Heritage Global Inc. [HGBL] Filings

10-Q 1 hgbl-20230630.htm 10-Q 10-Q

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 June 30, 2023


☐	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 The 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 ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

As of August 1, 2023, there were 37,145,151 shares of common stock outstanding, $0.01 par value.

TABLE OF CONTENTS


Part I.	Financial Information

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022	3

	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2023 and 2022 (unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

Part II.	Other Information

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

	Signature Page	34

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)



	June 30, 2023			December 31, 2022
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	15,035		$	12,667
Accounts receivable, net		2,912			988
Current portion of notes receivable, net		8,569			4,505
Inventory – equipment		5,049			4,619
Other current assets		988			1,113
Total current assets		32,553			23,892
Non-current portion of notes receivable, net		6,400			4,245
Equity method investments		15,778			13,973
Right-of-use assets		2,856			2,776
Property and equipment, net		1,745			1,571
Intangible assets, net		3,949			4,144
Goodwill		7,446			7,446
Deferred tax assets		9,085			9,449
Other assets		70			64
Total assets	$	79,882		$	67,560

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	6,531		$	8,924
Payables to sellers		8,085			3,188
Current portion of third party debt		1,681			3,411
Current portion of lease liabilities		777			703
Total current liabilities		17,074			16,226
Non-current portion of third party debt		6,382			871
Non-current portion of lease liabilities		2,181			2,164
Total liabilities		25,637			19,261

Stockholders’ equity:
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 563 and 565 shares of Series N as of June 30, 2023 and December 31, 2022, respectively; with liquidation preference over common stockholders equivalent to $1,000 per share		6			6
Common stock, $0.01 par value, authorized 300,000,000 shares; issued 37,145,151 and 36,932,177 shares as of June 30, 2023 and December 31, 2022, respectively; and outstanding 36,901,683 and 36,688,709 shares as June 30, 2023 and December 31, 2022, respectively		371			369
Additional paid-in capital		294,156			293,589
Accumulated deficit		(239,893	)		(245,270	)
Treasury stock at cost, 243,468 shares as of June 30, 2023 and December 31, 2022		(395	)		(395	)
Total stockholders’ equity		54,245			48,299
Total liabilities and stockholders’ equity	$	79,882		$	67,560

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 June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenues:
Services revenue	$	9,810		$	4,595		$	20,055		$	8,763
Asset sales		3,288			6,470			9,655			11,659
Total revenues		13,098			11,065			29,710			20,422

Operating costs and expenses:
Cost of services revenue		1,807			910			4,147			1,664
Cost of asset sales		1,935			5,631			6,270			9,033
Selling, general and administrative		6,440			4,939			12,740			9,214
Depreciation and amortization		121			133			241			266
Total operating costs and expenses		10,303			11,613			23,398			20,177
Earnings of equity method investments		306			4,172		683				4,254
Operating income		3,101			3,624			6,995			4,499
Interest expense, net		(101	)		(37	)		(169	)		(75	)
Income before income tax expense		3,000			3,587			6,826			4,424
Income tax expense		221			1,009			1,218			1,201
Net income	$	2,779		$	2,578		$	5,608		$	3,223

Weighted average common shares outstanding – basic		36,700,830			36,103,198			36,627,200			36,053,729
Weighted average common shares outstanding – diluted		37,651,694			36,999,614			37,504,023			36,846,539
Net income per share – basic	$	0.08		$	0.07		$	0.15		$	0.09
Net income per share – diluted	$	0.07		$	0.07		$	0.15		$	0.09

