hgbl-10q_20210331.htm

10-Q 1 hgbl-10q_20210331.htm 10-Q hgbl-10q_20210331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-39471

Heritage Global Inc.

(Exact name of registrant as specified in its charter)


Florida	59-2291344
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

12625 High Bluff Drive, Suite 305, San Diego, CA 92130

(Address of Principal Executive Offices)

(858) 847-0659
(Registrant’s Telephone Number)

N/A

(Registrant’s Former Name)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	HGBL	Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2021, there were 35,672,477 shares of common stock, $0.01 par value, outstanding.

TABLE OF CONTENTS

Part I.	Financial Information	4

Item 1.	Financial Statements	4

	Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020	4

	Condensed Consolidated Statements of Income for the three months ended March 31, 2021 and 2020 (unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

Part II.	Other Information	30

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements.

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of US dollars, except share and per share amounts)

	March 31, 2021			December 31, 2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	15,852		$	23,385
Accounts receivable		2,297			1,496
Current portion of notes receivable, net		2,036			1,338
Inventory – equipment		91			235
Other current assets		447			498
Total current assets		20,723			26,952
Non-current portion of notes receivable, net		1,565			748
Equity method investments		2,402			2,402
Right-of-use assets		830			963
Property and equipment, net		132			130
Intangible assets, net		3,056			3,123
Goodwill		5,585			5,585
Deferred tax assets		4,450			4,402
Other assets		246			250
Total assets	$	38,989		$	44,555

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	7,202		$	13,609
Current portion of lease liabilities		301			380
Total current liabilities		7,503			13,989
Non-current portion of lease liabilities		564			623
Total liabilities		8,067			14,612

Stockholders’ equity:
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 568 shares of Series N as of March 31, 2021 and December 31, 2020		6			6
Common stock, $0.01 par value, authorized 300,000,000 shares; issued and outstanding 35,647,477 shares as of March 31, 2021 and 35,281,183 as of December 31, 2020		357			353
Additional paid-in capital		293,343			293,400
Accumulated deficit		(262,784	)		(263,816	)
Total stockholders’ equity		30,922			29,943
Total liabilities and stockholders’ equity	$	38,989		$	44,555

The accompanying notes are an integral part of these condensed consolidated financial statements.

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands of US dollars, except share and per share amounts)

(unaudited)

	Three Months Ended March 31,
	2021		2020
Revenues:
Services revenue	$	5,030	$	4,088
Asset sales		2,071		156
Total revenues		7,101		4,244

Operating costs and expenses:
Cost of services revenue		1,175		551
Cost of asset sales		820		38
Selling, general and administrative		3,969		3,472
Depreciation and amortization		91		90
Total operating costs and expenses		6,055		4,151
Earnings of equity method investments		—		1
Operating income		1,046		94
Interest and other expense, net		3		(27	)
Income before income tax expense		1,049		67
Income tax expense		17		29
Net income	$	1,032	$	38

Weighted average common shares outstanding – basic		34,788,016		28,751,689
Weighted average common shares outstanding – diluted		37,533,065		30,200,114
Net income per share – basic	$	0.03	$	0.00
Net income per share – diluted	$	0.03	$	0.00

The accompanying notes are an integral part of these condensed consolidated financial statements.

HERITAGE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands of US dollars, except share amounts)
(unaudited)

Additional

Accumulated

other

Preferred stock

Common stock

paid-in

Accumulated

comprehensive

Amount

capital

deficit

loss

Total

Balance as of December 31, 2020

568

SEC Form 10-Q filed by Heritage Global Inc.