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Stockholders' Equity | 12 Months Ended
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Dec. 31, 2019
Equity [Abstract] |
Stockholders' Equity | Note 18 – Stockholders’ Equity Capital Stock The Company’s authorized capital stock consists of 300,000,000 common shares with a par value of $0.01 per share and 10,000,000 preferred shares with a par value of $10.00 per share. During 2018 and 2019 the Company issued 173,130 and 10,783 shares of common stock, respectively, pursuant to the exercise of stock options. In connection with an agreement entered on November 25, 2019, the Company issued 75,000 common shares to Maxim Group LLC for services rendered. As further described below the Company issued a total of 600,000 shares of restricted stock during 2018. Each share of Series N preferred stock has a voting entitlement equal to 40 common shares, votes with the common stock on an as-converted basis and is senior to all other preferred stock of the Company. Dividends, if any, will be paid on an as-converted basis equal to common stock dividends. The conversion value of each share of Series N preferred stock is $1,000, and each share is convertible to 40 common shares at the rate of $25.00 per common share. The holders of shares of Series N preferred stock are entitled to liquidation preference over common stockholders equivalent to $1,000 per share. During 2018 and 2019, no shares of the Company’s Series N preferred stock were converted into shares of the Company’s common stock. Stock-Based Compensation Plans At December 31, 2019, the Company had four stock-based compensation plans which are described below. The fourth of these plans was adopted on May 5, 2016, and received approval from the Company’s stockholders at the special meeting of stockholders held on September 14, 2016. 2003 Stock Option and Appreciation Rights Plan In 2003, the stockholders of the Company approved the 2003 Stock Option and Appreciation Rights Plan (the “2003 Plan”) which provided for the issuance of incentive stock options, non-qualified stock options and Stock Appreciation Rights (“SARs”) up to an aggregate of 2,000,000 shares of common stock (subject to adjustment in the event of stock dividends, stock splits, and other similar events). The plan had a ten-year term, and therefore after 2013 no options have been issued. The price at which shares of common stock covered by the option can be purchased was determined by the Company’s Board or a committee thereof; however, in the case of incentive stock options the exercise price was never less than the fair market value of the Company’s common stock on the date the option was granted.
2003 Plan |  | 2019 |  |  | 2018 |
Options outstanding, beginning of year |  |  | 310,000 |  |  |  | 985,000 |
Options expired |  |  | (140,000 | ) |  |  | (660,000 | )
Options forfeited |  |  | (150,000 | ) |  |  | (15,000 | )
Options outstanding, end of year |  |  | 20,000 |  |  |  | 310,000 |
The outstanding options vested over four years at an exercise price of $1.00 per share. No SARs were issued under the 2003 Plan. 2010 Non-Qualified Stock Option Plan In 2010, the Company’s Board approved the 2010 Non-Qualified Stock Option Plan (the “2010 Plan”) to induce certain key employees of the Company or any of its subsidiaries who are in a position to contribute materially to the Company’s prosperity to remain with the Company, to offer such persons incentives and rewards in recognition of their contributions to the Company’s progress, and to encourage such persons to continue to promote the best interests of the Company. The Company reserved 1,250,000 shares of common stock (subject to adjustment under certain circumstances) for issuance or transfer upon exercise of options granted under the 2010 Plan. Options may be issued under the 2010 Plan to any key employees or consultants selected by the Company’s Board (or an appropriately qualified committee). Options may not be granted with an exercise price less than the fair market value of the common stock of the Company as of the day of the grant. Options granted pursuant to the plan are subject to limitations on transfer and execution and may be issued subject to vesting conditions. Options may also be forfeited in certain circumstances. During 2018 and 2019, options to purchase 85,000 and 60,000 shares were granted to the Company’s independent directors as part of their annual compensation.
