in June 2017, and the copier lease expires in October 2018. The annual lease obligations are as shown below (in thousands): 2017 $ 543 2018 489 2019 456 2020 340 2021 113 Total $ 1,941 At December 31, 2016, HGI’s future debt obligations are related to the Street Capital Loan. Amounts owed under the loan are $0.7 million in 2017, and $0.3 million plus accrued interest in 2018. In the normal course of its business, HGI may be subject to contingent liabilities with respect to assets sold either directly or through Joint Ventures. At December 31, 2016 HGI does not expect any potential contingent liabilities, individually or in the aggregate, to have a material adverse effect on its assets or results of operations. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 12 – Income Taxes In 2014 the Company recorded a valuation allowance against its deferred tax assets, reducing the carrying value of those assets to zero, as a result of historical losses. At December 31, 2015 and 2016, the Company continued to carry a full valuation allowance against its deferred tax assets. The following table summarizes the change in the valuation allowance during 2015 and 2016 (in thousands): Balance at December 31, 2014 $ 28,842 Change during 2015 3,080 Balance at December 31, 2015 31,922 Change during 2016 (264 ) Balance at December 31, 2016 $ 31,658 At December 31, 2016 the Company has aggregate tax net operating loss carry forwards of approximately $74.5 million ($59.3 million of unrestricted net operating tax losses and approximately $15.2 million of restricted net operating tax losses) and unused minimum tax credit carry forwards of $0.5 million. Substantially all of the net operating loss carryforwards and unused minimum tax credit carry forwards expire between 2024 and 2035. The reported tax expense varies from the amount that would be provided by applying the statutory U.S. Federal income tax rate to the income (loss) before income tax expense for the following reasons in each of the years ending December 31 (in thousands): 2016 2015 Expected federal statutory tax benefit $ 14 $ (4,130 ) Increase (reduction) in taxes resulting from: State income taxes recoverable 21 17 Non-deductible expenses (permanent differences) 45 1,162 Change in valuation allowance (264 ) 3,080 Other 205 (114 ) Income tax expense $ 21 $ 15 The Company’s utilization of restricted net operating tax loss carry forwards against future income for tax purposes is restricted pursuant to the “change in ownership” rules in Section 382 of the Internal Revenue Code. These rules, in general, provide that an ownership change occurs when the percentage shareholdings of 5% direct or indirect stockholders of a loss corporation have, in aggregate, increased by more than 50 percentage points during the immediately preceding three years. Restrictions in net operating loss carry forwards occurred in 2001 as a result of the acquisition of the Company by Street Capital. Further restrictions may have occurred as a result of subsequent changes in the share ownership and capital structure of the Company and Street Capital and disposition of business interests by the Company. Pursuant to Section 382 of the Internal Revenue Code, the annual usage of the Company’s net operating loss carry forwards was limited to approximately $2.5 million per annum until 2008 and $1.7 million per annum thereafter. There is no certainty that the application of these “change in ownership” rules may not recur, resulting in further restrictions on the Company’s income tax loss carry forwards existing at a particular time. In addition, further restrictions, reductions in, or expiration of net operating loss and net capital loss carry forwards may occur through future merger, acquisition and/or disposition transactions or failure to continue a significant level of business activities. Any such additional limitations could require the Company to pay income taxes on its future earnings and record an income tax expense to the extent of such liability, despite the existence of such tax loss carry forwards. All loss taxation years remain open for audit pending the application of the respective tax losses against income in a subsequent taxation year. In general, the statute of limitations expires three years from the date that a company files a tax return applying prior year tax loss carry forwards against income for tax purposes in the later year. The 2013 through 2015 taxation years remain open for audit. The Company is subject to state income tax in multiple jurisdictions. In most states, the Company does not have tax loss carry forwards available to shield income attributable to a particular state from being subject to tax in that particular state. The components of the deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows in (thousands): 2016 2015 Net operating loss carry forwards $ 29,909 $ 30,073 Stock based compensation 1,070 1,019 Write-down of real estate inventory 1,569 1,550 Trade names (1,363 ) (1,388 ) Customer relationships (293 ) (351 ) Fair value adjustment of contingent consideration (55 ) 91 Other (139 ) (32 ) Gross deferred tax assets 30,698 30,962 Less: valuation allowance (31,658 ) (31,922 ) Deferred tax assets (liabilities), net of valuation allowance $ (960 ) $ (960 ) As a result of the acquisition of NLEX in 2014, and the recognition of an indefinite-lived intangible asset in the amount of $2.4 million related to the NLEX trade name, the Company is required to record a non-current deferred tax liability in the amount of $1.0 million. Uncertain Tax Positions The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. Upon adoption of this principle in 2007, the Company derecognized certain tax positions that, upon examination, more likely than not would not have been sustained as a recognized tax benefit. As a result of derecognizing uncertain tax positions, the Company has recorded a cumulative reduction in its deferred tax assets of approximately $12.0 million associated with prior years’ tax benefits, which are not expected to be available primarily due to change of control usage restrictions, and a reduction in the rate of the tax benefit associated with all of its tax attributes. Due to the Company’s historic policy of applying a valuation allowance against its deferred tax assets, the effect of the above was an offsetting reduction in the Company’s valuation allowance. Accordingly, the above reduction had no net impact on the Company’s financial position, operations or cash flow. As of December 31, 2016, the unrecognized tax benefit has been determined to be $12.1 million, which is unchanged from the balance as of December 31, 2015. In the unlikely event that these tax benefits are recognized in the future, the amount recognized at that time should result in a reduction in the Company’s effective tax rate. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. Because the Company has tax loss carry forwards in excess of the unrecognized tax benefits, the Company did not accrue for interest and penalties related to unrecognized tax benefits either upon the initial derecognition of uncertain tax positions or in the current period. It is possible that the total amount of the Company’s unrecognized tax benefits will significantly increase or decrease within the next 12 months. These changes may be the result of future audits, the application of “change in ownership” rules leading to further restrictions in tax losses arising from changes in the capital structure of the Company, reductions in available tax loss carry forwards through future merger, acquisition and/or disposition transactions, failure to continue a significant level of business activities, or other circumstances not known to management at this time. At this time, an estimate of the range of reasonably possible outcomes cannot be made. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13 – Related Party Transactions Debt with Street Capital Until the second quarter of 2014, as discussed below, Street Capital was the Company’s majority shareholder. Street Capital remained a related party following the distribution of its investment in HGI to Street Capital shareholders as a result of the Services Agreement and the relationship of the Company’s Chairman of the Board discussed below. The Services Agreement terminated on August 31, 2015, however subsequent to its termination Street Capital remained a related party as a result of the Street Capital Loan as well as the Company’s Chairman of the Board, who is also a significant shareholder of the Company, is also the chairman of the board of Street Capital. At December 31, 2016 and 2015, the Company reported amounts owed to Street Capital of $1.0 million and $1.7 million, respectively, as related party debt (see Note 9). Total interest of $0.5 million has been accrued to the principal balance of the debt through December 31, 2016, and remains unpaid. Street Beginning in 2004, HGI and Street Capital entered into successive annual management services agreements (collectively, the “Agreement”). Under the terms of the Agreement, HGI agreed to pay Street Capital for ongoing services provided to HGI by Street Capital personnel. These services included preparation of the Company’s financial statements and regulatory filings, taxation matters, stock-based compensation administration, Board administration, patent portfolio administration and litigation matters. In 2013, Street Capital announced its plan to dispose of its interest in HGI, and on March 20, 2014, Street Capital declared a dividend in kind, consisting of Street Capital’s distribution of its majority interest in HGI to Street Capital shareholders. The dividend was paid on April 30, 2014 to shareholders of record as of April 1, 2014. Following this disposition, the Company and Street Capital entered into a replacement management services agreement (the “Services Agreement”). Under the terms of the Services Agreement, Street Capital remained as external manager and continued to provide the same services, at similar rates, until the Services Agreement was terminated effective August 31, 2015, as described more fully in the Current Report on Form 8-K filed with the SEC on September 1, 2015. The amounts charged by Street Capital, which are included in selling, general and administrative expenses and have been added to the Street Capital Loan balance, are detailed below (in thousands): Year ended December 31, 2016 2015 Management fees $ — $ 240 Other charges — 50 Total $ — $ 290 Transactions with Other Related Parties Through April 2016, as part of the operations of HGP the Company leased office space in Foster City, CA that is owned by an entity jointly controlled by Ross Dove and Kirk Dove, the Company’s Chief Executive Officer and President and Chief Operating Officer, respectively. The Company terminated the lease agreement in the second quarter of 2016. The total amount paid to the related party for the lease is outlined in the table below. Both Ross Dove and Kirk Dove shared equally in the payments in both 2016 and 2015. As part of the operations of NLEX, the Company leases office space in Edwardsville, IL that is owned by the President of NLEX, David Ludwig. The total amount paid to the related party is outlined in the table below. All of the payments were made to David Ludwig. The lease amounts paid by the Company to the related parties, which are included in selling, general and administrative expenses during the year ended December 31, 2016 and 2015, are detailed below (in thousands): Year ended December 31, Leased premises location 2016 2015 Foster City, CA $ 76 $ 228 Edwardsville, IL 99 97 Total $ 175 $ 325 In 2016 the Company entered into multiple related party loan agreements with certain executive officers of the Company. These related party loans are described more fully in Note 9 to the consolidated financial statements. Both Ross Dove and Kirk Dove, who were parties to the related party loans, shared equally in all payments made by the Company to satisfy obligations under the loan agreements. During 2016 the Company paid David Ludwig $0.8 million for his second earn-out provision payment. