10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2015

OR

[  ] 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: 0-17973

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 91230
(Address of Principal Executive Offices)

(858) 847-0656
(Registrant’s Telephone Number)

N/A
(Registrant’s Former Name)

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 and Exchange Act of 1934 during the preceding 12 months (or for such shorter time 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 [X]     No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X]     No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Exchange Act Rule 12b-2).

Large Accelerated Filer [  ]	Accelerated Filer [  ]
Non-Accelerated Filer   [  ]	Smaller reporting company [X]

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

As of November 10, 2015, there were 28,467,648 shares of common stock, $0.01 par value, outstanding.

TABLE OF CONTENTS

Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2015 and 2014	4
	Condensed Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2015	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
Part II.	Other Information
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27

2

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements.

HERITAGE GLOBAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share and per share amounts)
(unaudited)

		September 30,			December 31,
		2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	2,657		$	3,633
Accounts receivable, net		757			3,043
Deposits		2			173
Inventory – equipment		435			139
Other current assets		568			587
Total current assets		4,419			7,575
Inventory – real estate		3,760			6,508
Equity method investments		209			1,134
Property and equipment, net		115			150
Identifiable intangible assets, net		7,202			7,657
Goodwill		8,846			8,846
Total assets	$	24,551		$	31,870
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	6,716		$	7,225
Current portion of third party debt		2,500			525
Current portion of related party debt		1,698			2,985
Contingent consideration – current		1,353			803
Total current liabilities		12,267			11,538
Long-term third party debt		—			2,500
Contingent consideration		2,472			3,395
Deferred tax liabilities		960			960
Total liabilities		15,699			18,393
Stockholders’ equity:
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding           569 Class N shares at September 30, 2015 and 575 Class N shares at December 31, 2014		6			6
Common stock, $0.01 par value, authorized 300,000,000 shares; issued and outstanding           28,467,648 shares at September 30, 2015 and 28,167,408 shares at December 31, 2014		285			282
Additional paid-in capital		284,005			283,691
Accumulated deficit		(275,385	)		(270,468	)
Accumulated other comprehensive loss		(59	)		(34	)
Total stockholders’ equity		8,852			13,477
Total liabilities and stockholders’ equity	$	24,551		$	31,870

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

3

HERITAGE GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands of US dollars, except per share amounts)
(unaudited)

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2015			2014			2015			2014
Revenue:
Asset liquidation
Commissions and other	$	2,358		$	1,365		$	7,549		$	4,687
Asset sales		682			4,738			2,094			6,212
Total revenue		3,040			6,103			9,643			10,899
Operating costs and expenses:
Asset liquidation		516			3,385			2,128			4,419
Real estate inventory write-down		2,748			—			2,748			—
Selling, general and administrative, including expenses paid to related parties		3,045			2,698			8,953			7,456
Depreciation and amortization		166			119			490			357
Total operating costs and expenses		6,475			6,202			14,319			12,232
(Losses) earnings of equity accounted asset liquidation investments		(34	)		(41	)		105			(53	)
Operating loss		(3,469	)		(140	)		(4,571	)		(1,386	)
Other income (expenses):
Earnings of other equity method investments		—			129			5			164
Interest expense – third party		(127	)		(79	)		(262	)		(250	)
Interest expense – related party		(21	)		(43	)		(66	)		(149	)
Total other (expense) income		(148	)		7			(323	)		(235	)
Loss before income tax expense		(3,617	)		(133	)		(4,894	)		(1,621	)
Income tax expense		20			55			23			24,722
Net loss		(3,637	)		(188	)		(4,917	)		(26,343	)
Other comprehensive income (loss):
Foreign currency translation adjustments		4			(7	)		(25	)		9
Comprehensive loss	$	(3,633	)	$	(195	)	$	(4,942	)	$	(26,334	)
Weighted average common shares outstanding – basic and diluted (in thousands)		28,468			28,167			28,293			28,167
Net loss per share – basic and diluted	$	(0.13	)	$	(0.01	)	$	(0.17	)	$	(0.94	)

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

4

HERITAGE GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the nine months ended September 30, 2015
(In thousands of US dollars, except share amounts)
(unaudited)

`															Accumulated
									Additional						other
	Preferred stock				Common stock				paid-in			Accumulated			comprehensive
	Shares			Amount	Shares		Amount		capital			deficit			loss			Total
Balance at December 31, 2014	575		$	6	28,167,408	$	282	$	283,691		$	(270,468	)	$	(34	)	$	13,477
Stock-based compensation expense	—			—	—		—		317			—			—			317
Issuance of common stock from       restricted stock awards	—			—	300,000		3		(3	)		—			—			—
Conversion of Series N preferred      stock into common stock	(6	)		—	240		—		—			—			—			—
Net loss	—			—	—		—		—			(4,917	)		—			(4,917	)
Foreign currency translation adjustments	—			—	—		—		—			—			(25	)		(25	)
Balance at September 30, 2015	569		$	6	28,467,648	$	285	$	284,005		$	(275,385	)	$	(59	)	$	8,852

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

5

HERITAGE GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
(unaudited)

		Nine months ended
		September 30,
		2015			2014
Cash flows (used in) provided by operating activities:
Net loss	$	(4,917	)	$	(26,343	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Accrued management fees and other charges added to principal of related party debt		290			444
Accrued interest added to principal of related party debt		66			149
Accretion of contingent consideration discount		140			—
Stock-based compensation expense		317			363
Real estate inventory write-down		2,748			—
Earnings of equity method investments		(110	)		(111	)
Depreciation and amortization		490			357
Return on investment in equity accounted asset liquidation investments		441			432
Changes in operating assets and liabilities:
Accounts receivable		294			(824	)
Deposits		171			13
Inventory		(296	)		96
Other current assets		27			(95	)
Deferred income tax assets		—			24,667
Accounts payable and accrued liabilities		(541	)		2,107
Net cash (used in) provided by operating activities		(880	)		1,255
Cash flows provided by (used in) investing activities:
Cash paid to acquire NLEX, net of cash acquired		—			(1,361	)
Cash distributions from equity method investments		737			498
Proceeds from sale of equity method investments		1,992			—
Investment in equity method investments		(143	)		(606	)
Purchase of property and equipment		—			(13	)
Net cash provided by (used in) investing activities		2,586			(1,482	)
Cash flows (used in) provided by financing activities:
Proceeds from debt payable to third parties		—			2,928
Repayment of debt payable to third parties		(525	)		(1,427	)
Proceeds from debt payable to related party		775			2,018
Repayment of debt payable to related party		(2,419	)		(2,105	)
Payment of contingent consideration		(513	)		—
Net cash (used in) provided by financing activities		(2,682	)		1,414
Net (decrease) increase in cash and cash equivalents		(976	)		1,187
Cash and cash equivalents at beginning of period		3,633			3,213
Cash and cash equivalents at end of period	$	2,657		$	4,400
Supplemental cash flow information:
Cash paid for taxes	$	70		$	19
Cash paid for interest	$	178		$	167

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

6

HERITAGE GLOBAL INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015

Note 1 –Basis of Presentation

 These unaudited condensed consolidated interim financial statements include the accounts of Heritage Global Inc. together with its subsidiaries, including Heritage Global Partners, Inc. (“HGP”), Heritage Global LLC (“HG LLC”), Equity Partners HG LLC (“Equity Partners”), National Loan Exchange, Inc. (“NLEX”), C2 Communications Technologies Inc., and C2 Investments Inc. These entities, collectively, are referred to as “HGI,” the “Company,” “we” or “our” in these financial statements. Our unaudited condensed consolidated interim financial statements were prepared in conformity with generally accepted accounting principles 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’s sole operating segment is its asset liquidation business.

We have prepared the condensed consolidated interim financial statements included herein pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In management’s opinion, these financial statements reflect all adjustments that are necessary to present fairly the results for the interim periods included herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations; however, we believe that the disclosures are appropriate. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 31, 2015.

The results of operations for the three and nine month periods ended September 30, 2015 are not necessarily indicative of those operating results to be expected for any subsequent interim period or for the entire year ending December 31, 2015. The accompanying condensed consolidated balance sheet at December 31, 2014 has been derived from the audited consolidated balance sheet at December 31, 2014, contained in the above referenced Form 10-K. Certain prior year balances within the condensed consolidated financial statements have been reclassified to conform to the current year presentation.

Note 2 – Summary of Significant Accounting Policies

Use of estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Significant estimates include the assessment of collectability of revenue recognized, and the valuation of accounts receivable, inventory, investments, goodwill and intangible assets, liabilities, contingent consideration, deferred income tax assets and liabilities, and stock-based compensation. These estimates have the potential to significantly impact our consolidated financial statements, either because of the significance of the financial statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events that are continuous in nature.

The functional currency of foreign operations is deemed to be the local country’s currency. Assets and liabilities of operations outside of the United States are generally translated into U.S. dollars, and the effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss).

7

The critical accounting policies used in the preparation of our audited consolidated financial statements are discussed in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no changes to these policies in the first nine months of 2015.

Recently Adopted Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 requires discontinued operations treatment for disposals of a component or group of components that represents a strategic shift that has or will have a major impact on an entity’s operations or financial results. It also expands the scope of ASC 205-20 to disposals of equity method investments and acquired businesses held for sale. With respect to disclosures, ASU 2014-08 both 1) expands disclosure requirements for transactions that meet the definition of a discontinued operation, and 2) requires entities to disclose information about individually significant components that are disposed of or held for sale and do not qualify as discontinued operations. ASU 2014-08 also requires specific presentation of various items on the face of the financial statements. ASU 2014-08 is effective for interim and annual periods beginning on or after December 15, 2014, with early adoption permitted. The Company therefore adopted ASU 2014-08 in the first quarter of 2015. However, since the Company does not currently have either discontinued operations or any planned disposals that would require the expanded reporting required by ASU 2014-08, its adoption had no impact on its consolidated financial statements.

Future Accounting Pronouncements

In January 2015, the FASB issued Accounting Standards update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates the requirement for entities to consider whether an underlying event or transaction is extraordinary, and, if so, to separately present the item in the income statement net of tax, after income from continuing operations. Instead, items that are both unusual and infrequent should be separately presented as a component of income from continuing operations, or be disclosed in the notes to the financial statements. ASU 2015-01 will be effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2015. Early adoption is permitted provided that the new standard is applied from the beginning of the fiscal year of adoption. The Company has not historically reported extraordinary items in its consolidated financial statements, and is not aware of any pending transactions or events that might have required reporting as extraordinary items, and therefore does not expect the adoption of ASU 2015-01 to have a material impact on its consolidated financial statements.

In March 2015, the FASB issued Accounting Standards update 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 eliminates entity specific consolidation guidance for limited partnerships, and revises other aspects of the consolidation analysis, but does not change the existing consolidation guidance for corporations that are not variable interest entities (“VIEs”). For public business entities, ASU 2015-02 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company has not yet adopted ASU 2015-02 nor assessed its potential impact on its consolidated financial statements.

In April 2015, the FASB issued Accounting Standards update 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 changes the presentation of debt issuance costs in financial statements, by requiring them to be presented in the balance sheet as a direct deduction from the related debt liability, rather than as an asset. Amortization of the costs is reported as interest expense. There is no change to the current guidance on the recognition and measurement of debt issuance costs. For public business entities, ASU 2015-03 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company has not yet adopted ASU 2015-03 nor assessed its potential impact on its consolidated financial statements.

In August 2015, the FASB issued Accounting Standards update 2015-15, Interest – Imputation of Interest, (“ASU 2015-15”). ASU 2015-15 amends subtopic 835-30 of the accounting standards codification (which was previously amended by ASU 2015-03), to allow for the capitalization of debt issuance costs related to line of credit agreements. Capitalized costs would be presented as an asset and subsequently amortized ratably over the term of the line of credit. The Company has not yet adopted ASU 2015-15 nor assessed its potential impact on its consolidated financial statements.

8

In September 2015, the FASB issued Accounting Standards update 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 changes the recognition of business combination adjustments by requiring acquirers to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer is required to record the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts. These amounts are calculated as if the accounting was completed at acquisition date. The acquirer is also required to present separately on the face of the income statement, or disclose in the notes, the amount recorded in current-period earnings (by line item) that would have been recorded in previous reporting periods had the adjustments been recognized as of the acquisition date. ASU 2015-16 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company has not yet adopted ASU 2015-16 nor assessed its potential impact on its consolidated financial statements.

Note 3 – Acquisition of National Loan Exchange, Inc.