2010 Plan |  | 2019 |  |  | 2018 |
Options outstanding, beginning of year |  |  | 915,000 |  |  |  | 830,000 |
Options granted |  |  | 60,000 |  |  |  | 85,000 |
Options outstanding, end of year |  |  | 975,000 |  |  |  | 915,000 |
The outstanding options vest over four years at exercise prices ranging from $0.24 to $0.70 per share. Equity Partners Stock Option Plan In 2011, the Company’s Board approved the Equity Partners Stock Option Plan (the “Equity Partners Plan”) to allow the Company to issue options to purchase common stock as a portion of the purchase price of Equity Partners. The Company reserved 230,000 shares of common stock for issuance upon exercise of options granted under the Equity Partners Plan. During 2011, options to purchase 230,000 shares with an exercise price of $1.83, vesting immediately, were granted under the Equity Partners Plan. During 2018, options to purchase 230,000 shares expired.
Equity Partners Plan |  | 2018 |
Options outstanding, beginning of year |  |  | 230,000 |
Options expired |  |  | (230,000 | )
Options outstanding, end of year |  |  | — |
Other Options Issued In 2012, the Company’s Board approved the issuance of options for 625,000 shares of common stock. The options expired during 2019. In 2019, the Company’s Board approved the issuance of options to purchase 265,000 shares at exercise prices ranging from $0.70 to $0.85 to certain accredited personnel.
Other Options |  | 2019 |  |  | 2018 |
Options outstanding, beginning of year |  |  | 625,000 |  |  |  | 625,000 |
Options issued |  |  | 265,000 |  |  |  | — |
Options expired |  |  | (625,000 | ) |  |  | — |
Options outstanding, end of year |  |  | 265,000 |  |  |  | 625,000 |
Heritage Global Inc. 2016 Stock Option Plan On May 5, 2016, subject to the approval received by the stockholders of the Company on September 14, 2016, the Company adopted the Heritage Global Inc. 2016 Stock Option Plan (the “2016 Plan”) which provided for the issuance of incentive stock options and non-qualified stock options up to an aggregate of 3,150,000 shares of common stock (subject to adjustment in the event of stock dividends, stock splits, and other similar events). Options may not be granted with an exercise price less than the fair market value of the common stock of the Company as of the day of the grant. Options granted pursuant to the plan are subject to limitations on transfer and execution and may be issued subject to vesting conditions. Options may also be forfeited in certain circumstances. During 2016 options to purchase 2,539,200 shares of common stock were granted to the Company’s employees. During 2018 and 2019, options to purchase a total of 441,500 and 324,850 shares, respectively, were granted to the Company’s employees under the 2016 Plan. On June 1, 2018, the Company issued options to purchase 300,000 shares of common stock to the employees of NLEX, in connection with the Addendum to the Employment Agreements of David Ludwig and Tom Ludwig. As of December 31, 2018, 173,130 shares of common stock were issued pursuant to the exercise of these common stock options. The remaining 126,870 shares expired as of July 31, 2018.
2016 Plan |  | 2019 |  |  | 2018 |
Options outstanding, beginning of year |  |  | 2,453,900 |  |  |  | 2,370,450 |
Options granted |  |  | 324,850 |  |  |  | 441,500 |
Options exercised |  |  | (31,276 | ) |  |  | (173,130 | )
Options expired |  |  | — |  |  |  | (126,870 | )
Options forfeited |  |  | (395,624 | ) |  |  | (58,050 | )
Options outstanding, end of year |  |  | 2,351,850 |  |  |  | 2,453,900 |
The outstanding options under the 2016 Plan vest over four years at exercise prices ranging from $0.45 to $0.85 per share. Stock-Based Compensation Expense Total compensation cost related to stock options in both 2019 and 2018 was $0.3 million. These amounts were recorded in selling, general and administrative expense in both years. During 2019, options to purchase 31,276 shares were exercised. During 2018, options to purchase 173,130 shares were exercised. The tax benefit recognized by the Company related to these option exercises was not material. In connection with the stock option grants during 2019 and 2018, the fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions:
|  | 2019 |  |  | 2018 |
Risk-free interest rate |  | 2% - 3% |  |  | 2% - 3% |
