Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 01, 2019 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Trading Symbol | hgbl | ||
Entity Registrant Name | Heritage Global Inc. | ||
Entity Central Index Key | 0000849145 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 29,253,278 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Public Float | $ 9 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 4,268 | $ 2,109 |
Accounts receivable (net of allowance for doubtful accounts of $0 in 2018; $110 in 2017) | 400 | 384 |
Inventory – equipment | 2,405 | 170 |
Other current assets | 607 | 357 |
Total current assets | 7,680 | 3,020 |
Property and equipment, net | 175 | 145 |
Equity method investments | 2,767 | 14 |
Intangible assets, net | 3,627 | 3,877 |
Goodwill | 6,158 | 6,158 |
Other assets | 224 | 236 |
Total assets | 20,631 | 13,450 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 8,101 | 5,019 |
Current portion of related party debt | 0 | 382 |
Current portion of third party debt | 1,178 | 356 |
Contingent consideration | 2,774 | |
Other current liabilities | 892 | 133 |
Total current liabilities | 10,171 | 8,664 |
Non-current portion of third party debt | 438 | 786 |
Other non-current liabilities | 1,838 | |
Deferred tax liabilities | 584 | 512 |
Total liabilities | 13,031 | 9,962 |
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, 2018 and December 31, 2017 | 6 | 6 |
Common stock, $0.01 par value, authorized 300,000,000 shares; issued and outstanding 29,253,278 shares at December 31, 2018 and 28,470,148 shares at December 31, 2017 | 293 | 285 |
Additional paid-in capital | 284,751 | 284,396 |
Accumulated deficit | (277,373) | (281,124) |
Accumulated other comprehensive loss | (77) | (75) |
Total stockholders’ equity | 7,600 | 3,488 |
Total liabilities and stockholders’ equity | $ 20,631 | $ 13,450 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 0 | $ 110 |
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 | 29,253,278 | 28,470,148 |
Common stock, shares outstanding | 29,253,278 | 28,470,148 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | ||
Total revenues | $ 23,664 | $ 20,129 |
Operating costs and expenses: | ||
Selling, general and administrative | 15,219 | 13,597 |
Depreciation and amortization | 319 | 313 |
Settlement accrual (Note 9) | 0 | 1,142 |
Total operating costs and expenses | 19,586 | 19,765 |
Operating income | 4,078 | 364 |
Fair value adjustment of contingent consideration | 157 | (938) |
Interest and other expense, net | (214) | (95) |
Income (loss) before income tax expense (benefit) | 4,021 | (669) |
Income tax expense (benefit) | 270 | (420) |
Net income (loss) | $ 3,751 | $ (249) |
Weighted average common shares outstanding – basic | 28,581,654 | 28,468,545 |
Weighted average common shares outstanding – diluted | 28,894,927 | 28,468,545 |
Net income (loss) per share – basic | $ 0.13 | $ (0.01) |
Net income (loss) per share – diluted | $ 0.13 | $ (0.01) |
Comprehensive income (loss): | ||
Net income (loss) | $ 3,751 | $ (249) |
Other comprehensive loss: | ||
Foreign currency translation adjustment | (2) | (4) |
Comprehensive income (loss) | 3,749 | (253) |
Services Revenue [Member] | ||
Revenues: | ||
Total revenues | 21,658 | 17,937 |
Operating costs and expenses: | ||
Cost of services revenue and assets sales | 2,904 | 3,007 |
Asset Sales [Member] | ||
Revenues: | ||
Total revenues | 2,006 | 2,192 |
Operating costs and expenses: | ||
Cost of services revenue and assets sales | $ 1,144 | $ 1,706 |
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 Loss [Member] |
Beginning 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 | ||||
Issuance of common stock from stock option awards | $ 1 | 1 | ||||
Issuance of common stock from stock options awards (shares) | 10,000 | 10,000 | ||||
Stock-based compensation expense | $ 246 | 246 | ||||
Net (loss) income | (249) | (249) | ||||
Foreign currency translation adjustment | (4) | (4) | ||||
Ending Balance at Dec. 31, 2017 | 3,488 | $ 6 | $ 285 | 284,396 | (281,124) | (75) |
Balance (in shares) at Dec. 31, 2017 | 569 | 28,480,148 | ||||
Issuance of common stock from stock option awards | $ 74 | $ 2 | 72 | |||
Issuance of common stock from stock options awards (shares) | 173,130 | 173,130 | ||||
Issuance of restricted common stock | $ 6 | (6) | ||||
Issuance of restricted common stock (shares) | 300,000 | 600,000 | ||||
Stock-based compensation expense | $ 289 | 289 | ||||
Net (loss) income | 3,751 | 3,751 | ||||
Foreign currency translation adjustment | (2) | (2) | ||||
Ending Balance at Dec. 31, 2018 | $ 7,600 | $ 6 | $ 293 | $ 284,751 | $ (277,373) | $ (77) |
Balance (in shares) at Dec. 31, 2018 | 569 | 29,253,278 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows provided by operating activities: | ||
Net income (loss) | $ 3,751 | $ (249) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Accrued interest added to principal of related party debt | 8 | 33 |
Settlement accrual (Note 9) | 0 | 1,142 |
Fair value adjustment of contingent consideration | (157) | 938 |
Stock-based compensation expense | 289 | 246 |
Depreciation and amortization | 319 | 313 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (16) | 863 |
Inventory – equipment | (2,235) | 93 |
Other assets | (238) | 12 |
Accounts payable and accrued liabilities | 3,839 | (1,761) |
Other non-current liabilities | 1,838 | 0 |
Deferred tax liabilities | 72 | (448) |
Net cash provided by operating activities | 7,470 | 1,182 |
Cash flows used in investing activities: | ||
Purchase of property and equipment | (99) | (44) |
Investment in equity method investments | (2,753) | 0 |
Net cash used in investing activities | (2,852) | (44) |
Cash flows used in financing activities: | ||
Proceeds from debt payable to related party | 0 | 750 |
Proceeds from debt payable to third parties | 1,300 | 0 |
Repayment of debt payable to related party | (390) | (1,413) |
Repayment of debt payable to third parties | (826) | 0 |
Payment of contingent consideration | (2,617) | (897) |
Proceeds from exercise of options to purchase common shares | 74 | 1 |
Net cash used in financing activities | (2,459) | (1,559) |
Net increase (decrease) in cash and cash equivalents | 2,159 | (421) |
Cash and cash equivalents at beginning of year | 2,109 | 2,530 |
Cash and cash equivalents at end of year | 4,268 | 2,109 |
Supplemental cash flow information: | ||
Cash paid for income taxes | 56 | 23 |
Cash paid for interest | $ 249 | 3 |
Non-cash Financing Activities: | ||
Promissory note issued in connection with settlement accrual (Note 9) | $ 1,142 |
Description of Business and Pri
Description of Business and Principles of Consolidation | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 | |
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 income (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. 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 agreement (collectively, “Joint Ventures”). Transactions in which the Company’s ownership share meets the criteria for the equity method investments under ASC 323 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 In prior years the Company has incurred significant operating losses and has partially relied on debt financing to fund its operations. As of December 31, 2018, the Company had an accumulated deficit of $277.4 million and a working capital deficit of $2.5 million. At December 31, 2018, the Company had cash and cash equivalents of $4.3 million and during 2018 the Company generated approximately $7.5 million in positive cash flows from operating activities. Until the Company achieves consistent profitability, it might need to continue to partially rely on debt financing to fund its operations. Management expects that a combination of existing cash and cash equivalents, cash flows from the Company’s asset liquidation operations and proceeds from existing 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. 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. All inventory is recorded at the lower of cost or net realizable value. 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, 2018 and 2017, the carrying values of the Company’s cash, accounts receivable, 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, 2018 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. No impairment charges were necessary during 2018. 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. No impairment charges were necessary during 2018. 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, 2018 based on uncertainty relating to the further utilization of the net deferred tax assets. For further discussion of our income taxes, see Note 12 to the consolidated financial statements. On December 22, 2017, the 2017 Tax Cuts and Jobs Act (“Tax Act”) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax (Toll Charge) on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. The most significant change that impacts the Company is the reduction in the corporate federal income tax rate from 35% to 21%. In a manner consistent with ASC 740, the effect of a change in tax law or rates shall be recognized at the date of enactment, accordingly, the Company accounted for the corporate federal rate reduction in the fourth quarter of 2017. Under the guidance set forth in the SEC’s Staff Accounting Bulletin No. 118 (“SAB 118”), the Company may record provisional amounts for the impact of the Tax Act. As of the third quarter of 2018, the Company had finalized its 2017 federal income tax return and as such, completed the accounting for the income tax effects of the Tax Act. Any future adjustments required due to additional guidance or changes in the interpretations of the Tax Act will be recorded as discrete adjustments to the income tax expense in the period in which such changes occur. Contingent consideration At December 31, 2018 the Company no longer carries a contingent consideration balance. We previously had 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 was assessed quarterly, and any adjustments, together with the accretion of the present value discount, were reported as a fair value adjustment on the Company’s consolidated statement of operations. The Company adjusted its contingent consideration liability each reporting period to the fair value of the estimated remaining earn-out liability owed to David Ludwig. During 2018 the Company made the final contingent consideration payments to David Ludwig in the aggregate amount of $2.6 million, resulting in a contingent consideration of zero at December 31, 2018. 