On June 2, 2014, and effective May 31, 2014, the Company acquired all of the issued and outstanding capital stock in National Loan Exchange, Inc. (“NLEX”), a broker of charged-off receivables in the United States and Canada. NLEX operates as a wholly owned division of the Company. The acquisition of NLEX is consistent with HGI’s strategy to expand the services provided by its asset liquidation business. In connection with the acquisition, HGI entered into employment agreements with the previous owner and key employees of NLEX.

The consideration for the acquisition consisted of $2.0 million cash and an earn-out provision (“contingent consideration”). Under the terms of the NLEX purchase agreement, the Company will pay, to the former owner of NLEX, 50% of the Net Profits (as defined in the NLEX stock purchase agreement) of NLEX for each of the four years following the closing. The payments are due on or about July 30 of each year, beginning in 2015. In July 2015 the Company made its first payment to the former owner of NLEX in the amount of $0.5 million. The contingent consideration is capped at an aggregate of $5.0 million, and at September 30, 2015, subject to the application of a 9% discount rate, is estimated to have a present value of approximately $3.9 million. Key assumptions in determining this present value include projected earnings through May 2018 and a weighted average cost of capital of 31.6% . At September 30, 2015, the Company has recorded a current liability of $1.4 million for the estimated second earn-out payment, and estimated that the non-current portion of the contingent consideration is $2.5 million.

In connection with the contingent consideration, during the period January 1, 2015 through September 30, 2015, the Company recognized a total of $0.1 million of interest expense which represents the accretion of the present value discount during the period.

See Note 7 for discussion of the intangible assets and goodwill recorded in connection with the acquisition of NLEX.

Note 4 – Real Estate Inventory Write-down

In October 2015, the Company executed a listing agreement with a real estate broker to list its real estate inventory for sale at a list price of $4.9 million. The carrying value of the inventory had been $6.5 million. The Company determined that the net realizable value for the inventory, based on the most probable selling price net of costs to complete the sale, was $3.8 million. As such, the Company recorded an inventory write-down charge during the three months ended September 30, 2015, of $2.7 million, reducing the carrying cost of the inventory to $3.8 million.

9

Note 5 – Stock-based Compensation

Options

At September 30, 2015 the Company had three stock-based compensation plans, which are described more fully in Note 15 to the audited consolidated financial statements for the year ended December 31, 2014, contained in the Company’s most recently filed Annual Report on Form 10-K.

During the first nine months of 2015 the Company issued a total of 50,000 options to the Company’s independent directors as part of their annual compensation. During the same period, 40,000 options expired and no options were exercised or forfeited.

 The following summarizes the changes in common stock options for the nine months ended September 30, 2015:

				Weighted
				Average
				Exercise
	Options			Price
Outstanding at December 31, 2014	2,165,000		$	1.71
Granted	50,000		$	0.42
Expired	(40,000	)	$	0.90
Outstanding at September 30, 2015	2,175,000		$	1.70
Options exercisable at September 30, 2015	1,743,750		$	1.78

The Company recognized stock-based compensation expense related to stock options of $0.1 million and $0.3 million for the three and nine months ended September 30, 2015, respectively. As of September 30, 2015 there is approximately $0.1 million of unrecognized stock-based compensation expense related to unvested option awards outstanding, which is expected to be recognized over a weighted average period of 1.7 years.

Restricted Stock

Restricted stock awards represent a right to receive shares of common stock at a future date determined in accordance with the participant’s award agreement. There is no exercise price and no monetary payment required for receipt of restricted stock awards or the shares issued in settlement of the award. Instead, consideration is furnished in the form of the participant’s services to the Company. Compensation cost for these awards is based on the fair value on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period.

The following summarizes the changes in restricted stock awards for the nine months ended September 30, 2015:

				Weighted
	Restricted			Average Grant
	Stock			Date Fair Value
	Awards			Per Share
Awards at December 31, 2014	300,000		$	0.38
Granted	—			—
Vested	(150,000	)	$	0.38
Unvested awards at September 30, 2015	150,000		$	0.38
Vested awards at September 30, 2015	150,000		$	0.38

The Company recognized stock-based compensation expense related to restricted stock awards of $0.1 million for the nine months ended September 30, 2015. As of September 30, 2015 there is approximately $0.1 million of unrecognized stock-based compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 1.5 years.

10

Note 6 – Earnings Per Share

The Company is required, in periods in which it has net income, to calculate basic earnings per share (“basic EPS”) using the two-class method. The two-class method is required because the Company’s Class N preferred shares, each of which is convertible to 40 common shares, have the right to receive dividends or dividend equivalents should the Company declare dividends on its common stock. Under the two-class method, earnings for the period are allocated on a pro-rata basis to the common and preferred stockholders. The weighted-average number of common and preferred shares outstanding during the period is then used to calculate basic EPS for each class of shares.

In periods in which the Company has a net loss, basic loss per share is calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The two-class method is not used in periods in which the Company has a net loss because the preferred stock does not participate in losses.

Stock options and other potential common shares are included in the calculation of diluted earnings per share (“diluted EPS”), since they are assumed to be exercised or converted, except when their effect would be anti-dilutive. For the nine months ended September 30, 2015 and 2014, the Company recorded a net loss and therefore in both years excluded the outstanding options as of September 30 from its calculation of diluted EPS, since they would be anti-dilutive.

Note 7 – Intangible Assets and Goodwill

Identifiable intangible assets

The Company’s identifiable intangible assets are associated with its acquisitions of HGP in 2012 and NLEX in 2014, as shown in the table below (dollars in thousands):

	Original	Remaining		Acquisition		Accumulated			Carrying Value
Amortized Intangible Assets	Life (years)	Life (years)		Cost		Amortization			September 30, 2015
Customer/Broker Network (HGP)	12	8.4	$	4,180	$	(1,248	)	$	2,932
Trade Name (HGP)	14	10.4		1,460		(374	)		1,086
Customer Relationships (NLEX)	7.6	6.3		834		(146	)		688
Non-Compete Agreement (NLEX)	2	0.7		71		(47	)		24
Website (NLEX)	5	3.7		48		(13	)		35
Total				6,593		(1,828	)		4,765
Unamortized Intangible Assets
Trade Name (NLEX)	N/A	N/A		2,437		—			2,437
Total			$	9,030	$	(1,828	)	$	7,202

Amortization expense during the first nine months of 2015 and 2014 was $0.5 million and $0.3 million, respectively.

The estimated amortization expense as of September 30, 2015 during the next five fiscal years is shown below (in thousands):

Year		Amount
2015 (remainder of year from October 1, 2015 to December 31, 2015)	$	152
2016	$	587
2017	$	572
2018	$	572
2019	$	566

11

Goodwill

The Company’s goodwill is related to its asset liquidation business, and is comprised of goodwill from three acquisitions, as shown in the table below (in thousands). There were no impairment losses or other charges to the carrying amount of goodwill during the nine months ended September 30, 2015 and 2014.

Entity acquired	Acquisition date		Goodwill
Equity Partners	June 2011	$	573
HGP	February 2012		4,728
NLEX	June 2014		3,545
Total goodwill		$	8,846

Note 8 – Equity Method Investments

Summarized financial information – Equity method accounted asset liquidation investments

The summarized results of operations attributable to HGI’s equity method accounted asset liquidation investments are detailed in the table below (in thousands):

		Nine months ended
		September 30,
		2015		2014
Revenues	$	654	$	46
Operating income (loss)	$	105	$	(53	)

Note 9 – Debt

Outstanding debt at September 30, 2015 and December 31, 2014 is summarized as follows (in thousands):

		September 30,		December 31,
		2015		2014
Current:
Third Party Debt	$	2,500	$	—
Related Party Debt		1,698		2,985
Credit Facility		—		525
		4,198		3,510
Non-current:
Third Party Debt		—		2,500
Total debt	$	4,198	$	6,010

The Company entered into a loan with an unrelated party (the “Third Party Debt”) during the second quarter of 2014 for a principal amount of $2.5 million. The loan bears interest at 6% and had an original maturity date of January 15, 2015. In December 2014, the maturity date was extended to January 15, 2016 at the same interest rate. The loan is not subject to any covenants or conditions.

The Company’s Related Party Debt (the “Counsel Loan”), which is due on demand, was originally entered into in 2003 and accrued interest at 10% per annum compounded quarterly from the date funds were advanced. The Counsel Loan is secured by the assets of the Company.

In the second quarter of 2014, following Street Capital Group Inc.’s (formerly Counsel Corporation, herein referred to as “Counsel”) distribution of its ownership interest in HGI to Counsel shareholders as a dividend in kind, the unpaid balance of the Counsel Loan began accruing interest at a rate per annum equal to the lesser of the Wall St. Journal (“WSJ”) prime rate + 2.0%, or the maximum rate allowable by law. As of September 30, 2015 and December 31, 2014, the interest rate on the loan was 5.25% . Please see Note 11 for further discussion of transactions with Counsel.

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The Credit Facility in existence at December 31, 2014, which is included within third party debt on the condensed consolidated balance sheet, was provided to HG LLC by a U.S. bank. The Credit Facility was repaid in full and terminated in March 2015.

Note 10 – Income Taxes

At September 30, 2015 the Company has aggregate tax net operating loss carry forwards of approximately $87.9 million ($59.1 million of unrestricted net operating tax losses and approximately $28.8 million of restricted net operating tax losses) and unused minimum tax credit carry forwards of $0.5 million. Substantially all of the net operating loss carry forwards and unused minimum tax credit carry forwards expire between 2025 and 2035. The Company’s utilization of restricted net operating tax loss carry forwards against future income for tax purposes is restricted pursuant to the “change in ownership” rules in Section 382 of the Internal Revenue Code.

The reported tax expense (benefit) varies from the amount that would be provided by applying the statutory U.S. Federal income tax rate to the loss from continuing operations before taxes primarily as a result of the change in the deferred tax asset valuation allowance.

The Company records net deferred tax assets to the extent that it believes such assets will more likely than not be realized. As a result of our cumulative losses and uncertainty with respect to future taxable income, we have provided a full valuation allowance against our net deferred tax assets as of December 31, 2014 and September 30, 2015.

Note 11 – Related Party Transactions

Debt with Counsel

Until the second quarter of 2014, as discussed below, Counsel was the Company’s majority shareholder. Counsel remained a related party following the distribution of its investment in HGI to Counsel shareholders as a result of the Services Agreement discussed below. The Services Agreement terminated on August 31, 2015, however subsequent to its termination Counsel remained a related party because Allan Silber, an affiliate of Counsel, is the Company’s chairman of the board, and a significant shareholder of the Company. At September 30, 2015 and December 31, 2014, the Company reported amounts owed to Counsel of $1.7 million and $3.0 million, respectively, as related party debt (see Note 9). Total interest of $0.4 million has been accrued on the debt through September 30, 2015, and remains unpaid.

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Counsel Services Provided to the Company

Beginning in December 2004, HGI and Counsel entered into successive annual management services agreements (collectively, the “Agreement”). Under the terms of the Agreement, HGI agreed to pay Counsel for ongoing services provided to HGI by Counsel personnel. These services included 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 were: 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 received compensation from HGI. Rather, Counsel allocated 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 specifically relating to the ongoing operations of HGI’s asset liquidation business. The amounts due under the Agreement were payable within 30 days following the respective year end, subject to applicable restrictions. Any unpaid amounts bore interest at 10% per annum commencing on the day after such year end.

In the first quarter of 2013, Counsel announced its plan to dispose of its interest in HGI, and 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 dividend was paid on April 30, 2014 to shareholders of record as of April 1, 2014.

Following this disposition, the Company and Counsel entered into a replacement management services agreement (the “Services Agreement”). Under the terms of the Services Agreement, Counsel remained as external manager and continued to provide the same services, at similar rates, until the Services Agreement was terminated effective August 31, 2015, as described more fully in the Current Report on Form 8-K filed with the SEC on September 1, 2015.

The amounts charged by Counsel, which have been accrued and added to the Counsel Loan balance, are detailed below (in thousands):

		Nine months ended September 30,
		2015		2014
Management fees	$	240	$	270
Other charges		50		174
Total	$	290	$	444

Transactions with Other Related Parties

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 senior officers of HGI. It also leases office space in Edwardsville, IL, as part of the operations of NLEX, which is owned by senior officers of NLEX. The lease amounts paid by the Company to the related parties, which are included in selling, general and administrative expenses during the nine months ended September 30, 2015 and 2014, are detailed below (in thousands):

		Nine months ended September 30,
Leased premises location		2015		2014
Foster City, CA	$	171	$	171
Edwardsville, IL		73		32
Total	$	244	$	203

Note 12 – Subsequent Events

The Company has evaluated events subsequent to September 30, 2015 for disclosure. There have been no material subsequent events requiring disclosure in this Report except for the event already disclosed in Note 4 to the unaudited condensed consolidated financial statements.