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
	Preferred stock					Common stock				paid-in		Accumulated			Treasury stock
	Shares			Amount		Shares		Amount		capital		deficit			Shares		Amount			Total
Balance as of December 31, 2022		565		$	6		36,932,177	$	369	$	293,589	$	(245,270	)	$	243,468	$	(395	)	$	48,299
Cumulative change in accounting principle (Note 2)		—			—		—		—		—		(231	)		—		—			(231	)
Balance as of January 1, 2023 (as adjusted for change in accounting principle)		565			6		36,932,177		369		293,589		(245,501	)		243,468		(395	)		48,068
Issuance of common stock from stock option awards		—			—		31,191		—		5		—			—		—			5
Stock-based compensation expense		—			—		—		—		179		—			—		—			179
Issuance of restricted common stock		—			—		134,592		2		150		—			—		—			152
Net income		—			—		—		—		—		2,829			—		—			2,829
Balance as of March 31, 2023		565			6		37,097,960		371		293,923		(242,672	)		243,468		(395	)		51,233
Issuance of common stock from stock option awards		—			—		32,111		—		5		—			—		—			5
Stock-based compensation expense		—			—		—		—		228		—			—		—			228
Issuance of restricted common stock		—			—		15,000		—		—		—			—		—			—
Issuance of common stock due to conversion of Series N Preferred stock		(2	)		—		80		—		—		—			—		—			—
Net income		—			—		—		—		—		2,779			—		—			2,779
Balance as of June 30, 2023		563		$	6		37,145,151	$	371	$	294,156	$	(239,893	)	$	243,468	$	(395	)	$	54,245


									Additional
	Preferred stock				Common stock				paid-in			Accumulated			Treasury stock
	Shares		Amount		Shares		Amount		capital			deficit			Shares		Amount			Total
Balance as of December 31, 2021		565	$	6		36,574,702	$	366	$	293,030		$	(260,763	)	$	—	$	—		$	32,639
Issuance of common stock from stock option awards		—		—		103,135		1		(24	)		—			—		—			(23	)
Stock-based compensation expense		—		—		—		—		106			—			—		—			106
Net income		—		—		—		—		—			645			—		—			645
Balance as of March 31, 2022		565		6		36,677,837		367		293,112			(260,118	)		—		—			33,367
Issuance of common stock from stock option awards		—		—		56,250		—		25			—			—		—			25
Stock-based compensation expense		—		—		—		—		108			—			—		—			108
Repurchase of common stock		—		—		—		—		—			—			71,512		(105	)		(105	)
Net income		—		—		—		—		—			2,578			—		—			2,578
Balance as of June 30, 2022		565	$	6		36,734,087	$	367

Heritage Global Inc. [HGBL] Filings
10-Q	[2023-08-10]
10-Q	[2023-05-11]
10-K	[2023-03-24]
10-Q	[2022-11-10]
10-Q	[2022-08-10]
10-Q	[2022-05-12]
10-K	[2022-03-17]
10-Q	[2021-11-10]
10-Q	[2021-08-12]
10-Q	[2021-05-13]
10-K	[2021-03-08]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
10-Q	[2020-05-11]
10-K	[2020-03-09]
10-Q	[2019-11-08]
10-Q	[2019-08-05]
10-Q	[2019-05-06]
10-K	[2019-03-11]
10-Q	[2018-11-05]
10-Q	[2018-08-06]
10-Q	[2018-05-07]
10-K	[2018-03-13]
10-Q	[2017-11-06]
10-Q	[2017-08-09]
10-Q	[2017-05-08]
10-K	[2017-03-07]
10-Q	[2016-11-07]
10-Q	[2016-08-08]
10-Q	[2016-05-09]
10-K	[2016-03-17]
10-Q	[2015-11-12]
10-Q	[2015-08-13]
10-Q	[2015-05-14]
10-K	[2015-03-31]
10-Q	[2014-11-13]
10-Q	[2014-08-14]
10-Q	[2014-05-14]
10-K	[2014-03-31]
10-Q	[2013-11-14]
10-Q	[2013-08-14]
10-Q	[2013-05-14]
10-K	[2013-03-28]
10-Q	[2012-11-13]
10-Q	[2012-08-14]
10-Q	[2012-05-14]
10-K	[2012-03-22]