The Company began its asset liquidation operations in the second quarter of 2009, through its subsidiary HG LLC, 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, HG LLC arranges traditional asset disposition sales, including liquidation and auction sales, earning commission revenue from the latter. HG LLC was originally owned 75% by the Company and 25% by HG LLC’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, HG LLC 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, HGI entered into employment and consulting agreements with the previous owners and employees of Equity Partners.

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, a full-service, global auction, appraisal and asset advisory firm. In connection with the acquisition, HGI entered into employment agreements with the previous owners and employees of HGP. The following table summarizes the consideration paid for HGP 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 HGI common shares ³	2,100
625,000 options to purchase HGI 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 HGI’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

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.

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