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

The following discussion and analysis should be read in conjunction with the information contained in the unaudited condensed consolidated interim financial statements of the Company and the related notes thereto for the three-month and nine-month periods ended September 30, 2015, appearing elsewhere herein, and in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission (“SEC”).

Forward Looking Information

This Quarterly Report on Form 10-Q (the “Report”) contains certain “forward-looking statements” that are based on management’s exercise of business judgment as well as assumptions made by, and information currently available to, management. When used in this document, the words “may,” "will,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. These statements reflect our current view of future events and are subject to certain risks and uncertainties, as noted in the Company’s Annual Report on Form 10-K, filed with the SEC, and as noted below. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results could differ materially from those anticipated in these forward-looking statements. We undertake no obligation, and do not intend, to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our expectations will materialize.

Overview, History and Recent Developments

Heritage Global Inc. (“HGI,” “we” or the “Company”) was incorporated in the State of Florida in 1983 under the name “MedCross, Inc.” The Company’s name was changed to “I-Link Incorporated” in 1997, to “Acceris Communications Inc.” in 2003, to “C2 Global Technologies Inc.” in 2005, to “Counsel RB Capital Inc.” in 2011, and to Heritage Global Inc. effective August 22, 2013. The most recent name change more closely identifies the Company with its core auction business, Heritage Global Partners, Inc. (“HGP”).

On March 20, 2014, the Company’s former majority shareholder, Street Capital Group Inc. (formerly Counsel Corporation, herein referred to as “Counsel”), declared a dividend of all of its shares of the Company. This dividend was paid on April 30, 2014 to Counsel’s common shareholders of record as of April 1, 2014.

On June 2, 2014, effective as of May 31, 2014, the Company acquired all of the outstanding equity of National Loan Exchange, Inc. (“NLEX”), a broker of charged-off receivables in the United States and Canada. As a result of this acquisition, NLEX now operates as a wholly owned division of the Company. The acquisition is discussed in Note 3 of the unaudited condensed consolidated interim financial statements.

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The organization chart below outlines the basic corporate structure of the Company as of September 30, 2015.

(1)	Registrant.
(2)	Full service, global auction, appraisal and asset advisory company.
(3)	Asset liquidation company which acquires and monetizes distressed and surplus assets.
(4)	Investment banking firm specializing in financially distressed companies and properties.
(5)	Broker of charged-off receivables.
(6)	Owns and licenses telecommunications patents.

Asset liquidation

The Company’s asset liquidation business is its sole operating segment, and the Company’s objective is to build a sustainable, long-term global capital asset solutions business that is the leading resource for clients requiring capital asset solutions.

The asset liquidation business began operations in 2009 with the establishment of Heritage Global LLC (“HG LLC”). In addition to acquiring turnkey manufacturing facilities and used industrial machinery and equipment, HG LLC arranges traditional asset disposition sales, including liquidation and auction sales. In the second quarter of 2011, HG LLC acquired 100% of the business of EP USA, LLC (d/b/a Equity Partners) (“Equity Partners”), thereby expanding the Company’s operations. Equity Partners is a boutique investment banking firm and provider of financial solutions for distressed businesses and properties.

In February 2012 the Company increased its in-house asset liquidation expertise via its acquisition of 100% of the outstanding equity of Heritage Global Partners, Inc. (“HGP”), a global full-service auction, appraisal and asset advisory firm, and in the fourth quarter of 2012, the Company launched Heritage Global Partners Europe (“HGP Europe”). Through its wholly-owned subsidiary Heritage Global Partners UK Limited, the Company opened three European-based offices, one each in the United Kingdom, Germany and Spain.

As described above, effective May 31, 2014, the Company again expanded its asset liquidation operations with the acquisition of NLEX. NLEX is the largest volume broker of charged-off receivables in the United States and Canada, and its offerings include national, state and regional portfolios on behalf of many of the world’s top financial institutions. The NLEX acquisition is consistent with HGI’s strategy to expand and diversify the services provided by its asset liquidation business.

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As a result of the events and acquisitions outlined above, HGI is positioned to be a value-driven, innovative leader in corporate and financial asset liquidation transactions, valuations and advisory services. HGI focuses on identifying, valuing, acquiring and monetizing underlying tangible and intangible assets in global industrial and financial sectors. HGI specializes in both acting as an adviser and acquiring or brokering turnkey manufacturing facilities, surplus industrial machinery and equipment, industrial inventories, accounts receivable portfolios, related intellectual property, and entire business enterprises. Management believes that HGI’s expanded global platform will allow the Company to achieve its long term industry leadership goals.

Intellectual property licensing

The Company holds several patents, including two that relate to Voice over Internet Protocol (“VoIP”). U.S. Patent No. 6,438,124 was developed by the Company, and encompasses the technology that allows two parties to converse phone-to-phone, regardless of the distance, by transmitting voice/sound via the Internet. U.S. Patent No. 6,243,373 (the “VoIP Patent”) was purchased from a third party (the “Vendor”). These patents, together with related international patents and patent applications, form the Company’s international VoIP Patent Portfolio (the “Portfolio”) that covers the basic process and technology that enable VoIP communication as used in the market today. As part of the consideration for the acquisition of the VoIP Patent, the Vendor is entitled to receive 35% of the net earnings from the Portfolio. To date the Company has recognized aggregate revenue of $17.8 million from settlement and licensing agreements and paid $2.6 million to the Vendor. At this time, although the Company expects to continue to incur costs relating to maintaining ownership of these patents, it is not expected that either these costs or related revenue will be material.

Industry and Competition

Asset Liquidation

The asset liquidation business consists primarily of the auction, appraisal and asset advisory services provided by HGP and Equity Partners, and, since the second quarter of 2014, the accounts receivable brokerage services provided by NLEX. It also includes the purchase and sale, including at auction, of industrial machinery and equipment, real estate, inventories, accounts receivable and distressed debt. The market for these services and assets is highly fragmented. To acquire auction or appraisal contracts, or assets for resale, HGI competes with other liquidators, auction companies, dealers and brokers. It also competes with them for potential purchasers, as well as with equipment manufacturers, distributors, dealers and equipment rental companies. Some competitors have significantly greater financial and marketing resources and name recognition.

HGI’s business strategy includes the option of partnering with one or more additional purchasers, pursuant to a partnership, joint venture or limited liability company agreement (collectively, “Joint Ventures”). These Joint Ventures give the Company access to more opportunities, enabling it to compete more effectively with the market’s larger participants and contribute to the Company’s objective to be the leading resource for clients requiring capital asset solutions.

Government Regulation

We are subject to federal, state and local consumer protection laws, including laws protecting the privacy of customer non-public information and regulations prohibiting unfair and deceptive trade practices. Many jurisdictions also regulate "auctions" and "auctioneers" and may regulate online auction services. These consumer protection laws and regulations could result in substantial compliance costs and could interfere with the conduct of our business.

Legislation in the United States, including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010, has increased public companies’ regulatory and compliance costs as well as the scope and cost of work provided by independent registered public accountants and legal advisors. The mandatory adoption of XBRL reporting in 2011 has also increased the Company’s costs paid to third party service providers. As regulatory and compliance guidelines continue to evolve, we expect to continue to incur costs, which may or may not be material, in order to comply with legislative requirements or rules, pronouncements and guidelines by regulatory bodies.

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Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations references our unaudited condensed consolidated interim financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). This requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Management bases its estimates and judgments on historical experience and various other factors that are considered to be reasonable under the circumstances. Actual results could differ from those estimates.

Significant estimates required in the preparation of the unaudited condensed consolidated interim financial statements included in this Report include the assessment of collectability of revenue recognized, and the valuation of accounts receivable, inventory, investments, goodwill, intangible assets, liabilities, contingent consideration, deferred income tax assets and liabilities and stock-based compensation. These estimates are considered significant either because of the significance of the financial statement items to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events that are continuous in nature.

The critical accounting policies used in the preparation of our audited consolidated financial statements are discussed in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no changes to these policies in the first nine months of 2015.

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Management’s Discussion of Financial Condition

Liquidity and Capital Resources

Liquidity

At September 30, 2015 the Company had a working capital deficit of $7.8 million, as compared to a working capital deficit of $4.0 million at December 31, 2014, an increase of approximately $3.8 million.

The Company’s current assets decreased to $4.4 million compared to $7.6 million at December 31, 2014. The most significant change was a decrease of $2.3 million in accounts receivable. This was primarily due to the receipt of $2.0 million of proceeds related to the Company’s exit from its investment in Polaroid during the fourth quarter of 2014. The cash proceeds received in 2015 were subsequently used to repay third party and related party debt.

The Company’s current liabilities increased to $12.3 million compared to $11.5 million at December 31, 2014. The current portion of third party debt increased by $2.0 million and the current portion of contingent consideration increased by $0.6 million. This was offset slightly by accounts payable and accrued liabilities which decreased $0.5 million, and the Counsel Loan which decreased $1.3 million. Although during the first quarter of 2015 the Company repaid the $0.5 million credit facility balance that was outstanding at December 31, 2014, the portion of its third party debt (the “Third Party Loan”) considered current increased by $2.5 million from December 31, 2014. The Third Party Loan matures on January 15, 2016.

During the first nine months of 2015, the Company’s primary sources of cash were the operations of its asset liquidation business, cash receipts of $3.2 million related to its equity method investments, and advances of $0.8 million under the Counsel Loan. Cash disbursements, other than those related to debt repayment of $2.9 million ($0.5 million to third parties and $2.4 million under the Counsel Loan), were primarily related to operating expenses.

The Company has historically classified both real estate inventory and asset liquidation related equity method investments as non-current, although they are expected to be converted to cash within a year. At September 30, 2015 and December 31, 2014, these assets totaled approximately $4.0 million and $7.5 million, respectively.

The Company expects that its asset liquidation business will continue to be the primary source of cash required for ongoing operations for the foreseeable future.

Ownership Structure and Capital Resources

• At September 30, 2015 the Company had stockholders’ equity of $8.9 million, as compared to $13.5 million at December 31, 2014.

• On April 1, 2013, Counsel announced that its Board of Directors had approved a plan to focus Counsel’s operations on its core business, mortgage lending, and therefore to dispose of its other operating segments, including its interest in HGI. On March 20, 2014, Counsel declared a dividend of all of its shares of the Company. This dividend was paid on April 30, 2014 to Counsel’s common shareholders of record as of April 1, 2014. On May 1, 2014, HGI and Counsel entered into a management services agreement (the “Services Agreement”) under which Counsel continued to provide management and other services to HGI until the Services Agreement was terminated effective August 31, 2015. For more detail regarding the Services Agreement, see Note 11 in the unaudited condensed consolidated financial statements.

• The Company determines its future capital and operating requirements based upon its current and projected operating performance and the extent of its contractual commitments. The Company expects to be able to finance its future operations through a combination of its asset liquidation business and securing additional debt financing. The Company’s contractual requirements are limited to the outstanding loans and lease commitments with related and unrelated parties. The Company intends to repay its outstanding loans at maturity. Capital requirements are generally limited to the Company’s purchases of surplus and distressed assets. The Company believes that its current capital resources are sufficient for these requirements. In the event additional capital is needed, the Company believes it can obtain additional debt financing through either related party loans or through a new credit facility.

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Cash Position and Cash Flows

Cash and cash equivalents at September 30, 2015 were $2.7 million as compared to $3.6 million at December 31, 2014, a decrease of approximately $0.9 million.

Cash used in or provided by operating activities Cash used in operating activities was $0.9 million during the nine months ended September 30, 2015 as compared to $1.3 million cash provided during the same period in 2014. During the first nine months of 2015 the Company had a pre-tax loss of $4.9 million, as compared to a pre-tax loss of $1.6 million for the same period in 2014, an increase of $3.3 million. The Company recorded a non-cash real estate inventory write-down charge during the nine months ended September 30, 2015, which contributed to $2.7 million of the increase in the pre-tax loss. The operations of NLEX, which was acquired during the second quarter of 2014, generated $1.3 million of operating profit for the nine months ended September 30, 2015, excluding the NLEX related amortization of intangible assets, compared to $0.3 million for the nine months ended September 30, 2014 (which included only four months of NLEX operations).