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Legal Proceedings | Note 14 – Legal Proceedings The Company is involved in various other legal matters arising out of its operations in the normal course of business, none of which are expected, individually or in the aggregate, to have a material adverse effect on the Company. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 15 – Stockholders’ Equity Capital Stock The Company’s authorized capital stock consists of 300,000,000 common shares with a par value of $0.01 per share and 10,000,000 preferred shares with a par value of $10.00 per share. During 2016 the Company issued 40,000 shares of common stock pursuant to the exercise of stock options. There were no options exercised during 2015. Each Class N preferred share has a voting entitlement equal to 40 common shares, votes with the common stock on an as-converted basis and is senior to all other preferred stock of the Company. Dividends, if any, will be paid on an as-converted basis equal to common stock dividends. The conversion value of each Class N preferred share is $1,000, and each share is convertible to 40 common shares at the rate of $25.00 per common share. The Class N preferred shareholders are entitled to liquidation preference over common shareholders equivalent to $1,000 per share. During 2016, no shares of the Company’s Class N preferred stock were converted into shares of the Company’s common stock; during 2015, six shares of the Class N preferred stock were converted into 240 shares of the Company’s common stock. Stock- Based Compensation Plans At December 31, 2016, the Company had four stock-based compensation plans which are described below. The fourth of these plans was adopted on May 5, 2016, and received approval from the Company’s shareholders at the special meeting of stockholders held on September 14, 2016. 2003 Stock Option and Appreciation Rights Plan In 2003, the stockholders of the Company approved the 2003 Stock Option and Appreciation Rights Plan (the “2003 Plan”) which provided for the issuance of incentive stock options, non-qualified stock options and Stock Appreciation Rights (“SARs”) up to an aggregate of 2,000,000 shares of common stock (subject to adjustment in the event of stock dividends, stock splits, and other similar events). The plan had a ten-year term, and therefore after 2013 no options have been issued. The price at which shares of common stock covered by the option can be purchased was determined by the Company’s Board or a committee thereof; however, in the case of incentive stock options the exercise price was never less than the fair market value of the Company’s common stock on the date the option was granted. 2003 Plan 2016 2015 Options outstanding, beginning of year 1,170,000 1,210,000 Options forfeited (115,000 ) — Options exercised (40,000 ) — Options expired (20,000 ) (40,000 ) Options outstanding, end of year 995,000 1,170,000 The outstanding options vest over four years at exercise prices ranging from $0.08 to $2.00 per share. No SARs were issued under the 2003 Plan. 2010 Non-Qualified Stock Option Plan In 2010, the Company’s Board approved the 2010 Non-Qualified Stock Option Plan (the “2010 Plan”) to induce certain key employees of the Company or any of its subsidiaries who are in a position to contribute materially to the Company’s prosperity to remain with the Company, to offer such persons incentives and rewards in recognition of their contributions to the Company’s progress, and to encourage such persons to continue to promote the best interests of the Company. The Company reserved 1,250,000 shares of common stock (subject to adjustment under certain circumstances) for issuance or transfer upon exercise of options granted under the 2010 Plan. Options may be issued under the 2010 Plan to any key employees or consultants selected by the Company’s Board (or an appropriately qualified committee). Options may not be granted with an exercise price less than the fair market value of the common stock of the Company as of the day of the grant. Options granted pursuant to the plan are subject to limitations on transfer and execution and may be issued subject to vesting conditions. Options may also be forfeited in certain circumstances. During 2016, options to purchase 70,000 shares were granted to the Company’s independent directors as part of the annual compensation, options to purchase 125,000 shares were granted to the Company’s independent directors as a special grant in connection with the Company’s grant of options to its employee base in the fourth quarter, and options to purchase 525,000 shares were granted to the Company’s officers as part of the Company’s grant to its employee base in the fourth quarter. During 2015, options to purchase 50,000 shares were granted to the Company’s independent directors as part of their annual compensation. 2010 Plan 2016 2015 Options outstanding, beginning of year 150,000 100,000 Options granted 720,000 50,000 Options forfeited (90,000 ) — Options outstanding, end of year 780,000 150,000 The outstanding options vest over four years at exercise prices ranging from $0.24 to $0.70 per share. Equity Partners Stock Option Plan In 2011, the Company’s Board approved the Equity Partners Stock Option Plan (the “Equity Partners Plan”) to allow the Company to issue options to purchase common stock as a portion of the purchase price of Equity Partners. The Company reserved 230,000 shares of common stock for issuance upon exercise of options granted under the Equity Partners Plan. During 2011, options to purchase 230,000 shares with an exercise price of $1.83, vesting immediately, were granted under the Equity Partners Plan. Equity Partners Plan 2016 2015 Options outstanding, beginning of year 230,000 230,000 Options granted — — Options forfeited — — Options outstanding, end of year 230,000 230,000 Other Options Issued In 2012, the Company’s Board approved the issuance of options as part of the acquisition of HGP, and reserved 625,000 shares of common stock for issuance upon option exercise. The options have an exercise price of $2.00, and vested over four years, beginning on the first anniversary of the grant date. Unlike other options issued by the Company under its stock option plans, the options issued as part of the HGP acquisition survive termination of employment. None of the option holders have terminated their employment with the Company. Other Options 2016 2015 Options outstanding, beginning of year 625,000 625,000 Options granted — — Options forfeited — — Options outstanding, end of year 625,000 625,000 Heritage Global Inc. 2016 Stock Option Plan On May 5, 2016, subject to the approval received by the stockholders of the Company on September 14, 2016, the Company adopted the Heritage Global Inc. 2016 Stock Option Plan (the “2016 Plan”) which provided for the issuance of incentive stock options and non-qualified stock options up to an aggregate of 3,150,000 shares of common stock (subject to adjustment in the event of stock dividends, stock splits, and other similar events). Options may not be granted with an exercise price less than the fair market value of the common stock of the Company as of the day of the grant. Options granted pursuant to the plan are subject to limitations on transfer and execution and may be issued subject to vesting conditions. Options may also be forfeited in certain circumstances. During 2016 options to purchase 2,539,200 shares of common stock were granted to the Company’s employees. 2016 Plan 2016 2015 Options outstanding, beginning of year — — Options granted 2,539,200 — Options forfeited — — Options outstanding, end of year 2,539,200 — The outstanding options vest over four years at an exercise price of $0.45 per share. Stock-Based Compensation Expense Total compensation cost related to stock options in 2016 and 2015 was $0.1 million and $0.3 million, respectively. These amounts were recorded in selling, general and administrative expense in both years. During 2016 options to purchase 40,000 shares were exercised. The tax benefit recognized by the Company related to these option exercises was not material. During 2015 no options were exercised and therefore no tax benefit was recognized. In connection with the stock option grants during 2016 and 2015, the fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions: 2016 2015 Risk-free interest rate 1% - 2% 0.99% Expected life (years) 6.75 4.75 Expected volatility 94% - 99% 94% Expected dividend yield Zero Zero The risk-free interest rates are those for U.S. Treasury constant maturities for terms matching the expected term of the option. The expected life of the options is calculated according to the simplified method for estimating the expected term of the options, based on the vesting period and contractual term of each option grant. Expected volatility is based on the Company’s historical volatility. The Company has never paid a dividend on its common stock and therefore the expected dividend yield is zero. The following summarizes the changes in common stock options for 2016 and 2015: 2016 2015 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of year 2,175,000 $ 1.70 2,165,000 $ 1.71 Granted 3,259,200 $ 0.45 50,000 $ 0.42 Exercised (40,000 ) $ 0.12 — N/A Expired (20,000 ) $ 0.15 (40,000 ) $ 0.90 Forfeited (205,000 ) $ 0.92 — N/A Outstanding at end of year 5,169,200 $ 0.96 2,175,000 $ 1.70 Options exercisable at year end 1,847,500 $ 1.86 1,743,750 $ 1.78 Weighted-average fair value of options granted during the year $ 0.31 $ 0.29 As of December 31, 2015, the Company had 431,250 unvested options with a weighted average grant date fair value of $1.13 per share. As of December 31, 2016, the Company had 3,321,700 unvested options with a weighted average grant date fair value of $0.32 per share. As of December 31, 2016, the total unrecognized stock-based compensation expense related to unvested stock options was $1.0 million, which is expected to be recognized over a weighted-average period of 3.9 years. The total fair value of options vesting during the years ending December 31, 2016 and 2015 was $0.4 million and $0.8 million, respectively. The unvested options have no associated performance conditions. In general, the Company’s employee turnover is low, and the Company expects that the majority of the unvested options will vest according to the standard four-year timetable. The following table summarizes information about all stock options outstanding at December 31, 2016: Exercise price Options Outstanding Weighted Average Remaining Life Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Life (years) Weighted Average Exercise Price $ 0.08 to $ 0.15 10,000 0.2 $ 0.08 10,000 0.2 $ 0.08 $ 0.24 to $ 0.40 40,000 9.3 $ 0.24 — — $ — $ 0.42 to $ 1.00 3,459,200 9.5 $ 0.48 177,500 3.4 $ 0.92 $ 1.83 to $ 2.00 1,660,000 1.8 $ 1.97 1,660,000 1.8 $ 1.97 5,169,200 7.0 $ 0.96 1,847,500 2.0 $ 1.86 At December 31, 2016 and 2015, the aggregate intrinsic value of exercisable options was $4,000 and $9,000, respectively. Restricted Stock Restricted stock awards represent a right to receive shares of common stock at a future date determined in accordance with the participant’s award agreement. There is no exercise price and no monetary payment required for receipt of restricted stock awards or the shares issued in settlement of the award. Instead, consideration is furnished in the form of the participant’s services to the Company. Compensation cost for these awards is based on the fair value on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period. The Company granted restricted stock awards for 300,000 shares to two key employees (150,000 each), in connection with their employment agreements in 2014. The following summarizes the changes in restricted stock awards for the year ended December 31, 2016: Restricted Stock Awards Weighted Average Grant Date Fair Value Unvested at December 31, 2015 150,000 $ 0.38 Forfeited (37,500 ) $ 0.38 Vested (75,000 ) $ 0.38 Unvested at December 31, 2016 37,500 $ 0.38 Vested at December 31, 2016 225,000 $ 0.38 The Company recognized stock-based compensation expense related to restricted stock awards of $18,000 and $0.1 million for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016 there is approximately $4,000 of unrecognized stock-based compensation expense related to unvested restricted stock awards, which is expected to be recognized over the next three months. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 – Subsequent Events The Company has evaluated events subsequent to December 31, 2016 for potential recognition or disclosure in its consolidated financial statements. There have been no other material subsequent events requiring disclosure in this Report. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Use of estimates | Use of estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Significant estimates include the assessment of collectability of revenue recognized and the valuation of accounts receivable, inventory, investments, goodwill and intangible assets, liabilities, contingent consideration, deferred income tax assets and liabilities, and stock-based compensation. These estimates have the potential to significantly impact our consolidated financial statements, either because of the significance of the financial statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events that are continuous in nature. |
Foreign Currency | Foreign Currency The functional currency of foreign operations is deemed to be the local country’s currency. Assets and liabilities of operations outside of the United States are generally translated into U.S dollars, and the effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive loss. |
Reclassifications | Reclassifications Certain prior year balances within the consolidated financial statements have been reclassified to conform to current year presentation. |
Nature of Business | Nature of Business The Company earns revenue both from commission or fee-based services, and from the sale of distressed or surplus assets. With respect to the former, revenue is recognized as the services are provided. With respect to the latter, the majority of the asset sale transactions are conducted directly by the Company and the revenue is recognized in the period in which the asset is sold. Fee based revenue is reported as services revenue, and the associated direct costs are reported as cost of services revenue. At the balance sheet date, any unsold assets which the Company owns are reported as inventory, any outstanding accounts receivable are included in the Company’s accounts receivable, and any associated liabilities are included in the Company’s accrued liabilities. Equipment inventory is expected to be sold within a year and is therefore classified as a current asset; however, real estate inventory is generally classified as non-current due to the uncertainty in the timing of its sale. The remaining asset sale transactions involve the Company acting jointly with one or more additional purchasers, pursuant to a partnership, joint venture or limited liability company (“LLC”) agreement (collectively, “Joint Ventures”). These transactions are accounted for as equity method investments, and, accordingly, the Company’s proportionate share of the net income (loss) is reported as earnings of equity method investments. At each balance sheet date, the Company’s investments in these Joint Ventures are reported in the consolidated balance sheet as equity method investments. Although the Company generally expects to exit each of its investments in Joint Ventures in less than one year, they are classified on the balance sheet as non-current assets due to the uncertainties relating to the timing of resale of the underlying assets as a result of the Joint Venture relationship. The Company monitors the value of the Joint Ventures’ underlying assets and liabilities, and records a write down of its investments if the Company concludes that there has been a decline in the value of the net assets. As the activity of the Joint Ventures involves asset purchase/resale transactions, which is similar in nature to the Company’s other asset liquidation activities, the earnings (losses) of the Joint Ventures are included in the operating income/loss in the accompanying consolidated statements of operations. |
Liquidity | Liquidity The Company has incurred significant operating losses for the past several years and has partially relied on debt financing to fund its operations. As of December 31, 2016, the Company had an accumulated deficit of $280.9 million and a working capital deficit of $4.1 million. Until the Company achieves profitability, it will need to continue to partially rely on debt financing to fund its operations. Management expects that a combination of the Company’s asset liquidation operations and debt financing will generate cash flow sufficient to fund the Company’s operations through the one year period subsequent to the financial statement issuance date, and beyond. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents with financial institutions in the United States and Spain. These accounts may from time to time exceed federally insured limits. The Company has not experienced any losses on such accounts. |
Accounts receivable | Accounts receivable The Company’s accounts receivable primarily relate to the operations of its asset liquidation business. They generally consist of three major categories: (1) fees, commissions and retainers relating to appraisals and auctions, (2) receivables from asset sales, and (3) receivables from Joint Venture partners. The initial value of an account receivable corresponds to the fair value of the underlying goods or services. To date, a majority of the receivables have been classified as current and, due to their short-term nature, any decline in fair value would be due to issues involving collectability. At each financial statement date the collectability of each outstanding account receivable is evaluated, and an allowance is recorded if the book value exceeds the amount that is deemed collectable. See Note 8 for more detail regarding the Company’s accounts receivable. |
Inventory | Inventory The Company’s inventory consists of assets acquired for resale, which are normally expected to be sold within a one-year operating cycle. The inventory is recorded at the lower of cost or net realizable value. During the year ended December 31, 2015, the Company recorded an inventory write-down charge of $2.7 million to reduce the carrying value of its real estate inventory to its net realizable value. No such similar charge was required during the year ended December 31, 2016, as the Company sold its real estate inventory for an amount greater than its carrying value. See Note 3 for further discussion of the Company’s inventory real estate inventory. |
Fair value of financial instruments | Fair value of financial instruments The fair value of financial instruments is the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. At December 31, 2016 and 2015, the carrying values of the Company’s cash, accounts receivable, deposits, other assets, accounts payable and accrued liabilities approximate fair value given the short term nature of these instruments. The Company’s debt obligations approximate fair value as a result of the interest rate on the debt obligation approximating prevailing market rates. There are three levels within the fair value hierarchy: Level 1 – quoted prices in active markets for identical assets or liabilities; Level 2 – significant other observable inputs; and Level 3 – significant unobservable inputs. The Company employs fair value accounting for only the contingent consideration recorded as part of the acquisition of NLEX. The fair value of the Company’s contingent consideration was determined using a discounted cash flow analysis, which is based on significant inputs that are not observable in the market and therefore fall within Level 3. See Note 10 for more discussion of this contingent consideration. |
Business combinations | Business combinations Acquisitions are accounted for under FASB Accounting Standards Codification Topic 805, Business Combinations |
Intangible assets | Intangible assets Intangible assets are recorded at fair value upon acquisition. Those with an estimated useful life are amortized, and those with an indefinite useful life are unamortized. Subsequent to acquisition, the Company monitors events and changes in circumstances that require an assessment of intangible asset recoverability. Indefinite-lived intangible assets are assessed at least annually to determine both if they remain indefinite-lived and if they are impaired. The Company assesses whether or not there have been any events or changes in circumstances that suggest the value of the asset may not be recoverable. Amortized intangible assets are not tested annually, but are assessed when events and changes in circumstances suggest the assets may be impaired. If an assessment determines that the carrying amount of any intangible asset is not recoverable, an impairment loss is recognized in the statement of operations, determined by comparing the carrying amount of the asset to its fair value. All of the Company’s identifiable intangible assets at December 31, 2016 have been acquired as part of the acquisitions of HGP in 2012 and NLEX in 2014, and are discussed in more detail in Note 7. During 2015 the Company recorded an impairment charge of $2.7 million related to the customer network acquired as part of the acquisition of HGP. No impairment charges were necessary during 2016. See Note 7 for more detail regarding the Company’s identifiable intangible assets. |
Goodwill | Goodwill Goodwill, which results from the difference between the purchase price and the fair value of net identifiable tangible and intangible assets acquired in a business combination, is not amortized but, in accordance with GAAP, is tested at least annually for impairment. The Company performs its annual impairment test as of October 1. Testing goodwill is a two-step process, in which the carrying amount of the reporting unit associated with the goodwill is first compared to the reporting unit’s estimated fair value. If the carrying amount of the reporting unit exceeds its estimated fair value, the fair values of the reporting unit’s assets and liabilities are analyzed to determine whether the goodwill of the reporting unit has been impaired. An impairment loss is recognized to the extent that the Company’s recorded goodwill exceeds its implied fair value as determined by this two-step process. FASB Accounting Standards Update 2011-08, Testing Goodwill for Impairment In testing goodwill, the Company initially uses a qualitative approach and analyzes relevant factors to determine if events and circumstances have affected the value of the goodwill. If the result of this qualitative analysis indicates that the value has been impaired, the Company then applies a quantitative approach to calculate the difference between the goodwill’s recorded value and its fair value. An impairment loss is recognized to the extent that the recorded value exceeds its fair value. All of the Company’s goodwill relates to its acquisitions of Equity Partners in 2011, HGP in 2012 and NLEX in 2014, and is discussed in more detail in Note 7. During 2015 the Company recorded an impairment charge of $2.7 million related to the goodwill from its acquisition of HGP. No impairment charges were necessary during 2016. |