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 reasonably estimated, the Company accounts for the estimated loss in the current period. See Note 14 for further discussion. Revenue recognition On January 1, 2018, the Company adopted the new accounting standard FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) to all contracts using the modified retrospective method. Based on the Company’s analysis of contracts with customers in prior periods, there was no cumulative effect adjustment to the opening balance of the Company’s accumulated deficit as a result of the adoption of this new standard. We expect the impact of the adoption of the new standard to be immaterial to the consolidated financial statements on an ongoing basis. Services revenue generally consists of commissions and fees from providing auction services, appraisals, brokering of sales transactions and providing merger and acquisition advisory services. Asset sales revenue generally consists of proceeds obtained through sales of purchased assets. Revenue is recognized for both services revenue and asset sales revenue based on the ASC 606 standard recognition model, which consists of the following: (1) an agreement exists between two or more parties that creates enforceable rights and obligations, (2) the performance obligations are clearly identified, (3) the transaction price has been determined, (4) the transaction price has been properly allocated to each performance obligation, and (5) the entity satisfies a performance obligation by transferring a promised good or service to a customer for each of the entities. All services and asset sales revenue from contracts with customers is considered to be one reporting segment — the asset liquidation business. Although the Company provides various services within the asset liquidation business, it does not disaggregate revenue streams further than as reported in its statement of operations, services revenue and asset sales. Generally, revenue is recognized in the asset liquidation business at the point in time in which the performance obligation has been satisfied and full consideration is received. The exception to recognition at a point in time occurs when certain contracts provide for advance payments recognized over a period of time. Services revenue recognized over a period of time is not material in comparison to total revenues (4% of total revenues for the year ended December 31, 2018), and therefore not reported on a disaggregated basis. Further, as certain contracts stipulate that the customer make advance payments, amounts not recognized within the reporting period are considered deferred revenue and the Company’s “contract liability”. As of December 31, 2018, the deferred revenue balance was approximately $795,000. The Company records receivables related to asset liquidation in certain situations based on timing of payments for asset liquidation transactions held at the end of the reporting period; however, revenue is generally recognized in the period that the Company satisfies the performance obligation and cash is collected. The Company does not record a “contract asset” for partially satisfied performance obligations. 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, in which the Company’s ownership share meets the criteria for the equity method investments under ASC 323, 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, net of estimated forfeitures. 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 the years ended December 31, 2018 and 2017, was $0.8 million and $0.5 million, respectively. Recently adopted accounting pronouncements In 2014, the FASB issued new guidance related to revenue recognition (ASU 2014-09 Revenue from Contracts with Customers (Topic 606)). Subsequently the FASB has issued additional guidance (ASUs 2015-14; 2016-08; 2016-10; 2016-12; 2016-13; 2016-20). The guidance establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The above stated updates became effective January 1, 2018 and did not have a material impact on the Company’s consolidated financial statements, except for more comprehensive disclosure requirements (see Note 2 — Revenue Recognition for further detail). In 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (“ASU 2016-15”), which clarifies the classification of certain cash receipts and payments. The specific cash flow issues addressed by ASU 2016-15, with the objective of reducing the existing diversity in practice, are as follows: (1) Debt prepayment or debt extinguishment costs; (2) Settlement of zero-coupon debt instruments or other debt instruments with insignificant coupon interest rates; (3) Contingent consideration payments made after a business combination; (4) Proceeds from the settlement of insurance claims; (5) Proceeds from the settlement of corporate-owned life insurance policies; (6) Distributions received from equity method investees; (7) Beneficial interest in securitization transactions; and (8) Separately identifiable cash flows and application of the predominance in principle. ASU 2016-15 became effective January 1, 2018 and did not have a material impact on the Company’s consolidated financial statements. In 2017, the FASB issued ASU 2017-01, Business Combinations (“ASU 2017-01”), which clarifies the definition of a business under ASC 805. The main provisions of ASU 2017-01 provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. ASU 2017-01 became effective January 1, 2018 and did not have a material impact on the Company’s consolidated financial statements. Future accounting pronouncements In 2016, the FASB issued ASU 2016-02, Leases In 2017, the FASB issued ASU 2017-04, Intangibles Goodwill and Other |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
Inventory | Note 3 – Inventory As of December 31, 2018, the Company’s inventory balance largely consisted of machinery and equipment related to a purchase with partners of a pharmaceutical campus in Huntsville, Alabama, which was finalized in the fourth quarter of 2018. The 110-acre campus includes three independent modern buildings with various pharmaceutical manufacturing and packing line assets. The Company’s interest in the purchase and carrying value for this inventory at December 31, 2018 was approximately $2.3 million. |
Equity Method Investments
Equity Method Investments | 12 Months Ended |
Dec. 31, 2018 | |
Equity Method Investments And Joint Ventures [Abstract] | |
Equity Method Investments | Note 4 – Equity Method Investments On November 14, 2018, CPFH LLC was formed to purchase certain real estate assets among partners in a Joint Venture. The Company’s share of the Joint Venture is 25%. The table below details CPFH LLC’s revenues and operating loss during the years ended December 31, 2018 and 2017 (in thousands): 2018 2017 Revenues $ — $ — Operating loss $ (115 ) $ — The table below details the summarized components of assets and liabilities, as at December 31, 2018 and 2017, of CPFH LLC at those dates (in thousands): 2018 2017 Assets $ 11,064 $ — Liabilities $ 168 $ — |
Earnings per Share
Earnings per Share | 12 Months Ended |
Dec. 31, 2018 | |
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: 2018 2017 Basic weighted average shares outstanding 28,581,654 28,468,545 Treasury stock effect of common stock options and restricted stock awards 313,273 — Diluted weighted average common shares outstanding 28,894,927 28,468,545 For the years ended December 31, 2018 and 2017 there were potential common shares totaling approximately 1.0 million and 5.0 million, respectively, that were excluded from the computation of diluted EPS as the inclusion of such shares would have been anti-dilutive. |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 2018 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment, net | Note 6 – Property and Equipment, net 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, 2018 December 31, 2017 Furniture, fixtures and office equipment $ 228 $ 164 Software and technology assets 326 291 554 455 Accumulated depreciation (379 ) (310 ) Property and equipment, net $ 175 $ 145 Depreciation expense related to property and equipment was $69,000 and $68,000 for the years ended December 31, 2018 and 2017, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017 are shown below (in thousands except for lives): Amortized Intangible Assets Original Life (years) Remaining Life (years) Carrying Value December 31 2017 Amortization Carrying Value December 2018 Customer Network (HGP) 12 5.2 $ 136 $ (22 ) $ 114 Trade Name (HGP) 14 7.2 850 (104 ) 746 Customer Relationships (NLEX) 7.6 3.1 440 (110 ) 330 Website (NLEX) 5 0 14 (14 ) — Total 1,440 (250 ) 1,190 Unamortized Intangible Assets Trade Name (NLEX) N/A N/A 2,437 — 2,437 Total $ 3,877 $ (250 ) $ 3,627 Amortized Intangible Assets Original Life (years) Remaining Life (years) Carrying Value December 31 2016 Amortization Carrying Value December 31 2017 Customer Network (HGP) 12 6.2 $ 158 $ (22 ) $ 136 Trade Name (HGP) 14 8.2 953 (103 ) 850 Customer Relationships (NLEX) 7.6 4.1 550 (110 ) 440 Website (NLEX) 5 1.4 24 (10 ) 14 Total 1,685 (245 ) 1,440 Unamortized Intangible Assets Trade Name (NLEX) N/A N/A 2,437 — 2,437 Total $ 4,122 $ (245 ) $ 3,877 Amortization expense during each of 2018 and 2017 was $0.3 million and $0.2 million, respectively. No significant residual value is estimated for these intangible assets. The Company performed its annual impairment test for the year ended December 31, 2018, 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 (in thousands): Year Amount 2019 $ 236 2020 236 2021 236 2022 128 2023 125 Thereafter 229 Total $ 1,190 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. Goodwill consisted of the following at December 31, 2018 and 2017 (in thousands): Acquisition December 31, 2018 December 31, 2017 Equity Partners $ 573 $ 573 HGP 2,040 2,040 NLEX 3,545 3,545 Total goodwill $ 6,158 $ 6,158 The Company performed its annual impairment test for the year ended December 31, 2018, 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, 2018 | |