With respect to operations, the Company’s operating loss for the nine month period ended September 30, 2015 was $4.6 million as compared to $1.4 million for the same period in 2014. The increase in the loss was primarily attributable to the real estate inventory write-down charge recorded in 2015. This was offset partially by gross profit from asset liquidation operations, including earnings of equity accounted asset liquidation investments, which increased by $1.2 million. This change in gross profit was largely due to the inclusion of NLEX gross profit of $3.1 million in 2015. Selling, general and administrative expenses increased by approximately $1.5 million, almost all of which related to the 2015 inclusion of NLEX operations for the entire nine month period.

Cash provided by or used in investing activities Cash provided by investing activities during the nine months ended September 30, 2015 was $2.6 million, as compared to $1.5 million cash used during the same period in 2014. The 2015 activity consisted primarily of the following cash receipts related to the Company’s equity method investments: $2.0 million of proceeds from the Company’s December 2014 exit from Polaroid (received in 2015), and $0.7 million of distributions from the Company’s other equity method investments. In 2014 the most significant items were the net $1.4 million cash paid to acquire NLEX and $0.6 million of investments in equity method investments. This was offset partially by $0.5 million of cash distributions from the Company’s equity method investments.

Cash used in or provided by financing activities Cash used in financing activities was $2.7 million during the nine months ended September 30, 2015, as compared to $1.4 million cash provided during the same period in 2014. The 2015 activity consisted of net $1.6 million of debt repaid to Counsel, $0.5 million of debt repaid to third parties, and $0.5 million of contingent consideration paid. In 2014, the Company received $1.5 million (net of repayments) as loans from third parties, primarily used for the purchase of NLEX.

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Management’s Discussion of Results of Operations

The following table sets out the Company’s condensed consolidated results of operations for the three and nine months ended September 30, 2015 and 2014 (dollars in thousands).

Quarterly and Year to Date Statement of Operations

		Three months ended						Change				Nine months ended						Change
		Sept 30, 2015			Sept 30, 2014			Dollars		Percent		Sept 30, 2015			Sept 30, 2014			Dollars		Percent
Revenue
Asset liquidation:
Commissions and other	$	2,358		$	4,738		$	(2,380	)	-50%	$	7,549		$	6,212		$	1,337		22%
Asset sales		682			1,365			(683	)	-50%		2,094			4,687			(2,593	)	-55%
Total revenue		3,040			6,103			(3,063	)	-50%		9,643			10,899			(1,256	)	-12%
Operating costs and expenses:
Asset liquidation		516			3,385			(2,869	)	-85%		2,128			4,419			(2,291	)	-52%
Real estate inventory write-down		2,748			-			2,748		100%		2,748			-			2,748		100%
Selling, general and administrative		3,045			2,698			347		13%		8,953			7,456			1,497		20%
Depreciation and amortization		166			119			47		39%		490			357			133		37%
Total operating costs and expenses		6,475			6,202			273		4%		14,319			12,232			2,087		17%
(Losses) earnings of equity accounted asset liquidation investments		(34	)		(41	)		7		-17%		105			(53	)		158		298%
Operating Loss		(3,469	)		(140	)		(3,329	)	2378%		(4,571	)		(1,386	)		(3,185	)	230%
Other income (expenses):
Earnings of other equity method investments		-			129			(129	)	-100%		5			164			(159	)	-97%
Interest expense - third party		(127	)		(79	)		(48	)	61%		(262	)		(250	)		(12	)	5%
Interest expense - related party		(21	)		(43	)		22		-51%		(66	)		(149	)		83		-56%
Total other (expense) income		(148	)		7			(155	)	-2214%		(323	)		(235	)		(88	)	37%
Loss before income tax expense		(3,617	)		(133	)		(3,484	)	2620%		(4,894	)		(1,621	)		(3,273	)	202%
Income tax expense		20			55			(35	)	-		23			24,722			(24,699	)	-100%
Net loss	$	(3,637	)	$	(188	)	$	(3,449	)	1835%	$	(4,917	)	$	(26,343	)	$	21,426		-81%

The Company’s asset liquidation revenue has several components: (1) traditional asset disposition services, such as commissions from on-line and webcast auctions, liquidations and negotiated sales, and commissions from the NLEX charged-off receivables business, (2) the acquisition and subsequent disposition of distressed and surplus assets, including industrial machinery and equipment, real estate, inventories, accounts receivable and distressed debt, and (3) fees earned for management advisory services. The Company also earns income from its asset liquidation business through its earnings from equity accounted asset liquidation investments.

Three-Month Period Ended September 30, 2015 Compared to Three-Month Period Ended September 30, 2014

Asset liquidation revenues were $3.0 million in 2015 compared to $6.1 million in 2014, asset liquidation expense was $0.5 million in 2015 compared to $3.4 million in 2014, and losses of equity method asset liquidation investments were $34,000 in 2015 compared to $41,000 in 2014. The asset liquidation gross profit was therefore $2.5 million in 2015 compared to $2.7 million in 2014, a decrease of $0.2 million or 7%. Because the Company conducts its asset liquidation operations both independently and through partnerships, and the ratio of the two is unlikely to remain constant in each period, the operations must be considered as a whole rather than on a line-by-line basis. The decreased gross profit in the current quarter reflects the vagaries of the timing of asset liquidation transactions.

The Company recorded a $2.7 million real estate inventory write-down charge during the three months ended September 30, 2015. No charge was taken in the comparable 2014 period. The write-down represented a net realizable value adjustment to the carrying value of the Company’s real estate inventory.

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Selling, general and administrative expense, including expenses paid to related parties, was $3.0 million during the three months ended September 30, 2015, compared to $2.7 million during the same period in 2014, an increase of approximately $0.3 million or 11%.

Significant components of selling, general and administrative expense were as shown below (dollars in thousands):

		Three months ended
		September 30,
		2015		2014	% change
Compensation
HGP	$	1,100	$	975	13%
Equity Partners		377		291	30%
NLEX		443		425	4%
Former President's salary		34		34	-
Stock-based compensation		41		118	-65%
Legal		84		53	58%
Consulting		174		130	34%
Counsel management fees		60		90	-33%
Accounting and tax consulting		51		82	-38%
Insurance, including Directors and Officers liability		61		34	79%
Occupancy		154		134	15%
Travel and entertainment		221		156	42%
Advertising and promotion		138		68	103%
Other		107		108	-1%
Total Selling, General & Administrative		3,045		2,698

The increases in insurance, occupancy, travel and entertainment, and advertising and promotion expense are primarily due to the general growth of operations for HGP, Equity Partners and NLEX. The increase in legal expense results from work performed related to the Company’s real estate inventory. The decrease in accounting expense is primarily due to independent contractors included in 2014 which have been replaced with full time employees in 2015. The decrease in stock-based compensation is primarily the result of awards becoming fully vested during 2015 and not incurring any related expense in the third quarter.

Depreciation and amortization expense was $166,000 in 2015 compared to $119,000 in 2014, and consisted almost entirely of amortization expense related to intangible assets. The increase in 2015 was due to the inclusion of amortization of the NLEX intangible assets acquired in the second quarter of 2014. In both years the depreciation of property and equipment was not material.

Nine-Month Period Ended September 30, 2015 Compared to Nine-Month Period Ended September 30, 2014

Asset liquidation revenues were $9.6 million in 2015 compared to $10.9 million in 2014, asset liquidation expense was $2.1 million in 2015 compared to $4.4 million in 2014, and earnings of equity method asset liquidation investments were $0.1 million in 2015 compared to a loss of $53,000 in 2014. The asset liquidation gross profit was therefore $7.6 million in 2015 compared to $6.4 million in 2014, an increase of approximately $1.2 million or 19%. Because the Company conducts its asset liquidation operations both independently and through partnerships, and the ratio of the two is unlikely to remain constant in each period, the operations must be considered as a whole rather than on a line-by-line basis. The increased gross profit in the current year reflects the vagaries of the timing of asset liquidation transactions. It also reflects the acquisition of NLEX, which was responsible for $3.1 million of the year to date asset liquidation gross profit in 2015 compared to $1.1 million for the period from acquisition (May 31, 2014) through September 30, 2014.

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The Company recorded a $2.7 million real estate inventory write-down charge during the nine months ended September 30, 2015. No charge was taken in the comparable 2014 period. The write-down represented a net realizable value adjustment to the carrying value of the Company’s real estate inventory.

Selling, general and administrative expense, including expenses paid to related parties, was $9.0 million during the nine months ended September 30, 2015, compared to $7.5 million during the same period in 2014, an increase of approximately $1.5 million or 20%. Selling, general and administrative expenses increased overall primarily due to the inclusion of NLEX expenses of $1.9 million in 2015 compared to $0.8 million in the comparative period in 2014.

Significant components of selling, general and administrative expense were as shown below (dollars in thousands):

		Nine months ended
		September 30,
		2015		2014	% change
Compensation
HGP	$	3,093	$	2,927	6%
Equity Partners		1,047		826	27%
NLEX		1,342		586	129%
Former President's salary		103		103	-
Stock-based compensation		317		363	-13%
Legal		198		220	-10%
Consulting		401		358	12%
Counsel management fees		240		270	-11%
Accounting and tax consulting		154		271	-43%
Insurance, including Directors and Officers liability		146		113	29%
Occupancy		447		373	20%
Travel and entertainment		688		484	42%
Advertising and promotion		320		221	45%
Other		457		341	34%
Total Selling, General & Administrative		8,953		7,456

The increases in insurance, occupancy, travel and entertainment, and advertising and promotion expense are primarily due to the inclusion of NLEX expenses for the entire nine months in 2015, as compared to only four months in 2014. The decreases in legal and accounting expense are primarily due to the inclusion, in 2014 only, of expenses related to the acquisition of NLEX. The decrease in stock-based compensation is primarily the result of awards becoming fully vested during the 2015.

Depreciation and amortization expense was $0.5 million in 2015 compared to $0.4 million in 2014, and consisted almost entirely of amortization expense related to intangible assets. The increase in 2015 was due to the inclusion of amortization of the NLEX intangible assets acquired in the second quarter of 2014. In both years the depreciation of property and equipment was not material.

23

Non-GAAP Financial Measure - Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”)

We prepared our unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”).

We use the non-GAAP financial measure “EBITDA” in assessing the Company’s results. Additionally, we use an alternative measure, “Adjusted EBITDA,” to further reconcile from the standard definition to an amount management believes is a more appropriate metric for the Company. We define Adjusted EBITDA as net loss plus interest expense, provision for income taxes, stock-based compensation, inventory write-downs, depreciation and amortization. We believe that Adjusted EBITDA is relevant and useful supplemental information for our investors. Management believes that the presentation of this non-GAAP financial measure, when considered together with our GAAP financial measures and the reconciliation to the most directly comparable GAAP financial measure, provides a more complete understanding of the factors and trends affecting the Company than could be obtained absent these disclosures. Management uses Adjusted EBITDA to make operating and strategic decisions and to evaluate the Company’s performance. We have disclosed this non-GAAP financial measure so that our investors have the same financial data that management uses, with the intention of assisting investors to make comparisons to our historical operating results and analyze our underlying performance. Management believes that Adjusted EBITDA is a useful supplemental tool to evaluate the underlying operating performance of the Company on an ongoing basis. Our use of Adjusted EBITDA is not meant to be, and should not be, considered in isolation or as a substitute for, or superior to, any GAAP financial measure. You should carefully evaluate the quarterly financial information, below, which reconciles our GAAP reported net loss to Adjusted EBITDA for the periods presented (in thousands).

		For the three months ended																					Nine months ended
		9/30/2015			6/30/2015			3/31/2015			12/31/2014			9/30/2014			6/30/2014			3/31/2014			Sept 30, 2015			Sept 30, 2014
Net loss	$	(3,637	)	$	(693	)	$	(587	)	$	(171	)	$	(188	)	$	(584	)	$	(25,571	)	$	(4,917	)	$	(26,343	)
Add back:
Depreciation and amortization		166			165			159			209			119			120			118			490			357
Interest expense		148			24			156			305			122			139			138			328			399
Income tax expense		20			-			3			-			55			-			24,667			23			24,722
EBITDA	$	(3,303	)	$	(504	)	$	(269	)	$	343		$	108		$	(325	)	$	(648	)	$	(4,076	)	$	(865	)
Management add back:
Real estate inventory write-down		2,748			-			-			-			-			-			-			2,748			-
Stock based compensation		41			156			120			121			118			122			123			317			363
Adjusted EBITDA	$	(514	)	$	(348	)	$	(149	)	$	464		$	226		$	(203	)	$	(525	)	$	(1,011	)	$	(502	)

24

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Our primary exposure to market risk is limited to interest rate and foreign exchange rate sensitivity, which is affected by changes in the general level of interest rates and foreign exchange rates. Due to the fact that our cash is deposited with major financial institutions in non-interest bearing accounts, we believe that we are not subject to any material interest rate risk as it relates to interest income. As to interest expense, we have one debt instrument that has a variable interest rate. The Counsel Loan bears interest at a rate per annum equal to the lesser of the WSJ prime rate + 2.0%, or the maximum rate allowable by law. Assuming that the Counsel Loan amount at September 30, 2015 was constant during the next twelve-month period, the impact of a one percent increase in the interest rate would be an increase in interest expense of approximately $17,000 for that twelve-month period. We do not believe that, in the near term, we are subject to material interest rate risk on our debt. There have been no material changes to the interest rate risks since December 31, 2014.