Deferred income taxes | Deferred income taxes The Company recognizes deferred tax assets and liabilities for temporary differences between the tax bases of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted tax rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. In 2014, as a result of incurring losses in previous years, the Company recorded a valuation allowance against all of its net deferred tax assets. The Company continues to carry the full valuation allowance as of December 31, 2016. |
Contingent consideration | Contingent consideration At December 31, 2016 the Company’s contingent consideration consists of the estimated fair value of remaining payments pursuant to an earn-out provision payable to the former owner and current president of NLEX (“David Ludwig”) that was part of the consideration for the acquisition of NLEX in 2014. The estimated fair value assigned to the contingent consideration at the acquisition date was determined using a discounted cash flow analysis. Its fair value is assessed quarterly, and any adjustments, together with the accretion of the present value discount, are reported as a fair value adjustment on the Company’s consolidated statement of operations. In the fourth quarter of 2016 the Company agreed in principle with David Ludwig to extend the earn-out provision. The extension of the earn-out is subject to ratification by the Board of Directors. As a result, and based on management’s best estimate as of December 31, 2016 that the earn-out will be extended by at least one year, the Company adjusted the earn-out liability in the fourth quarter of 2016 by approximately $1.0 million to reflect an increase in the expected payments to be made to David Ludwig. See Note 10 to the consolidated financial statements for more discussion of the contingent consideration. |
Liabilities and contingencies | Liabilities and contingencies The Company is involved from time to time in various legal matters arising out of its operations in the normal course of business. On a case by case basis, the Company evaluates the likelihood of possible outcomes for this litigation. Based on this evaluation, the Company determines whether a loss accrual is appropriate. If the likelihood of a negative outcome is probable, and the amount can be estimated, the Company accounts for the estimated loss in the current period. |
Revenue recognition | Revenue recognition Services revenue generally consists of commissions and fees from providing auction services, appraisals, brokering of sales transactions and providing merger and acquisition advisory services. Revenue is recognized when persuasive evidence of an arrangement exists, the selling price is fixed and determinable, goods or services have been provided, and collectability is reasonably assured. For asset sales revenue is recognized in the period in which the asset is sold, the buyer has assumed the risks and awards of ownership, the Company has no continuing substantive obligations and collectability is reasonably assured. We evaluate revenue from asset liquidation transactions in accordance with the accounting guidance to determine whether to report such revenue on a gross or net basis. We have determined that we act as an agent for our fee based asset liquidation transactions and therefore we report the revenue from transactions in which we act as an agent on a net basis. The Company also earns asset liquidation income through asset liquidation transactions that involve the Company acting jointly with one or more additional purchasers, pursuant to a partnership, joint venture or limited liability company (“LLC”) agreement (collectively, “Joint Ventures”). For these transactions, the Company does not record asset liquidation revenue or expense. Instead, the Company’s proportionate share of the net income (loss) is reported as earnings of equity method investments. In general, the Joint Ventures apply the same revenue recognition and other accounting policies as the Company. |
Cost of services revenue and asset sales | Cost of services revenue and asset sales Cost of services revenue generally includes the direct costs associated with generating commissions and fees from the Company’s auction and appraisal services, merger and acquisition advisory services, and brokering of charged-off receivable portfolios. The Company recognizes these expenses in the period in which the revenue they relate to is recorded. Cost of asset sales generally includes the cost of purchased inventory and the related direct costs of selling inventory. The Company recognizes these expenses in the period in which title to the inventory passes to the buyer, and the buyer assumes the risk and reward of the inventory. |
Stock-based compensation | Stock-based compensation The Company’s stock-based compensation is primarily in the form of options to purchase common shares. The grant date fair value of stock options is calculated using the Black-Scholes option pricing model. The determination of the fair value of the Company’s stock options is based on a variety of factors including, but not limited to, the price of the Company’s common stock, the expected volatility of the stock price over the expected life of the award, and expected exercise behavior. The grant date fair value of the awards is subsequently expensed over the vesting period. The provisions of the Company’s stock-based compensation plans do not require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the option awards as equity. See Note 15 for further discussion of the Company’s stock-based compensation. |
Advertising | Advertising The Company expenses advertising costs in the period in which they are incurred. Advertising and promotion expense included in selling, general and administrative expense for both the years ended December 31, 2016 and 2015, was $0.4 million. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In 2014, the FASB issued Accounting Standards update 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern In 2015, the FASB issued Accounting Standards update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items In 2015, the FASB issued Accounting Standards update 2015-02, Amendments to the Consolidation Analysis In 2015, the FASB issued Accounting Standards update 2015-03, Simplifying the Presentation of Debt Issuance Costs In 2015, the FASB issued Accounting Standards update 2015-15, Interest – Imputation of Interest In 2015, the FASB issued Accounting Standards update 2015-16, Simplifying the Accounting for Measurement-Period Adjustments |
Future accounting pronouncements | Future accounting pronouncements In 2014, the FASB issued Accounting Standards update 2014-09, Revenue from Contracts with Customers In 2015, the FASB issued Accounting Standards update 2015-17, Balance Sheet Classification of Deferred In 2016, the FASB issued Accounting Standards update 2016-02, Leases In 2016, the FASB issued Accounting Standards update 2016-07, Investments – Equity Method and Joint Ventures In 2016, the FASB issued Accounting Standards update 2016-08, Revenue from Contracts with Customers In 2016, the FASB issued Accounting Standards update 2016-09, Compensation – Stock Compensation In 2016, the FASB issued Accounting Standards update 2016-10, Revenue from Contracts with Customers In 2016, the FASB issued Accounting Standards update 2016-12, Revenue from Contracts with Customers In 2016, the FASB issued Accounting Standards update 2016-15, Statement of Cash Flows In 2017, the FASB issued Accounting Standards update 2017-01, Business Combinations In 2017, the FASB issued Accounting Standards update 2017-04, Intangibles – Goodwill and Other |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investments And Joint Ventures [Abstract] | |
Schedule of Company's Share of Revenues and Operating Income Earned from the Joint Ventures in Which it is Invested | 2016 2015 Revenues $ 198 $ 1,007 Operating income $ 52 $ 286 |
Schedule of the components of assets and liabilities attributable to the Company from the Joint Ventures in which it is invested | 2016 2015 Current assets $ 57 $ 194 Current liabilities $ 106 $ 291 |
Schedule of Earnings of Equity Method Investments Within The Consolidated Statements of Operations and Comprehensive Income (Loss) | 2016 2015 Earnings of equity method investments included within operating income (loss) $ 52 $ 286 (Losses) earnings of equity method investments included within other income (3 ) 5 Total earnings of equity method investments $ 49 $ 291 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of the Shares Used in Computing Diluted EPS | The table below shows the calculation of the shares used in computing diluted EPS: For the Year Ended December 31, Weighted Average Shares Calculation: 2016 2015 Basic weighted average shares outstanding 28,400,886 28,252,219 Treasury stock effect of common stock options and restricted stock awards 33,946 — Diluted weighted average common shares outstanding 28,434,832 28,252,219 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property and Equipment | The following summarizes the components of the Company’s property and equipment (in thousands): December 31, 2016 December 31, 2015 Furniture, fixtures and office equipment $ 144 $ 95 Software and technology assets 254 245 398 340 Accumulated depreciation (242 ) (230 ) Property and equipment, net $ 156 $ 110 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | The details of identifiable intangible assets as of December 31, 2016 and 2015, are shown below (in thousands except for lives): Amortized Intangible Assets Original Life (years) Remaining Life (years) Carrying Value December 31 2015 Amortization Impairment Carrying Value December 2016 Customer Network (HGP) 12 7.2 $ 178 $ (20 ) — $ 158 Trade Name (HGP) 14 9.2 1,059 (106 ) — 953 Customer Relationships (NLEX) 7.6 5.1 660 (110 ) — 550 Non-Compete Agreement (NLEX) 2 0 15 (15 ) — — Website (NLEX) 5 2.4 33 (9 ) — 24 Total 1,945 (260 ) — 1,685 Unamortized Intangible Assets Trade Name (NLEX) N/A N/A 2,437 — — 2,437 Total $ 4,382 $ (260 ) $ — $ 4,122 Amortized Intangible Assets Original Life (years) Remaining Life (years) Carrying Value December 31 2014 Amortization Impairment Carrying Value December 31 2015 Customer Network (HGP) 12 8.2 $ 3,193 $ (266 ) $ (2,749 ) $ 178 Trade Name (HGP) 14 10.2 1,165 (106 ) — 1,059 Customer Relationships (NLEX) 7.6 6.1 770 (110 ) — 660 Non-Compete Agreement (NLEX) 2 0.4 50 (35 ) — 15 Website (NLEX) 5 3.4 42 (9 ) — 33 Total 5,220 (526 ) (2,749 ) 1,945 Unamortized Intangible Assets Trade Name (NLEX) N/A N/A 2,437 — — 2,437 Total $ 7,657 $ (526 ) $ (2,749 ) $ 4,382 |
Schedule of Estimated Amortization Expense, Intangible Assets | The estimated amortization expense during the next five fiscal years and thereafter is shown below: Year Amount 2017 $ 245 2018 245 2019 240 2020 236 2021 236 Thereafter 483 Total $ 1,685 |
Schedule of Goodwill Activity | A summary of the goodwill activity for 2016 and 2015 is shown below (in thousands): Acquisition December 31, 2014 Impairment December 31, 2015 Impairment December 31, 2016 Equity Partners $ 573 $ — $ 573 $ — $ 573 HGP 4,728 (2,688 ) 2,040 — 2,040 NLEX 3,545 — 3,545 — 3,545 Total goodwill $ 8,846 $ (2,688 ) $ 6,158 $ — $ 6,158 |
Accounts Receivable and Accou28
