Counsel RB Capital LLC

12 Months Ended

Dec. 31, 2011

Business Combinations and Subsidiary Accounting [Abstract]

Business Combination and Subsidiary Accounting Disclosure [Text Block]

Note 2 – Counsel RB Capital LLC

Counsel RB, which began operating in the second quarter of 2009, specializes in capital asset solutions. This involves finding, acquiring and monetizing distressed and surplus capital assets. In addition to acquiring turn-key manufacturing facilities and used industrial machinery and equipment, Counsel RB arranges traditional asset disposition sales, including liquidation and auction sales, earning commission revenue from the latter.

Acquisition of Equity Partners

In June 2011, Counsel RB expanded its operations through its acquisition of 100% of the business of Equity Partners. Equity Partners was founded in 1988, and works with financially distressed companies and properties to arrange customized financial solutions in the form of debt/refinancing or equity investments, to create joint venture relationships, or to organize going concern sales of a business or property. Its services are intended to allow distressed businesses to remain intact in order to maintain their going concern values, which typically are significantly higher than their liquidation values. As part of the acquisition, CRBCI entered into employment and consulting agreements with the previous owners and employees of Equity Partners.

The following table summarizes the consideration paid for Equity Partners and the amounts of the assets acquired and liabilities assumed recognized at fair value:

	$
Consideration
Cash	175
Equity instruments:
122,950 CRBCI common shares	184
230,000 options to purchase CRBCI common shares	460
Fair value of total consideration	819
Recognized amounts of identifiable assets acquired and liabilities assumed
Accounts receivable	244
Property, plant and equipment	2
Goodwill	573
Total identifiable net assets	819
Acquisition related costs (included in selling, general, and administrative expenses in CRBCI’s condensed consolidated statement of operations for the year ended December 31, 2011)	46

The fair value of the 122,950 CRBCI common shares issued as part of the consideration was determined using the closing price of the shares on June 22, 2011. The fair value of the 230,000 options to purchase CRBCI common shares was determined using the Black-Scholes Option Pricing Model. Inputs to the model included an exercise price of $1.83, an expected volatility of 323%, a risk-free interest rate of 2.10%, an expected life of 4.75 years, and an expected dividend yield of zero.

The fair value of the accounts receivable is the value as reported in the above table, and includes an allowance of $0.

The only transactions recognized separately from the acquisition were approximately $46 of professional fees incurred by the Company, which have been expensed in the year ended December 31, 2011.

Acquisition of non-controlling interest

Counsel RB was initially owned 75% by the Company and 25% by Counsel RB’s Co-CEOs. At November 30, 2010, the Company acquired the Co-CEOs’ 25% interest in exchange for 3,242,000 common shares of CRBCI. As required by GAAP, the Company’s acquisition of the 25% non-controlling interest in Counsel RB was accounted for as an equity transaction.

Asset liquidation accounting presentation

Counsel RB’s asset liquidation transactions are generally conducted through two different formats. GAAP requires that they be reported separately in the consolidated financial statements.

Revenue from transactions that Counsel RB conducts directly is reported as Asset Liquidation revenue, and the associated direct costs are reported as Asset Liquidation costs. At the balance sheet date, any unsold assets are reported as Inventory, any outstanding accounts receivable are included in the Company’s Amounts Receivable, and any associated liabilities are included in the Company’s Accrued Liabilities. Although all inventory is expected to be sold in less than one year, real estate inventory is not recorded as a current asset.

Transactions that involve Counsel RB acting jointly with one or more additional purchasers, pursuant to a partnership, joint venture or limited liability company (“LLC”) agreement (collectively, “Joint Ventures”), require that Counsel RB’s proportionate share of the net income (loss) be reported as Earnings (Loss) of Equity Accounted Asset Liquidation Investments. Although all of Counsel RB’s investments in Joint Ventures are expected to be sold in less than one year, they are reported on the balance sheet as non-current Asset Liquidation Investments.

Summarized financial information – Equity accounted asset liquidation investments

The table below details the components of assets and liabilities, as at December 31, 2011 and 2010, attributable to CRBCI from the Joint Ventures in which it was invested at December 31, 2011 and 2010.

	2011		2010
Current assets	$	3,435	$	4,983
Noncurrent assets	$	34	$	34
Current liabilities	$	14	$	1,469
Noncurrent liabilities	$	—	$	—

The table below details the results of operations, for the year ended December 31, 2011 and 2010, attributable to CRBCI from the Joint Ventures in which it was invested during 2011 and 2010.

	2011		2010
Gross revenues	$	3,505	$	22,262
Gross profit	$	2,201	$	7,758
Income from continuing operations	$	2,183	$	7,586
Net income	$	2,183	$	7,586
Net income after non-controlling interest	$	2,183	$	6,011