Related Party Transactions

12 Months Ended

Dec. 31, 2013

Related Party Transactions [Text Block]

Note 11 – Related Party Transactions

Related Party Debt with Counsel

At December 31, 2013 the Company had a balance of $2,550 owing to Counsel under the Counsel Loan, of which $168 was accrued interest, as compared to a non-interest bearing receivable of $2,929 at December 31, 2012. For further discussion of the terms of the Counsel Loan, see Note 7.

Counsel Services Provided to Company

Beginning in December 2004, HGI and Counsel have entered into successive annual management services agreements (collectively, the Agreement). Under the terms of the Agreement, HGI has agreed to pay Counsel for ongoing services provided to HGI by Counsel personnel. These services include preparation of the Company's financial statements and regulatory filings, taxation matters, stock-based compensation administration, Board administration, patent portfolio administration and litigation matters. The Counsel employees providing the services are: 1) its Executive Vice President, Secretary and Chief Financial Officer, 2) its Tax Manager, 3) an Accounting Manager, and 4) its Accounts Payable Clerk. These employees have the same or similar positions with HGI, but none of them receive compensation from HGI. Rather, Counsel allocates to HGI a percentage, based on time incurred, of the employees' base compensation paid by Counsel. Beginning in the first quarter of 2011, additional amounts were charged to HGI for Counsel services relating to the ongoing operations of HGI's asset liquidation business. The amounts due under the Agreement are payable within 30 days following the respective year end, subject to applicable restrictions. Any unpaid amounts bear interest at 10% per annum commencing on the day after such year end.

All amounts charged by Counsel are detailed below:

		Year ended
Item		December 31,
		2013		2012
Management fees	$	360	$	360
Other charges		74		75
Total	$	434	$	435

On March 20, 2014, Counsel declared a dividend in kind, consisting of Counsel’s distribution of its majority interest in HGI to Counsel shareholders. The record date is April 1, 2014 and the payment date is April 30, 2014. This transaction completes Counsel’s planned disposition of its interest in HGI, as announced in the first quarter of 2013. Following this declaration, the Company and Counsel have agreed to enter into a replacement management services agreement (the “Services Agreement”). Under the terms of the agreement, Counsel will remain as external manager and will continue to provide the same services, at similar rates. Payment will be due within thirty days following the end of each quarter. Unpaid balances will accrue interest at a rate per annum equal to the lesser of the then current rate announced from time to time by the Wall Street Journal as the “prime rate”, plus two percent ( 2%), or the maximum rate allowable by law. The Services Agreement has an initial term of one year, which renews automatically for successive one-year terms unless notice by either party is given within ninety days before the expiration. The Services Agreement may be terminated at any time upon mutual agreement of the Company and Counsel. The Company is currently considering the internalization of its management in the future, but expects that it will continue to avail itself of the services provided under the Services Agreeement until such time.

Transactions with Other Related Parties

On July 26, 2013, the Company and its Co-CEOs entered into an agreement by which the Co-CEOs terminated their employment with the Company and HG LLC. Under the agreement, as disclosed in the Company’s Current Report on Form 8-K filed on July 31, 2013, effective June 30, 2013 the Co-CEOs departed the Company along with the personnel in the New York and Los Angeles offices of HG LLC. In August 2012, each Co-CEO had acquired 400,000 common shares of the Company, with a total value of $1,054, in return for intellectual property licensing agreements. The $1,054 was recorded as stock-based compensation in 2012. On July 26, 2013, the Co-CEOs returned these common shares, which had a fair value of $624, in order to re-acquire the licensing agreements. The Company therefore recorded intellectual property licensing revenue of $624. The shares have been cancelled.

The Company, beginning in 2009, leased office space in White Plains, NY and Los Angeles, CA as part of the operations of HG LLC. Both premises are owned by entities that are controlled by a former Co-CEO of HG LLC and the Company. In connection with the departure of the Co-CEOs, these lease agreements were terminated, without penalty, effective June 30, 2013.

Additionally, the Company leases office space in Foster City, CA as part of the operations of HGP. The premises are owned by an entity that is jointly controlled by the former owners of HGP.

The lease amounts paid by the Company to the related parties are detailed below:

		Year ended
Leased premises location		December 31,
		2013		2012
White Plains, NY	$	66	$	126
Los Angeles, CA		12		26
Foster City, CA		228		130
Total	$	306	$	282

As discussed in Note 2, as part of the acquisition of HGP during the first quarter of 2012, the Company issued Promissory Notes totaling $1,000 to its two former owners, partially offset by $151 of accounts receivable from the former owners. During the third quarter of 2012, the Promissory Notes, which did not accrue interest, were repaid in full, and the accounts receivable were collected.