We did not have any foreign currency hedges or other derivative financial instruments as of September 30, 2015. We do not enter into financial instruments for trading or speculative purposes and do not currently utilize derivative financial instruments. Although our operations are conducted primarily in the United States we do conduct some asset liquidation services in foreign countries and sometimes use foreign currencies to conduct those services. Thus we are occasionally subject to foreign currency exchange rate risk. Management monitors operations and will act as required to minimize this risk. There have been no material changes to the foreign currency risks since December 31, 2014.

Item 4. Controls and Procedures.

As of the end of the period covered by this Quarterly Report, our Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”) conducted evaluations of our disclosure controls and procedures. As defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosure. Based on this evaluation, the Certifying Officers have concluded that our disclosure controls and procedures were effective.

Further, there were no changes in our internal control over financial reporting during the third fiscal quarter of 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

There have been no material changes to the legal proceedings discussed in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on March 31, 2015.

Item 1A. Risk Factors

There have been no material changes to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on March 31, 2015.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

26

Item 6. Exhibits. (a) Exhibits

Exhibit No.	Identification of Exhibit
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted under Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted under Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized.

	Heritage Global Inc.
Date: November 12, 2015	By:	/s/ Ross Dove
		Ross Dove
		Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Scott A. West
		Scott A. West
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting
		Officer)

28

EX-31.1

Exhibit 31.1

OFFICER’S CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ross Dove, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Heritage Global Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer (s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer (s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015

By:	/s/ Ross Dove
	Ross Dove
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

OFFICER’S CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott A. West, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Heritage Global Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015

By:	/s/ Scott A. West
	Scott A. West
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

HERITAGE GLOBAL INC.

OFFICER’S CERTIFICATION
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. 1350)

The undersigned Ross Dove, duly appointed and incumbent officer of Heritage Global Inc., a Florida corporation (the “Corporation”), in connection with the Corporation’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), does hereby represent, warrant and certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended, that, to the best of his knowledge:

1.	The Report is in full compliance with reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

November 12, 2015

/s/ Ross Dove
Ross Dove
Chief Executive Officer
(Principal Executive Officer)

EX-32.2

Exhibit 32.2

HERITAGE GLOBAL INC.

OFFICER’S CERTIFICATION
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. 1350)

The undersigned Scott A. West, duly appointed and incumbent officer of Heritage Global Inc., a Florida corporation (the “Corporation”), in connection with the Corporation’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), does hereby represent, warrant and certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended, that, to the best of his knowledge:

1.	The Report is in full compliance with reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

November 12, 2015

/s/ Scott A. West
Scott A. West
Chief Financial Officer
(Principal Financial Officer)

XML

Schedule of Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current:
Third Party Loan	$ 2,500	$ 0
Debt Payable to Related Parties	1,698	2,985
Credit Facility	0	525
Total current debt	4,198	3,510
Non-current:
Third Party Loan	0	2,500
Total debt	$ 4,198	$ 6,010

XML

Schedule of Changes in Common Stock Options (Details)	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Options, Outstanding at beginning of the period (in shares)	2,165,000
Options, Granted (in shares)	50,000
Options, Expired (in shares)	(40,000)
Options, Outstanding at end of the period (in shares)	2,175,000
Options exercisable at end of the period (in shares)	1,743,750
Weighted Average Exercise Price, Outstanding at beginning of the period (in dollars per share) | $ / shares	$ 1.71
Weighted Average Exercise Price, Granted (in dollars per share) | $ / shares	0.42
Weighted Average Exercise Price, Expired | $ / shares	0.90
Weighted Average Exercise Price, Outstanding at end of the period (in dollars per share) | $ / shares	1.70
Weighted Average Exercise Price, Options exercisable at end of the period (in dollars per share) | $ / shares	$ 1.78

XML

Acquisition of National Loan Exchange, Inc. (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended	5 Months Ended	9 Months Ended
	Jul. 31, 2015	Jun. 02, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Cash Consideration for Business Acquisition		$ 2,000
Business Combination, Contingent Consideration Arrangements, Description		Under the terms of the NLEX purchase agreement, the Company will pay, to the former owner of NLEX, 50% of the Net Profits (as defined in the NLEX stock purchase agreement) of NLEX for each of the four years following the closing. The payments are due on or about July 30 of each year, beginning in 2015. In July 2015 the Company made its first payment to the former owner of NLEX in the amount of $0.5 million. The contingent consideration is capped at an aggregate of $5.0 million, and at September 30, 2015, subject to the application of a 9% discount rate, is estimated to have a present value of approximately $3.9 million.	Under the terms of the NLEX purchase agreement, the Company will pay, to the former owner of NLEX, 50% of the Net Profits (as defined in the NLEX stock purchase agreement) of NLEX for each of the four years following the closing. The payments are due on or about July 30 of each year, beginning in 2015. In July 2015 the Company made its first payment to the former owner of NLEX in the amount of $0.5 million. The contingent consideration is capped at an aggregate of $5.0 million, and at September 30, 2015, subject to the application of a 9% discount rate, is estimated to have a present value of approximately $3.9 million.
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High		$ 5,000
Payment for contingent consideration			$ 513	$ 0
Contingent consideration, current			1,353		$ 803
Contingent consideration, non-current			2,472		$ 3,395
Accretion of contingent consideration discount			140	$ 0
Approximations [Member]
Contingent consideration			3,900
Contingent consideration, current			1,400
Contingent consideration, non-current			2,500
Accretion of contingent consideration discount			$ 100
Contingent Consideration [Member]
Discount rate		9.00%	9.00%
Contingent Consideration [Member] | Approximations [Member]
Payment for contingent consideration	$ 500
Weighted Average Cost of Capital [Member]
Discount rate		31.60%

XML

Schedule of Goodwill (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Jun. 02, 2014	Feb. 29, 2012	Jun. 30, 2011
Goodwill	$ 8,846	$ 8,846
Equity Partners [Member]
Goodwill					$ 573
HGP [Member]
Goodwill				$ 4,728
NLEX [Member]
Goodwill			$ 3,545

XML

Acquisition of National Loan Exchange, Inc.

9 Months Ended

Sep. 30, 2015

Acquisition of National Loan Exchange, Inc. [Text Block]

Note 3 – Acquisition of National Loan Exchange, Inc.

On June 2, 2014, and effective May 31, 2014, the Company acquired all of the issued and outstanding capital stock in National Loan Exchange, Inc. (“NLEX”), a broker of charged-off receivables in the United States and Canada. NLEX operates as a wholly owned division of the Company. The acquisition of NLEX is consistent with HGI’s strategy to expand the services provided by its asset liquidation business. In connection with the acquisition, HGI entered into employment agreements with the previous owner and key employees of NLEX.

The consideration for the acquisition consisted of $2.0 million cash and an earn-out provision (“contingent consideration”). Under the terms of the NLEX purchase agreement, the Company will pay, to the former owner of NLEX, 50% of the Net Profits (as defined in the NLEX stock purchase agreement) of NLEX for each of the four years following the closing. The payments are due on or about July 30 of each year, beginning in 2015. In July 2015 the Company made its first payment to the former owner of NLEX in the amount of $0.5 million. The contingent consideration is capped at an aggregate of $5.0 million, and at September 30, 2015, subject to the application of a 9% discount rate, is estimated to have a present value of approximately $3.9 million. Key assumptions in determining this present value include projected earnings through May 2018 and a weighted average cost of capital of 31.6% . At September 30, 2015, the Company has recorded a current liability of $1.4 million for the estimated second earn-out payment, and estimated that the non-current portion of the contingent consideration is $2.5 million.

In connection with the contingent consideration, during the period January 1, 2015 through September 30, 2015, the Company recognized a total of $0.1 million of interest expense which represents the accretion of the present value discount during the period.

See Note 7 for discussion of the intangible assets and goodwill recorded in connection with the acquisition of NLEX.

XML

Intangible Assets and Goodwill (Narrative) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Goodwill, Impairment Loss	$ 0.0	$ 0.0
Approximations [Member]
Amortization expense, intangible assets	$ 0.5	$ 0.3

XML

Earnings Per Share (Narrative) (Details)	9 Months Ended
	Sep. 30, 2015
Convertible Preferred Stock, Shares Issuable upon Conversion	The value of each Class N preferred share is $1,000, and each share is convertible to 40 common shares at the rate of $25 per common share.

XML

Debt (Narrative) (Details) - USD ($) $ in Millions	4 Months Ended	9 Months Ended		12 Months Ended
	Dec. 31, 2003	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Jun. 30, 2014
Counsel Loan, Description		The Company’s Related Party Debt (the “Counsel Loan”), which is due on demand, was originally entered into in 2003 and accrued interest at 10% per annum compounded quarterly from the date funds were advanced. The Counsel Loan is secured by the assets of the Company.In the second quarter of 2014, following Street Capital Group Inc.’s (formerly Counsel Corporation, herein referred to as “Counsel”) distribution of its ownership interest in HGI to Counsel shareholders as a dividend in kind, the unpaid balance of the Counsel Loan began accruing interest at a rate per annum equal to the lesser of the Wall St. Journal (“WSJ”) prime rate + 2.0%, or the maximum rate allowable by law. As of September 30, 2015 and December 31, 2014, the interest rate on the loan was 5.25%		The Company’s Related Party Debt (the “Counsel Loan”), which is due on demand, was originally entered into in 2003 and accrued interest at 10% per annum compounded quarterly from the date funds were advanced. The Counsel Loan is secured by the assets of the Company.In the second quarter of 2014, following Street Capital Group Inc.’s (formerly Counsel Corporation, herein referred to as “Counsel”) distribution of its ownership interest in HGI to Counsel shareholders as a dividend in kind, the unpaid balance of the Counsel Loan began accruing interest at a rate per annum equal to the lesser of the Wall St. Journal (“WSJ”) prime rate + 2.0%, or the maximum rate allowable by law. As of September 30, 2015 and December 31, 2014, the interest rate on the loan was 5.25%
Other Third Party Debt [Member]
Other unrelated third party debt					$ 2.5
Debt Instrument, Interest Rate, Stated Percentage		6.00%	6.00%	6.00%
Debt Instrument, Maturity Date		Jan. 15, 2016	Jan. 15, 2015	Jan. 15, 2016
Counsel Loan [Member]
Related Party Debt, Interest rate	10.00%	5.25%		5.25%

XML

Income Taxes (Narrative) (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Operating Loss Carryforwards, Expiration Date	Substantially all of the net operating loss carry forwards and unused minimum tax credit carry forwards expire between 2025 and 2035.
Operating Loss Carryforwards, Limitations on Use	The Company’s utilization of restricted net operating tax loss carry forwards against future income for tax purposes is restricted pursuant to the “change in ownership” rules in Section 382 of the Internal Revenue Code.	The Company’s utilization of restricted net operating tax loss carry forwards against future income for tax purposes is restricted pursuant to the “change in ownership” rules in Section 382 of the Internal Revenue Code.
Approximations [Member]
Operating loss carryforwards	$ 87.9
Tax Credit Carryforward, Amount	0.5
Unrestricted [Member] | Approximations [Member]
Operating loss carryforwards	59.1
Restricted [Member] | Approximations [Member]
Operating loss carryforwards	$ 28.8

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Summary of Significant Accounting Policies [Text Block]

Note 2 – Summary of Significant Accounting Policies

Use of estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Significant estimates include the assessment of collectability of revenue recognized, and the valuation of accounts receivable, inventory, investments, goodwill and intangible assets, liabilities, contingent consideration, deferred income tax assets and liabilities, and stock-based compensation. These estimates have the potential to significantly impact our consolidated financial statements, either because of the significance of the financial statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events that are continuous in nature.

The functional currency of foreign operations is deemed to be the local country’s currency. Assets and liabilities of operations outside of the United States are generally translated into U.S. dollars, and the effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss).

The critical accounting policies used in the preparation of our audited consolidated financial statements are discussed in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no changes to these policies in the first nine months of 2015.

