March 31, 2015 04:00 PM Eastern Daylight Time

SAN DIEGO & TORONTO – (BUSINESS WIRE) – Heritage Global Inc. (OTCQB: HGBL, CSE: HGP), a leader in asset liquidation transactions, valuations and advisory services, today reported financial results for the fourth quarter and twelve-month periods ended December 31, 2014 as summarized below.

Summary Financial Data
(unaudited)

($ in thousands, except per share amounts)

Three months ended
December 31,

Twelve months ended
December 31,

2014

2013

2014

2013

Total asset liquidation revenue(1) $ 3,287 $ 2,479 $ 14,186 $ 8,068
Earnings (loss) of asset liquidation investments(2) 196 (65) 143 1,200
Operating loss (514) (1,159) (1,900) (2,937)
Net loss (171) (4,746) (26,514) (6,396)
Loss per diluted common share $ (0.00) $ (0.17) $ (0.94) $ (0.22)

1. Represents revenue generated from activities where Heritage Global acted in a principal capacity or had majority interest in a transaction.
2. Represents equity income from activities where Heritage Global acted as a member of a syndicate in a transaction.

2014 Q4 Summary:

  • Heritage Global Partners achieved an approximate 33% increase in total asset liquidation revenue to $3.3 million, compared to the year ago fourth quarter level. Combined asset liquidation revenue and earnings of equity accounted asset liquidation investments (pre-tax) rose to approximately $3.5 million, up from $2.4 million in the prior year quarter.
  • Heritage Global successfully completed two global online sales featuring late model high quality biopharmaceutical laboratory and R&D assets previously owned by Boehringer Ingelheim, a world-leading pharmaceutical company.
  • Heritage Equity Partners, a premier boutique investment banking and M&A advisor to distressed organizations and special situations, and a division of Heritage Global, acted as investment banker and advisor to Gaspari Nutrition, Inc. in its successful December 2014 approved sale of substantially all of its assets to a subsidiary of Total Produce, Allegro Nutrition.
  • National Loan Exchange (NLEX), acquired in Q2 2014, contributed approximately $0.9 million of net asset liquidation revenue during the quarter.
  • The Company reported a net loss of $0.2 million, or approximately break-even on a per diluted common share basis. This was a significant improvement versus the $4.7 million net loss, or $0.17 per diluted share, generated in Q4 2013.

Heritage Global Partners Managing Partner Ross Dove stated, “The 2014 fourth quarter capped off a very solid year for Heritage Global as we generated a 75 percent increase in asset liquidation revenue to $14.2 million for the period. Importantly, all of the Company’s divisions contributed to this improved performance, helping us drive top-line growth. Among the key developments during the past year was our acquisition of National Loan Exchange, a leading North American charged-off receivables broker, and the forging of an exclusive strategic alliance with Troostwijk Auctions focused on monetizing global energy industry assets on behalf of regional and multinational European corporations. We are off to a good start in 2015 and focused on growing our business and supporting our worldwide clientele through the balance of this year and beyond.”

About Heritage Global Inc. – Heritage Global Inc. (OTCQB: HGBL, CSE: HGP) is a value-driven, innovative leader in tangible and intangible asset valuations and transactions. Heritage Global focuses on identifying, valuing, acquiring and monetizing underlying assets in 28 global manufacturing and technology sectors. Heritage Global specializes both in acting as an adviser, as well as acquiring or brokering turnkey manufacturing facilities, surplus industrial machinery and equipment, industrial inventories, accounts receivable portfolios and related intellectual property, and entire business enterprises.

Forward-Looking Statements – The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, other than statements of historical facts, which address the Company’s expectations, should be considered as forward-looking statements. Such statements are based on knowledge of the environment in which the Company currently operates, but because of the factors listed herein, as well as other factors beyond the Company’s control, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that may cause actual results to differ from anticipated results include, but are not limited to, obtaining necessary approvals and other risks detailed from time to time in the Company’s securities and other regulatory filings.