Accounts Receivable and Accounts Payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables And Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of the following at December 31, 2016 and 2015 (in thousands): 2016 2015 Due to auction clients $ 3,152 $ 3,457 Sales and other taxes 935 1,421 Remuneration and benefits 637 645 Accounting, auditing and tax consulting 151 128 Customer deposits — 108 Due to Joint Venture partners 1,371 69 Asset liquidation expenses 257 246 Interest expense — 76 Other 243 489 Total accounts payable and accrued liabilities $ 6,746 $ 6,639 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | 2016 2015 Current: Related party debt $ 664 $ 1,721 Non-current: Related party debt 348 — Third party debt — 2,500 Total debt $ 1,012 $ 4,221 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Assets and Liabilities Measured on Recurring Basis | The following tables present the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015 (in thousands): Fair Value as of December 31, 2016 Level 1 Level 2 Level 3 Total Liabilities Contingent consideration $ — $ — $ 2,733 $ 2,733 Fair Value as of December 31, 2015 Level 1 Level 2 Level 3 Total Liabilities Contingent consideration $ — $ — $ 3,457 $ 3,457 |
Summary of Changes in the Fair Value of the Contingent Consideration Liability | The following table summarizes the changes in the fair value of the contingent consideration liability during 2015 and 2016 (in thousands): Balance at December 31, 2014 $ 4,198 Payment of contingent consideration (513 ) Fair value adjustment of contingent consideration (228 ) Balance at December 31, 2015 3,457 Payment of contingent consideration (816 ) Fair value adjustment of contingent consideration 92 Balance at December 31, 2016 $ 2,733 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | 2017 $ 543 2018 489 2019 456 2020 340 2021 113 Total $ 1,941 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Summary of Change in Valuation Allowance | The following table summarizes the change in the valuation allowance during 2015 and 2016 (in thousands): Balance at December 31, 2014 $ 28,842 Change during 2015 3,080 Balance at December 31, 2015 31,922 Change during 2016 (264 ) Balance at December 31, 2016 $ 31,658 |
Schedule of Components of Income Tax Expense (Benefit) | The reported tax expense varies from the amount that would be provided by applying the statutory U.S. Federal income tax rate to the income (loss) before income tax expense for the following reasons in each of the years ending December 31 (in thousands): 2016 2015 Expected federal statutory tax benefit $ 14 $ (4,130 ) Increase (reduction) in taxes resulting from: State income taxes recoverable 21 17 Non-deductible expenses (permanent differences) 45 1,162 Change in valuation allowance (264 ) 3,080 Other 205 (114 ) Income tax expense $ 21 $ 15 |
Schedule of Deferred Tax Assets and Liabilities | The components of the deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows in (thousands): 2016 2015 Net operating loss carry forwards $ 29,909 $ 30,073 Stock based compensation 1,070 1,019 Write-down of real estate inventory 1,569 1,550 Trade names (1,363 ) (1,388 ) Customer relationships (293 ) (351 ) Fair value adjustment of contingent consideration (55 ) 91 Other (139 ) (32 ) Gross deferred tax assets 30,698 30,962 Less: valuation allowance (31,658 ) (31,922 ) Deferred tax assets (liabilities), net of valuation allowance $ (960 ) $ (960 ) |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Services Relating to Operations Paid to Related Party | The amounts charged by Street Capital, which are included in selling, general and administrative expenses and have been added to the Street Capital Loan balance, are detailed below (in thousands): Year ended December 31, 2016 2015 Management fees $ — $ 240 Other charges — 50 Total $ — $ 290 |
Schedule of Lease Amounts Paid to Related Parties | The lease amounts paid by the Company to the related parties, which are included in selling, general and administrative expenses during the year ended December 31, 2016 and 2015, are detailed below (in thousands): Year ended December 31, Leased premises location 2016 2015 Foster City, CA $ 76 $ 228 Edwardsville, IL 99 97 Total $ 175 $ 325 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Class Of Stock [Line Items] | |
Schedule of Assumptions for Fair Value of Option Grant | In connection with the stock option grants during 2016 and 2015, the fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions: 2016 2015 Risk-free interest rate 1% - 2% 0.99% Expected life (years) 6.75 4.75 Expected volatility 94% - 99% 94% Expected dividend yield Zero Zero |
Schedule of Changes in Common Stock Options | The following summarizes the changes in common stock options for 2016 and 2015: 2016 2015 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of year 2,175,000 $ 1.70 2,165,000 $ 1.71 Granted 3,259,200 $ 0.45 50,000 $ 0.42 Exercised (40,000 ) $ 0.12 — N/A Expired (20,000 ) $ 0.15 (40,000 ) $ 0.90 Forfeited (205,000 ) $ 0.92 — N/A Outstanding at end of year 5,169,200 $ 0.96 2,175,000 $ 1.70 Options exercisable at year end 1,847,500 $ 1.86 1,743,750 $ 1.78 Weighted-average fair value of options granted during the year $ 0.31 $ 0.29 |
Schedule of Information about All Stock Options Outstanding | The following table summarizes information about all stock options outstanding at December 31, 2016: Exercise price Options Outstanding Weighted Average Remaining Life Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Life (years) Weighted Average Exercise Price $ 0.08 to $ 0.15 10,000 0.2 $ 0.08 10,000 0.2 $ 0.08 $ 0.24 to $ 0.40 40,000 9.3 $ 0.24 — — $ — $ 0.42 to $ 1.00 3,459,200 9.5 $ 0.48 177,500 3.4 $ 0.92 $ 1.83 to $ 2.00 1,660,000 1.8 $ 1.97 1,660,000 1.8 $ 1.97 5,169,200 7.0 $ 0.96 1,847,500 2.0 $ 1.86 |
Schedule of Changes in Restricted Stock Awards | The following summarizes the changes in restricted stock awards for the year ended December 31, 2016: Restricted Stock Awards Weighted Average Grant Date Fair Value Unvested at December 31, 2015 150,000 $ 0.38 Forfeited (37,500 ) $ 0.38 Vested (75,000 ) $ 0.38 Unvested at December 31, 2016 37,500 $ 0.38 Vested at December 31, 2016 225,000 $ 0.38 |
Other Options Issued [Member] | |
Class Of Stock [Line Items] | |
Schedule of Stock Options and Other Stock Options Issued | Other Options 2016 2015 Options outstanding, beginning of year 625,000 625,000 Options granted — — Options forfeited — — Options outstanding, end of year 625,000 625,000 |
2003 Stock Option and Appreciation Rights Plan [Member] | |
Class Of Stock [Line Items] | |
Schedule of Stock Options and Other Stock Options Issued | 2003 Plan 2016 2015 Options outstanding, beginning of year 1,170,000 1,210,000 Options forfeited (115,000 ) — Options exercised (40,000 ) — Options expired (20,000 ) (40,000 ) Options outstanding, end of year 995,000 1,170,000 |
2010 Non-Qualified Stock Option Plan [Member] | |
Class Of Stock [Line Items] | |
Schedule of Stock Options and Other Stock Options Issued | 2010 Plan 2016 2015 Options outstanding, beginning of year 150,000 100,000 Options granted 720,000 50,000 Options forfeited (90,000 ) — Options outstanding, end of year 780,000 150,000 |
Equity Partners Stock Option Plan [Member] | |
Class Of Stock [Line Items] | |
Schedule of Stock Options and Other Stock Options Issued | Equity Partners Plan 2016 2015 Options outstanding, beginning of year 230,000 230,000 Options granted — — Options forfeited — — Options outstanding, end of year 230,000 230,000 |
2016 Stock Option Plan [Member] | |
Class Of Stock [Line Items] | |
Schedule of Stock Options and Other Stock Options Issued | 2016 Plan 2016 2015 Options outstanding, beginning of year — — Options granted 2,539,200 — Options forfeited — — Options outstanding, end of year 2,539,200 — |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary Of Significant Accounting Policies [Line Items] | |||
Accumulated deficit | $ (280,889,000) | $ (280,875,000) | $ (280,889,000) |
Working capital deficit | 4,100,000 | ||
Real estate inventory write-down | 0 | 2,748,000 | |
Impairment charges | 2,749,000 | ||
Goodwill impairment charges | $ 0 | 2,688,000 | |
Additional earn-out period | 1 year | ||
Selling, General and Administrative Expenses [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Advertising and promotion expense | $ 400,000 | 400,000 | |
HGP [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Goodwill impairment charges | $ 2,700,000 | 2,688,000 | |
NLEX [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Additional earn-out period | 1 year | ||
Additional earn-out liability | $ 1,000,000 | ||
Customer Network [Member] | HGP [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Impairment charges | $ 0 | $ 2,700,000 |
Real Estate Inventory (Narrativ
Real Estate Inventory (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Oct. 31, 2015 | Sep. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Real Estate [Line Items] | |||||
Real estate inventory, selling price | $ 4,900,000 | $ 4,100,000 | |||
Real Estate, Inventory Pre Write-down Carrying Value | $ 6,500,000 | ||||
Real Estate, Inventory Post Write-down Carrying Value | $ 3,700,000 | 3,700,000 | |||
Real estate inventory write-down | $ 0 | 2,748,000 | |||
Lease agreement term | 5 years | ||||
Annual rental payments | $ 700,000 | ||||
Rental income | $ 300,000 | 0 | |||
Sale of real estate inventory | 4,100,000 | ||||
Closing costs on sale of real estate inventory | 300,000 | ||||
Gross profit realized on sale of real estate inventory | $ 100,000 | ||||
Approximations [Member] | |||||
Real Estate [Line Items] | |||||
Real estate inventory write-down | $ 2,700,000 |
Schedule of Company's Share of
Schedule of Company's Share of Revenues and Operating Income Earned from the Joint Ventures in Which it is Invested (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Equity Method Investments And Joint Ventures [Abstract] | ||
Revenues | $ 198 | $ 1,007 |
Operating income | $ 52 | $ 286 |
Schedule of the components of a
Schedule of the components of assets and liabilities attributable to the Company from the Joint Ventures in which it is invested (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Equity Method Investments And Joint Ventures [Abstract] | ||
Current assets | $ 57 | $ 194 |
Current liabilities | $ 106 | $ 291 |
Schedule of Earnings of Equity
Schedule of Earnings of Equity Method Investments Within The Consolidated Statements of Operations and Comprehensive Income (Loss ) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Equity Method Investments And Joint Ventures [Abstract] | ||
Earnings of equity method investments | $ 52 | $ 286 |
(Losses) earnings of equity method investments included within other income | (3) | 5 |
Total earnings of equity method investments | $ 49 | $ 291 |
Earnings per Share (Narrative)
Earnings per Share (Narrative) (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Convertible Preferred Stock, Shares Issuable upon Conversion | The Company’s Class N preferred shares, each of which is convertible to 40 common shares, have the right to receive dividends or dividend equivalents should the Company declare dividends on its common stock. | |
Class N preferred shares, each convertible to common shares | 40 | |
Anti-dilutive common shares | 5,100,000 | 2,200,000 |
Earnings per Share - Schedule o
Earnings per Share - Schedule of Calculation of the Shares Used in Computing Diluted EPS (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares outstanding | 28,400,886 | 28,252,219 |
Treasury stock effect of common stock options and restricted stock awards | 33,946 | |
Diluted weighted average common shares outstanding | 28,434,832 | 28,252,219 |
Property and Equipment (Narrati
Property and Equipment (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property Plant And Equipment [Line Items] | ||
Depreciation expense | $ 56,000 | $ 49,000 |
Furniture, fixtures and office equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Estimated service life | 5 years | |
Software and technology assets [Member] | ||
Property Plant And Equipment [Line Items] | ||
Estimated service life | 3 years |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 398 | $ 340 |
Accumulated depreciation | (242) | (230) |
Property and equipment, net | 156 | 110 |
Furniture, fixtures and office equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 144 | 95 |