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 $0 and $110,000 as of December 31, 2018 and 2017, respectively. Accounts payable and accrued liabilities Accounts payable and accrued liabilities consisted of the following at December 31, 2018 and 2017 (in thousands): 2018 2017 Due to auction clients $ 3,113 $ 2,478 Sales and other taxes 293 342 Remuneration and benefits 2,112 957 Accounting, auditing and tax consulting 140 174 Customer deposits 600 102 Due to Joint Venture partners 1,367 247 Asset liquidation expenses 191 254 Interest expense 6 42 Other 279 423 Total accounts payable and accrued liabilities $ 8,101 $ 5,019 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Note 9 – Debt Outstanding debt at December 31, 2018 and 2017 is summarized as follows (in thousands): 2018 2017 Current: Related party debt $ — $ 382 Third party debt 1,178 356 Non-current: Related party debt — — Third party debt 438 786 Total debt $ 1,616 $ 1,524 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 stockholders 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, 2017, the interest rate on the loan was 5.50%. In the fourth quarter of 2016, the Company entered into a related party secured promissory note with an entity owned by certain executive officers of the Company (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 On September 27, 2018, Heritage Global, Inc. entered into a secured promissory note and business loan agreement (the “Credit Facility”) with First Choice Bank, for a $1.5 million revolving line of credit. The Credit Facility matures on October 5, 2019 and replaced the Line of Credit. The Company is permitted to use the proceeds of the loan solely for its business operations. The Credit Facility accrues at a variable interest rate, which is equal to the rate of interest last quoted by The Wall Street Journal as the “prime rate,” not to be less than 5.25% per annum, with a minimum interest charge of $100 per month. The Company will pay interest on the Credit Facility in regular monthly payments, beginning on November 5, 2018. The Company may prepay the Credit Facility without penalty, subject to the minimum monthly interest charge. The Company is the borrower, with certain of the subsidiaries of the Company as guarantors under the Credit Facility. The Credit Facility is secured by a first priority security interest in all of the Company’s and its certain subsidiaries’ current and future tangible and intangible assets, inventory, chattel paper, accounts, equipment and general intangibles. The availability of draws under the Credit Facility is conditioned, among other things, on the compliance with certain customary representations and warranties, including the preparation of timely financial statements, payment of taxes and disclosure of all material legal or administrative proceedings. The agreement governing the Credit Facility also contains customary affirmative covenants regarding, among other things, the maintenance of records, compliance with governmental requirements, timely submission of all filings with the Securities and Exchange Commission and payment of taxes. The Credit Facility contains certain customary financial covenants and negative covenants that, among other things, include restrictions on the Company’s ability to create, incur or assume indebtedness for borrowed money, including capital leases or to sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of the Company’s assets. During the fourth quarter of 2018, the Company had borrowed $1.3 million on the line of credit and made one repayment of $0.5 million, resulting in a balance of $0.8 million as of December 31, 2018. On January 30, 2018, HG LLC, a wholly owned subsidiary of HGI, settled a long-standing litigation matter that was commenced against the predecessor in interest of HG LLC. The settlement, which also involved several other co-defendant parties, included a complete release of HG LLC’s predecessor in interest and its successors and affiliates by the plaintiffs from all claims arising from or relating to the facts and circumstances underlying the litigation. The portion of the settlement attributable to HG LLC’s predecessor in interest was paid on behalf of HG LLC by 54 Finance, LLC (“54 Finance”) (an affiliate of a co-defendant in the litigation) in consideration of a Promissory Note dated January 30, 2018 (the “Note”) from HG LLC in the amount of $1,260,000. Pursuant to a Guaranty dated January 30, 2018, HGI has guaranteed the obligations of HG LLC under the Note, which are required to be paid in 36 equal installments of $35,000, and any remaining outstanding balance hereunder shall be due and payable in full on January 30, 2021. As of December 31, 2017, we accrued the present value of the Note based on the payment terms noted above and at an interest rate of 6.5%. The Note was recorded as of December 31, 2017 as this was determined to be a recognized subsequent event pursuant to ASC 855, Subsequent Events. Upon the occurrence of any Event of Default (as defined below), in the sole discretion of 54 Finance, the outstanding principal balance of the Note will bear interest at a rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to 12%. An “Event of Default” means: (a) any failure of HG LLC to pay when due any amount thereunder, when and as due, (b) any failure on the part of HG LLC to pay upon 54 Finance’s demand any fees, costs, expenses or other charges hereunder or otherwise due to HG LLC under the Note or the Guaranty, (c) any breach, failure or default under the Guaranty, (d) HG LLC or HGI repudiates or revokes, or purports to repudiate or revoke, any obligation under the Note or the Guaranty, or the obligation of HGI under the Guaranty is limited or terminated by operation of law or by HGI, or (e) HG LLC or HGI are insolvent or admit in writing its inability to pay debts as they mature, or make a general assignment for the benefit of its creditors, or institute any bankruptcy, insolvency or similar proceeding under the laws of any jurisdiction, or take any action to authorize such proceeding. During 2018 the Company made the scheduled payments on the Note totaling $385,000. The outstanding balance on the Note as of December 31, 2018 was $816,000. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017, the Company had no Level 1 or Level 2 assets or liabilities measured at fair value. As of December 31, 2017, the Company’s contingent consideration from the acquisition of NLEX in 2014 of $2.8 million, was the only financial asset or liability measured at fair value on a recurring basis, and was classified as Level 3 within the fair value hierarchy. The final payment on the contingent consideration was paid during 2018. 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 Level 3 fair value of the contingent consideration was $2,774,000 as of December 31, 2017. 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 was 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 were 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 2017 and 2018 (in thousands): Balance at December 31, 2016 $ 2,733 Payment of contingent consideration (897 ) Fair value adjustment of contingent consideration 938 Balance at December 31, 2017 2,774 Payment of contingent consideration (2,617 ) Fair value adjustment of contingent consideration (157 ) Balance at December 31, 2018 $ - |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 – Commitments and Contingencies At December 31, 2018, HGI’s lease commitments related to its offices in California, Illinois, Maryland, and Arizona, a warehouse space lease in the Netherlands, and an automobile lease. The California office leases expire in January 2020 and April 2021; the Illinois office lease expires in June 2023, and the Arizona office lease expires in August 2019. The automobile lease expires in May 2020 and the Netherlands warehouse lease expires in August 2019. The annual lease obligations are as shown below (in thousands): 2019 $ 598 2020 453 2021 222 2022 111 2023 46 Total $ 1,430 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. As of December 31, 2018, in connection to a purchase with partners of a pharmaceutical campus in Huntsville, Alabama, the Company has a contractual obligation to make remaining guaranteed distribution payments to a partner totaling approximately $3.8 million by no later than May 26, 2020. At December 31, 2018 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, 2018 | |
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, 2017 and 2018, 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 2017 and 2018 (in thousands): Balance at December 31, 2016 $ 31,658 Change during 2017 (1,726 ) Balance at December 31, 2017 29,932 Change during 2018 (999 ) Balance at December 31, 2018 $ 28,933 At December 31, 2018 the Company has aggregate tax net operating loss carry forwards of approximately $71.8 million ($56.6 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 $0.1 million. Substantially all of the net operating loss carry forwards and unused minimum tax credit carry forwards expire between 2024 and 2036. 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): 2018 2017 Expected federal statutory tax benefit (loss) $ 963 $ (228 ) Increase (reduction) in taxes resulting from: State income taxes recoverable 198 21 Non-deductible expenses (permanent differences) 42 51 Change in valuation allowance (999 ) (1,726 ) Tax rate changes (256 ) 1,477 Other 322 (15 ) Income tax expense (benefit) $ 270 $ (420 ) 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 2015 through 2017 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, 2018 and 2017 are as follows in (thousands): 2018 2017 Net operating loss carry forwards $ 28,573 $ 29,303 Stock based compensation 763 610 Trade names (763 ) (690 ) Customer relationships (106 ) (123 ) Fair value adjustment of contingent consideration — 168 Other (118 ) 152 Gross deferred tax assets 28,349 29,420 Less: valuation allowance (28,933 ) (29,932 ) Deferred tax assets (liabilities), net of valuation allowance $ (584 ) $ (512 ) 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 $0.6 million. The 2017 Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017, and significantly affected U.S. tax law by changing how the U.S. imposes income tax on multinational corporations. The Tax Act reduces the U.S. statutory corporate tax rate from 35% to 21% for our tax years beginning in 2018, which resulted in the re-measurement of the federal portion of our deferred tax liabilities as of December 31, 2017 from 35% to the new 21% tax rate; a reduction of approximately $1.5 million. Under the guidance set forth in the SEC’s Staff Accounting Bulletin No. 118 (“SAB 118”), the Company may record provisional amounts for the impact of the Tax Act. As of the third quarter of 2018, the Company had finalized its 2017 federal income tax return and as such, completed the accounting for the income tax effects of the Tax Act. Any future adjustments required due to additional guidance or changes in the interpretations of the Tax Act will be recorded as discrete adjustments to the income tax expense in the period in which such change occur. 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 $4.4 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, 2018, the unrecognized tax benefit has been determined to be $4.4 million. 