The Company has determined that the acquisition of certain assets and liabilities of American Laboratory Trading, ("ALT") constitutes a business acquisition as defined by ASC Topic 805, Business Combinations ("ASC 805"). Accordingly, the assets acquired and liabilities assumed in the transaction were recorded at their estimated acquisition fair values, while transaction costs associated with the acquisition were expensed as incurred pursuant to the purchase method of accounting in accordance with ASC 805. The Company’s purchase price allocation was based on an evaluation of the appropriate fair values and represents management’s best estimate based on available data. Fair values are determined based on the requirements of ASC Topic 820, Fair Value Measurement (“ASC 820”).

On August 23, 2021, the Company acquired (the “Transaction”) certain assets and liabilities of American Laboratory Trading pursuant to the terms and conditions of an Asset Purchase Agreement (the “Asset Purchase Agreement”), dated August 18, 2021, among the Company, American Laboratory Trading and certain individuals named therein. The aggregate purchase price paid to American Laboratory Trading was approximately $5.6 million, consisting of $2.3 million in cash, as adjusted for American Laboratory Trading's working capital, the $2.0 million ALT Note and acquired real property of $1.3 million. The Asset Purchase Agreement contains customary representations and warranties and covenants by each party. The Company and ALT are obligated, subject to certain limitations, to indemnify the other under the Asset Purchase Agreement for losses arising from certain breaches of the Asset Purchase Agreement and for certain other liabilities, subject to applicable limitations set forth in the Asset Purchase Agreement. HGI has guaranteed the obligations of ALT under the terms of the Asset Purchase Agreement and the ALT Note.

On August 23, 2021, in connection with the Transaction, a wholly-owned subsidiary of HGI (“RE Purchaser”), acquired the real property used in ALT’s business (the “Property”) pursuant to a Purchase and Sale Agreement (the “Real Estate Purchase Agreement” and together with the Purchase Agreement, the “Agreements”),

dated August 18, 2021, between 12 Colton Road, LLC and RE Purchaser. The purchase price for the Property was $1.3 million. The Real Estate Purchase Agreement contains customary representations and warranties and covenants by each party. The parties to the Real Estate Purchase Agreement are obligated, subject to certain limitations, to indemnify the other under the Real Estate Purchase Agreement for losses arising from certain breaches of the Real Estate Purchase Agreement and other liabilities, subject to applicable limitations set forth in the Real Estate Purchase Agreement.

ALT is a supplier of refurbished lab equipment and a provider of surplus asset services for the life sciences industry. The acquisition enhances the Company’s position in the biotech sector. Acquisition-related costs consisted of external fees for advisory, legal, and other professional services and totaled approximately $0.2 million for the year ended December 31, 2021, respectively.

The major classes of assets and liabilities to which the Company has allocated the purchase price were as follows (in thousands):


Accounts receivable	$	410
Inventory - equipment		498
Property, plant and equipment		1,315
Intangible assets		1,800
Goodwill		1,861
Other assets		8
Accounts payable and accrued liabilities		(274	)
Purchase price	$	5,618

The $1.8 million of intangible assets are attributable to $1.2 million of vendor relationships that will be amortized over a period of five years and $0.7 million for the American Laboratory Trading trade name, which will be amortized over a period of 20 years. The Company made certain adjustments to the purchase price allocation during the fourth quarter of 2021, which primarily include an increase to separately identifiable intangible assets of $0.4 million and a decrease to the fair value of acquired inventory of $0.6 million.

The excess of the consideration transferred over the fair values of assets acquired and liabilities assumed was recorded as goodwill, which was primarily attributed to increased synergies that are expected to be achieved from the acquisition. Goodwill is expected to be deductible for income tax purposes.

The financial results of ALT have been included in the Company's consolidated financial statements since the date of the acquisition and have been reported as part of the Company's Industrial Assets Division.

The unaudited pro forma financial information presented in the table below (in thousands) is provided for illustrative purposes only and summarizes the combined results of operations of the Company and ALT. For purposes of this pro forma presentation, the acquisition of ALT is assumed to have occurred on January 1, 2020. The pro forma financial information for all periods presented also includes the estimated business combination accounting effects resulting from this acquisition, notably amortization expense from the acquired intangible assets, interest expense from the ALT Note, and certain other integration related impacts.

This unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on January 1, 2020, nor of the results of operations that may be obtained in the future.


	For the Year Ended December 31,
	2021		2020
Pro forma revenues	$	29,788	$	32,082
Pro forma net income	$	3,285	$	10,296

Pro forma net income per share - basic	$	0.09	$	0.34
Pro forma net income per share - diluted	$	0.09	$	0.31