Software and technology assets [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 254 | $ 245 |
Schedule of Intangible Assets (
Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Total net amortized intangible assets | $ 1,945 | $ 5,220 | |
Amortization | (260) | (526) | |
Impairment | (2,749) | ||
Total net amortized intangible assets | $ 1,945 | 1,685 | 1,945 |
Total net intangible assets | 4,382 | 7,657 | |
Total net intangible assets | 4,382 | 4,122 | 4,382 |
NLEX [Member] | Trade Name [Member] | |||
Finite And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Unamortized intangible assets | 2,437 | 2,437 | |
Impairment of indefinite lived | 0 | ||
Unamortized intangible assets | 2,437 | $ 2,437 | $ 2,437 |
Customer Network [Member] | HGP [Member] | |||
Finite And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Finite-Lived intangible asset, useful life | 12 years | 12 years | |
Finite-Lived intangible assets, remaining amortization period | 7 years 2 months 12 days | 8 years 2 months 12 days | |
Total net amortized intangible assets | $ 178 | $ 3,193 | |
Amortization | (20) | (266) | |
Impairment | (2,700) | (2,749) | |
Total net amortized intangible assets | 178 | $ 158 | $ 178 |
Trade Name [Member] | HGP [Member] | |||
Finite And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Finite-Lived intangible asset, useful life | 14 years | 14 years | |
Finite-Lived intangible assets, remaining amortization period | 9 years 2 months 12 days | 10 years 2 months 12 days | |
Total net amortized intangible assets | $ 1,059 | $ 1,165 | |
Amortization | (106) | (106) | |
Total net amortized intangible assets | 1,059 | $ 953 | $ 1,059 |
Customer Relationships [Member] | NLEX [Member] | |||
Finite And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Finite-Lived intangible asset, useful life | 7 years 7 months 6 days | 7 years 7 months 6 days | |
Finite-Lived intangible assets, remaining amortization period | 5 years 1 month 6 days | 6 years 1 month 6 days | |
Total net amortized intangible assets | $ 660 | $ 770 | |
Amortization | (110) | (110) | |
Total net amortized intangible assets | 660 | $ 550 | $ 660 |
Non-Compete Agreement [Member] | NLEX [Member] | |||
Finite And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Finite-Lived intangible asset, useful life | 2 years | 2 years | |
Finite-Lived intangible assets, remaining amortization period | 0 years | 4 months 24 days | |
Total net amortized intangible assets | $ 15 | $ 50 | |
Amortization | $ (15) | (35) | |
Total net amortized intangible assets | 15 | $ 15 | |
NLEX's Website [Member] | NLEX [Member] | |||
Finite And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Finite-Lived intangible asset, useful life | 5 years | 5 years | |
Finite-Lived intangible assets, remaining amortization period | 2 years 4 months 24 days | 3 years 4 months 24 days | |
Total net amortized intangible assets | $ 33 | $ 42 | |
Amortization | (9) | (9) | |
Total net amortized intangible assets | $ 33 | $ 24 | $ 33 |
Intangible Assets and Goodwil45
Intangible Assets and Goodwill (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2011 | |
Finite Lived Intangible Assets [Line Items] | ||||||
Amortization expense, intangible assets | $ 260,000 | $ 526,000 | ||||
Impairment charge | 2,749,000 | |||||
Total net amortized intangible assets | $ 1,945,000 | 1,685,000 | 1,945,000 | $ 5,220,000 | ||
Goodwill | 6,158,000 | 6,158,000 | 6,158,000 | 8,846,000 | ||
Non cash impairment charge | 0 | 2,688,000 | ||||
HGP [Member] | ||||||
Finite Lived Intangible Assets [Line Items] | ||||||
Goodwill | 2,040,000 | 2,040,000 | 2,040,000 | 4,728,000 | $ 4,700,000 | |
Non cash impairment charge | 2,700,000 | 2,688,000 | ||||
Fair value of goodwill | 2,000,000 | 2,000,000 | ||||
Equity Partners [Member] | ||||||
Finite Lived Intangible Assets [Line Items] | ||||||
Goodwill | 573,000 | 573,000 | 573,000 | 573,000 | $ 600,000 | |
NLEX [Member] | ||||||
Finite Lived Intangible Assets [Line Items] | ||||||
Goodwill | 3,545,000 | 3,545,000 | 3,545,000 | 3,545,000 | ||
Customer Network [Member] | HGP [Member] | ||||||
Finite Lived Intangible Assets [Line Items] | ||||||
Amortization expense, intangible assets | 20,000 | 266,000 | ||||
Impairment charge | 2,700,000 | 2,749,000 | ||||
Total net amortized intangible assets | $ 178,000 | $ 158,000 | $ 178,000 | $ 3,193,000 |
Schedule of Estimated Amortizat
Schedule of Estimated Amortization Expense, Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
2,017 | $ 245 | ||
2,018 | 245 | ||
2,019 | 240 | ||
2,020 | 236 | ||
2,021 | 236 | ||
Thereafter | 483 | ||
Total | $ 1,685 | $ 1,945 | $ 5,220 |
Schedule of Goodwill Activity (
Schedule of Goodwill Activity (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2011 | |
Goodwill [Line Items] | ||||||
Goodwill | $ 6,158,000 | $ 6,158,000 | $ 6,158,000 | $ 8,846,000 | ||
Impairment | 0 | (2,688,000) | ||||
Equity Partners [Member] | ||||||
Goodwill [Line Items] | ||||||
Goodwill | 573,000 | 573,000 | 573,000 | 573,000 | $ 600,000 | |
HGP [Member] | ||||||
Goodwill [Line Items] | ||||||
Goodwill | 2,040,000 | 2,040,000 | 2,040,000 | 4,728,000 | $ 4,700,000 | |
Impairment | (2,700,000) | (2,688,000) | ||||
NLEX [Member] | ||||||
Goodwill [Line Items] | ||||||
Goodwill | $ 3,545,000 | $ 3,545,000 | $ 3,545,000 | $ 3,545,000 |
Accounts Receivable and Accou48
Accounts Receivable and Accounts Payable (Narrative) (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts Receivable And Accounts Payable [Abstract] | ||
Allowance for doubtful accounts | $ 36,000 | $ 44,000 |
Schedule of Accounts Payable an
Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Payables And Accruals [Abstract] | ||
Due to auction clients | $ 3,152 | $ 3,457 |
Sales and other taxes | 935 | 1,421 |
Remuneration and benefits | 637 | 645 |
Accounting, auditing and tax consulting | 151 | 128 |
Customer deposits | 108 | |
Due to Joint Venture partners | 1,371 | 69 |
Asset liquidation expenses | 257 | 246 |
Interest expense | 76 | |
Other | 243 | 489 |
Total accounts payable and accrued liabilities | $ 6,746 | $ 6,639 |
Schedule of Debt (Details)
Schedule of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current: | ||
Related party debt | $ 664 | $ 1,721 |
Non-current: | ||
Related party debt | 348 | 0 |
Third party debt | 0 | 2,500 |
Total debt | $ 1,012 | $ 4,221 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2016 | Sep. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2003 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||||||||
Third party debt, non-current | $ 0 | $ 0 | $ 2,500,000 | |||||
Repayment of outstanding principal | $ 2,500,000 | 525,000 | ||||||
Street Capital Loan, Description | The Company’s related party debt (the “Street Capital Loan”) was originally entered into in 2003 and accrued interest at 10% per annum compounded quarterly from the date funds were advanced. The Street Capital Loan was originally secured by the assets of the Company. In 2014, following Street Capital’s distribution of its ownership interest in HGI to Street Capital shareholders as a dividend in kind, the unpaid balance of the Street Capital Loan began accruing interest at a rate per annum equal to the lesser of the Wall St. Journal (“WSJ”) prime rate + 2.0%, or the maximum rate allowable by law. As of December 31, 2015, the interest rate on the loan was 5.50%. | |||||||
Proceeds from debt payable to related party | $ 1,099,000 | 775,000 | ||||||
Accrued interest paid | 187,000 | $ 178,000 | ||||||
Revolving Line of Credit [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit | 0 | 0 | ||||||
Trust [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Related party loan, Interest rate | 10.00% | |||||||
Proceeds from debt payable to related party | $ 400,000 | |||||||
Related party loan, maturity period | 90 days | |||||||
Accrued interest paid | $ 8,000 | |||||||
Affiliated Entity and Chief Executive Officer [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Related party loan, Interest rate | 10.00% | |||||||
Proceeds from debt payable to related party | $ 700,000 | |||||||
Related party loan, maturity period | 180 days | |||||||
Accrued interest paid | 19,000 | |||||||
Affiliated Entity [Member] | Revolving Line of Credit [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit aggregate borrowing capacity | 1,500,000 | $ 1,500,000 | ||||||
Interest rate description | Aggregate loans under the Line of Credit up to $1.0 million incur interest at a variable rate per annum based on the rate charged to the Entity by its bank, plus 2.0%. Amounts outstanding at any time in excess of $1.0 million incur interest at a rate of 8.0% per annum. | |||||||
Line of credit, annual commitment fee | $ 15,000 | |||||||
Line of credit, commitment fee payment description | monthly basis | |||||||
Maturity description | The Line of Credit matures at the earlier of (i) three years from the date of the Agreement, (ii) the termination of the Entity’s line of credit with its bank, or (iii) forty-five (45) days following the date the Company closes a new credit facility with a financial institution. | |||||||
Street Capital Loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Related party loan, Interest rate | 10.00% | 4.75% | 5.50% | |||||
Wall St. Journal ("WSJ") prime rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate per annum | 1.00% | 2.00% | ||||||
Bank Plus 2.0% [Member] | Affiliated Entity [Member] | Revolving Line of Credit [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate per annum | 2.00% | |||||||
Bank Plus 2.0% [Member] | Affiliated Entity [Member] | Revolving Line of Credit [Member] | Maximum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit | $ 1,000,000 | $ 1,000,000 | ||||||
8.0% Interest Rate [Member] | Affiliated Entity [Member] | Revolving Line of Credit [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Related party loan, Interest rate | 8.00% | |||||||
8.0% Interest Rate [Member] | Affiliated Entity [Member] | Revolving Line of Credit [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit | $ 1,000,000 | $ 1,000,000 | ||||||
Other Third Party Debt [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Third party debt, non-current | $ 2,500,000 | $ 2,500,000 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | 6.00% | 6.00% | |||||
Debt Instrument, Maturity Date | Jan. 15, 2016 | Jan. 15, 2017 | Jan. 15, 2015 | |||||
Repayment of outstanding principal | $ 2,500,000 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Additional earn-out period | 1 year | |
Assets measured at fair value on non-recurring basis | $ 0 | |
Level 1 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | 0 | $ 0 |
Fair value of assets | 0 | 0 |
Level 2 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | 0 | 0 |
Fair value of assets | $ 0 | 0 |
NLEX [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Additional earn-out period | 1 year | |
NLEX [Member] | Contingent Consideration [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | $ 2,733,000 | 3,457,000 |
NLEX [Member] | Level 3 [Member] | Contingent Consideration [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | $ 2,733,000 | $ 3,457,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Financial Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
NLEX [Member] | Contingent Consideration [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | $ 2,733,000 | $ 3,457,000 |
Level 1 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | 0 | 0 |
Level 2 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | 0 | 0 |
Level 3 [Member] | NLEX [Member] | Contingent Consideration [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | $ 2,733,000 | $ 3,457,000 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Changes in the Fair Value of the Contingent Consideration Liability (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Payment of contingent consideration | $ (816) | $ (513) |