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, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13 – Related Party Transactions Debt with Street Capital During 2018, the Company terminated the existing Street Capital Loan through the repayment of all principal and interest outstanding totaling $0.4 million. The Company’s loan from Street Capital was previously classified as related party debt because the Company’s Board of Director Chairman was an affiliate of Street Capital through December 2018. Transactions with Other Related Parties 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 was approximately $105,000 and $100,000 for the years ended December 31, 2018 and 2017, respectively, and is included in selling, general and administrative expenses in the consolidated financial statements. All of the payments in both 2018 and 2017 were made to David Ludwig. On June 1, 2018, the Company amended its lease agreement with David Ludwig, whereby the term of the agreement extends to May 31, 2023 and the rent amounts were agreed upon for the new term. In 2016 the Company entered into a secured related party loan agreement with certain executive officers of the Company which is more fully described in Note 9. Both Ross Dove and Kirk Dove, who were parties to the related party loan, share equally in all payments made by the Company to satisfy obligations under the loan agreement. During the year ended December 31, 2018, the Company made payment of approximately $179,000 to the respective parties based on the profit share provision for principal and guarantee transactions that occurred in 2017 and the first three quarters of 2018. In connection with the Company entering into a new credit facility with a third party bank on September 27, 2018, the Company terminated the related party loan agreement. During 2018 the Company paid David Ludwig $2.6 million for his final earn-out provision payment. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Legal Proceedings | Note 14 – Legal Proceedings The Company is involved in various 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, 2018 | |
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 2017 and 2018 the Company issued 10,000 and 173,130 shares of common stock, respectively, pursuant to the exercise of stock options. As further described below the Company issued a total of 600,000 shares of restricted stock during 2018. 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 stockholders are entitled to liquidation preference over common stockholders equivalent to $1,000 per share. During 2017 and 2018, no shares of the Company’s Class N preferred stock were converted into shares of the Company’s common stock. Stock-Based Compensation Plans At December 31, 2018, 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 stockholders 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 2018 2017 Options outstanding, beginning of year 985,000 995,000 Options exercised — (10,000 ) Options expired (660,000 ) — Options forfeited (15,000 ) — Options outstanding, end of year 310,000 985,000 The outstanding options vest over four years at exercise prices ranging from $1.00 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 2017 and 2018, options to purchase 50,000 and 85,000 shares were granted to the Company’s independent directors as part of their annual compensation. 2010 Plan 2018 2017 Options outstanding, beginning of year 830,000 780,000 Options granted 85,000 50,000 Options outstanding, end of year 915,000 830,000 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. During 2018, options to purchase 230,000 shares expired. Equity Partners Plan 2018 2017 Options outstanding, beginning of year 230,000 230,000 Options expired (230,000 ) — Options outstanding, end of year — 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 2018 2017 Options outstanding, beginning of year 625,000 625,000 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. During 2018, options to purchase a total of 441,500 shares were granted to the Company’s employees. On June 1, 2018, the Company issued options to purchase 300,000 shares of common stock to the employees of NLEX, in connection with the Addendum to the Employment Agreements of David Ludwig and Tom Ludwig. As of December 31, 2018, 173,130 shares of common stock were issued pursuant to the exercise of these common stock options. The remaining 126,870 shares expired as of July 31, 2018. 2016 Plan 2018 2017 Options outstanding, beginning of year 2,370,450 2,539,200 Options granted 441,500 — Options exercised (173,130 ) — Options expired (126,870 ) — Options forfeited (58,050 ) (168,750 ) Options outstanding, end of year 2,453,900 2,370,450 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 2018 and 2017 was $0.3 million and $0.2 million, respectively. These amounts were recorded in selling, general and administrative expense in both years. During 2018, options to purchase 173,130 shares were exercised. During 2017, options to purchase 10,000 shares were exercised. The tax benefit recognized by the Company related to these option exercises was not material. In connection with the stock option grants during 2018 and 2017, 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: 2018 2017 Risk-free interest rate 2% - 3% 1% - 2% Expected life (years) 3.21 6.80 Expected volatility 83% 95% 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 2018 and 2017: 2018 2017 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of year 5,040,450 $ 0.97 5,169,200 $ 0.96 Granted 526,500 $ 0.43 50,000 $ 0.48 Exercised (173,130 ) $ 0.43 (10,000 ) $ 0.08 Expired (1,016,870 ) $ 1.74 — N/A Forfeited (73,050 ) $ 0.77 (168,750 ) $ 0.45 Outstanding at end of year 4,303,900 $ 0.75 5,040,450 $ 0.97 Options exercisable at year end 2,533,700 $ 0.96 2,672,337 $ 1.43 Weighted-average fair value of options granted during the year $ 0.17 $ 0.38 As of December 31, 2017, the Company had 2,368,113 unvested options with a weighted average grant date fair value of $0.31 per share. As of December 31, 2018, the Company had 1,770,200 unvested options with a weighted average grant date fair value of $0.31 per share. As of December 31, 2018, the total unrecognized stock-based compensation expense related to unvested stock options was $0.7 million, which is expected to be recognized over a weighted-average period of 2.8 years. The total fair value of options vesting during the years ending December 31, 2018 and 2017 was $0.3 million and $0.3 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, 2018: Exercise price Options Outstanding Weighted Average Remaining Life Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Life (years) Weighted Average Exercise Price $ 0.24 to $ 0.40 100,000 8.5 $ 0.34 20,000 7.3 $ 0.24 $ 0.42 to $ 1.00 3,438,900 7.5 $ 0.48 1,748,700 7.0 $ 0.51 $ 1.01 to $ 2.00 765,000 0.2 $ 2.00 765,000 0.2 $ 2.00 4,303,900 6.2 $ 0.75 2,533,700 5.0 $ 0.96 At December 31, 2018 and 2017, the aggregate intrinsic value of exercisable options was $11,000 and $1,000, 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 vested balance of restricted stock awards was 262,500 at December 31, 2017, and the Company recognized stock-based compensation expense related to restricted stock awards of approximately $4,000 for the year ended December 31, 2017. On June 1, 2018, the Company granted 600,000 shares of Company restricted common stock in connection with the Addendum to the Employment Agreements of David Ludwig and Tom Ludwig. The shares are subject to certain restrictions on transfer and a right of repurchase over five years, ending May 31, 2023, and require a continued term of service to the Company. Stock-based compensation expense related to the restricted stock awards, calculated by using the grant date fair value of $0.43 per share, was $30,000 for the year ended December 31, 2018. The unrecognized stock-based compensation expense as of December 31, 2018 was approximately $0.2 million. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 – Subsequent Events The Company has evaluated events subsequent to December 31, 2018 for potential recognition or disclosure in its consolidated financial statements. There have been no material subsequent events requiring disclosure in these financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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 income (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. 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 agreement (collectively, “Joint Ventures”). Transactions in which the Company’s ownership share meets the criteria for the equity method investments under ASC 323 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 In prior years the Company has incurred significant operating losses and has partially relied on debt financing to fund its operations. As of December 31, 2018, the Company had an accumulated deficit of $277.4 million and a working capital deficit of $2.5 million. At December 31, 2018, the Company had cash and cash equivalents of $4.3 million and during 2018 the Company generated approximately $7.5 million in positive cash flows from operating activities. Until the Company achieves consistent profitability, it might need to continue to partially rely on debt financing to fund its operations. Management expects that a combination of existing cash and cash equivalents, cash flows from the Company’s asset liquidation operations and proceeds from existing 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. 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. All inventory is recorded at the lower of cost or net realizable value. |
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, 2018 and 2017, the carrying values of the Company’s cash, accounts receivable, 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, 2018 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. No impairment charges were necessary during 2018. |
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. No impairment charges were necessary during 2018. |