Recently Adopted Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 requires discontinued operations treatment for disposals of a component or group of components that represents a strategic shift that has or will have a major impact on an entity’s operations or financial results. It also expands the scope of ASC 205-20 to disposals of equity method investments and acquired businesses held for sale. With respect to disclosures, ASU 2014-08 both 1) expands disclosure requirements for transactions that meet the definition of a discontinued operation, and 2) requires entities to disclose information about individually significant components that are disposed of or held for sale and do not qualify as discontinued operations. ASU 2014-08 also requires specific presentation of various items on the face of the financial statements. ASU 2014-08 is effective for interim and annual periods beginning on or after December 15, 2014, with early adoption permitted. The Company therefore adopted ASU 2014-08 in the first quarter of 2015. However, since the Company does not currently have either discontinued operations or any planned disposals that would require the expanded reporting required by ASU 2014-08, its adoption had no impact on its consolidated financial statements.

Future Accounting Pronouncements

In January 2015, the FASB issued Accounting Standards update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates the requirement for entities to consider whether an underlying event or transaction is extraordinary, and, if so, to separately present the item in the income statement net of tax, after income from continuing operations. Instead, items that are both unusual and infrequent should be separately presented as a component of income from continuing operations, or be disclosed in the notes to the financial statements. ASU 2015-01 will be effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2015. Early adoption is permitted provided that the new standard is applied from the beginning of the fiscal year of adoption. The Company has not historically reported extraordinary items in its consolidated financial statements, and is not aware of any pending transactions or events that might have required reporting as extraordinary items, and therefore does not expect the adoption of ASU 2015-01 to have a material impact on its consolidated financial statements.

In March 2015, the FASB issued Accounting Standards update 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 eliminates entity specific consolidation guidance for limited partnerships, and revises other aspects of the consolidation analysis, but does not change the existing consolidation guidance for corporations that are not variable interest entities (“VIEs”). For public business entities, ASU 2015-02 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company has not yet adopted ASU 2015-02 nor assessed its potential impact on its consolidated financial statements.

In April 2015, the FASB issued Accounting Standards update 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 changes the presentation of debt issuance costs in financial statements, by requiring them to be presented in the balance sheet as a direct deduction from the related debt liability, rather than as an asset. Amortization of the costs is reported as interest expense. There is no change to the current guidance on the recognition and measurement of debt issuance costs. For public business entities, ASU 2015-03 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company has not yet adopted ASU 2015-03 nor assessed its potential impact on its consolidated financial statements.

In August 2015, the FASB issued Accounting Standards update 2015-15, Interest – Imputation of Interest , (“ASU 2015-15”). ASU 2015-15 amends subtopic 835-30 of the accounting standards codification (which was previously amended by ASU 2015-03), to allow for the capitalization of debt issuance costs related to line of credit agreements. Capitalized costs would be presented as an asset and subsequently amortized ratably over the term of the line of credit. The Company has not yet adopted ASU 2015-15 nor assessed its potential impact on its consolidated financial statements.

In September 2015, the FASB issued Accounting Standards update 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 changes the recognition of business combination adjustments by requiring acquirers to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer is required to record the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts. These amounts are calculated as if the accounting was completed at acquisition date. The acquirer is also required to present separately on the face of the income statement, or disclose in the notes, the amount recorded in current-period earnings (by line item) that would have been recorded in previous reporting periods had the adjustments been recognized as of the acquisition date. ASU 2015-16 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company has not yet adopted ASU 2015-16 nor assessed its potential impact on its consolidated financial statements.

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Related Party Transactions (Narrative) (Details) - USD ($) $ in Thousands	4 Months Ended	9 Months Ended	12 Months Ended
	Dec. 31, 2003	Sep. 30, 2015	Dec. 31, 2014
Debt Payable to Related Parties		$ 1,698	$ 2,985
Related Party Transaction, Description of Transaction		Beginning in December 2004, HGI and Counsel entered into successive annual management services agreements (collectively, the “Agreement”). Under the terms of the Agreement, HGI agreed to pay Counsel for ongoing services provided to HGI by Counsel personnel. These services included 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 were: 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 received compensation from HGI. Rather, Counsel allocated 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 specifically relating to the ongoing operations of HGI’s asset liquidation business. The amounts due under the Agreement were payable within 30 days following the respective year end, subject to applicable restrictions. Any unpaid amounts bore interest at 10% per annum commencing on the day after such year end. In the first quarter of 2013, Counsel announced its plan to dispose of its interest in HGI, and 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 dividend was paid on April 30, 2014 to shareholders of record as of April 1, 2014.Following this disposition, the Company and Counsel entered into a replacement management services agreement (the “Services Agreement”). Under the terms of the Services Agreement, Counsel remained as external manager and continued to provide the same services, at similar rates, until the Services Agreement was terminated effective August 31, 2015, as described more fully in the Current Report on Form 8-K filed with the SEC on September 1, 2015.	Beginning in December 2004, HGI and Counsel entered into successive annual management services agreements (collectively, the “Agreement”). Under the terms of the Agreement, HGI agreed to pay Counsel for ongoing services provided to HGI by Counsel personnel. These services included 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 were: 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 received compensation from HGI. Rather, Counsel allocated 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 specifically relating to the ongoing operations of HGI’s asset liquidation business. The amounts due under the Agreement were payable within 30 days following the respective year end, subject to applicable restrictions. Any unpaid amounts bore interest at 10% per annum commencing on the day after such year end. In the first quarter of 2013, Counsel announced its plan to dispose of its interest in HGI, and 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 dividend was paid on April 30, 2014 to shareholders of record as of April 1, 2014.Following this disposition, the Company and Counsel entered into a replacement management services agreement (the “Services Agreement”). Under the terms of the Services Agreement, Counsel remained as external manager and continued to provide the same services, at similar rates, until the Services Agreement was terminated effective August 31, 2015, as described more fully in the Current Report on Form 8-K filed with the SEC on September 1, 2015.
Approximations [Member]
Related Party Accrued Interest		$ 400
Debt Payable to Related Parties		$ 1,700	$ 3,000
Counsel Loan [Member]
Related Party Debt, Interest rate	10.00%	5.25%	5.25%

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Schedule of Services Relating to Operations Paid to Related Party (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Selling, General and Administrative Expenses Paid to Related Party	$ 290	$ 444
Management Fees [Member]
Selling, General and Administrative Expenses Paid to Related Party	240	270
Other Charges [Member]
Selling, General and Administrative Expenses Paid to Related Party	$ 50	$ 174

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 2,657	$ 3,633
Accounts receivable, net	757	3,043
Deposits	2	173
Inventory - equipment	435	139
Other current assets	568	587
Total current assets	4,419	7,575
Non-current assets:
Inventory - real estate	3,760	6,508
Equity method investments	209	1,134
Property and equipment, net	115	150
Identifiable intangible assets, net	7,202	7,657
Goodwill	8,846	8,846
Total assets	24,551	31,870
Current liabilities:
Accounts payable and accrued liabilities	6,716	7,225
Current portion of third party debt	2,500	525
Current portion of related party debt	1,698	2,985
Contingent consideration - current	1,353	803
Total current liabilities	12,267	11,538
Non-current liabilities:
Long-term third party debt	0	2,500
Contingent consideration	2,472	3,395
Deferred tax liabilities	960	960
Total liabilities	15,699	18,393
Stockholders' equity:
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and outstanding 569 Class N shares at September 30, 2015 and 575 Class N shares at December 31, 2014	6	6
Common stock, $0.01 par value, authorized 300,000,000 shares; issued and outstanding 28,467,648 shares at September 30, 2015 and 28,167,408 shares at December 31, 2014	285	282
Additional paid-in capital	284,005	283,691
Accumulated deficit	(275,385)	(270,468)
Accumulated other comprehensive loss	(59)	(34)
Total stockholders' equity	8,852	13,477
Total liabilities and stockholders' equity	$ 24,551	$ 31,870

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows (used in) provided by operating activities:
Net loss	$ (4,917)	$ (26,343)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Accrued management fees and other charges added to principal of related party debt	290	444
Accrued interest added to principal of related party debt	66	149
Accretion of contingent consideration discount	140	0
Stock-based compensation expense	317	363
Real estate inventory write-down	2,748	0
Earnings of equity method investments	(110)	(111)
Depreciation and amortization	490	357
Return on investment in equity accounted asset liquidation investments	441	432
Changes in operating assets and liabilities:
Accounts receivable	294	(824)
Deposits	171	13
Inventory	(296)	96
Other current assets	27	(95)
Deferred income tax assets	0	24,667
Accounts payable and accrued liabilities	(541)	2,107
Net cash (used in) provided by operating activities	(880)	1,255
Cash flows provided by (used in) investing activities:
Cash paid to acquire NLEX, net of cash acquired	0	(1,361)
Cash distributions from equity method investments	737	498
Proceeds from sale of equity method investments	1,992	0
Investment in equity method investments	(143)	(606)
Purchase of property and equipment	0	(13)
Net cash provided by (used in) investing activities	2,586	(1,482)
Cash flows (used in) provided by financing activities:
Proceeds from debt payable to third parties	0	2,928
Repayment of debt payable to third parties	(525)	(1,427)
Proceeds from debt payable to related party	775	2,018
Repayment of debt payable to related party	(2,419)	(2,105)
Payment of contingent consideration	(513)	0
Net cash (used in) provided by financing activities	(2,682)	1,414
Net (decrease) increase in cash and cash equivalents	(976)	1,187
Cash and cash equivalents at beginning of period	3,633	3,213
Cash and cash equivalents at end of period	2,657	4,400
Supplemental cash flow information:
Cash paid for taxes	70	19
Cash paid for interest	$ 178	$ 167

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Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	1 Months Ended	5 Months Ended	9 Months Ended
	Feb. 29, 2012	Jun. 02, 2014	Sep. 30, 2015	Dec. 31, 2014
Finite-Lived and indefinite-lived intangible assets, gross			$ 9,030
Gross intangible assets			6,593
Accumulated amortization			(1,828)
Total net amortized intangible assets			4,765
Total net intangible assets			$ 7,202	$ 7,657
Customer/Broker Network [Member] | HGP [Member]
Finite-Lived intangible asset, useful life	12 years
Finite-Lived intangible assets, remaining amortization period			8 years 4 months 24 days
Gross intangible assets			$ 4,180
Accumulated amortization			(1,248)
Total net amortized intangible assets			$ 2,932
Trade Name [Member] | HGP [Member]
Finite-Lived intangible asset, useful life	14 years
Finite-Lived intangible assets, remaining amortization period			10 years 4 months 24 days
Gross intangible assets			$ 1,460
Accumulated amortization			(374)
Total net amortized intangible assets			1,086
Trade Name [Member] | NLEX [Member]
Accumulated amortization		$ 0
Unamortized intangible assets		$ 2,437	$ 2,437
Customer Relationships [Member] | NLEX [Member]
Finite-Lived intangible asset, useful life		7 years 7 months 6 days
Finite-Lived intangible assets, remaining amortization period			6 years 3 months 18 days
Gross intangible assets			$ 834
Accumulated amortization			(146)
Total net amortized intangible assets			$ 688
Non-Compete Agreement [Member] | NLEX [Member]
Finite-Lived intangible asset, useful life		2 years
Finite-Lived intangible assets, remaining amortization period			8 months 12 days
Gross intangible assets			$ 71
Accumulated amortization			(47)
Total net amortized intangible assets			$ 24
NLEX's Website [Member] | NLEX [Member]
Finite-Lived intangible asset, useful life		5 years
Finite-Lived intangible assets, remaining amortization period			3 years 8 months 12 days
Gross intangible assets			$ 48
Accumulated amortization			(13)
Total net amortized intangible assets			$ 35

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Equity Method Investments (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Results of Operations Attributable to the Company from the Joint Ventures in Which it is Invested [Table Text Block]

		Nine months ended
		September 30,
		2015		2014
Revenues	$	654	$	46
Operating income (loss)	$	105	$	(53	)

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Schedule of Estimated Amortization Expense, Intangible Assets (Details) $ in Thousands	Sep. 30, 2015 USD ($)
2015 (remainder of year from October 1, 2015 to December 31, 2015)	$ 152
2016	587
2017	572
2018	572
2019	$ 566

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Services Relating to Operations Paid to Related Party [Table Text Block]

		Nine months ended September 30,
		2015		2014
Management fees	$	240	$	270
Other charges		50		174
Total	$	290	$	444

Schedule of Lease Amounts Paid to Related Parties [Table Text Block]

		Nine months ended September 30,
Leased premises location		2015		2014
Foster City, CA	$	171	$	171
Edwardsville, IL		73		32
Total	$	244	$	203

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Basis of Presentation

9 Months Ended

Sep. 30, 2015

Basis of Presentation [Text Block]

Note 1 –Basis of Presentation

 These unaudited condensed consolidated interim financial statements include the accounts of Heritage Global Inc. together with its subsidiaries, including Heritage Global Partners, Inc. (“HGP”), Heritage Global LLC (“HG LLC”), Equity Partners HG LLC (“Equity Partners”), National Loan Exchange, Inc. (“NLEX”), C2 Communications Technologies Inc., and C2 Investments Inc. These entities, collectively, are referred to as “HGI,” the “Company,” “we” or “our” in these financial statements. Our unaudited condensed consolidated interim financial statements were prepared in conformity with generally accepted accounting principles 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’s sole operating segment is its asset liquidation business.

