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Description of Business and Principles of Consolidation
12 Months Ended
Dec. 31, 2013
Description of Business and Principles of Consolidation [Text Block]

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 LLC (“HG LLC”), Equity Partners HG LLC (“Equity Partners”), Heritage Global Partners, Inc. (“HGP”), C2 Communications Technologies Inc., and C2 Investments Inc. 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 accounting principles generally accepted 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 operates in two business segments, Asset Liquidation and Patent Licensing. The Company’s segments are discussed in more detail in Note 15.

The Company’s Asset Liquidation segment, which began operations in the second quarter of 2009, specializes in services relating to the acquisition and disposition of distressed and surplus assets, including appraisal and auctions. It consists of the operations of HG LLC, Equity Partners and HGP. These operations are discussed in more detail in Note 2.

Licensing of intellectual property constitutes the Company’s Patent Licensing segment. HGI owns certain patents, including two foundational patents in voice over internet protocol (“VoIP”) technology – U.S. Patent Nos. 6,243,373 (the “VoIP Patent”) and 6,438,124 (the “C2 Patent”) (together the “VoIP Patent Portfolio”), which it licenses. HGI’s target market consists of carriers, equipment manufacturers, service providers and end users in the internet protocol telephony market who are using HGI’s patented VoIP technologies by deploying VoIP networks for phone-to-phone communications.

In 2007, the Company began investing in Internet-based e-commerce businesses by acquiring minority positions in several companies. The Company’s most significant investment took place in 2009, when it indirectly acquired an approximate 5% interest in Polaroid Corporation, pursuant to a Chapter 11 reorganization in a U.S. bankruptcy court. The Company’s investments are discussed in more detail in Note 5.