Expected life (years) |  |  | 6.8 |  |  |  | 3.2 |
Expected volatility |  | 73% |  |  | 83% |
Expected dividend yield |  | Zero |  |  | Zero |
The risk-free interest rates are those for U.S. Treasury constant maturities for terms matching the expected term of the option. The expected life of the options is calculated according to the simplified method for estimating the expected term of the options, based on the vesting period and contractual term of each option grant. Expected volatility is based on the Company’s historical volatility. The Company has never paid a dividend on its common stock and therefore the expected dividend yield is zero. The following summarizes the changes in common stock options for 2019 and 2018:
|  | 2019 |  |  | 2018 |
|  | Options |  |  | Weighted Average Exercise Price |  |  | Options |  |  | Weighted Average Exercise Price |
Outstanding at beginning of year |  |  | 4,303,900 |  |  | $ | 0.75 |  |  |  | 5,040,450 |  |  | $ | 0.97 |
Granted |  |  | 649,850 |  |  | $ | 0.74 |  |  |  | 526,500 |  |  | $ | 0.43 |
Exercised |  |  | (31,276 | ) |  | $ | 0.45 |  |  |  | (173,130 | ) |  | $ | 0.43 |
Expired |  |  | (765,000 | ) |  | $ | 2.00 |  |  |  | (1,016,870 | ) |  | $ | 1.74 |
Forfeited |  |  | (545,624 | ) |  | $ | 0.61 |  |  |  | (73,050 | ) |  | $ | 0.77 |
Outstanding at end of year |  |  | 3,611,850 |  |  | $ | 0.51 |  |  |  | 4,303,900 |  |  | $ | 0.75 |
Options exercisable at year end |  |  | 2,157,336 |  |  | $ | 0.46 |  |  |  | 2,533,700 |  |  | $ | 0.96 |
Weighted-average fair value of options granted during the year |  |  |  |  |  | $ | 0.50 |  |  |  |  |  |  | $ | 0.17 |
As of December 31, 2018, the Company had 1,770,200 unvested options with a weighted average grant date fair value of $0.31 per share. As of December 31, 2019, the Company had unvested options for the purchase of 1,454,514 shares with a weighted average grant date fair value of $0.39 per share. As of December 31, 2019, the total unrecognized stock-based compensation expense related to unvested stock options was $0.5 million, which is expected to be recognized over a weighted-average period of 2.5 years. The total fair value of options vesting during the years ending December 31, 2019 and 2018 was $0.3 million and $0.3 million, respectively. The unvested options have no associated performance conditions. In general, the Company’s employee turnover is low, and the Company expects that the majority of the unvested options will vest according to the standard four-year timetable. The following table summarizes information about all stock options outstanding at December 31, 2019:
Exercise price |  | Options Outstanding |  |  | Weighted Average Remaining Life (years) |  |  | Weighted Average Exercise Price |  |  | Number Exercisable |  |  | Weighted Average Remaining Life (years) |  |  | Weighted Average Exercise Price |
$ 0.24 to $ 0.40 |  |  | 100,000 |  |  |  | 7.5 |  |  | $ | 0.34 |  |  |  | 45,000 |  |  |  | 6.9 |  |  | $ | 0.29 |
$ 0.42 to $ 0.48 |  |  | 2,792,250 |  |  |  | 7.0 |  |  | $ | 0.45 |  |  |  | 2,022,336 |  |  |  | 6.9 |  |  | $ | 0.45 |
$ 0.48 to $ 1.00 |  |  | 719,600 |  |  |  | 8.5 |  |  | $ | 0.75 |  |  |  | 90,000 |  |  |  | 1.1 |  |  | $ | 0.76 |
|  |  | 3,611,850 |  |  |  | 7.3 |  |  | $ | 0.51 |  |  |  | 2,157,336 |  |  |  | 6.7 |  |  | $ | 0.46 |
At December 31, 2019 and 2018, the aggregate intrinsic value of exercisable options was $1.2 million and $11,000, respectively. 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. On June 1, 2018, the Company granted 600,000 shares of Company restricted common stock in connection with the Addendum to the Employment Agreements of David Ludwig and Tom Ludwig. The shares are subject to certain restrictions on transfer and a right of repurchase over five years, ending May 31, 2023, and require a continued term of service to the Company. Stock-based compensation expense related to the restricted stock awards, calculated by using the grant date fair value of $0.43 per share, was $30,000 for the year ended December 31, 2018 and $52,000 for the year ended December 31, 2019. The unrecognized stock-based compensation expense as of December 31, 2018 and 2019 was approximately $0.2 million.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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