We have prepared the condensed consolidated interim financial statements included herein pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In management’s opinion, these financial statements reflect all adjustments that are necessary to present fairly the results for the interim periods included herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations; however, we believe that the disclosures are appropriate. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 31, 2015.

The results of operations for the three and nine month periods ended September 30, 2015 are not necessarily indicative of those operating results to be expected for any subsequent interim period or for the entire year ending December 31, 2015. The accompanying condensed consolidated balance sheet at December 31, 2014 has been derived from the audited consolidated balance sheet at December 31, 2014, contained in the above referenced Form 10-K. Certain prior year balances within the condensed consolidated financial statements have been reclassified to conform to the current year presentation.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Preferred stock, par value (in dollars per share)	$ 10.00	$ 10.00
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	569	575
Preferred stock, shares outstanding	569	575
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common Stock, Shares, Issued	28,467,648	28,167,408
Common stock, shares outstanding	28,467,648	28,167,408

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Related Party Transactions

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Text Block]

Note 11 – Related Party Transactions

Debt with Counsel

Until the second quarter of 2014, as discussed below, Counsel was the Company’s majority shareholder. Counsel remained a related party following the distribution of its investment in HGI to Counsel shareholders as a result of the Services Agreement discussed below. The Services Agreement terminated on August 31, 2015, however subsequent to its termination Counsel remained a related party because Allan Silber, an affiliate of Counsel, is the Company’s chairman of the board, and a significant shareholder of the Company. At September 30, 2015 and December 31, 2014, the Company reported amounts owed to Counsel of $1.7 million and $3.0 million, respectively, as related party debt (see Note 9). Total interest of $0.4 million has been accrued on the debt through September 30, 2015, and remains unpaid.

Counsel Services Provided to the Company

Beginning in December 2004, HGI and Counsel entered into successive annual management services agreements (collectively, the “Agreement”). Under the terms of the Agreement, HGI agreed to pay Counsel for ongoing services provided to HGI by Counsel personnel. These services included 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 were: 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 received compensation from HGI. Rather, Counsel allocated 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 specifically relating to the ongoing operations of HGI’s asset liquidation business. The amounts due under the Agreement were payable within 30 days following the respective year end, subject to applicable restrictions. Any unpaid amounts bore interest at 10% per annum commencing on the day after such year end.

In the first quarter of 2013, Counsel announced its plan to dispose of its interest in HGI, and 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 dividend was paid on April 30, 2014 to shareholders of record as of April 1, 2014.

Following this disposition, the Company and Counsel entered into a replacement management services agreement (the “Services Agreement”). Under the terms of the Services Agreement, Counsel remained as external manager and continued to provide the same services, at similar rates, until the Services Agreement was terminated effective August 31, 2015, as described more fully in the Current Report on Form 8-K filed with the SEC on September 1, 2015.

The amounts charged by Counsel, which have been accrued and added to the Counsel Loan balance, are detailed below (in thousands):

		Nine months ended September 30,
		2015		2014
Management fees	$	240	$	270
Other charges		50		174
Total	$	290	$	444

Transactions with Other Related Parties

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 senior officers of HGI. It also leases office space in Edwardsville, IL, as part of the operations of NLEX, which is owned by senior officers of NLEX. The lease amounts paid by the Company to the related parties, which are included in selling, general and administrative expenses during the nine months ended September 30, 2015 and 2014, are detailed below (in thousands):

		Nine months ended September 30,
Leased premises location		2015		2014
Foster City, CA	$	171	$	171
Edwardsville, IL		73		32
Total	$	244	$	203

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 10, 2015
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Trading Symbol	hgbl
Entity Registrant Name	Heritage Global Inc.
Entity Central Index Key	0000849145
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		28,467,648
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

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Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Text Block]

Note 12 – Subsequent Events

The Company has evaluated events subsequent to September 30, 2015 for disclosure. There have been no material subsequent events requiring disclosure in this Report, except for the event already disclosed in Note 4 to the unaudited condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Asset liquidation
Commissions and other	$ 2,358	$ 1,365	$ 7,549	$ 4,687
Asset sales	682	4,738	2,094	6,212
Total revenue	3,040	6,103	9,643	10,899
Operating costs and expenses:
Asset liquidation	516	3,385	2,128	4,419
Real estate inventory write-down	2,748	0	2,748	0
Selling, general and administrative, including expenses paid to related parties	3,045	2,698	8,953	7,456
Depreciation and amortization	166	119	490	357
Total operating costs and expenses	6,475	6,202	14,319	12,232
(Losses) earnings of equity accounted asset liquidation investments	(34)	(41)	105	(53)
Operating loss	(3,469)	(140)	(4,571)	(1,386)
Other income (expenses):
Earnings of other equity method investments	0	129	5	164
Interest expense - third party	(127)	(79)	(262)	(250)
Interest expense - related party	(21)	(43)	(66)	(149)
Total other (expense) income	(148)	7	(323)	(235)
Loss before income tax expense	(3,617)	(133)	(4,894)	(1,621)
Income tax expense	20	55	23	24,722
Net loss	(3,637)	(188)	(4,917)	(26,343)
Other comprehensive income (loss):
Foreign currency translation adjustments	4	(7)	(25)	9
Comprehensive loss	$ (3,633)	$ (195)	$ (4,942)	$ (26,334)
Weighted average common shares outstanding - basic and diluted (in thousands)	28,468	28,167	28,293	28,167
Net loss per share - basic and diluted	$ (0.13)	$ (0.01)	$ (0.17)	$ (0.94)

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Earnings Per Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Text Block]

Note 6 – Earnings Per Share

The Company is required, in periods in which it has net income, to calculate basic earnings per share (“basic EPS”) using the two-class method. The two-class method is required because the Company’s Class N preferred shares, each of which is convertible to 40 common shares, have the right to receive dividends or dividend equivalents should the Company declare dividends on its common stock. Under the two-class method, earnings for the period are allocated on a pro-rata basis to the common and preferred stockholders. The weighted-average number of common and preferred shares outstanding during the period is then used to calculate basic EPS for each class of shares.

In periods in which the Company has a net loss, basic loss per share is calculated by dividing the loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. The two-class method is not used in periods in which the Company has a net loss because the preferred stock does not participate in losses.

Stock options and other potential common shares are included in the calculation of diluted earnings per share (“diluted EPS”), since they are assumed to be exercised or converted, except when their effect would be anti-dilutive. For the nine months ended September 30, 2015 and 2014, the Company recorded a net loss and therefore in both years excluded the outstanding options as of September 30 from its calculation of diluted EPS, since they would be anti-dilutive.

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Stock-based Compensation

9 Months Ended

Sep. 30, 2015

Stock-based Compensation [Text Block]

Note 5 – Stock-based Compensation

Options

At September 30, 2015 the Company had three stock-based compensation plans, which are described more fully in Note 15 to the audited consolidated financial statements for the year ended December 31, 2014, contained in the Company’s most recently filed Annual Report on Form 10-K.

During the first nine months of 2015 the Company issued a total of 50,000 options to the Company’s independent directors as part of their annual compensation. During the same period, 40,000 options expired and no options were exercised or forfeited.

 The following summarizes the changes in common stock options for the nine months ended September 30, 2015:

				Weighted
				Average
				Exercise
	Options			Price
Outstanding at December 31, 2014	2,165,000		$	1.71
Granted	50,000		$	0.42
Expired	(40,000	)	$	0.90
Outstanding at September 30, 2015	2,175,000		$	1.70
Options exercisable at September 30, 2015	1,743,750		$	1.78

The Company recognized stock-based compensation expense related to stock options of $0.1 million and $0.3 million for the three and nine months ended September 30, 2015, respectively. As of September 30, 2015 there is approximately $0.1 million of unrecognized stock-based compensation expense related to unvested option awards outstanding, which is expected to be recognized over a weighted average period of 1.7 years.

Restricted Stock

Restricted stock awards represent a right to receive shares of common stock at a future date determined in accordance with the participant’s award agreement. There is no exercise price and no monetary payment required for receipt of restricted stock awards or the shares issued in settlement of the award. Instead, consideration is furnished in the form of the participant’s services to the Company. Compensation cost for these awards is based on the fair value on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period.

The following summarizes the changes in restricted stock awards for the nine months ended September 30, 2015:

				Weighted
	Restricted			Average Grant
	Stock			Date Fair Value
	Awards			Per Share
Awards at December 31, 2014	300,000		$	0.38
Granted	—			—
Vested	(150,000	)	$	0.38
Unvested awards at September 30, 2015	150,000		$	0.38
Vested awards at September 30, 2015	150,000		$	0.38

The Company recognized stock-based compensation expense related to restricted stock awards of $0.1 million for the nine months ended September 30, 2015. As of September 30, 2015 there is approximately $0.1 million of unrecognized stock-based compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average period of 1.5 years.

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Debt (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Debt [Table Text Block]

		September 30,		December 31,
		2015		2014
Current:
Third Party Debt	$	2,500	$	—
Related Party Debt		1,698		2,985
Credit Facility		—		525
		4,198		3,510
Non-current:
Third Party Debt		—		2,500
Total debt	$	4,198	$	6,010

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Use of estimates [Policy Text Block]

Use of estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Significant estimates include the assessment of collectability of revenue recognized, and the valuation of accounts receivable, inventory, investments, goodwill and intangible assets, liabilities, contingent consideration, deferred income tax assets and liabilities, and stock-based compensation. These estimates have the potential to significantly impact our consolidated financial statements, either because of the significance of the financial statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events that are continuous in nature.

The functional currency of foreign operations is deemed to be the local country’s currency. Assets and liabilities of operations outside of the United States are generally translated into U.S. dollars, and the effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss).

The critical accounting policies used in the preparation of our audited consolidated financial statements are discussed in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no changes to these policies in the first nine months of 2015.

Recently Adopted Accounting Pronouncements [Policy Text Block]

Recently Adopted Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 requires discontinued operations treatment for disposals of a component or group of components that represents a strategic shift that has or will have a major impact on an entity’s operations or financial results. It also expands the scope of ASC 205-20 to disposals of equity method investments and acquired businesses held for sale. With respect to disclosures, ASU 2014-08 both 1) expands disclosure requirements for transactions that meet the definition of a discontinued operation, and 2) requires entities to disclose information about individually significant components that are disposed of or held for sale and do not qualify as discontinued operations. ASU 2014-08 also requires specific presentation of various items on the face of the financial statements. ASU 2014-08 is effective for interim and annual periods beginning on or after December 15, 2014, with early adoption permitted. The Company therefore adopted ASU 2014-08 in the first quarter of 2015. However, since the Company does not currently have either discontinued operations or any planned disposals that would require the expanded reporting required by ASU 2014-08, its adoption had no impact on its consolidated financial statements.

Future Accounting Pronouncements [Policy Text Block]

Future Accounting Pronouncements

In January 2015, the FASB issued Accounting Standards update 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU 2015-01”). ASU 2015-01 eliminates the requirement for entities to consider whether an underlying event or transaction is extraordinary, and, if so, to separately present the item in the income statement net of tax, after income from continuing operations. Instead, items that are both unusual and infrequent should be separately presented as a component of income from continuing operations, or be disclosed in the notes to the financial statements. ASU 2015-01 will be effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2015. Early adoption is permitted provided that the new standard is applied from the beginning of the fiscal year of adoption. The Company has not historically reported extraordinary items in its consolidated financial statements, and is not aware of any pending transactions or events that might have required reporting as extraordinary items, and therefore does not expect the adoption of ASU 2015-01 to have a material impact on its consolidated financial statements.

In March 2015, the FASB issued Accounting Standards update 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 eliminates entity specific consolidation guidance for limited partnerships, and revises other aspects of the consolidation analysis, but does not change the existing consolidation guidance for corporations that are not variable interest entities (“VIEs”). For public business entities, ASU 2015-02 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company has not yet adopted ASU 2015-02 nor assessed its potential impact on its consolidated financial statements.