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, 2018 based on uncertainty relating to the further utilization of the net deferred tax assets. For further discussion of our income taxes, see Note 12 to the consolidated financial statements. On December 22, 2017, the 2017 Tax Cuts and Jobs Act (“Tax Act”) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax (Toll Charge) on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. The most significant change that impacts the Company is the reduction in the corporate federal income tax rate from 35% to 21%. In a manner consistent with ASC 740, the effect of a change in tax law or rates shall be recognized at the date of enactment, accordingly, the Company accounted for the corporate federal rate reduction in the fourth quarter of 2017. Under the guidance set forth in the SEC’s Staff Accounting Bulletin No. 118 (“SAB 118”), the Company may record provisional amounts for the impact of the Tax Act. As of the third quarter of 2018, the Company had finalized its 2017 federal income tax return and as such, completed the accounting for the income tax effects of the Tax Act. Any future adjustments required due to additional guidance or changes in the interpretations of the Tax Act will be recorded as discrete adjustments to the income tax expense in the period in which such changes occur. |
Contingent consideration | Contingent consideration At December 31, 2018 the Company no longer carries a contingent consideration balance. We previously had 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 was assessed quarterly, and any adjustments, together with the accretion of the present value discount, were reported as a fair value adjustment on the Company’s consolidated statement of operations. The Company adjusted its contingent consideration liability each reporting period to the fair value of the estimated remaining earn-out liability owed to David Ludwig. During 2018 the Company made the final contingent consideration payments to David Ludwig in the aggregate amount of $2.6 million, resulting in a contingent consideration of zero at December 31, 2018. 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 reasonably estimated, the Company accounts for the estimated loss in the current period. See Note 14 for further discussion. |
Revenue recognition | Revenue recognition On January 1, 2018, the Company adopted the new accounting standard FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) to all contracts using the modified retrospective method. Based on the Company’s analysis of contracts with customers in prior periods, there was no cumulative effect adjustment to the opening balance of the Company’s accumulated deficit as a result of the adoption of this new standard. We expect the impact of the adoption of the new standard to be immaterial to the consolidated financial statements on an ongoing basis. Services revenue generally consists of commissions and fees from providing auction services, appraisals, brokering of sales transactions and providing merger and acquisition advisory services. Asset sales revenue generally consists of proceeds obtained through sales of purchased assets. Revenue is recognized for both services revenue and asset sales revenue based on the ASC 606 standard recognition model, which consists of the following: (1) an agreement exists between two or more parties that creates enforceable rights and obligations, (2) the performance obligations are clearly identified, (3) the transaction price has been determined, (4) the transaction price has been properly allocated to each performance obligation, and (5) the entity satisfies a performance obligation by transferring a promised good or service to a customer for each of the entities. All services and asset sales revenue from contracts with customers is considered to be one reporting segment — the asset liquidation business. Although the Company provides various services within the asset liquidation business, it does not disaggregate revenue streams further than as reported in its statement of operations, services revenue and asset sales. Generally, revenue is recognized in the asset liquidation business at the point in time in which the performance obligation has been satisfied and full consideration is received. The exception to recognition at a point in time occurs when certain contracts provide for advance payments recognized over a period of time. Services revenue recognized over a period of time is not material in comparison to total revenues (4% of total revenues for the year ended December 31, 2018), and therefore not reported on a disaggregated basis. Further, as certain contracts stipulate that the customer make advance payments, amounts not recognized within the reporting period are considered deferred revenue and the Company’s “contract liability”. As of December 31, 2018, the deferred revenue balance was approximately $795,000. The Company records receivables related to asset liquidation in certain situations based on timing of payments for asset liquidation transactions held at the end of the reporting period; however, revenue is generally recognized in the period that the Company satisfies the performance obligation and cash is collected. The Company does not record a “contract asset” for partially satisfied performance obligations. 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, in which the Company’s ownership share meets the criteria for the equity method investments under ASC 323, 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, net of estimated forfeitures. 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 the years ended December 31, 2018 and 2017, was $0.8 million and $0.5 million, respectively. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In 2014, the FASB issued new guidance related to revenue recognition (ASU 2014-09 Revenue from Contracts with Customers (Topic 606)). Subsequently the FASB has issued additional guidance (ASUs 2015-14; 2016-08; 2016-10; 2016-12; 2016-13; 2016-20). The guidance establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The above stated updates became effective January 1, 2018 and did not have a material impact on the Company’s consolidated financial statements, except for more comprehensive disclosure requirements (see Note 2 — Revenue Recognition for further detail). In 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (“ASU 2016-15”), which clarifies the classification of certain cash receipts and payments. The specific cash flow issues addressed by ASU 2016-15, with the objective of reducing the existing diversity in practice, are as follows: (1) Debt prepayment or debt extinguishment costs; (2) Settlement of zero-coupon debt instruments or other debt instruments with insignificant coupon interest rates; (3) Contingent consideration payments made after a business combination; (4) Proceeds from the settlement of insurance claims; (5) Proceeds from the settlement of corporate-owned life insurance policies; (6) Distributions received from equity method investees; (7) Beneficial interest in securitization transactions; and (8) Separately identifiable cash flows and application of the predominance in principle. ASU 2016-15 became effective January 1, 2018 and did not have a material impact on the Company’s consolidated financial statements. In 2017, the FASB issued ASU 2017-01, Business Combinations (“ASU 2017-01”), which clarifies the definition of a business under ASC 805. The main provisions of ASU 2017-01 provide a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. ASU 2017-01 became effective January 1, 2018 and did not have a material impact on the Company’s consolidated financial statements. |
Future accounting pronouncements | Future accounting pronouncements In 2016, the FASB issued ASU 2016-02, Leases In 2017, the FASB issued ASU 2017-04, Intangibles Goodwill and Other |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity Method Investments And Joint Ventures [Abstract] | |
Schedule of Revenues and Operating Loss | 2018 2017 Revenues $ — $ — Operating loss $ (115 ) $ — |
Schedule of the Components of Assets and Liabilities | 2018 2017 Assets $ 11,064 $ — Liabilities $ 168 $ — |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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: 2018 2017 Basic weighted average shares outstanding 28,581,654 28,468,545 Treasury stock effect of common stock options and restricted stock awards 313,273 — Diluted weighted average common shares outstanding 28,894,927 28,468,545 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 December 31, 2017 Furniture, fixtures and office equipment $ 228 $ 164 Software and technology assets 326 291 554 455 Accumulated depreciation (379 ) (310 ) Property and equipment, net $ 175 $ 145 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | The details of identifiable intangible assets as of December 31, 2018 and 2017 are shown below (in thousands except for lives): Amortized Intangible Assets Original Life (years) Remaining Life (years) Carrying Value December 31 2017 Amortization Carrying Value December 2018 Customer Network (HGP) 12 5.2 $ 136 $ (22 ) $ 114 Trade Name (HGP) 14 7.2 850 (104 ) 746 Customer Relationships (NLEX) 7.6 3.1 440 (110 ) 330 Website (NLEX) 5 0 14 (14 ) — Total 1,440 (250 ) 1,190 Unamortized Intangible Assets Trade Name (NLEX) N/A N/A 2,437 — 2,437 Total $ 3,877 $ (250 ) $ 3,627 Amortized Intangible Assets Original Life (years) Remaining Life (years) Carrying Value December 31 2016 Amortization Carrying Value December 31 2017 Customer Network (HGP) 12 6.2 $ 158 $ (22 ) $ 136 Trade Name (HGP) 14 8.2 953 (103 ) 850 Customer Relationships (NLEX) 7.6 4.1 550 (110 ) 440 Website (NLEX) 5 1.4 24 (10 ) 14 Total 1,685 (245 ) 1,440 Unamortized Intangible Assets Trade Name (NLEX) N/A N/A 2,437 — 2,437 Total $ 4,122 $ (245 ) $ 3,877 |
Schedule of Estimated Amortization Expense, Intangible Assets | The estimated amortization expense during the next five fiscal years and thereafter is shown below (in thousands): Year Amount 2019 $ 236 2020 236 2021 236 2022 128 2023 125 Thereafter 229 Total $ 1,190 |
Schedule of Goodwill | Goodwill consisted of the following at December 31, 2018 and 2017 (in thousands): Acquisition December 31, 2018 December 31, 2017 Equity Partners $ 573 $ 573 HGP 2,040 2,040 NLEX 3,545 3,545 Total goodwill $ 6,158 $ 6,158 |
Accounts Receivable and Accou_2
Accounts Receivable and Accounts Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables And Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued liabilities consisted of the following at December 31, 2018 and 2017 (in thousands): 2018 2017 Due to auction clients $ 3,113 $ 2,478 Sales and other taxes 293 342 Remuneration and benefits 2,112 957 Accounting, auditing and tax consulting 140 174 Customer deposits 600 102 Due to Joint Venture partners 1,367 247 Asset liquidation expenses 191 254 Interest expense 6 42 Other 279 423 Total accounts payable and accrued liabilities $ 8,101 $ 5,019 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | 2018 2017 Current: Related party debt $ — $ 382 Third party debt 1,178 356 Non-current: Related party debt — — Third party debt 438 786 Total debt $ 1,616 $ 1,524 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement of Financial Assets and Liabilities on Recurring Basis | Error extracting Word content |
