Asset Liquidation Operations

12 Months Ended

Dec. 31, 2012

Asset Liquidation Operations [Abstract]

Asset Liquidation Operations [Text Block]

Note 2 – Asset Liquidation Operations

The Company began its asset liquidation operations in the second quarter of 2009, through its subsidiary Counsel RB, which specializes in capital asset solutions. These involve 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. Counsel RB was originally owned 75% by the Company and 25% by Counsel RB’s Co-CEOs. In November 2010, the Company acquired the Co-CEOs’ 25% interest in exchange for approximately 3.2 million shares of the Company.

In June 2011, Counsel RB expanded its operations through its acquisition of 100% of the business of EP USA, LLC (d/b/a Equity Partners ) (“Equity Partners”), a boutique investment banking firm and provider of financial solutions. 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 the acquisition date.

	$
Consideration paid
Cash		175
Equity instruments:
122,950 CRBCI common shares 1		184
230,000 options to purchase CRBCI common shares at $1.83 per share 2		460
Fair value of total consideration		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
Recognized amounts of identifiable assets acquired and liabilities assumed
Accounts receivable (net of $0 allowance for doubtful accounts)		244
Property, plant and equipment		2
Total identifiable net assets assumed		246
Goodwill		573
		819

1 Value determined using the closing price of the Company’s common shares on June 22, 2011.

2 Value determined using the Black-Scholes Option Pricing Model.  Inputs to the model included 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.

The goodwill is discussed in Note 6.

The only transactions recognized separately from the acquisition were the acquisition costs noted in the above table.

On February 29, 2012 the Company again expanded its asset liquidation operations through the acquisition of 100% of the issued and outstanding capital stock in Heritage Global Partners, Inc, a full-service, global auction, appraisal and asset advisory firm. In connection with the acquisition, CRBCI entered into employment agreements with the previous owners and employees of Heritage Global Partners. The following table summarizes the consideration paid for Heritage Global Partners and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:

At February 29, 2012

	$
Consideration paid
Cash 1	3,000
Promissory notes, net of receivable from owners 2	849
Equity instruments:
1,000,000 CRBCI common shares 3	2,100
625,000 options to purchase CRBCI common shares at $2.00 per share 4	1,131
Fair value of total consideration	7,080
Acquisition related costs (included in selling, general, and administrative expenses in CRBCI’s consolidated statement of operations for the year ended December 31, 2012)	78
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash 1	656
Accounts receivable (net of $0 allowance for doubtful accounts)	870
Deposits	20
Prepaid expenses	43
Property, plant and equipment	37
Identifiable intangible assets	5,640
Accounts payable and accrued liabilities	(1,212	)
Client liability account	(1,424	)
Short-term note payable	(100	)
Future income taxes payable	(2,178	)
Total identifiable net assets assumed	2,352
Goodwill	4,728
	7,080

¹ Net cash used for the acquisition was $2,344.

² The notes (the “Promissory Notes”) were paid in full on their August 31, 2012 maturity date.

³ Value determined using the closing price of the Company’s common shares on February 29, 2012

⁴ Value determined using the Black-Scholes Option Pricing Model. Inputs to the model included an expected volatility
rate of 133%, a risk-free interest rate of 1.25%, an expected life of 4.75 years, and an expected dividend yield of $nil.

The fair value of the accounts receivable is the value as reported in the above table.

The goodwill and identifiable intangible assets are discussed in Note 6.

To date, the only transactions recognized separately from the acquisition were the acquisition costs noted in the above table.

Expansion into international markets

In the third quarter of 2012, the Company began expanding its asset liquidation operations into markets outside of North America. In July an exclusive strategic alliance agreement was signed with Asset Remarketing S. De R.L. de C.V. (“Asset Remarketing”), a Mexican company specializing in the monetization of manufacturing assets and real estate in Latin America, including Mexico, Costa Rica and the Dominican Republic. The Company and Asset Remarketing operate under the name “Asset Remarketing – HGP Latin America”.

In the fourth quarter of 2012, the Company launched Heritage Global Partners Europe. Through its wholly-owned subsidiary Heritage Global Partners UK Limited (“HGP UK”), the Company opened three European-based offices, one each in the United Kingdom, Germany and Spain.