In April 2015, the FASB issued Accounting Standards update 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 changes the presentation of debt issuance costs in financial statements, by requiring them to be presented in the balance sheet as a direct deduction from the related debt liability, rather than as an asset. Amortization of the costs is reported as interest expense. There is no change to the current guidance on the recognition and measurement of debt issuance costs. For public business entities, ASU 2015-03 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. The Company has not yet adopted ASU 2015-03 nor assessed its potential impact on its consolidated financial statements.

In August 2015, the FASB issued Accounting Standards update 2015-15, Interest – Imputation of Interest , (“ASU 2015-15”). ASU 2015-15 amends subtopic 835-30 of the accounting standards codification (which was previously amended by ASU 2015-03), to allow for the capitalization of debt issuance costs related to line of credit agreements. Capitalized costs would be presented as an asset and subsequently amortized ratably over the term of the line of credit. The Company has not yet adopted ASU 2015-15 nor assessed its potential impact on its consolidated financial statements.

In September 2015, the FASB issued Accounting Standards update 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 changes the recognition of business combination adjustments by requiring acquirers to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer is required to record the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts. These amounts are calculated as if the accounting was completed at acquisition date. The acquirer is also required to present separately on the face of the income statement, or disclose in the notes, the amount recorded in current-period earnings (by line item) that would have been recorded in previous reporting periods had the adjustments been recognized as of the acquisition date. ASU 2015-16 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company has not yet adopted ASU 2015-16 nor assessed its potential impact on its consolidated financial statements.

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Debt

9 Months Ended

Sep. 30, 2015

Debt [Text Block]

Note 9 – Debt

Outstanding debt at September 30, 2015 and December 31, 2014 is summarized as follows (in thousands):

		September 30,		December 31,
		2015		2014
Current:
Third Party Debt	$	2,500	$	—
Related Party Debt		1,698		2,985
Credit Facility		—		525
		4,198		3,510
Non-current:
Third Party Debt		—		2,500
Total debt	$	4,198	$	6,010

The Company entered into a loan with an unrelated party (the “Third Party Debt”) during the second quarter of 2014 for a principal amount of $2.5 million. The loan bears interest at 6% and had an original maturity date of January 15, 2015. In December 2014, the maturity date was extended to January 15, 2016 at the same interest rate. The loan is not subject to any covenants or conditions.

The Company’s Related Party Debt (the “Counsel Loan”), which is due on demand, was originally entered into in 2003 and accrued interest at 10% per annum compounded quarterly from the date funds were advanced. The Counsel Loan is secured by the assets of the Company.

In the second quarter of 2014, following Street Capital Group Inc.’s (formerly Counsel Corporation, herein referred to as “Counsel”) distribution of its ownership interest in HGI to Counsel shareholders as a dividend in kind, the unpaid balance of the Counsel Loan began accruing interest at a rate per annum equal to the lesser of the Wall St. Journal (“WSJ”) prime rate + 2.0%, or the maximum rate allowable by law. As of September 30, 2015 and December 31, 2014, the interest rate on the loan was 5.25% . Please see Note 11 for further discussion of transactions with Counsel.

The Credit Facility in existence at December 31, 2014, which is included within third party debt on the condensed consolidated balance sheet, was provided to HG LLC by a U.S. bank. The Credit Facility was repaid in full and terminated in March 2015.

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Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2015

Intangible Assets and Goodwill [Text Block]

Note 7 – Intangible Assets and Goodwill

Identifiable intangible assets

The Company’s identifiable intangible assets are associated with its acquisitions of HGP in 2012 and NLEX in 2014, as shown in the table below (dollars in thousands):

	Original	Remaining		Acquisition		Accumulated			Carrying Value
Amortized Intangible Assets	Life (years)	Life (years)		Cost		Amortization			September 30, 2015
Customer/Broker Network (HGP)	12	8.4	$	4,180	$	(1,248	)	$	2,932
Trade Name (HGP)	14	10.4		1,460		(374	)		1,086
Customer Relationships (NLEX)	7.6	6.3		834		(146	)		688
Non-Compete Agreement (NLEX)	2	0.7		71		(47	)		24
Website (NLEX)	5	3.7		48		(13	)		35
Total				6,593		(1,828	)		4,765
Unamortized Intangible Assets
Trade Name (NLEX)	N/A	N/A		2,437		—			2,437
Total			$	9,030	$	(1,828	)	$	7,202

Amortization expense during the first nine months of 2015 and 2014 was $0.5 million and $0.3 million, respectively.

The estimated amortization expense as of September 30, 2015 during the next five fiscal years is shown below (in thousands):

Year		Amount
2015 (remainder of year from October 1, 2015 to December 31, 2015)	$	152
2016	$	587
2017	$	572
2018	$	572
2019	$	566

Goodwill

The Company’s goodwill is related to its asset liquidation business, and is comprised of goodwill from three acquisitions, as shown in the table below (in thousands). There were no impairment losses or other charges to the carrying amount of goodwill during the nine months ended September 30, 2015 and 2014.

Entity acquired	Acquisition date		Goodwill
Equity Partners	June 2011	$	573
HGP	February 2012		4,728
NLEX	June 2014		3,545
Total goodwill		$	8,846

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Equity Method Investments

9 Months Ended

Sep. 30, 2015

Equity Method Investments [Text Block]

Note 8 – Equity Method Investments

Summarized financial information – Equity method accounted asset liquidation investments

The summarized results of operations attributable to HGI’s equity method accounted asset liquidation investments are detailed in the table below (in thousands):

		Nine months ended
		September 30,
		2015		2014
Revenues	$	654	$	46
Operating income (loss)	$	105	$	(53	)

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Income Taxes

9 Months Ended

Sep. 30, 2015

Income Taxes [Text Block]

Note 10 – Income Taxes

At September 30, 2015 the Company has aggregate tax net operating loss carry forwards of approximately $87.9 million ($59.1 million of unrestricted net operating tax losses and approximately $28.8 million of restricted net operating tax losses) and unused minimum tax credit carry forwards of $0.5 million. Substantially all of the net operating loss carry forwards and unused minimum tax credit carry forwards expire between 2025 and 2035. The Company’s utilization of restricted net operating tax loss carry forwards against future income for tax purposes is restricted pursuant to the “change in ownership” rules in Section 382 of the Internal Revenue Code.

The reported tax expense (benefit) varies from the amount that would be provided by applying the statutory U.S. Federal income tax rate to the loss from continuing operations before taxes primarily as a result of the change in the deferred tax asset valuation allowance.

The Company records net deferred tax assets to the extent that it believes such assets will more likely than not be realized. As a result of our cumulative losses and uncertainty with respect to future taxable income, we have provided a full valuation allowance against our net deferred tax assets as of December 31, 2014 and September 30, 2015.

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Schedule of Share-based Compensation, Restricted Stock, Activity (Details)	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Awards at December 31, 2014	300,000
Granted	0
Vested	(150,000)
Unvested awards at September 30, 2015	150,000
Vested Awards at September 30, 2015	150,000
Awards at December 31, 2014 Weighted Average Grant Date Fair Value Per Share | $ / shares	$ 0.38
Weighted Average Grant Date Fair Value Price Per Share, Granted | $ / shares	0
Weighted Average Grant Date Fair Value Price Per Share, Vested | $ / shares	0.38
Unvested awards at September 30, 2015 Weighted Average Grant Date Fair Value Per Share | $ / shares	0.38
Vested awards at September 30, 2015 Weighted Average Grant Date Fair Value Per Share | $ / shares	$ 0.38

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Intangible Assets and Goodwill (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Intangible Assets [Table Text Block]

	Original	Remaining		Acquisition		Accumulated			Carrying Value
Amortized Intangible Assets	Life (years)	Life (years)		Cost		Amortization			September 30, 2015
Customer/Broker Network (HGP)	12	8.4	$	4,180	$	(1,248	)	$	2,932
Trade Name (HGP)	14	10.4		1,460		(374	)		1,086
Customer Relationships (NLEX)	7.6	6.3		834		(146	)		688
Non-Compete Agreement (NLEX)	2	0.7		71		(47	)		24
Website (NLEX)	5	3.7		48		(13	)		35
Total				6,593		(1,828	)		4,765
Unamortized Intangible Assets
Trade Name (NLEX)	N/A	N/A		2,437		—			2,437
Total			$	9,030	$	(1,828	)	$	7,202

Schedule of Estimated Amortization Expense, Intangible Assets [Table Text Block]

Year		Amount
2015 (remainder of year from October 1, 2015 to December 31, 2015)	$	152
2016	$	587
2017	$	572
2018	$	572
2019	$	566

Schedule of Goodwill [Table Text Block]

Entity acquired	Acquisition date		Goodwill
Equity Partners	June 2011	$	573
HGP	February 2012		4,728
NLEX	June 2014		3,545
Total goodwill		$	8,846

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Real Estate Inventory Write-down (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Oct. 31, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Real Estate, List Price	$ 4,900
Real Estate, Inventory Write-down		$ 2,748	$ 0	$ 2,748	$ 0
Approximations [Member]
Real Estate, Inventory Write-down		$ 2,700		2,700
Approximations [Member] | Pre-Write down [Member]
Real Estate, Carrying Value				6,500
Approximations [Member] | Post Write down [Member]
Real Estate, Carrying Value				$ 3,800

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Schedule of Lease Amounts Paid to Related Parties (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Amount Charged on Leased Premises	$ 244	$ 203
Lease Amounts [Member] | Foster City, CA [Member]
Amount Charged on Leased Premises	171	171
Lease Amounts [Member] | Edwardsville, IL [Member]
Amount Charged on Leased Premises	$ 73	$ 32

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Beginning Balance at Dec. 31, 2014	$ 6	$ 282	$ 283,691	$ (270,468)	$ (34)	$ 13,477
Balance (in shares) at Dec. 31, 2014	575	28,167,408
Stock-based compensation expense			317			317
Issuance of common stock from restricted stock awards		$ 3	(3)
Issuance of common stock from restricted stock awards (shares)		300,000
Conversion of Series N preferred stock into common stock (Shares)	(6)	240
Net loss				(4,917)		(4,917)
Foreign currency translation adjustments					(25)	(25)
Ending Balance at Sep. 30, 2015	$ 6	$ 285	$ 284,005	$ (275,385)	$ (59)	$ 8,852
Balance (in shares) at Sep. 30, 2015	569	28,467,648

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Real Estate Inventory Write-down

9 Months Ended

Sep. 30, 2015

Real Estate Inventory Write-down [Text Block]

Note 4 – Real Estate Inventory Write-down

In October 2015, the Company executed a listing agreement with a real estate broker to list its real estate inventory for sale at a list price of $4.9 million. The carrying value of the inventory had been $6.5 million. The Company determined that the net realizable value for the inventory, based on the most probable selling price net of costs to complete the sale, was $3.8 million. As such, the Company recorded an inventory write-down charge during the three months ended September 30, 2015, of $2.7 million, reducing the carrying cost of the inventory to $3.8 million.

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Stock-based Compensation (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Sep. 30, 2014
Options, Granted (in shares)		50,000
Options expired		40,000
Stock-based compensation expense		$ 317	$ 363
Restricted Stock [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		1 year 6 months
Restricted Stock [Member] | Approximations [Member]
Stock-based compensation expense	$ 100	$ 100
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	100	$ 100
Options [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		1 year 8 months 12 days
Options [Member] | Approximations [Member]
Stock-based compensation expense	100	$ 300
Employee Service-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options	$ 100	$ 100

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Schedule of Results of Operations Attributable to the Company from the Joint Ventures in Which it is Invested (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Revenues	$ 654	$ 46
Operating income (loss)	$ 105	$ (53)

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Stock-based Compensation (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Changes in Common Stock Options [Table Text Block]

				Weighted
				Average
				Exercise
	Options			Price
Outstanding at December 31, 2014	2,165,000		$	1.71
Granted	50,000		$	0.42
Expired	(40,000	)	$	0.90
Outstanding at September 30, 2015	2,175,000		$	1.70
Options exercisable at September 30, 2015	1,743,750		$	1.78

Schedule of Share-based Compensation, Restricted Stock, Activity [Table Text Block]

				Weighted
	Restricted			Average Grant
	Stock			Date Fair Value
	Awards			Per Share
Awards at December 31, 2014	300,000		$	0.38
Granted	—			—
Vested	(150,000	)	$	0.38
Unvested awards at September 30, 2015	150,000		$	0.38
Vested awards at September 30, 2015	150,000		$	0.38