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 2017 and 2018 (in thousands): Balance at December 31, 2016 $ 2,733 Payment of contingent consideration (897 ) Fair value adjustment of contingent consideration 938 Balance at December 31, 2017 2,774 Payment of contingent consideration (2,617 ) Fair value adjustment of contingent consideration (157 ) Balance at December 31, 2018 $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | 2019 $ 598 2020 453 2021 222 2022 111 2023 46 Total $ 1,430 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Summary of Change in Valuation Allowance | The following table summarizes the change in the valuation allowance during 2017 and 2018 (in thousands): Balance at December 31, 2016 $ 31,658 Change during 2017 (1,726 ) Balance at December 31, 2017 29,932 Change during 2018 (999 ) Balance at December 31, 2018 $ 28,933 |
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): 2018 2017 Expected federal statutory tax benefit (loss) $ 963 $ (228 ) Increase (reduction) in taxes resulting from: State income taxes recoverable 198 21 Non-deductible expenses (permanent differences) 42 51 Change in valuation allowance (999 ) (1,726 ) Tax rate changes (256 ) 1,477 Other 322 (15 ) Income tax expense (benefit) $ 270 $ (420 ) |
Schedule of Deferred Tax Assets and Liabilities | The components of the deferred tax assets and liabilities as of December 31, 2018 and 2017 are as follows in (thousands): 2018 2017 Net operating loss carry forwards $ 28,573 $ 29,303 Stock based compensation 763 610 Trade names (763 ) (690 ) Customer relationships (106 ) (123 ) Fair value adjustment of contingent consideration — 168 Other (118 ) 152 Gross deferred tax assets 28,349 29,420 Less: valuation allowance (28,933 ) (29,932 ) Deferred tax assets (liabilities), net of valuation allowance $ (584 ) $ (512 ) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Class Of Stock [Line Items] | |
Schedule of Assumptions for Fair Value of Option Grant | In connection with the stock option grants during 2018 and 2017, 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: 2018 2017 Risk-free interest rate 2% - 3% 1% - 2% Expected life (years) 3.21 6.80 Expected volatility 83% 95% Expected dividend yield Zero Zero |
Schedule of Changes in Common Stock Options | The following summarizes the changes in common stock options for 2018 and 2017: 2018 2017 Options Weighted Average Exercise Price Options Weighted Average Exercise Price Outstanding at beginning of year 5,040,450 $ 0.97 5,169,200 $ 0.96 Granted 526,500 $ 0.43 50,000 $ 0.48 Exercised (173,130 ) $ 0.43 (10,000 ) $ 0.08 Expired (1,016,870 ) $ 1.74 — N/A Forfeited (73,050 ) $ 0.77 (168,750 ) $ 0.45 Outstanding at end of year 4,303,900 $ 0.75 5,040,450 $ 0.97 Options exercisable at year end 2,533,700 $ 0.96 2,672,337 $ 1.43 Weighted-average fair value of options granted during the year $ 0.17 $ 0.38 |
Schedule of Information about All Stock Options Outstanding | The following table summarizes information about all stock options outstanding at December 31, 2018: Exercise price Options Outstanding Weighted Average Remaining Life Weighted Average Exercise Price Number Exercisable Weighted Average Remaining Life (years) Weighted Average Exercise Price $ 0.24 to $ 0.40 100,000 8.5 $ 0.34 20,000 7.3 $ 0.24 $ 0.42 to $ 1.00 3,438,900 7.5 $ 0.48 1,748,700 7.0 $ 0.51 $ 1.01 to $ 2.00 765,000 0.2 $ 2.00 765,000 0.2 $ 2.00 4,303,900 6.2 $ 0.75 2,533,700 5.0 $ 0.96 |
Other Options Issued [Member] | |
Class Of Stock [Line Items] | |
Schedule of Stock Options and Other Stock Options Issued | Other Options 2018 2017 Options outstanding, beginning of year 625,000 625,000 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 2018 2017 Options outstanding, beginning of year 985,000 995,000 Options exercised — (10,000 ) Options expired (660,000 ) — Options forfeited (15,000 ) — Options outstanding, end of year 310,000 985,000 |
2010 Non-Qualified Stock Option Plan [Member] | |
Class Of Stock [Line Items] | |
Schedule of Stock Options and Other Stock Options Issued | 2010 Plan 2018 2017 Options outstanding, beginning of year 830,000 780,000 Options granted 85,000 50,000 Options outstanding, end of year 915,000 830,000 |
Equity Partners Stock Option Plan [Member] | |
Class Of Stock [Line Items] | |
Schedule of Stock Options and Other Stock Options Issued | Equity Partners Plan 2018 2017 Options outstanding, beginning of year 230,000 230,000 Options expired (230,000 ) — Options outstanding, end of year — 230,000 |
2016 Stock Option Plan [Member] | |
Class Of Stock [Line Items] | |
Schedule of Stock Options and Other Stock Options Issued | 2016 Plan 2018 2017 Options outstanding, beginning of year 2,370,450 2,539,200 Options granted 441,500 — Options exercised (173,130 ) — Options expired (126,870 ) — Options forfeited (58,050 ) (168,750 ) Options outstanding, end of year 2,453,900 2,370,450 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Narrative) (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($)Segment | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) | Jan. 01, 2018USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Cumulative effect adjustment to accumulated deficit | $ (277,373,000) | $ (281,124,000) | ||
Working capital deficit | 2,500,000 | |||
cash flows from operating activities | 7,470,000 | 1,182,000 | ||
Cash and cash equivalents | 4,268,000 | $ 2,109,000 | ||
Intangible assets impairment charges | 0 | |||
Goodwill impairment charges | $ 0 | |||
Corporate income tax rate | 21.00% | 35.00% | ||
Payment of contingent consideration | $ 2,617,000 | $ 897,000 | ||
Selling, General and Administrative Expenses [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Advertising and promotion expense | $ 800,000 | $ 500,000 | ||
ASC 606 [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of reporting segment | Segment | 1 | |||
Percentage of service revenue that is recognized over a period of time against total revenue | 4.00% | |||
Deferred revenue | $ 795,000 | |||
ASU 2016-02 [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Right of use assets | $ 1,100,000 | |||
Operating lease liability | $ 1,200,000 | |||
Difference Between Revenue Guidance in Effect Before and After Topic 606 [Member] | ASC 606 [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Cumulative effect adjustment to accumulated deficit | $ 0 | |||
NLEX [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Fair value of liabilities | 0 | |||
Payment of contingent consideration | $ 2,600,000 |
Inventory (Narrative) (Details)
Inventory (Narrative) (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)aBuilding | Dec. 31, 2017USD ($) | |
Real Estate [Line Items] | ||
Purchase of inventory | $ 2,235 | $ (93) |
Alabama [Member] | ||
Real Estate [Line Items] | ||
Area of campus | a | 110 | |
Number of buildings | Building | 3 | |
Purchase of inventory | $ 2,300 |
Equity Method Investments (Narr
Equity Method Investments (Narrative) (Details) | Nov. 14, 2018 |
CPFH LLC [Member] | |
Schedule Of Equity Method Investments [Line Items] | |
Equity method investment, ownership percentage | 25.00% |
Schedule of Revenues and Operat
Schedule of Revenues and Operating Loss (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
CPFH LLC [Member] | |
Schedule Of Equity Method Investments [Line Items] | |
Operating loss | $ (115) |
Schedule of the Components of A
Schedule of the Components of Assets and Liabilities (Details) - CPFH LLC [Member] $ in Thousands | Dec. 31, 2018USD ($) |
Schedule Of Equity Method Investments [Line Items] | |
Assets | $ 11,064 |
Liabilities | $ 168 |
Earnings per Share (Narrative)
Earnings per Share (Narrative) (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
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 | 1,000,000 | 5,000,000 |
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, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares outstanding | 28,581,654 | 28,468,545 |
Treasury stock effect of common stock options and restricted stock awards | 313,273 | |
Diluted weighted average common shares outstanding | 28,894,927 | 28,468,545 |
Property and Equipment, net (Na
Property and Equipment, net (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property Plant And Equipment [Line Items] | ||
Depreciation expense | $ 69,000 | $ 68,000 |
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, 2018 | Dec. 31, 2017 |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 554 | $ 455 |
Accumulated depreciation | (379) | (310) |
Property and equipment, net | 175 | 145 |
Furniture, fixtures and office equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 228 | 164 |
Software and technology assets [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 326 | $ 291 |
Schedule of Intangible Assets (
Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Finite And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Total net amortized intangible assets | $ 1,440 | $ 1,685 | |
Amortization | (250) | (245) | |
Total net amortized intangible assets | 1,190 | 1,440 | |
Total net intangible assets | 3,877 | 4,122 | |
Total net intangible assets | 3,627 | 3,877 | |
NLEX [Member] | Trade Name [Member] | |||
Finite And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
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 | 6 years 2 months 12 days | 7 years 2 months 12 days | |
Total net amortized intangible assets | $ 136 | $ 158 | |
Amortization | (22) | (22) | |
Total net amortized intangible assets | $ 114 | $ 136 | |
HGP Trade Name [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 | 8 years 2 months 12 days | 9 years 2 months 12 days | |
Total net amortized intangible assets | $ 850 | $ 953 | |
Amortization | (104) | (103) | |
Total net amortized intangible assets | $ 746 | $ 850 | |
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 | 4 years 1 month 6 days | 5 years 1 month 6 days | |
Total net amortized intangible assets | $ 440 | $ 550 | |
Amortization | (110) | (110) | |
Total net amortized intangible assets | $ 330 | $ 440 | |
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 | 1 year 4 months 24 days | 2 years 4 months 24 days | |
Total net amortized intangible assets | $ 14 | $ 24 | |
Amortization | $ (14) | (10) | |
Total net amortized intangible assets | $ 14 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2011 | |
Finite Lived Intangible Assets [Line Items] | |||||
Amortization expense, intangible assets | $ 250 | $ 245 | |||
Goodwill | 6,158 | 6,158 | |||
Equity Partners [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Goodwill | 573 | 573 | $ 600 | ||