HERITAGE GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS

Three Months
Ended

Twelve Months
Ended

December 31, December 31,
(In thousands of US dollars, except per share amounts) 2014 2013 2014 2013
Revenue:
Asset liquidation:
Asset sales $ 48 $ 247 $ 6,260 $ 2,046
Commissions and other 3,239 2,232 7,926 6,022
Total asset liquidation revenue 3,287 2,479 14,186 8,068
Intellectual property licensing 824
Total revenue 3,287 2,479 14,186 8,892
Operating costs and expenses:
Asset liquidation 212 1,030 4,631 2,706
Patent licensing and maintenance 11 25 43 191

Selling, general and administrative, including expenses paid to

related parties 3,565 2,404 10,989 9,660
Depreciation and amortization 209 114 566 472
Total operating costs and expenses 3,997 3,573 16,229 13,029
(710) (1,094) (2,043) (4,137)
Earnings (loss) of asset liquidation investments 196 (65) 143 1,200
Operating loss (514) (1,159) (1,900) (2,937)
Other income (expenses):
Gain on sale of equity-method investment 551 551
Earnings of other equity-method investments 97 65 261 126
Interest expense – third party (264) (80) (514) (388)
Interest expense – related party (41) (77) (190) (168)
Total other income (expenses) 343 (92) 108 (430)
Income (loss) before income tax expense (171) (1,251) (1,792) (3,367)
Income tax expense 3,495 24,722 3,029
Net loss (171) (4,746) (26,514) (6,396)
Other comprehensive income (loss):
Currency translation adjustment (net of tax of $0) 1 (24) 10 (37)
Comprehensive loss (170) $ (4,770) $ (26,504) $ (6,433)
Weighted average common shares outstanding – basic and diluted
(in thousands) 28,167 28,167 28,167 28,610
Net loss per share – basic and diluted: $ (0.00) $ (0.17) $ (0.94) $ (0.22)

The notes contained in our Annual Report on Form 10-K are an integral part of these condensed consolidated financial statements.

HERITAGE GLOBAL INC.
CONSOLIDATED BALANCE SHEETS
as of December 31, 2014 and 2013
(In thousands of US dollars, except share and per share amounts)

2014 2013
ASSETS
Current assets:
Cash and cash equivalents $ 3,633 $ 3,213
Accounts receivable (net of allowance for doubtful accounts of $31; 2013 – $0) 3,043 1,670
Deposits 173 17
Inventory – equipment 139 578
Other current assets 587 480
Deferred income tax assets 1,366
Total current assets 7,575 7,324
Non-current assets:
Inventory – real estate 6,508 6,078
Asset liquidation investments 978 1,380
Other equity-method investments 156 1,769
Property, plant and equipment, net 150 32
Identifiable intangible assets, net 7,657 4,810
Goodwill 8,846 5,301
Deferred income tax assets 23,301

Total assets

$ 31,870 $ 49,995
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 7,131 $ 6,510
Debt payable to third parties 539 1,438
Debt payable to a related party 2,985 2,550
Contingent consideration 803
Total current liabilities 11,458 10,498
Non-current liabilities:
Debt payable to third parties 2,580
Contingent consideration 3,395
Deferred tax liabilities 960
Total liabilities 18,393 10,498
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $10.00 par value, authorized 10,000,000 shares; issued and
outstanding 575 Class N shares at December 31, 2014 and 579 Class N
shares at December 31, 2013, liquidation preference of $575 at December 31,
2014 and $579 at December 31, 2013 6 6
Common stock, $0.01 par value, authorized 300,000,000 shares; issued and
outstanding 28,167,408 shares at December 31, 2014 and 28,167,248 shares
at December 31, 2013 282 282
Additional paid-in capital 283,691 283,207
Accumulated deficit (270,468) (243,954)
Accumulated other comprehensive loss (34) (44)
Total stockholders’ equity 13,477 39,497
Total liabilities and stockholders’ equity $ 31,870 $ 49,995

The notes contained in our Annual Report on Form 10-K are an integral part of these condensed consolidated financial statements.

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