Fair value adjustment of contingent consideration | (92) | 228 |
NLEX [Member] | Contingent Consideration [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Beginning balance | 3,457 | 4,198 |
Payment of contingent consideration | (816) | (513) |
Fair value adjustment of contingent consideration | 92 | (228) |
Ending balance | $ 2,733 | $ 3,457 |
Commitments and Contingencies55
Commitments and Contingencies (Narrative) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Street Capital Loan [Member] | |
Commitment And Contingencies [Line Items] | |
Future debt obligation payable in 2017 | $ 0.7 |
Future debt obligation including accrued interest payable in 2018 | $ 0.3 |
California office lease one | |
Commitment And Contingencies [Line Items] | |
Lease expiration period | 2020-01 |
California office lease two | |
Commitment And Contingencies [Line Items] | |
Lease expiration period | 2021-04 |
Illinois office lease | |
Commitment And Contingencies [Line Items] | |
Lease expiration period | 2018-06 |
Arizona office lease | |
Commitment And Contingencies [Line Items] | |
Lease expiration period | 2019-08 |
Automobile lease | |
Commitment And Contingencies [Line Items] | |
Lease expiration period | 2017-06 |
Copier lease | |
Commitment And Contingencies [Line Items] | |
Lease expiration period | 2018-10 |
Schedule of Future Minimum Rent
Schedule of Future Minimum Rental Payments for Operating Leases (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
2,017 | $ 543 |
2,018 | 489 |
2,019 | 456 |
2,020 | 340 |
2,021 | 113 |
Total | $ 1,941 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes [Line Items] | ||||
Carrying value of deferred tax assets | $ 0 | |||
Operating loss carryforwards | $ 74,500 | |||
Tax Credit Carryforward, Amount | $ 500 | |||
Operating Loss Carryforwards, Expiration Date | Substantially all of the net operating loss carryforwards and unused minimum tax credit carry forwards expire between 2024 and 2035. | |||
Operating Loss Carryforwards, Limitations on Use | The Company’s utilization of restricted net operating tax loss carry forwards against future income for tax purposes is restricted pursuant to the “change in ownership” rules in Section 382 of the Internal Revenue Code. These rules, in general, provide that an ownership change occurs when the percentage shareholdings of 5% direct or indirect stockholders of a loss corporation have, in aggregate, increased by more than 50 percentage points during the immediately preceding three years. Restrictions in net operating loss carry forwards occurred in 2001 as a result of the acquisition of the Company by Street Capital. Further restrictions may have occurred as a result of subsequent changes in the share ownership and capital structure of the Company and Street Capital and disposition of business interests by the Company. Pursuant to Section 382 of the Internal Revenue Code, the annual usage of the Company’s net operating loss carry forwards was limited to approximately $2.5 million per annum until 2008 and $1.7 million per annum thereafter. There is no certainty that the application of these “change in ownership” rules may not recur, resulting in further restrictions on the Company’s income tax loss carry forwards existing at a particular time. In addition, further restrictions, reductions in, or expiration of net operating loss and net capital loss carry forwards may occur through future merger, acquisition and/or disposition transactions or failure to continue a significant level of business activities. Any such additional limitations could require the Company to pay income taxes on its future earnings and record an income tax expense to the extent of such liability, despite the existence of such tax loss carry forwards. | |||
Open Tax Year | 2,015 | 2,014 | 2,013 | |
Non-current deferred tax liability | $ 960 | $ 960 | ||
Reduction in Deferred Tax Assets | 12,000 | |||
Unrecognized Tax Benefits | $ 12,100 | $ 12,100 | ||
NLEX [Member] | ||||
Income Taxes [Line Items] | ||||
Non-current deferred tax liability | $ 1,000 | |||
Trade Names [Member] | Indefinite-Lived [Member] | NLEX [Member] | ||||
Income Taxes [Line Items] | ||||
Identifiable intangible assets | $ 2,400 | |||
Operating Loss Carryforwards Per Year After 2008 [Member] | ||||
Income Taxes [Line Items] | ||||
Operating Loss Carryforwards, Limitations on Use | The Company’s utilization of restricted net operating tax loss carry forwards against future income for tax purposes is restricted pursuant to the “change in ownership” rules in Section 382 of the Internal Revenue Code. These rules, in general, provide that an ownership change occurs when the percentage shareholdings of 5% direct or indirect stockholders of a loss corporation have, in aggregate, increased by more than 50 percentage points during the immediately preceding three years. Restrictions in net operating loss carry forwards occurred in 2001 as a result of the acquisition of the Company by Street Capital. Pursuant to Section 382 of the Internal Revenue Code, the annual usage of the Company’s net operating loss carry forwards was limited to approximately $2.5 million per annum until 2008 and $1.7 million per annum thereafter. Further restrictions may have occurred as a result of subsequent changes in the share ownership and capital structure of the Company and Street Capital and disposition of business interests by the Company. | |||
Unrestricted [Member] | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | $ 59,300 | |||
Restricted [Member] | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | $ 15,200 |
Summary of Change in Valuation
Summary of Change in Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Beginning balance | $ 31,922 | $ 28,842 |
Change during the period | (264) | 3,080 |
Ending balance | $ 31,658 | $ 31,922 |
Schedule of Components of Incom
Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Expected federal statutory tax benefit | $ 14 | $ (4,130) |
Increase (reduction) in taxes resulting from: | ||
State income taxes recoverable | 21 | 17 |
Non-deductible expenses (permanent differences) | 45 | 1,162 |
Change in valuation allowance | (264) | 3,080 |
Other | 205 | (114) |
Income tax expense | $ 21 | $ 15 |
Schedule of Deferred Tax Assets
Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Income Taxes [Line Items] | |||
Net operating loss carry forwards | $ 29,909 | $ 30,073 | |
Stock based compensation | 1,070 | 1,019 | |
Write-down of real estate inventory | 1,569 | 1,550 | |
Fair value adjustment of contingent consideration | (55) | 91 | |
Other | (139) | (32) | |
Gross deferred tax assets | 30,698 | 30,962 | |
Less: valuation allowance | (31,658) | (31,922) | $ (28,842) |
Deferred tax assets (liabilities), net of valuation allowance | (960) | (960) | |
Trade Names [Member] | |||
Income Taxes [Line Items] | |||
Deferred tax liabilities, intangible assets | (1,363) | (1,388) | |
Customer Relationships [Member] | |||
Income Taxes [Line Items] | |||
Deferred tax liabilities, intangible assets | $ (293) | $ (351) |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Street Capital [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Description of Transaction | Beginning in 2004, HGI and Street Capital entered into successive annual management services agreements (collectively, the “Agreement”). Under the terms of the Agreement, HGI agreed to pay Street Capital for ongoing services provided to HGI by Street Capital personnel. These services included preparation of the Company’s financial statements and regulatory filings, taxation matters, stock-based compensation administration, Board administration, patent portfolio administration and litigation matters. In 2013, Street Capital announced its plan to dispose of its interest in HGI, and on March 20, 2014, Street Capital declared a dividend in kind, consisting of Street Capital’s distribution of its majority interest in HGI to Street Capital shareholders. The dividend was paid on April 30, 2014 to shareholders of record as of April 1, 2014. Following this disposition, the Company and Street Capital entered into a replacement management services agreement (the “Services Agreement”). Under the terms of the Services Agreement, Street Capital remained as external manager and continued to provide the same services, at similar rates, until the Services Agreement was terminated effective August 31, 2015, as described more fully in the Current Report on Form 8-K filed with the SEC on September 1, 2015. | |
David Ludwig [Member] | ||
Related Party Transaction [Line Items] | ||
Second earn-out provision payment | $ 0.8 | |
Street Capital Loan [Member] | ||
Related Party Transaction [Line Items] | ||
Related Party Accrued Interest | 0.5 | |
Related party debt | $ 1 | $ 1.7 |
Schedule of Services Relating t
Schedule of Services Relating to Operations Paid to Related Party (Details) - Street Capital [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | ||
Selling, General and Administrative Expenses Paid to Related Party | $ 0 | $ 290 |
Management Fees [Member] | ||
Related Party Transaction [Line Items] | ||
Selling, General and Administrative Expenses Paid to Related Party | 0 | 240 |
Other Charges [Member] | ||
Related Party Transaction [Line Items] | ||
Selling, General and Administrative Expenses Paid to Related Party | $ 0 | $ 50 |
Schedule of Lease Amounts Paid
Schedule of Lease Amounts Paid to Related Parties (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | ||
Amount Charged on Leased Premises | $ 175 | $ 325 |
Lease Amounts [Member] | Foster City, CA [Member] | Senior Officers of HGI [Member] | ||
Related Party Transaction [Line Items] | ||
Amount Charged on Leased Premises | 76 | 228 |
Lease Amounts [Member] | Edwardsville, IL [Member] | Senior Officers of NLEX [Member] | ||
Related Party Transaction [Line Items] | ||
Amount Charged on Leased Premises | $ 99 | $ 97 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) | Sep. 14, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2003 | Dec. 31, 2014 |
Class Of Stock [Line Items] | ||||||||
Common stock, shares authorized | 300,000,000 | 300,000,000 | ||||||
Common stock, par value | $ 0.01 | $ 0.01 | ||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||||||
Preferred stock, par value | $ 10 | $ 10 | ||||||
Options, Exercised (in shares) | 40,000 | 0 | ||||||
Convertible Preferred Stock, Shares Issuable upon Conversion | The Company’s Class N preferred shares, each of which is convertible to 40 common shares, have the right to receive dividends or dividend equivalents should the Company declare dividends on its common stock. | |||||||
Class N preferred shares, each convertible to common shares | 40 | |||||||
Class N preferred shares, conversion price per share | $ 1,000 | |||||||
Term of Stock-Based Compensation Plan | 6 years 9 months | 4 years 9 months | ||||||
Exercise Price, Outstanding | $ 0.96 | $ 1.70 | $ 1.71 | |||||
Options to purchase, Granted (in shares) | 3,259,200 | 50,000 | ||||||
Exercise price, options granted in period | $ 0.45 | $ 0.42 | ||||||
Stock-based compensation expense | $ 99,000 | $ 358,000 | ||||||
Tax Benefit Realized from Exercise of Stock Options | $ 0 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 3,321,700 | 431,250 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value | $ 0.32 | $ 1.13 | ||||||
Employee Service-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options | $ 1,000,000 | |||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 3 years 10 months 24 days | |||||||
Fair Value of Options Vested in Period | $ 400,000 | $ 800,000 | ||||||
Aggregate intrinsic value of exercisable options | $ 4,000 | $ 9,000 | ||||||
Number of restricted stock awards granted | 300,000 | |||||||
Other Options Issued [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Stock Option Award Vesting Period | 4 years | |||||||
Options to purchase, Granted (in shares) | 0 | 0 | 625,000 | |||||