HGP [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Goodwill | 2,040 | 2,040 | $ 4,700 | ||
NLEX [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 3,545 | $ 3,545 | $ 3,500 |
Schedule of Estimated Amortizat
Schedule of Estimated Amortization Expense, Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
2019 | $ 236 | ||
2020 | 236 | ||
2021 | 236 | ||
2022 | 128 | ||
2023 | 125 | ||
Thereafter | 229 | ||
Total | $ 1,190 | $ 1,440 | $ 1,685 |
Schedule of Goodwill (Details)
Schedule of Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2011 |
Finite Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 6,158 | $ 6,158 | |||
Equity Partners [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Goodwill | 573 | 573 | $ 600 | ||
HGP [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Goodwill | 2,040 | 2,040 | $ 4,700 | ||
NLEX [Member] | |||||
Finite Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 3,545 | $ 3,545 | $ 3,500 |
Accounts Receivable and Accou_3
Accounts Receivable and Accounts Payable (Narrative) (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts Receivable And Accounts Payable [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 110,000 |
Schedule of Accounts Payable an
Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Payables And Accruals [Abstract] | ||
Due to auction clients | $ 3,113 | $ 2,478 |
Sales and other taxes | 293 | 342 |
Remuneration and benefits | 2,112 | 957 |
Accounting, auditing and tax consulting | 140 | 174 |
Customer deposits | 600 | 102 |
Due to Joint Venture partners | 1,367 | 247 |
Asset liquidation expenses | 191 | 254 |
Interest expense | 6 | 42 |
Other | 279 | 423 |
Total accounts payable and accrued liabilities | $ 8,101 | $ 5,019 |
Schedule of Debt (Details)
Schedule of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current: | ||
Related party debt | $ 0 | $ 382 |
Third party debt | 1,178 | 356 |
Non-current: | ||
Related party debt | 0 | 0 |
Third party debt | 438 | 786 |
Total debt | $ 1,616 | $ 1,524 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | Sep. 27, 2018USD ($) | Jan. 30, 2018USD ($)Installment | Dec. 31, 2018USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016 | Dec. 31, 2003 | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||||||||||
Street Capital Loan, Description | In 2014, following Street Capital’s distribution of its ownership interest in HGI to Street Capital stockholders 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, 2017, the interest rate on the loan was 5.50%. | |||||||||
Revolving Line of Credit [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit | $ 750,000 | |||||||||
Monthly interest payment | $ 4,000 | |||||||||
Line of credit, outstanding amount period | 1 month | |||||||||
Affiliated Entity [Member] | Revolving Line of Credit [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit aggregate borrowing capacity | $ 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. During 2017, the Company borrowed $750,000 on the Line of Credit and made one repayment of the full amount, including approximately $4,000 of interest. The total amount was outstanding for a one month period. | |||||||||
Expense incurred based on profit share provision for principle and guarantee transaction | $ 179,000 | |||||||||
Heritage Global LLC [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Litigation settlement, amount paid behalf of subsidiary | $ 1,260,000 | |||||||||
Number of installments | Installment | 36 | |||||||||
Litigation settlement installments amount due | $ 35,000 | |||||||||
Remaining outstanding debt balance payable date | Jan. 30, 2021 | |||||||||
Interest rate on promissory note | 6.50% | |||||||||
Percentage of default interest amount | 12.00% | |||||||||
Description of event of default | An “Event of Default” means: (a) any failure of HG LLC to pay when due any amount thereunder, when and as due, (b) any failure on the part of HG LLC to pay upon 54 Finance’s demand any fees, costs, expenses or other charges hereunder or otherwise due to HG LLC under the Note or the Guaranty, (c) any breach, failure or default under the Guaranty, (d) HG LLC or HGI repudiates or revokes, or purports to repudiate or revoke, any obligation under the Note or the Guaranty, or the obligation of HGI under the Guaranty is limited or terminated by operation of law or by HGI, or (e) HG LLC or HGI are insolvent or admit in writing its inability to pay debts as they mature, or make a general assignment for the benefit of its creditors, or institute any bankruptcy, insolvency or similar proceeding under the laws of any jurisdiction, or take any action to authorize such proceeding. | |||||||||
Debt instrument, periodic payment | $ 385,000 | |||||||||
Outstanding note balance | $ 816,000 | 816,000 | ||||||||
Street Capital Loan [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Related party loan, Interest rate | 10.00% | 5.50% | 5.50% | |||||||
First Choice Bank [Member] | Revolving Line of Credit [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit | $ 1,500,000 | 1,300,000 | $ 1,300,000 | |||||||
Debt instrument, Maturity date | Oct. 5, 2019 | |||||||||
Frequency of payment | monthly payments | |||||||||
Line of credit, repayment | 500,000 | |||||||||
Line of credit, remaining borrowing capacity | $ 800,000 | $ 800,000 | ||||||||
First Choice Bank [Member] | Revolving Line of Credit [Member] | Minimum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Monthly interest payment | $ 100 | |||||||||
Bank Plus 2.0% [Member] | Affiliated Entity [Member] | Revolving Line of Credit [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate per annum | 2.00% | |||||||||
Line of credit | $ 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% | |||||||||
Line of credit | $ 1,000,000 | |||||||||
Wall Street Journal prime rate [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate per annum | 1.00% | 2.00% | ||||||||
Wall Street Journal prime rate [Member] | First Choice Bank [Member] | Revolving Line of Credit [Member] | Minimum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate per annum | 5.25% |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
NLEX [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | $ 0 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | NLEX [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of liabilities | $ 2,774,000 | |
Fair Value, Measurements, Recurring [Member] | 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 |
Fair Value, Measurements, Recurring [Member] | 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 |
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, 2018 | Dec. 31, 2017 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value adjustment of contingent consideration | $ 157 | $ (938) |
NLEX [Member] | Contingent Consideration [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Beginning balance | 2,774 | 2,733 |
Payment of contingent consideration | (2,617) | (897) |
Fair value adjustment of contingent consideration | $ (157) | 938 |
Ending balance | $ 2,774 |
Commitments and Contingencies_2
Commitments and Contingencies (Narrative) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Commitment And Contingencies [Line Items] | |
Remaining minimum distribution payments | $ 3.8 |
Maximum [Member] | |
Commitment And Contingencies [Line Items] | |
Purchase commitment, remaining minimum amount payment date | May 26, 2020 |
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 | 2023-06 |
Arizona office lease | |
Commitment And Contingencies [Line Items] | |
Lease expiration period | 2019-08 |
Automobile lease | |
Commitment And Contingencies [Line Items] | |
Lease expiration period | 2020-05 |
Netherlands warehouse lease | |
Commitment And Contingencies [Line Items] | |
Lease expiration period | 2019-08 |
Schedule of Future Minimum Rent
Schedule of Future Minimum Rental Payments for Operating Leases (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
2019 | $ 598 |
2020 | 453 |
2021 | 222 |
2022 | 111 |
2023 | 46 |
Total | $ 1,430 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes [Line Items] | |||||
Carrying value of deferred tax assets | $ 0 | ||||
Operating loss carryforwards | $ 71,800 | ||||
Tax Credit Carryforward, Amount | $ 100 | ||||
Operating Loss Carryforwards, Expiration Date | Substantially all of the net operating loss carry forwards and unused minimum tax credit carry forwards expire between 2024 and 2036. | ||||
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 | 2017 | 2015 | 2015 | ||
Non-current deferred tax liability | $ 584 | $ 512 | |||
U.S. statutory corporate tax rate | 21.00% | 35.00% | |||
Tax act, change in tax rate, re-measurement of federal portion of deferred tax liabilities, reduction amount | $ 1,500 | ||||
Reduction in Deferred Tax Assets | $ 4,400 | ||||
Unrecognized Tax Benefits | $ 4,400 | ||||
NLEX [Member] | |||||
Income Taxes [Line Items] | |||||
Non-current deferred tax liability | 600 | ||||
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 | $ 56,600 | ||||
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, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Beginning balance | $ 29,932 | $ 31,658 |
Change during the period | (999) | (1,726) |
Ending balance | $ 28,933 | $ 29,932 |
Schedule of Components of Incom
Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Expected federal statutory tax benefit (loss) | $ 963 | $ (228) |
Increase (reduction) in taxes resulting from: | ||
State income taxes recoverable | 198 | 21 |
Non-deductible expenses (permanent differences) | 42 | 51 |
Change in valuation allowance | (999) | (1,726) |
Tax rate changes | (256) | 1,477 |
Other | 322 | (15) |
Income tax expense (benefit) | $ 270 | $ (420) |
Schedule of Deferred Tax Assets
Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Income Taxes [Line Items] | |||
Net operating loss carry forwards | $ 28,573 | $ 29,303 | |
Stock based compensation | 763 | 610 | |
Fair value adjustment of contingent consideration | 168 | ||
Other | (118) | ||
Other | 152 | ||
Gross deferred tax assets | 28,349 | 29,420 | |
Less: valuation allowance | (28,933) | (29,932) | $ (31,658) |
Deferred tax assets (liabilities), net of valuation allowance | (584) | (512) | |
Trade Names [Member] | |||
Income Taxes [Line Items] | |||
Deferred tax liabilities, intangible assets | (763) | (690) | |
Customer Relationships [Member] | |||
Income Taxes [Line Items] | |||
Deferred tax liabilities, intangible assets | $ (106) | $ (123) |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Payment to related party | $ 390,000 | $ 1,413,000 |
Ross Dove and Kirk Dove [Member] | ||
Related Party Transaction [Line Items] | ||
Payment to related party | 179,000 | |
Street Capital Loan [Member] | ||
Related Party Transaction [Line Items] | ||
Payment to related party | $ 400,000 | |
Lease Amounts [Member] | Senior Officer of NLEX [Member] | Edwardsville, IL [Member] | ||
Related Party Transaction [Line Items] | ||
Related party transaction agreement end date | May 31, 2023 | |
Lease Amounts [Member] | Senior Officer of NLEX [Member] | Edwardsville, IL [Member] | Selling, General and Administrative Expenses [Member] | ||
Related Party Transaction [Line Items] | ||
Payment to related party | $ 105,000 | $ 100,000 |
Final Earn-out Provision Payment [Member] | David Ludwig [Member] | ||
Related Party Transaction [Line Items] | ||
Payment to related party | $ 2,600,000 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) | Jul. 31, 2018 | Jun. 01, 2018 | Sep. 14, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2003 |
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) | 173,130 | 10,000 | ||||||||
Issuance of restricted common stock (shares) | 300,000 | |||||||||
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 | 3 years 2 months 15 days | 6 years 9 months 18 days | ||||||||
Exercise Price, Outstanding | $ 0.75 | $ 0.97 | $ 0.96 | |||||||
Options to purchase, Granted (in shares) | 526,500 | 50,000 | ||||||||
Exercise price, options granted in period | $ 0.43 | $ 0.48 | ||||||||
Options, Expired | 1,016,870 | 0 | ||||||||
Stock-based compensation expense | $ 289,000 | $ 246,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 1,770,200 | 2,368,113 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value | $ 0.31 | $ 0.31 | ||||||||
Unrecognized stock-based compensation | $ 700,000 | |||||||||
Unrecognized stock-based compensation, Period for recognition | 2 years 9 months 18 days | |||||||||
Fair Value of Options Vested in Period | $ 300,000 | $ 300,000 | ||||||||
Aggregate intrinsic value of exercisable options | 11,000 | 1,000 | ||||||||
Other Options Issued [Member] | ||||||||||
Class Of Stock [Line Items] | ||||||||||
Stock Option Award Vesting Period | 4 years | |||||||||
Options to purchase, Granted (in shares) | 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 | $ 300,000 | 200,000 | ||||||||
Restricted Stock [Member] | ||||||||||
Class Of Stock [Line Items] | ||||||||||
Stock-based compensation expense | $ 4,000 | |||||||||
Number of restricted shares awarded to each employee | 150,000 | |||||||||
Vested balance of restricted stock awards | 262,500 | |||||||||
Unrecognized stock-based compensation expense | $ 200,000 | |||||||||
Employees | NLEX [Member] | ||||||||||
Class Of Stock [Line Items] | ||||||||||
Options, Exercised (in shares) | 173,130 | |||||||||
Options to purchase, Granted (in shares) | 300,000 | |||||||||
Options, Expired | 126,870 | |||||||||
2003 Stock Option and Appreciation Rights Plan [Member] | ||||||||||
Class Of Stock [Line Items] | ||||||||||
Options, Exercised (in shares) | 0 | 10,000 | ||||||||
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 | |||||||||
Options, Expired | 660,000 | 0 | ||||||||
2003 Stock Option and Appreciation Rights Plan [Member] | Minimum [Member] | ||||||||||
Class Of Stock [Line Items] | ||||||||||
Exercise Price, Outstanding | $ 1 | |||||||||
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) | 85,000 | 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) | 85,000 | 50,000 | 70,000 | |||||||
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) | 230,000 | |||||||||
Exercise price, options granted in period | $ 1.83 | |||||||||
Options, Expired | 230,000 | 0 | ||||||||
2016 Stock Option Plan [Member] | ||||||||||
Class Of Stock [Line Items] | ||||||||||
Options, Exercised (in shares) | 173,130 | 0 | ||||||||
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) | 441,500 | 0 | 2,539,200 | |||||||
Options, Expired | 126,870 | 0 | ||||||||
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 stockholders are entitled to liquidation preference over common stockholders equivalent to $1,000 per share. | |||||||||
Conversion of class N preferred stock to shares of common stock | 0 | 0 | ||||||||
Common Stock [Member] | ||||||||||
Class Of Stock [Line Items] | ||||||||||
Options, Exercised (in shares) | 173,130 | 10,000 | ||||||||
Issuance of restricted common stock (shares) | 600,000 | |||||||||
Share price | $ 25 | |||||||||
Class N preferred stockholders to liquidation preference, conversion price per share | $ 1,000 | |||||||||
David Ludwig And Tom Ludwig [Member] | ||||||||||
Class Of Stock [Line Items] | ||||||||||
Issuance of restricted common stock (shares) | 600,000 | |||||||||
David Ludwig And Tom Ludwig [Member] | Restricted Stock [Member] | ||||||||||
Class Of Stock [Line Items] | ||||||||||
Stock-based compensation expense | $ 30,000 | |||||||||
Shares restriction term of service | 5 years | |||||||||
Weighted average grant date fair value | $ 0.43 |
Schedule of 2003 Stock Option a
Schedule of 2003 Stock Option and Appreciation Rights Plan (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 5,040,450 | 5,169,200 |
Options exercised | (173,130) | (10,000) |
Options expired | (1,016,870) | 0 |
Options forfeited | (73,050) | (168,750) |
Options outstanding, end of year | 4,303,900 | 5,040,450 |
2003 Stock Option and Appreciation Rights Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 985,000 | 995,000 |
Options exercised | 0 | (10,000) |
Options expired | (660,000) | 0 |
Options forfeited | (15,000) | 0 |
Options outstanding, end of year | 310,000 | 985,000 |
Schedule of 2010 Non-Qualified
Schedule of 2010 Non-Qualified Stock Option Plan (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 5,040,450 | 5,169,200 |
Options granted | 526,500 | 50,000 |
Options outstanding, end of year | 4,303,900 | 5,040,450 |
2010 Non-Qualified Stock Option Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 830,000 | 780,000 |
Options granted | 85,000 | 50,000 |
Options outstanding, end of year | 915,000 | 830,000 |
Schedule of Equity Partners Sto
Schedule of Equity Partners Stock Option Plan (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 5,040,450 | 5,169,200 |
Options expired | (1,016,870) | 0 |
Options outstanding, end of year | 4,303,900 | 5,040,450 |
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 expired | (230,000) | 0 |
Options outstanding, end of year | 0 | 230,000 |
Schedule of Other Stock Options
Schedule of Other Stock Options Issued (Details) - shares | Dec. 31, 2018 | Dec. 31, 2017 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding, beginning of year | 5,040,450 | 5,169,200 |
Options outstanding, end of year | 4,303,900 | 5,040,450 |
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 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, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options outstanding, beginning of year | 5,040,450 | 5,169,200 | |
Options granted | 526,500 | 50,000 | |
Options exercised | (173,130) | (10,000) | |
Options expired | (1,016,870) | 0 | |
Options forfeited | (73,050) | (168,750) | |
Options outstanding, end of year | 4,303,900 | 5,040,450 | 5,169,200 |
2016 Stock Option Plan [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options outstanding, beginning of year | 2,370,450 | 2,539,200 | |
Options granted | 441,500 | 0 | 2,539,200 |
Options exercised | (173,130) | 0 | |
Options expired | (126,870) | 0 | |
Options forfeited | (58,050) | (168,750) | |
Options outstanding, end of year | 2,453,900 | 2,370,450 | 2,539,200 |
Schedule of Assumptions for Fai
Schedule of Assumptions for Fair Value of Option Grant (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Risk-free interest rate (Minimum) | 2.00% | 1.00% |
Risk-free interest rate (Maximum) | 3.00% | 2.00% |
Expected life (years) | 3 years 2 months 15 days | 6 years 9 months 18 days |
Expected volatility | 83.00% | 95.00% |
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, 2018 | Dec. 31, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Options outstanding, beginning of year | 5,040,450 | 5,169,200 |
Options, Granted | 526,500 | 50,000 |
Options, Exercised | (173,130) | (10,000) |
Options, Expired | (1,016,870) | 0 |
Options, Forfeited | (73,050) | (168,750) |
Options outstanding, end of year | 4,303,900 | 5,040,450 |
Options exercisable at year end | 2,533,700 | 2,672,337 |
Weighted Average Exercise Price, Outstanding at beginning of year | $ 0.97 | $ 0.96 |
Weighted Average Exercise Price, Granted | 0.43 | 0.48 |
Weighted Average Exercise Price, Exercised | 0.43 | 0.08 |
Weighted Average Exercise Price, Expired | 1.74 | |
Weighted Average Exercise Price, Forfeited | 0.77 | 0.45 |
Weighted Average Exercise Price, Outstanding at end of year | 0.75 | 0.97 |
Weighted Average Exercise Price, Options exercisable at end of year | 0.96 | 1.43 |
Weighted-average fair value of options granted during the year | $ 0.17 | $ 0.38 |
Schedule of Information about A
Schedule of Information about All Stock Options Outstanding (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options Outstanding | 4,303,900 | 5,040,450 | 5,169,200 |
Options Outstanding, Weighted Average Remaining Life (years) | 6 years 2 months 12 days | ||
Options Outstanding, Weighted Average Exercise Price | $ 0.75 | $ 0.97 | $ 0.96 |
Number Exercisable | 2,533,700 | 2,672,337 | |
Number Exercisable, Weighted Average Remaining Life (years) | 5 years | ||
Number Exercisable, Weighted Average Exercise Price | $ 0.96 | $ 1.43 | |
Exercise Price $0.24 to $0.40 [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options Outstanding | 100,000 | ||
Options Outstanding, Weighted Average Remaining Life (years) | 8 years 6 months | ||
Options Outstanding, Weighted Average Exercise Price | $ 0.34 | ||
Number Exercisable | 20,000 | ||
Number Exercisable, Weighted Average Remaining Life (years) | 7 years 3 months 18 days | ||
Number Exercisable, 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 | 3,438,900 | ||
Options Outstanding, Weighted Average Remaining Life (years) | 7 years 6 months | ||
Options Outstanding, Weighted Average Exercise Price | $ 0.48 | ||
Number Exercisable | 1,748,700 | ||
Number Exercisable, Weighted Average Remaining Life (years) | 7 years | ||
Number Exercisable, Weighted Average Exercise Price | $ 0.51 | ||
Exercise Price $1.01 to $2.00 [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options Outstanding | 765,000 | ||
Options Outstanding, Weighted Average Remaining Life (years) | 2 months 12 days | ||
Options Outstanding, Weighted Average Exercise Price | $ 2 | ||
Number Exercisable | 765,000 | ||
Number Exercisable, Weighted Average Remaining Life (years) | 2 months 12 days | ||
Number Exercisable, Weighted Average Exercise Price | $ 2 |