Exercise price, options granted in period | $ 2 | |||||||
Stock Options [Member] | Selling, General and Administrative Expenses [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Stock-based compensation expense | $ 100,000 | $ 300,000 | ||||||
Restricted Stock [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Stock-based compensation expense | $ 18,000 | 100,000 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 3 months | |||||||
Number of restricted shares awarded to each employee | 150,000 | |||||||
Restricted Stock [Member] | Approximations [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 4,000 | |||||||
2003 Stock Option and Appreciation Rights Plan [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Options, Exercised (in shares) | 40,000 | 0 | ||||||
Number of Shares Authorized for Stock-Based Compensation Plan | 2,000,000 | |||||||
Term of Stock-Based Compensation Plan | 10 years | |||||||
Stock Option Award Vesting Period | 4 years | |||||||
Options to purchase, Granted (in shares) | 0 | |||||||
2003 Stock Option and Appreciation Rights Plan [Member] | Minimum [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Exercise Price, Outstanding | $ 0.08 | |||||||
2003 Stock Option and Appreciation Rights Plan [Member] | Maximum [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Exercise Price, Outstanding | $ 2 | |||||||
2010 Non-Qualified Stock Option Plan [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Number of Shares Authorized for Stock-Based Compensation Plan | 1,250,000 | |||||||
Stock Option Award Vesting Period | 4 years | |||||||
Options to purchase, Granted (in shares) | 720,000 | 50,000 | ||||||
2010 Non-Qualified Stock Option Plan [Member] | Directors [Member] | Annual Compensation [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Options to purchase, Granted (in shares) | 70,000 | 50,000 | ||||||
2010 Non-Qualified Stock Option Plan [Member] | Directors [Member] | Special Grant to Directors [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Options to purchase, Granted (in shares) | 125,000 | |||||||
2010 Non-Qualified Stock Option Plan [Member] | Officer [Member] | Special Grant to Employee Base [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Options to purchase, Granted (in shares) | 525,000 | |||||||
2010 Non-Qualified Stock Option Plan [Member] | Minimum [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Exercise Price, Outstanding | $ 0.24 | |||||||
2010 Non-Qualified Stock Option Plan [Member] | Maximum [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Exercise Price, Outstanding | $ 0.70 | |||||||
Equity Partners Stock Option Plan [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Number of Shares Authorized for Stock-Based Compensation Plan | 230,000 | |||||||
Options to purchase, Granted (in shares) | 0 | 0 | 230,000 | |||||
Exercise price, options granted in period | $ 1.83 | |||||||
2016 Stock Option Plan [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Number of Shares Authorized for Stock-Based Compensation Plan | 3,150,000 | |||||||
Stock Option Award Vesting Period | 4 years | |||||||
Exercise Price, Outstanding | $ 0.45 | |||||||
Options to purchase, Granted (in shares) | 2,539,200 | 0 | ||||||
Common Stock [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Options, Exercised (in shares) | 40,000 | |||||||
Share price | $ 25 | |||||||
Class N preferred shareholders to liquidation preference, conversion price per share | $ 1,000 | |||||||
Conversion of class N preferred stock to shares of common stock | 240 | |||||||
Preferred Stock [Member] | ||||||||
Class Of Stock [Line Items] | ||||||||
Convertible Preferred Stock, Shares Issuable upon Conversion | Each Class N preferred share has a voting entitlement equal to 40 common shares, votes with the common stock on an as-converted basis and is senior to all other preferred stock of the Company. Dividends, if any, will be paid on an as-converted basis equal to common stock dividends. The conversion value of each Class N preferred share is $1,000, and each share is convertible to 40 common shares at the rate of $25.00 per common share. The Class N preferred shareholders are entitled to liquidation preference over common shareholders equivalent to $1,000 per share. | |||||||
Conversion of class N preferred stock to shares of common stock | 0 | (6) |
Schedule of 2003 Stock Option a
Schedule of 2003 Stock Option and Appreciation Rights Plan (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 2,175,000 | 2,165,000 |
Options forfeited | (205,000) | 0 |
Options exercised | (40,000) | 0 |
Options expired | (20,000) | (40,000) |
Options outstanding, end of year | 5,169,200 | 2,175,000 |
2003 Stock Option and Appreciation Rights Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 1,170,000 | 1,210,000 |
Options forfeited | (115,000) | 0 |
Options exercised | (40,000) | 0 |
Options expired | (20,000) | (40,000) |
Options outstanding, end of year | 995,000 | 1,170,000 |
Schedule of 2010 Non-Qualified
Schedule of 2010 Non-Qualified Stock Option Plan (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 2,175,000 | 2,165,000 |
Options granted | 3,259,200 | 50,000 |
Options forfeited | (205,000) | 0 |
Options outstanding, end of year | 5,169,200 | 2,175,000 |
2010 Non-Qualified Stock Option Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 150,000 | 100,000 |
Options granted | 720,000 | 50,000 |
Options forfeited | (90,000) | 0 |
Options outstanding, end of year | 780,000 | 150,000 |
Schedule of Equity Partners Sto
Schedule of Equity Partners Stock Option Plan (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2011 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options outstanding, beginning of year | 2,175,000 | 2,165,000 | |
Options granted | 3,259,200 | 50,000 | |
Options forfeited | (205,000) | 0 | |
Options outstanding, end of year | 5,169,200 | 2,175,000 | |
Equity Partners Stock Option Plan [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options outstanding, beginning of year | 230,000 | 230,000 | |
Options granted | 0 | 0 | 230,000 |
Options forfeited | 0 | 0 | |
Options outstanding, end of year | 230,000 | 230,000 |
Schedule of Other Stock Options
Schedule of Other Stock Options Issued (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2012 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options outstanding, beginning of year | 2,175,000 | 2,165,000 | |
Options granted | 3,259,200 | 50,000 | |
Options forfeited | (205,000) | 0 | |
Options outstanding, end of year | 5,169,200 | 2,175,000 | |
Other Options Issued [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options outstanding, beginning of year | 625,000 | 625,000 | |
Options granted | 0 | 0 | 625,000 |
Options forfeited | 0 | 0 | |
Options outstanding, end of year | 625,000 | 625,000 |
Schedule of Heritage Global Inc
Schedule of Heritage Global Inc. 2016 Stock Option Plan (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 2,175,000 | 2,165,000 |
Options granted | 3,259,200 | 50,000 |
Options forfeited | (205,000) | 0 |
Options outstanding, end of year | 5,169,200 | 2,175,000 |
2016 Stock Option Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 0 | 0 |
Options granted | 2,539,200 | 0 |
Options forfeited | 0 | 0 |
Options outstanding, end of year | 2,539,200 | 0 |
Schedule of Assumptions for Fai
Schedule of Assumptions for Fair Value of Option Grant (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Risk-free interest rate | 0.99% | |
Risk-free interest rate (Minimum) | 1.00% | |
Risk-free interest rate (Maximum) | 2.00% | |
Expected life (years) | 6 years 9 months | 4 years 9 months |
Expected volatility | 94.00% | |
Expected volatility (Minimum) | 94.00% | |
Expected volatility (Maximum) | 99.00% | |
Expected dividend yield | 0.00% | 0.00% |
Schedule of Changes in Common S
Schedule of Changes in Common Stock Options (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Options outstanding, beginning of year | 2,175,000 | 2,165,000 |
Options, Granted | 3,259,200 | 50,000 |
Options, Exercised | (40,000) | 0 |
Options, Expired | (20,000) | (40,000) |
Options, Forfeited | (205,000) | 0 |
Options outstanding, end of year | 5,169,200 | 2,175,000 |
Options exercisable at year end | 1,847,500 | 1,743,750 |
Weighted Average Exercise Price, Outstanding at beginning of year | $ 1.70 | $ 1.71 |
Weighted Average Exercise Price, Granted | 0.45 | 0.42 |
Weighted Average Exercise Price, Exercised | 0.12 | |
Weighted Average Exercise Price, Expired | 0.15 | 0.90 |
Weighted Average Exercise Price, Forfeited | 0.92 | |
Weighted Average Exercise Price, Outstanding at end of year | 0.96 | 1.70 |
Weighted Average Exercise Price, Options exercisable at end of year | 1.86 | 1.78 |
Weighted-average fair value of options granted during the year | $ 0.31 | $ 0.29 |
Schedule of Information about A
Schedule of Information about All Stock Options Outstanding (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options Outstanding | 5,169,200 | 2,175,000 | 2,165,000 |
Options Outstanding, Weighted Average Remaining Life (years) | 7 years | ||
Options Outstanding, Weighted Average Exercise Price | $ 0.96 | $ 1.70 | $ 1.71 |
Number Exercisable | 1,847,500 | 1,743,750 | |
Number Exercisable, Weighted Average Remaining Life (years) | 2 years | ||
Number Exercisable, Weighted Average Exercise Price | $ 1.86 | $ 1.78 | |
Exercise Price $0.08 to $0.15 [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options Outstanding | 10,000 | ||
Options Outstanding, Weighted Average Remaining Life (years) | 2 months 12 days | ||
Options Outstanding, Weighted Average Exercise Price | $ 0.08 | ||
Number Exercisable | 10,000 | ||
Number Exercisable, Weighted Average Remaining Life (years) | 0 years | ||
Number Exercisable, Weighted Average Exercise Price | $ 0.08 | ||
Exercise Price $0.24 to $0.40 [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options Outstanding | 40,000 | ||
Options Outstanding, Weighted Average Remaining Life (years) | 9 years 3 months 18 days | ||
Options Outstanding, Weighted Average Exercise Price | $ 0.24 | ||
Exercise Price $0.42 to $1.00 [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options Outstanding | 3,459,200 | ||
Options Outstanding, Weighted Average Remaining Life (years) | 9 years 6 months | ||
Options Outstanding, Weighted Average Exercise Price | $ 0.48 | ||
Number Exercisable | 177,500 | ||
Number Exercisable, Weighted Average Remaining Life (years) | 3 years 4 months 24 days | ||
Number Exercisable, Weighted Average Exercise Price | $ 0.92 | ||
Exercise Price $1.83 to $2.00 [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options Outstanding | 1,660,000 | ||
Options Outstanding, Weighted Average Remaining Life (years) | 1 year 9 months 18 days | ||
Options Outstanding, Weighted Average Exercise Price | $ 1.97 | ||
Number Exercisable | 1,660,000 | ||
Number Exercisable, Weighted Average Remaining Life (years) | 1 year 9 months 18 days | ||
Number Exercisable, Weighted Average Exercise Price | $ 1.97 |
Schedule of Changes in Restrict
Schedule of Changes in Restricted Stock Awards (Details) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Restricted Stock Awards, Unvested at December 31, 2015 | shares | 150,000 |
Restricted Stock Awards, Forfeited | shares | (37,500) |
Restricted Stock Awards, Vested | shares | (75,000) |
Restricted Stock Awards, Unvested at December 31, 2016 | shares | 37,500 |
Restricted Stock Awards, Vested at December 31, 2016 | shares | 225,000 |
Weighted Average Grant Date Fair Value, Unvested at December 31, 2015 | $ / shares | $ 0.38 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 0.38 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 0.38 |
Weighted Average Grant Date Fair Value, Unvested at December 31, 2016 | $ / shares | 0.38 |
Weighted Average Grant Date Fair Value, Vested at December 31, 2016 | $ / shares | $ 0.38 |